Mutual Societies Application Notes
Amendment of rules for a society or credit union
Amending rules for a society or credit union
Notes
Please take time to read these notes carefully. They will help you to complete the form correctly.
These notes are for information only. They are not a full statement of legal obligations under the relevant
legislation. You may wish to seek legal advice on how to comply with the legislation.
If after reading these notes you need more help please:

check our website for more information on mutual societies: www.fca.org.uk;

email mutual.societies@fca.org.uk; or

call our contact centre on 0845 606 9966.
Terms in this form
'FCA', ‘PRA’, 'us' and 'we' refer to the Financial Conduct Authority or Prudential Regulation Authority.
'You' refers to the person signing the form on behalf of the society or credit union.
'Registered Friendly Society' means a society registered within the meaning of the Friendly Societies Act 1974
(the 1974 Act) by virtue of section 7(1)(a) of that Act.
'Benevolent society' means a society registered within the meaning of the 1974 Act by virtue of section 7(1)(c)
of that Act for any benevolent or charitable purpose.
'Working men’s club' means a society registered within the meaning of the 1974 Act by virtue of section 7(1)d
of that Act and set up for purposes of 'social intercourse, mutual helpfulness, mental and moral improvement
and rational recreation'.
'Specially authorised society' means a society registered within the meaning of the 1974 Act by virtue of
section 7(1)(f) of that Act for any purpose the Treasury has authorised to which the provisions of this Act
ought to be extended.
'Incorporated Friendly Society' means a society registered under the Friendly Societies Act 1992.
‘FSMA’ means the Financial Services and Markets Act 2000.
‘Registered society’ means a society registered under the Co-operative and Community Benefit Societies Act
2014
‘The 2014 Act’ is the Co-operative and Community Benefit Societies Act 2014
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Legislation and what to expect
Registered societies
Section 16 of the Co-operative and Community Benefit Societies Act 2014 provides for
how registered societies (including credit unions) may amend their rules for all matters
except for change of registered office and name changes.
No amendment of rules is valid until we have registered it.
Section 13 of the 2014 Act applies to name changes, which must be supported by a
resolution passed at a general meeting of the society. You will need to complete a
separate application form to change the name of your society.
If your society is registered as a non-profit private registered provider with the Homes
and Communities Agency (or any successor body), you will need to provide proof of their
formal consent when applying to change certain rules; for example, objects, distributing
assets to members, becoming or ceasing to be a subsidiary or associate of another
body.
If your society is registered as a social landlord with the Scottish Housing Regulator or
the Welsh Ministers, you will need to provide proof of their formal consent when
applying.
If your society is Scottish and registered with the Office of the Scottish Charity Regulator
(OSCR) then you should submit your application to OSCR for their consideration. We
will require proof of any formal consent from OSCR.
Credit unions
Section 4 of the Credit Union Act 1979 provides that the rules of a credit union may not
be amended except by a resolution passed by not less than two-thirds of the members
present at a general meeting called for that purpose after the giving of such notice as is
required by the rules for such a resolution.
Section 16 of the 2014 Act applies to credit unions and provides that no amendment of
rules is valid until we have registered it.
Amendments to the membership qualification in a credit union’s rules must conform to
section 1A of the Credit Unions Act 1979, which sets out the common bonds appropriate
to a credit union. Section 1A (5) provides that the Authority may accept as sufficient
evidence that the requirement of section 1A is met by a statutory declaration given by
three members and the secretary.
Section 1B sets out further requirements where the common bond relates to locality.
Section 1B (4) provides that the Authority may accept as sufficient evidence that the
conditions in section 1B are met by a statutory declaration given by three members and
the secretary of the society.
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Friendly societies
Rules must be amended in accordance with the registered rules of the registered
society.
Section 15 of the Friendly Societies Act 1974 provides that any amendments must be
consistent with the requirements of the Act. Section 18 provides that 'any amendment of
the rules of a society ….registered under this Act shall not be valid until the amendment
has been …registered, and for this purpose copies of the amendment, signed by three
members and the secretary of the society …. shall be sent to the Authority'.
Section 18 does not apply to changes in the registered office of a society or branch.
What to expect
There is no legal requirement for us to examine drafts. We will examine formal
applications to register amendments to rules to ensure that the proposed amendment (or
new rules) is/are not contrary to the requirements of the relevant legislation.
We will return deficient applications, with comments as appropriate. If we are satisfied
that the rules are not contrary to the relevant legislation, we will send you a formal
certificate of registration attached to one of the two copies of the amendments
submitted. The other copy of the amendments with the attached certificate will be placed
on the society's or credit union’s public file.
We have no powers to provide legal advice or interpret rules or legislation. If societies
or credit unions are unsure of the requirements of the legislation, they should seek
appropriate advice; for example, from their lawyers or sponsoring bodies.
We expect that where a society or credit union is affiliated to a sponsoring or trade body,
that organisation should take the lead in offering advice and the practical help required.
If the society or credit union uses model rules provided by a sponsoring body, it may be
worthwhile to check with the sponsoring body to see if they have a more up-to-date model.
This may already include some of the amendments the society wants to make.
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Details of rule changes
Full name of society or credit union (front page)
You must give the full registered name, please do not use abbreviations or a trading
name.
Society or credit union details
1.1 Society or credit union details
The register number is the number your society or credit union was given when it was
registered. If you are not sure what this is please search on the Mutuals Register at
http://mutuals.fsa.gov.uk, using the name of your society or credit union.
Proposed changes – partial or complete?
1.2 Are you applying for a partial or complete amendment of rules?

