The Co-operative Group announces governance reform proposals

August 08, 2014

The Co-operative Group today announces proposals to reform the Society’s governance structure.

The detailed proposals have been drawn up based on the four key principles of reform agreed unanimously by members at the Special General Meeting on 17th May 2014:

  • The creation of a Board of directors elected by members that is individually and collectively qualified to lead an organisation of the size and complexity of The Co-operative Group
  • The establishment of a structure that gives The Co-operative Group’s members appropriate powers to hold the Board properly to account for the performance of the business and adherence to co-operative values and principles
  • A move to the concept of ‘one member one vote’ with appropriate representation for Independent Society Members
  • The inclusion of necessary provisions in the Rules of The Co-operative Group to protect against de-mutualisation

The proposals, which follow a period of consultation with the Society’s members, have been reflected in a proposed new Rule book which will be put to a vote at a Special General Meeting on 30th August 2014. The proposed Rule book and further details of the proposals have today been sent to members with the Notice of Special General Meeting.

In summary the proposed constitutional structure would see the creation of:

  • A Board composed of a majority of Independent Directors including; an Independent Chair, five Independent Non-Executive Directors, two Executive Directors, including the Group Chief Executive and three Member Nominated Directors
    • All Board Directors will be expected to meet the high standards of competence commensurate with the needs of a business of the scale and complexity of the Group and a demonstrated commitment to Co-operative Values and Principles
  • Following approval of the rules, an interim transitional Board structure will be in place.
    • The Board will reduce from 18 to nine as soon as the new Rules are registered
    • Recruitment of the new Board members will begin immediately
    • The interim transitional Board structure will remain in place until the earlier of the new Board members being recruited or the Society’s Annual General Meeting in 2015
  • A Council to represent members and to act as guardian of the Group’s Purpose, Values and Principles and the Society’s Constitution, with the power to hold the Group Board to account
    • The Council will be composed of a maximum of 100 Members
    • The Council will be led by a President, elected for a term of two years
  • A Senate, elected by the Council, to help co-ordinate the activities of the Council and to act as a nexus for interactions between the Council, the Board, the Executive and members

The new structure will be underpinned by a move to one member one vote. This will allow members to vote on matters concerning the Group’s future, including the election of Directors, significant transactions, to participate in Society meetings and representation at national and local levels. Independent Societies will be appropriately represented, both as Corporate Members of the Society and on the Council and Senate.

The Board of The Co-operative Group has approved the proposals and recommends that members vote in favour of the governance changes at the Special General Meeting. The Group Executive, which has worked with the Board and members on the reform process, has also given the proposals its backing.

The proposed governance structure also has the support of Co-operatives UK. The independent body for the co-operative sector, recognised by the International Co-operatives Alliance as the apex body for all UK co-ops, has backed the new structure as being more inclusive for Group members while maintaining a clear recognition of co-operative values and principles.

Ursula Lidbetter, Chair, The Co-operative Group, said:

“These governance reforms represent the final crucial step in delivering the necessary change to restore the Group and return it to health. This has been a process built on co-operation, focusing above all on creating a Society where every member has a voice in shaping the Group’s future. I would like to thank our members for their engagement in building a governance structure that strengthens the society and enhances member engagement and our unique democracy.”

Richard Pennycook, Interim Chief Executive, The Co-operative Group, said:

"The Executive team welcomes today's announcement and supports the proposed reforms. This is a significant step towards meaningful reform and, if accepted by members at the forthcoming SGM, will mark the end of the Rescue Phase for the Group, following the necessary balance sheet repair that we have recently completed. We look forward to the support and challenge that will be provided by the highly competent and independent Board that is proposed, and to working closely with the new Council to ensure that the Group once again becomes a champion of its members.

“We will publish our half year results on 4th September, a few days after the SGM. I look forward to setting out the priorities for the Rebuild phase of our turnaround. These will be designed to begin the delivery of our new Purpose - "championing a better way of doing business for you and your communities" - and to once again make membership meaningful for the largest co-operative in the UK.”

Ian Snaith, of DWF LLP, who has acted as Independent Legal Advisor to the Group and membership in reforming the Group’s governance, has given the proposals his full backing.

"These reforms will increase member control of the society. For the first time every member will have a direct voice in electing directors and Council members. To improve the quality of business decisions, an elected board will have the skills and experience it needs to provide effective challenge to the Executive inside the decision-making process. The Council and Senate will maintain and improve active member involvement at all levels of the Society and the Council will hold the board to account for its business strategy and its application of Co-operative Values and Principles. All society members can make key decisions in society general meetings and by direct votes. The proposed rules include full protection against demutualisation. These reforms provide the International Co-operative Movement with an exciting new model for the Governance of large co-operatives.”

The full proposals can be viewed at www.co-operative.coop/proposed-rules. If approved by members at the Special General Meeting to be held on 30th August 2014, the new Rule book and transitional provisions will take effect following registration by the Financial Conduct Authority in its capacity as registering authority for registered societies, replacing the existing Rule book (Rules of Co-operative Group Limited adopted in May 2010 and most recently amended in November 2013) in its entirety.

Further announcements will be made in due course confirming the results of the SGM and registration of the new rules.

Enquiries:

The Co-operative Group

Therese O’Donnell/Russ Brady
Tel: 07738 622866 / 07880 784442

Tulchan Communications

Susanna Voyle
Jonathan Sibun
Tel: 020 7353 4200

Notes to Editors:

Voting - Voting at the Special General Meeting is by a poll and will require a two thirds majority of votes cast by the 127 Independent Society Members represent circa 21% of the vote; with the seven Regions representing the remaining circa 79%.

Attendees – Attendees at the Special General Meeting comprise delegations appointed by the Regional Boards and Area Committees as well as representatives of the Independent Society Members.

The Co-operative Group is the UK’s largest co-operative business, whose purpose is “Championing a better way of doing business for you and your communities.” Owned by over eight million members, The Co-operative Group operates a total of 4,500 outlets, with around 87,000 employees and has an annual turnover of £11 billion with interests across food, funerals, insurance and legal services.