Based on the model Articles of Association authored by www.seedsforchange.org.uk
These articles are for a Workers’ Co‑operative registering as a Company Limited by Guarantee. They are for a workers’ co‑operative which is:
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Fully mutual – only those employed by the co‑op may be members, so the co‑op is owned exclusively by the workers.
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Using consensus decision making or voting – choices are available to choose consensus decision making or voting. If voting is chosen it is on the basis of one member one vote.
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In common ownership – if the co‑op is dissolved any assets left over may not be distributed to the members, but must be passed on to a similar organisation. This makes the articles suitable for a non-profit co‑op.
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Collectively managed – all members are normally directors, but this can be easily changed to an elected board of directors by deleting article 17(2).
These articles are also:
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Suitable for full membership of Radical Routes (only if you choose the common ownership option). Only fully mutual co‑operatives in common ownership are eligible for full membership of Radical Routes.
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{width="1.3388888888888888in"
height="1.5743055555555556in"} This means that both bodies will
register your co‑op with these Articles.
These articles are provided without any representations or warranties, express or implied. Please check they are suitable for your needs and amend and adapt them as required.
At the very least you should deal with everything in this section. We strongly recommend that at least one member or your co‑op also reads through the explanations of each article so that someone in your co‑op understands your articles!
Insert your objects (i.e. aims, purpose) in 2(1)(a). Although it’s not legally necessary for you to have objects we think it’s a good idea to have them since they will provide a framework for your activities and provide a guide for future members. Additionally, many funders will expect you to have objects. See the notes below for more information.
In articles 1,7, 10 and 32 you have choices between using consensus decision making and voting. If your co‑op is to use consensus use option A in each case. If you intend to vote use option B. If you use consensus then make sure to define your process in your secondary rules. If you will use voting then decide on what majorities are required and change these in 10(1) and 32(3).
Article 17(2) provides for all members of the co‑op to be directors. If you’d prefer to elect a board of directors (i.e. not all members are on the management committee) then simply delete part 2 of Article 17. Although other articles refer to directors and the board of directors, they are written so that they work regardless of whether you have collective management or elected directors.
In addition to these articles it is essential that you draw up “secondary rules” or bye-laws which deal with some of the details that these articles leave out (secondary rules can be easily changed by the co‑op whereas any change in the articles requires a signed resolution to be posted to Companies House). The secondary rules must include at least the following:
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Details of your understanding and procedures of consensus (if you are using that way of making decisions)(10(3) and (32(3)). (You can get information on this from www.seedsforchange.org.uk);
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Quoracy for directors’ (13(2)) and general meetings (28(2));
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The minimum number of hours an employee must work per month in order to be eligible for membership (22(b)).
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Any other general rules that the co‑op might make for itself.
We’ve included sample Secondary Rules which cover the above points. You may wish to consider including details of the following as well:
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Principles of your co‑op – statements of the purpose of your co‑op and thoughts on how you wish to run it.
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Structure of your co‑op – what committees, working groups or other sub-groupings your co‑op usually has.
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Criteria for working for the co‑op – minimum standards that employees should have, or aspire to in order to be a worker (and therefore be eligible for membership of the co‑op).
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General guidelines on the probation period for new members.
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General working conditions, standard holiday allowance, working hours, allocation of work, e.g. whether all or most tasks will be rotated or kept within specific sub-groups etc.
It’s easy to register your co-op as a company – full instructions are available in How to Set Up A Workers’ Co-op handbook (download for free at www.seedsforchange.org.uk or order a copy from www.radicalroutes.org.uk).
If you’d prefer someone else to deal with the paperwork there are many Co-operative Development Bodies that will do it for you, including the Co-operative Enterprise Hub (www.co-operative.coop/enterprisehub) and Co-operatives UK (www.uk.coop). Both will register using these articles if you wish (these articles are on Co-operatives UK’s Approved Model List).
If you register your co‑op using these articles with Companies House then you should make sure that you tick box A8 on the registration form to indicate that some articles are entrenched.
If you wish to use the word co‑op or co‑operative in your name then you should tick box A2 – Company names’ restrictions.
Not every article is explained in this section – we’ve just dealt with the ones that are a little more complex or not so easy to understand.
1 These articles use a loose description of consensus in the definitions, and a clearer definition of your co‑op’s understanding and procedures should be included in the secondary rules. Although unanimity is not the same as consensus we use it in these articles because the interpretation of ‘unanimous’ in case law is looser than 100% unqualified agreement allowing abstentions (’stand asides’) and qualified support (’reservations’).