A complete amendment of rules is the replacement of the existing rule book by
a new rule book.

A partial amendment of rules is when the current rule book remains registered,
but some rules are amended, added or deleted (rescinded).
Partial amendment of rules
1.3 You must attach:

two printed copies of the amendment of rules, set out as per Annex A
(see Notes), one marked 'X' and each signed by three members and the
secretary of the society or credit union; and

a printed copy of the existing set of rules, marked to show where the
amendments occur, and what they are.
It is best to word every partial amendment in the form of a direction to a member, telling
the member exactly what they should do to make the necessary changes in their own
book of rules. Examples are shown in Annex A and these should be followed as far as
practicable.
The amendments must be arranged in the numerical order of the rules affected. Rules
should not be re-numbered except on a complete amendment of rules.
Where considerable amendments of a rule are proposed, or where the rule has already
been amended many times and is to be further amended, it is usually better to rescind
the whole rule and substitute a new rule. Where the change is simple, a mere
amendment of the part affected is usually sufficient.
Whenever an amendment is proposed, the rules should be examined for any
consequential amendments, which ought to be made at the same time.
If the society or credit union has reprinted its rules following the previous registration of a
rule amendment, it should ensure that any rule number or line number quoted in any
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subsequent application to register a partial amendment of rules refers to the registered
version of the rules (copies of which are sent to the society or credit union upon
registration and are also found on the society’s or credit union's public record file) and
not to the reprinted version. If you are unsure of the correct line number when wording
the ‘direction to members’ (referred to above) it is better to either rescind the entire rule
or to quote very specifically the figure, amount, word, group of words, sentence,
paragraph, etc to be amended.
Where the proposed rules are a copy of, or are based on, the rules of another society or
credit union already registered or are model rules, the name and register number of that
society or credit union should be stated in a covering letter, for reference purposes.
1.4 Is your society a registered society; or a credit union amending its membership
qualification?

All registered societies (not credit unions) need to complete Appendix 1, part 1
(see next pages for notes on appendices)

Credit unions–need to complete Appendix 2, parts 2 and 3 if you are amending
the membership qualification in your rules. The amendment will need to comply
with the requirements of sections 1A and 1B of the Credit Unions Act 1979 (see
notes below).
Complete amendment of rules
1.5 Please confirm that you have completed the relevant appendix.
(See next pages for notes on appendices).
1.6 You must attach the following:

