Community Benefit Society
A Community Benefit Society (often abbreviated as BenCom) is a type of not-for-profit legal form designed to serve the community interest. Registered under the Co-operative and Community Benefit Societies Act 2014, these societies operate on democratic principles and reinvest profits to benefit their community rather than for private gain. It is a popular choice for organisations that want to attract the support of a community by giving them ownership of key assets - such as pubs, landmark buildings and community shops.
Community Benefit Societies are registered with and regulated by the Financial Conduct Authority (FCA). BenComs are incorporated and therefore have legal personality, meaning they can enter into contracts and hold property in their own name. Some types of CBS are also eligible to apply for charitable status with OSCR, if they meet the charity test.
Key characteristics
1. Community purpose
A Community Benefit Society must exist primarily to benefit the wider community, not just its members. Its activities should demonstrate clear public benefit.
2. Democratic governance
BenComs operate on the principle of one member, one vote, regardless of how many shares a member holds. This ensures fair and equal participation in decision-making.
3. Community shares
Community Benefit Societies are a popular model for organisations seeking to raise finance from local people through share issues. See below.
4. Asset lock
Most Community Benefit Societies include an asset lock (most commonly a statutory asset lock, but can also be voluntary) in their rules, meaning that assets cannot be sold or transferred for private profit distribution. On dissolution, assets must be used for the community benefit or transferred to another similar organization.
5. Charitable status
Community Benefit Societies that have charitable objects an appropriate asset lock and exist for public benefit, may apply for charitable status from OSCR.
6. Profit distribution
Surpluses are primarily reinvested or used for community benefit, with only limited interest payable on share capital. If a BenCom is a charity, it must follow the rules set out by OSCR when considering paying interest to members/investors.
Profits/surpluses can never be distributed to members like a company dividend.
Registration requirements
To register a Community Benefit Society with the FCA, an organisation must:
- Submit an application form
- Provide a set of governing rules (often using model rules available from supporting bodies)
- Pay the applicable registration fee
The FCA will assess whether:
- The society is for the benefit of the community
- The rules provide for democratic governance
- The organisation is genuinely distinct from a co-operative or a private business
BenComs can seek investment by issuing community shares, a unique form of share capital that gives members a stake in the organisation without compromising serving the community interest. These shares are typically:
- Withdrawable (but not tradable)
- Not intended for speculative investment
- Limited in interest payments (to ensure community focus)
- Members/shareholders may be eligible for tax reliefs
Community shares have become a popular way for BenComs to finance start-ups or buy local assets.
Regulation and reporting
BenComs must submit:
- An annual return to the FCA
- Accounts and financial statements
- Details of share capital and membership changes
If the society is also a charity, it must report to OSCR in the same manner as all charities.
Further resources and links
Financial Conduct Authority (FCA) – Mutuals Register
FCA – Registration Guidance
Development Trust Association Scotland (DTAS)