Industrial Societies

An Industrial and Building Society is a society for the purpose of carrying on any industries, business or trades specified in or authorised by its rules, whether wholesale or retail, including the buying and selling of land, of which society no member other than a society registered under this Act shall have or claim an interest in the shares thereof exceeding £5,000 or such other sum as may be specified in an order under section 2 of the Industrial and Building Societies Act 1979. Provided always that no Industrial and Building Society shall be formed for or carry on the business of banking.

Copies of Acts of Tynwald can be found on the Legislation website.

This Practice Note sets out the procedure for incorporating an Industrial Society or Building Society in accordance with the Industrial and Building Societies Acts 1892 to 1979 ('the Acts'). It also summarises the principal ongoing statutory obligations applicable to such societies.

It addresses document registration procedures and statutory compliance requirements only. You should seek professional advice on the legal, financial or taxation implications of establishing a society if you are uncertain whether this structure is appropriate for your needs. The Central Registry will not give advice on such matters.

This Practice Note is intended as a general guide only and must be read in conjunction with the relevant legislation. It has no legal status and should not be relied upon as a substitute for legal advice.

Legislative Framework

The relevant legislation includes:

• Industrial and Building Societies Act 1892 (principal Act)
• Industrial and Building Societies Amendment Act 1928
• Industrial and Building Societies Act 1953
• Industrial and Building Societies Amendment Act 1955
• Industrial and Building Societies Act 1979

Applicants should ensure compliance with all relevant provisions of the Acts.

Registration of Societies

• A society must consist of at least seven persons (s.9(1) of the principal Act)
  
  
• The application to the Department to register the society must be signed by seven members and the secretary, and be accompanied by two written or printed copies of the rules (s9(2) of the principal Act)
  
  
• The Company and Business Names etc Act 2012 has effect in respect of the names of societies and companies registered under the Act (s9(3) of the principal Act)
  
  
• The word 'limited' shall be the last word in the name of every society, unless s2 of the 1955 Act applies
  
  
• Every society must have a registered office in the Isle of Man, to which all communications and notices may be addressed (s16(1)(a) of the principal Act)

Required Content of Rules

Society’s rules must comply with section 14 of the principal Act and include the matters set out in the relevant Schedule.

Special attention must be made to s14(3) of the principal Act which states that no rule and no amendment of a rule made by a society shall be valid until the same have been registered with the Department.

Industrial and Provident Societies

(Schedule 1)

The rules must include provisions relating to:

• Object, name and office
• Admission of members
• Meetings, voting and rulemaking
• Management and officers
• Interest and shareholding limits (as amended by 1979 Act)
• Transfers and withdrawal of shares
• Audit of accounts
• Profits, seal, investments, duties and fines

Building Societies

(Schedule 2)

The rules must include provisions relating to:

• Objects and office
• Raising funds and borrowing limits
• Investment of funds
• Withdrawal and redemption of shares
• Amendment of rules
• Appointment of directors and auditors
• Meetings
• Audit and inspection of securities

Failure to include the required matters may result in refusal of registration.

Duties and Obligations of Societies (s16 (1) of the Principal Act unless otherwise stated)

• Every society shall have a registered office in the Isle of Man, and notify the Department of the registered office address and of every subsequent change
  
  
• Display the name of the society on the outside of every office or place in which the business of the society us carried out
  
  
• Prepare an account (at least once in every year) of all receipts and expenditure of the society and have each account submitted for audit as required by ss(1)(c)
  
  
• Submit by the first of June every year a general statement made out to the 31^st December of the preceding year (to be call the 'annual return') of the receipts and expenditure etc, and the details of the auditor, the authority under which the auditor was appointed and a copy of the auditors report, as required  by ss(1)(d)

It is an offence under s16(2) if any registered society fails to comply with the requirements of the Act. Further details of who may also be deemed to have committed an offence are listed in s16(3) of the principal Act.

• Maintain under s4 of the 1955 Act -
  
  
• A register of members – containing the names, addresses, number of shares held and the amount paid or agreed to be paid on the shares of each member
  
  
• A statement of other property in the society, whether in loans, deposits or otherwise, held by each member
  
  
• The date at which each person was entered in the register as a member and the date at which any person ceased to be a member
  
  
• The names and addresses of the officers of the society, with the offices held by them respectively, and the dates on which they assumed office

The Department or a person acting on its behalf may at all reasonable hours inspect any particulars in the register.

• Special Resolutions – shall be sent to the Department within 14 days of their passing (s7 1955 Act), and shall not take effect until registered by the Department (s23(5) of the principal Act)

Dissolution of a society

A society may terminate or be dissolved in accordance with s24 of the principal Act:

• Upon the happening of any event declared by its rules to be the termination of the society
  
  
• By dissolution in the manner prescribed by its rules
  
  
• By dissolution with the consent of ¾ of the members, holding not less than 2/3 of the number of shares in the society, testified by their signatures to the instrument of dissolution. The instrument of dissolution shall state –
  
  
• The liabilities and assets of the society in detail
  
  
• The number of members, and the amount standing to their credit in the books of the society, or the nature of their interests in the society respectively
  
  
• The claims of depositors and other creditors, and the provision to be made for their payment
  
  
• The intended appropriation or division of the funds and property of the society
  
  
• The names of one or more persons to be appointed trustees for the special purpose, and their remuneration
  
  
• Alterations in the instrument of dissolution may be made with the like consent, testified in the same manner (s24 (3)(f) of the principal Act)
  
  
• By winding-up (under the provisions of the Companies Acts, in like manner, as nearly as may be, as if the society were a company under such Acts), refer to s24(4) of the principal Act for full details