Two printed copies of the amendment of rules, set out as per Annex A (see Notes),
o each signed by three members and the secretary of the society or
credit union (four signatures in total)
o with one set of rules marked 'X
'The front cover or page of the rulebook should contain:

the name of the society; and

the register number of the society.
If you are using model rules you must fill in the gaps in the model rulebook. If you are
retyping a model rulebook with amendments to the wording of the model, then in
addition please provide a 'marked up' version of the model to clearly indicate what
amendments have been made to it.
Sign both rulebooks at the end (after the last rule). The secretary and three members
are required to sign (four signatures in total). We require all signatures on the rules
books and on the form to be original signatures.
If the amendments to the rules fundamentally change the status of the society or credit
union, we may ask further questions.
1.7 Have you used model rules provided by a sponsoring body?
When we refer to a ‘model’, we mean a set of rules that is published by a sponsoring
body and that has our current approval. If the amendment has been sent through the
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sponsoring body, we will return a copy of the complete amendment to the sponsoring
body once registered (with our registration certificate attached).
We expect that where a society or credit union is affiliated to a sponsoring body, that
organisation would take the lead in offering advice and any practical help required.
Proper support by and advice from sponsoring bodies or professional advisers limits the
number of queries or rejections by us, reducing the need to enter into further
correspondence or to call meetings.
1.8 The secretary of the society or credit union must sign and date below.
We require all signatures to be original signatures.
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Appendix 1 – registered societies – Part 1
1.1 What business, industry or trade does the society carry out?
All societies must be carrying out a business industry or trade. Please specify this
here.
Societies cannot exist with the object to make profit mainly for the payment of
interest, dividend or bonuses on money invested or deposited with, or lent to, the
society or any other person.
1.2 Which condition of registration is the society meeting?
All societies must meet a condition of registration being that either:

the society is a bona fide co-operative society; or

the business of the society is being conducted for the benefit of the
community.
Bona fide co-operative
Co-operative societies are formed primarily to benefit their own members, who will
participate in the primary business of the society.
To satisfy us that it will be a bona fide co-operative, a society will normally have to fulfil
the following conditions, the first four of which also reflect the International Co-operative
Alliance's Statement on the Co-operative Identity:

Community of interest - There should be a common economic, social or
cultural need or interest among all members of the co-operative.

Conduct of business - The business will be run for the mutual benefit of the
members, so that the benefit members obtain will stem principally from their
participation in the business. Participation may vary according to the nature of
the business and may consist of:
o
buying from or selling to the society;
o
using the services or amenities provided by it; or
o
supplying services to carry out its business.

Control - Control of the society lies with all members. It is exercised by them
equally and should not be based, for example, on the amount of money each
member has put into the society. In general, the principle of ‘one member, one
vote’ should apply. Officers of the society should generally be elected by the
members who may also vote to remove them from office.

Interest on share and loan capital - Where part of the business capital is the
common property of the co-operative, members should receive only limited
compensation (if any) on any share or loan capital which they subscribe.
Interest on share and loan capital must not be more than a rate necessary to
obtain and retain enough capital to run the business. Section 2(3) of the 2014
Act states that a society may not be a bona fide co-operative if it carries on
business with the object of making profits mainly for paying interest, dividends
or bonuses on money invested with or lent to it, or to any other person.

Profits - If the rules of the society allow profits to be distributed, they must be
distributed among the members in line with those rules. Each member should
receive an amount that reflects the extent to which they have traded with the
society or taken part in its business. For example, in a retail trading society or an
agricultural marketing society, profits might be distributed among members as a
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dividend or bonus on purchases from or sales to the society. In other societies (for
example, social clubs) profits are not usually distributed among individual
members but members benefit through cheaper prices or improvements in the
amenities available.

Restriction on membership - There should normally be open membership.
This should not be restricted artificially to increase the value of the rights and
interests of current members, but there may be grounds for restricting
membership in certain circumstances, which do not offend co-operative
principles. For example, the membership of a club might be limited by the size
of its premises, or the membership of a self-build housing society by the
number of houses that could be built on a particular site.
We may cancel a society's registration if at any time it appears that the society no
longer complies with the conditions of registration.
Benefit of the community
We will normally expect a society to fulfil these conditions:

Conduct of business - The business must be run primarily for the benefit of
people who are not members of the society, and must also be in the interests of
the community at large. It will usually be charitable or philanthropic in character.

