The Board of EeH has recently agreed that EeH should convert from being a limited company to a Community Benefit Society (CBS).
Community Benefit Societies are known as exempt charities and are regulated by the Financial Conduct Authority rather than Companies House and the Charity Commission. Many Registered Providers of social housing (RPs) are Community Benefit Societies and most of the stock transfer (LSVT) housing associations who were originally formed as companies have now converted to CBS.
In summary, a CBS has the following characteristics:
- To serve the broader interests of the community and any profit or surplus made by the CBS must be used for the benefit of the community
- A charitable CBS must only undertake activities which further its charitable purposes (this can include activities which generate a profit, provided that the profit is re-invested in supporting its charitable activities)
- The Charities Act 2006 requires all exempt charities to have a principal regulator. For RPs this is the Regulator of Social Housing.
- A charitable CBS must comply with charity law which applies to both exempt and registered charities. Guidance issued by the Charity Commission is of relevance to all charities of either status.
- The HCA's Governance and Financial Viability Standard requires RPs to have governance arrangements which ensure compliance with "all relevant law", including RPs who are charitable CBS.
- A CBS must have an “asset lock”, which takes the form of a rule stating that if the CBS is dissolved, any residual assets must be transferred to another charity with the same or similar charitable purposes.
In order to proceed with a conversion, EeH will be required to obtain a number of consents and to formally notify other bodies of the intention to become a CBS. These include EeH bank/funders; the Charity Commission; the Regulator of Social Housing; EeH pension funds; and Tower Hamlets council.
Tenants and leaseholders should also be informed of the proposal and in particular whether any changes are proposed to governance or service delivery arrangements. In respect of this requirement, residents are advised that no changes are proposed and that all aspects of EeH governance and services will remain as currently provided. An article has also recently been published in EeH quarterly Residents Newsletter explaining the proposal to convert to a CBS and inviting residents to comment.
The conversion process to a CBS is expected to take about 6 months and further information will be provided once this has taken place.