Common Ownership - UK Law

UK Law

The principle is typically implemented through inserting two clauses in a company’s Memorandum of Association, or an industrial and provident society’s rules.

• the first provides that the company’s assets shall be applied solely in furtherance of its objectives and may not be divided among the members or trustees.
• the second provides for "altruistic dissolution”, an "asset lock", whereby if the enterprise is wound up, remaining assets exceeding liabilities shall not be divided among the members but shall be transferred to another enterprise with similar aims or to charity.

British law has been reluctant to entrench common ownership, insisting that a three-quarters majority of a company’s members, by passing a “special resolution”, have the right to amend a company’s memorandum of association. This three-quarters majority above applies to most limited companies, except that it is possible since 2006 to entrench altruistic dissolution in an industrial and provident society registered as a 'community benefit society' ('bencom'). This statutory asset lock is not available to societies registered as 'bona fide' co-operatives. However such entrenchment has also been written into the Community Interest Company (CIC), a new legal status that was introduced in 2005.