2(1) The objects help to define what your co‑op will do. In (a) you should list your specific objects, e.g. “To recycle and make available affordable bikes for the benefit of the local community”.
You can have as many objects as you want, and it’s a good idea to put all the things you are planning to do in here so that you don’t have to update your articles later on.
Don’t be too specific about your intentions, but do be clear because in future you may look back at this bit to see what the original intentions of the co‑op were.
**(b)** to **(d)** are standard co‑op clauses to ensure that your co‑op follows the co‑operative principles and values (which are in Annexe A).
**(e)** and **(f)** allow the co‑op to do things not explicitly mentioned in your objects so long as they support them.
2(2) This part ensures that the co‑op’s money is only spent on the objects or to run the business.
2(3) “Entrenching” the article is a way of ensuring that it doesn’t get changed without (in this case) all members agreeing.
This is a way of protecting important parts of your constitution from future change. It doesn’t make it impossible to make changes, but makes sure that the changes only happen with the consent of all members at that time.
3 This article is a standard co‑operative clause, and limits profits to being used for the good of the co‑op, its members or similar organisations.
4 This puts the co‑op in ‘common ownership’ – if it is wound up, anything left over is redistributed among other co‑ops or good causes.
This can be changed so that in the case of the co‑op being wound up anything left over is distributed among members and recent members. If your co‑op does this it will no longer be defined as ‘non-profit’ or ‘not for profit’, potentially making it more difficult to get grants.
5 This makes your co‑op a limited company, which means that if it is wound up members would normally only have to contribute £1 for any outstanding debts.
6 This gives the directors the power to run the company. See below for options on whether all or only some members are directors.
7 Even though the directors are responsible for running the co‑op, members can tell the directors to do, or not do something. Choose whether your co‑op will use consensus or a vote to make the decision of whether to tell the directors to do (or not do) something.
Obviously this is only useful if not all members of your co‑op are also directors, but is worth keeping in just in case at some point not all members are directors (e.g. by a change in the articles or because a member can’t be a director because they are too young or bankrupt).
8 This allows directors to delegate some of their authority, and explains who they can delegate to.
9 Although the directors are the only ones with the power to run the company, they may pass on these powers to others (whether individuals or committees) to take on tasks.
10 Choose one of the options to specify whether directors use consensus or vote in their meetings.
10(2) This allows directors to make decisions, even if they are not meeting in the same place at the same time so long as the decision is written down and signed by the directors.
10(1) Option B – voting: In a meeting a simple majority is enough to make a decision. If you prefer, you may choose a majority of, for example 75%. If directors are not all in one place at a meeting then decisions may still be made (e.g. by email) but must be unanimous according to 10(3).
11 This explains how directors’ meetings are called. If a director doesn’t feel the need to be told about meetings, they can just say this is the case (up to a week after the meeting took place) without it affecting whether the meeting is valid.
12 This explains that directors can be in a meeting, even if they’re not all in the same place. For this to happen they need to be able to communicate with each other, and agree that they are in a meeting.
13 A directors’ meeting can only go ahead if it is quorate. If not enough directors are there they can only propose another meeting.
Your co‑op should state in their secondary rules how many directors are needed to have an official meeting that is allowed to make decisions (a quorum).
If there are less than two directors, then the only decision that can be made is to call a general meeting in order to appoint more directors.
14 The directors may choose any member to facilitate at their meetings. If someone is due to facilitate, but does not turn up within ten minutes of the start time the directors may choose another facilitator.
15 This is a standard clause for companies to provide guidance on what to do when a director has a conflict of interest.
Normally the director in question should not take part in the decision in which the conflict of interest arises, but if the directors decide that it’s OK, or the conflict of interest is ‘permitted’, as defined in (4), then the director who has the conflict of interest is allowed to take part in the relevant decision.
\(4) Lists the exceptions: guarantees from or to a director, subscribing
for securities or providing benefits to directors or members past or
present.
16 The co‑op (through a decision at a general meeting) or the directors may make any rules for the co‑op.
17 Directors are appointed by general meeting, and only members may be directors.
17(2) This article requires all members to be directors – so all members share the duties and responsibilities of the co‑op. Because not everyone can be a director, for example if disqualified from holding a directorship (e.g. after bankruptcy), this article leaves the final decision to a general meeting to decide that person can continue to be a member of the co‑operative even if they can’t be a director.