Interest on share and loan capital - It is unusual for a community benefit
society to issue more than nominal share capital (for example, one £1 share
per member). Where it does issue more than nominal share capital or where
members make loans to the society, or both, any interest paid must not be
more than a reasonable rate necessary to obtain and retain enough capital to
run the business.

Profits and assets - The society's rules must not allow either profits or the
society’s assets to be distributed to the members. Profits must generally be
used to further the objects of the society by being ploughed back into the
business. Where profits are used in part for another purpose, that purpose
should be similar to the main object of the society, for example for philanthropic
or charitable purposes. The rules must specify the beneficiary or beneficiaries,
if any.
Where the rules of the society allow assets to be sold, the proceeds of the sale
should be used to further the society’s business activities only.

Dissolution - The society's rules must not allow its assets to be distributed to
its members on dissolution. The rules should state that on dissolution the
assets should be transferred, for example, to some other body with similar
objects. If no such body exists, the rules should state that the assets must then
be used for similar charitable or philanthropic purposes.
If a society with a registered address in England and Wales has exclusively
charitable purposes for the public benefit it is an ‘exempt charity’. This means it
cannot be registered with the Charity Commission but it is still subject to charity
law. For details on these points societies are encouraged to contact the Charity
Commission.
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A society which has its registered office situated in Scotland must register with
the Office of the Scottish Charity Regulator in order to be recognised as a
charity. For details on these points societies are encouraged to contact the
Office of the Scottish Charity Regulator.
We may cancel a society's registration if at any time it appears that the society no
longer complies with the conditions of registration.
Bona fide co-operatives – answer questions 1.3 to 1.7
Benefit of the community – answer questions 1.8 to 1.10
Bona fide co-operative
1.3 How do members benefit from the business industry or trade of the society?
Co-operative societies are formed primarily to benefit their own members. Please
explain what the benefits of membership are.
1.4 Is membership of the society required to obtain the benefits offered by it?
Please indicate whether the benefits the society offers are only available to
members.
1.5 In what way do members participate in an ongoing basis in the society’s
primary business?
For example, will they have a trading relationship with the society, or will they be its
employees? We would expect the information provided here to be the reason
members will wish to join the society.
1.6 How do members democratically control the society?
We expect to see democratic member control. Please explain here how that will
operate in your society.
1.7 How does the society use any surplus/profit?
If the society distributes the surplus/profit to members please explain how this is to
be done.
Each member should receive an amount that reflects the extent to which they
have traded with the society or taken part in its business.
If registering a complete rule amendment, continue to 2.1
Benefit of the community
1.8 Who are the community the society benefits?
Please state who the community of benefit is. For instance, if the society is seeking
to serve a local geographical community please refer to that.
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1.9 How does the society benefit that community?
Please state how the society benefits the community described above.
1.10 How does the society use any surplus/profit?
Please state how the society uses any surplus/profit. We expect any surplus or profit
to be used for the benefit of the community. It cannot be distributed to members.
If registering a complete rule amendment, continue to 2.1
2.1 Please complete the table below
You must complete the table indicating the rule number(s) in the new rules that
provide(s) for each of the matters set out in the table. Enter the rule numbers in the
column.
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Appendix 2 – Credit unions only
1 You must complete the following table indicating the rule number in the column
provided.
You must complete the table indicating the rule number(s) in the new rules that
provide(s) for each of the matters set out on the table. These matters are covered by
approved model rules issued by credit union sponsoring bodies.
2 Qualification for membership
Have you followed the specimen wording published by the Authority?
It is the responsibility of each credit union to produce a membership qualification for its
rules that meets the requirements of the 1979 Act. To help with this, the Authority has
published specimen wording that is based directly on the wording of the 1979 Act. If a
credit union follows the wording closely, it will demonstrate compliance with the
legislation, and that should make registration more straightforward. If you have not
obtained the specimen wording from a credit union sponsoring body, you may find it in
the credit union application pack on our website.
Individuals – Every credit union must adopt at least one common bond for individuals.
Your credit union may adopt more than one, but should not adopt any that it does not
intend to use. Credit unions amending their membership qualification should make the
first part of the statutory declaration in Appendix 2 Part 3.
Corporate – A credit union is not bound to admit corporate members, but if it intends to
do so, it must provide for this in its rules. The eligibility of corporate members is
dependent on the eligibility of individuals. A credit union may only make corporate
members eligible under the common bonds that it has chosen for individuals, but it is not
bound to make corporate members eligible under every one of those bonds. The list sets
out the possible ways in which corporate members may relate to each of the common
bonds for individuals. A credit union is not bound to adopt all the possible ways. Any
credit union admitting corporate members will need to make the second part of the
statutory declaration in Appendix 2 part 3.
The list sets out all the common bonds that are available to a credit union when drafting
its membership qualification. Please tick the relevant boxes to confirm which of these
common bonds the credit union has adopted in its rules.
2.1 – 2.2
No extra notes.
2.3 Residing or being employed in a particular locality
A credit union adopting a common bond involving a connection with a locality will be
subject to additional conditions. These conditions are that the number of potential
members must not exceed two million and all such members would all be able to
participate. A credit union with a common bond involving locality can make the third part
of the statutory declaration in Appendix 2 part 3 as evidence that it complies with the
additional conditions. If such a credit union deletes either of the two statements in the
declaration, it will need to provide evidence that extraordinary circumstances exist
justifying registration.
2.4 Being a member of a bona fide organisation or being otherwise associated
with other members of the society for a purpose other than that of forming a
society to be registered as a credit union.
No extra notes.
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2.5 Any other common bond approved by the FCA
The common bonds already approved by the Appropriate Regulator are unlikely to be
suitable for future use. Corporate members are not eligible under those common bonds.
2.6 Being a member of the same household as, and a relative of, a member of the
credit union.
No extra notes.
3 Three members and the secretary of the credit union should sign below in front
of a solicitor, a commissioner of oaths, a notary public or a justice of the peace
Please complete this as declaration that the requirements of section 1A and 1B of the
Credit Unions Act 1979 are met. The statutory declaration has three parts:

Individual – the first part is needed when a credit union amends the membership
qualification in its rules.

Corporate – the second part is needed when a credit union includes a rule providing
for the admission of corporate members.

Locality – the third part is needed when the membership qualification in a credit
union‘s rules is based on a common bond involving a connection with a locality.
This declaration is in addition to the statutory declaration in section 2 that the
amendment of rules has been duly made by your credit union in the manner provided in
your rules. It must be made in front of a commissioner for oaths, notary public, justice of
the peace or a solicitor. We recommend that you make both declarations at the same
time.
Appendix 3 – Societies registered under the Friendly Societies Act
1974
You must complete the table indicating the rule number(s) in the new rules that
provide(s) for each of the matters set out on the table. Enter the rule numbers in the
column.
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2 Statutory Declaration
2
Statutory declaration
Declaration
2.1 An officer of the society or credit union must sign below.
This should be completed by an officer of the society. The declaration must be made in
front of a commissioner for oaths, notary public, justice of the peace or a solicitor.
We require all signatures to be original signatures.
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Annex A
Annex A: specimen wording for a partial amendment
Partial amendment of rules of
………………………………..
Register number:……………………………
Rule 6, line 8
Delete 'seven' and substitute 'eight'.
Rule 7, line 12
After 'member' insert 'who joined before 1 September 1972.'.
Rule 8
At the end, add the following new paragraph (4).
'(4) .....................................
Rule 10
Rescind the rule.
Rule 12, paragraph (1)
Delete the paragraph and substitute: ‘(1) .......................................
Rule 15 ( as amended 1967, 1969,1972, 1974 )
Rescind the rule and substitute:
'Powers of Committee'
15. ...............................................
Rule 23 ( as amended 1970 ), paragraph (2), line 3.
In line 2 of the wording introduced by the partial amendment of rules registered on 15 August 1970
delete '£60' and substitute '£75'.
After rule 24 insert the following new rule 24A:
24A. .................................................
Signatures of three members:
AND
Signature of the secretary:
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