WAO is potentially looking for advice, as we’re thinking of approaching funders with existing/new clients and it seems to be a pre-requisite. It’s also time to revisit our articles, as we’re over five years old!
We have an asset lock… can talk to you in our catch up later
3.5. Division on dissolution
In the event of the winding up or dissolution of the society the assets of the society will first, according to law, be used to satisfy its debts and liabilities (including the payment of interest on share capital).
In the event that any assets remain to be disposed of after its liabilities are satisfied, share capital will be repaid at par value if sufficient funds are available, and in proportion to the size of holding if not.
The remaining assets will be transferred to a common ownership enterprise that has objects consistent with the mission of the society stated in 1.3 above, subject to any restrictions in 3.4 above, as may be nominated by the members at the time of or prior to the dissolution. If no such organisation is nominated, the assets will be transferred to Co-operatives UK (IP02783R).
In the event that for whatever reason any residual assets cannot be transferred as described above, they will be given for charitable purposes.
No amendment will be made that would reduce the amount given to social and charitable purposes, or remove this sentence.
Talk with John Hands from Sanford Housing Co-op.
The asset lock is in the Articles, and is worded so that the buildings, and ( now ) the freehold can only be sold to another co-operative with exactly the same ruleset as Sanford.
This was done, explicitly to block any carpetbaggers joining the co-op, in order to loot the assets.
Thanks Billy! I’ll DM you for his email address (unless he’s on the forum?)
This is great to know. I am setting up a new company & would maybe like it to have an asset lock but also be a coop.
The way that Sanford ended up owning the freehold was entertaining.
When Sanford was first started, they were given a lease on the land with a peppercorn ground rent.
Move forward 20-ish years, and lease-holders have the right-to-buy with a price set at a multiple of the ground rent.
When Sanford applied to buy the freehold, Lewisham Council freaked at the thought of selling land in London at such a cheap price.
During the negotiations, the Chair of Sanford suggested as a suitable compromise, that the freehold contained the condition that it must remain as publicly-owned housing, which Lewisham said was fine.
This term will carry over to ALL of the subsequent freeholders, so even if Sanford collapses, the land will have to remain as public housing, so it completely cuts out the possibility of that land being privatised.
You can tell that the Chair at that time was an old-school Unix-head, who really understood the intentions behind the GPL.
I believe we have one: > ## Dissolution
> ### Co-ownership
> 118. The Co-operative is a co-ownership enterprise. In the event of the
winding up or dissolution of the Co-operative the liquidator shall first,
according to law, use the assets of the Co-operative to satisfy its debts and
liabilities. Any balance of assets remaining may be distributed among the
Members and those persons who were Members at any time during the six
years prior to the date on which the Co-operative decide to wind up.
Distribution shall be in proportion to the relative contribution made by
Members and past Members during the six years prior to the winding up of
the Co-operative, or according to some other equitable formula agreed by
the Members on winding up which complies with the Co-operative Principles.
If such residual assets cannot be distributed in this manner they shall be
transferred to a common ownership co-operative (s) or to Co-operatives UK
(or any body that succeeds to its function).
I don’t think this is an asset lock. The point of an asset lock is that residual assets don’t get distributed to the members.
IANAL but I think there are sort of two levels of asset lock. One is within the control of the members - i.e. it might take a special resolution, but the members can vote to remove or change the lock on assets such that they can then distribute them amongst themselves. This sort of asset lock is often frowned upon by funders, as while it gives some protection, clearly the members retain control. I think there is also a statutory asset lock, where the lock cannot be amended by members. Funders tend to prefer this one. Certainly it’s worth checking with funders or potential funders before you get embroiled in detailed applications.
Thanks also to those who have been in contact via DM and other channels. I’ll share back what WAO decide on (and how funders respond) in due course…