If your co‑op is to be managed by a board of directors then delete 17(2).
18 This outlines how somebody stops being a director – most usually because they are no longer a member of the co‑op or because the general meeting has decided to end their directorship.
19 This just says that directors can be paid for work they do for the co‑op. (As directors they are also ‘office holders’ and not just employees, so they won’t necessarily have a normal employment contract for their work as directors – this article means they can still be paid for the official duties they do).
20 Directors can claim reasonable expenses for meetings – this doesn’t mean that this has to happen, nor that normal members can’t also be paid.
21(3) Directors need to prepare accounts in accordance with the law. All members may inspect the accounts, thus contributing to transparency and accountability within the co‑op.
It is important to consider how to protect individuals’ personal data (e.g. benefits payments) that might be in the accounts. The person responsible for the accounts should check whether any confidential data is included in the accounts and act accordingly.
22 Because this is a Workers’ Co‑op only people working for the co‑op can be members of the co‑op.
If you work for the co‑op you don’t have to be a member since this would be against the co‑operative principle of voluntary membership. On the other hand if you don’t work for the co‑op you can’t be a member.
The exceptions are during probation period and for those working less than a certain number of hours per month (the exact number of hours should be decided and put into your secondary rules). Workers falling into either (or both) of these categories may not be members.
The criteria of a minimum number of hours work per month is a traditional way of defining which workers are eligible for membership of a workers’ co‑op. You could set the minimum number of hour worked per month as low as 1, although 16, 24 or 32 hours per week are common.
23 Members are expected to actively participate in the running of the co‑op.
24 Membership can be ended by a decision at a general meeting. Although minimum standards for ending membership are stated here you should consider that ending membership means ending employment too – so any termination of membership should be done fairly so that there is no unfair dismissal.
\(c) says that the procedure is “subject to any disciplinary procedure”
which means that if you have a disciplinary procedure (and you should!)
then that takes precedence over what is written here.
25 There’s no longer a requirement for small companies to hold Annual General Meetings, so we’ve put this article in so that if not everyone is a director you should have at least four general meetings a year. This is to make sure that the co‑op remains democratic (you can change this to have more or less general meetings).
If all members are directors then you don’t need to hold four general meetings (presumably you’ll be meeting more often than that anyway).
This article gives a lot of powers of oversight to members if they decide at the general meeting to review the directors’ activities and require them to report on both the business and ethical indicators.
26 General meetings may be called by the directors, or 10% of membership may call a meeting. The proportion of members required to call a meeting can’t be changed as it is part of the Companies Act 2006.
27 Only co‑op members may take part in decisions. They can do this even if they are not all in the same place (e.g. participating by phone).
28 This defines the number of members required to allow a meeting to go ahead (and make decisions). You can decide a higher number and put it in your secondary rules.
29 General meetings must choose a facilitator.
30 The general meeting can decide to allow a non-member to attend and speak.
31 If after half an hour there still aren’t enough members present the meeting must be adjourned.
Other ways of adjourning a meeting are also listed here.
32 Choose one of the options to specify whether the general meeting should use consensus or vote.
32(3) Option B – voting: change this number if you wish to have a higher or lower requirement. This must be at least 50%.
33 This article means that voting can be demanded by members, which obviously is in conflict with any desire to use consensus. The right to demand a poll (i.e. a counted vote) is in the 2006 Companies Act s.321 so you can’t decide not to have it, but you can at least require a 100% vote.
If you chose the consensus option above then a 100% vote is required in any poll. (You can change this in 32(4)).
If you’ve chosen the voting options then the size of the majority needed at a poll is the same needed for other decisions, as set out in (32(3)).
34 The Companies Act 2006 requires companies to accept proxies. This and the next article explains how this works.
35(1) This means that even if you have appointed a proxy you are still allowed to attend a meeting and participate in decision making.
35(4) This means that if you haven’t signed the proxy notice (e.g. because you did it by email) then you must provide a note to confirm that your proxy is acting on your behalf.
36 This says that the co‑op can receive or send messages (e.g. notice of general meeting) and documents using electronic means – if this article isn’t in here then each individual member would have to explicitly agree to receive messages and documents by email etc. Nevertheless it is still a good idea to get agreement from each member.