An industrial and provident society (IPS) is an organisation set up to carry out a trade or business for community benefit. it is incorporated, which means that it has gone through the registration process that converts a new or existing business into a corporate body, making it a legal entity in its own right. IPSs are regulated by the Financial Services Authority, which took the job over from the Registrar of Friendly Societies (both being supervised by the Treasury).
Consumer, agricultural and housing co-operatives, working mens’ clubs, Women’s Institute, markets, allotment societies, mutual investment companies, friendly societies and housing associations usually incorporate as IPSs, as do some social enterprises. This process is facilitated by the existence of “model rules” developed by various federal bodies, which reduce the legal costs. Credit unions and building societies, which sprang from the same roots, are now governed by specific legislation.
Type of organisation: Industrial and Provident Society (IPS)
Legal Status: Incorporated
Governing Document: IPS rules
Common examples: Community business
IPSs fall into two categories:
IPSs may, in general, conduct any legal business except that of investment for profit.
Both types of IPS have a share capital, but it is usually not made up of equity shares like those in a company limited by shares, which appreciate or fall in value with the success of the enterprise that issues them. Rather they are par value shares, which can only be redeemed (if at all) at face value. The profits and losses of an IPS are thus the common property of the members. The share typically acts as a “membership ticket”, and voting is on a “one member one vote” basis. The maximum individual shareholding is currently set at £20,000 (although other IPSs may hold more shares than this).
An industrial and provident society has:
It is important to note that limited liability does not protect individuals that act negligently, improperly, fail to meet obligations under company law or trades without sufficient assets to cover debts, etc.
More on liability and legal structures.