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The House of Representatives on February 24, passed a Bill to amend the Industrial and Provident Societies Act, thereby improving the institutional framework of these bodies.
The law makes provision for these societies to be supervised and monitored by the Registrar of Co-operatives, instead of the Companies Office of Jamaica, which now has supervisory responsibility for them.
“Under that system, the Registrar of Companies was not really equipped to properly supervise and to manage the industrial and provident societies,” Minister of Finance and the Public Service, Hon. Audley Shaw, explained as he piloted the Bill.
The transfer of responsibility will ensure stricter supervisory and regulatory standards. Mr. Shaw stressed the importance of more stringent monitoring, drawing attention to the problems surrounding the now defunct Operation Pride Project, which was carried out under the National Housing Development Corporation.
He pointed to the matter of contracts, and how the operation of provident societies involved in that project, was brought into question. “And so, generally, it is perceived and considered necessary to improve the regulatory regime surrounding the industrial and provident societies,” the Minister said.
In addition, the amendment increases the ceiling for members’ shares in the societies, by moving them from a dollar value to a percentage of the total shares. “Consequently, $400 which is no longer realistic is being changed to 20 per cent of the total shares. This will prevent the need for periodic adjustments of the dollar value, through amendments to the legislation,” he noted.
The Act has also been amended to allow a society to appeal on refusal of an application by the Registrar. The Registrar is obliged to notify the society within 30 days of the refusal.
Some societies are currently registered under other Acts, such as the Agricultural Credit Board Act, but this will be discontinued, with the removal of that provision and the insertion of the Registrar of Co-operatives Act.
“This is being done in order to remove references to the Agricultural Credit Board, and the Agricultural Credit Board Act. The Registrar of Co-operatives, under the Co-operatives Act, will be responsible for societies that are involved in agricultural lending. These societies (agricultural entities) will not fall under the Industrial and Provident Societies Act,” Mr. Shaw explained.
Meanwhile, there will be more transparent procedures for dissolving a society. “A society can only be dissolved after the Registrar holds an inquiry or upon the receipt of an application of three quarters of the members of the society. The amendment also specifically states that a society cannot be wound up without an Order by the Registrar,” the Minister explained.
Fines have also been amended to make them more realistic, and in keeping with the modernisation of the law.
Many industrial and provident societies, including People’s Co-operative Banks, operate similarly to credit unions, but are not regulated by the Bank of Jamaica, hence risk of failure and misuse.
Mr. Shaw gave an undertaking to provide the House with a report on the current status of industrial and provident societies at a later date, to contextualise the amendments.