It is a society registered with the Financial Conduct Authority, owned by the members. The society is established for the benefit of the community and not of its members. Each member has one vote at the AGM, even if they have more than one share. Unlike with a company, the shares are not transferable and can only ever be refunded at par (usually £1). The share can never be worth more than what was paid for them. A CBS must be established with a social or environmental objective, and has a non-profit constitution and an asset lock. The differences between a charitable CBS and a non-charitable CBS are:

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• A charitable CBS has a stronger asset lock

• A charitable CBS has asked HMRC to recognise it as charitable and HMRC has agreed

 

A charitable community benefit society must only undertake activities that further its exclusively charitable objects. This means that a charitable community benefit society that intends to engage in trading activities that are neither in pursuit of its primary purpose nor ancillary to that purpose, may have to establish a trading subsidiary to carry out this trade.

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A charitable CBS is not registered with the Charity Commission as it is exempt from registration. It has to be registered with FCA as mentioned above.HMRC will also agree to charitable recognition and the related tax advantages if the objects are charitable, the asset lock is correct and any interest paid to members is low and not dependent on the surplus generated.

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In Scotland, there is no such term as the ‘exempt charity’ and therefore to be a charitable community benefit society the society must also apply to the Scottish Charity Regulator to be registered charity. To obtain tax benefits the organisation will also have to apply to HMRC. The same is true in Northern Ireland, where charitable community benefit societies must become registered charities with the Charity Commission for Northern Ireland, and apply separately to HMRC for tax benefits.