Establishing a Management Model
This information includes advice on establishing the following governance models:
Local Authority management under the 1899 Commons Act
As this procedure needs to be enacted by the district council it is essential to gain their support for the proposal and this is only likely if there has been a lengthy dialogue about the issues of concern on the common. In order to make a scheme for regulation and management the district council must publish the draft scheme at least three months before it is to be enacted. The scheme must be in the prescribed form. At the end of the consultation period the council must consider any objections and suggestions and may hold an inquiry. The council may then approve the scheme which will take immediate effect. However, if the landowner, or people representing at least one third in value of the interests of the common, object to the scheme then the council cannot proceed.
Commons Councils
Commons Councils are created by means of establishment orders. These are made by the Secretary of State but only where he/she is satisfied that there is substantial support for the proposal. In assessing the level of support particular regard must be given to persons entitled to exercise rights of common (and in particular those actually exercising such rights), persons occupying the land or having rights (other than rights of common) and persons with functions under enactments relating to the management of the land. There is consequently a need for considerable consultation prior to seeking an establishment order. Also, as the order will provide detailed arrangements specific to the council, including rules governing the agricultural activities, management of vegetation, exercise of rights of common and subscription level, it is essential to develop some draft proposals for discussion with interested parties. Unless the proposed council covers only a small area with few interested parties the consultation process is likely to require professional input.
Tip: Defra has developed a standard constitution for commons councils and this is available from their website.
Voluntary associations
The key instrument in the establishment of a voluntary association is the constitution. It is essential to involve all interested parties in an open discussion about the constitution in order to achieve as much buy-in to the proposal as possible at the outset. The constitution should be thorough and should cover most of the following aspects:
Objectives: these must be relevant to the powers and responsibilities of the group and reflect the fact that officers are voluntary. Examples may include:
the promotion and protection of members’ interests
supporting the agricultural management of the common including controlling and managing grazing
acting as a representative voice for the commoners
engendering co-operation between commoners and landowner
safeguarding the rights of members.
Officers and Committee: it will be necessary for the association to have elected officers and, depending on the number of members, a representative committee may be required. The constitution should outline the procedure for elections and state whether there is a maximum term of office.
Membership: usually open to all right holders whether by ownership or tenancy and also the landowner(s). In some cases it is widened to include representation from a local authority or specific stakeholder group as an associate or co-opted non-voting member.
Tip - A decision will need to taken as to whether all commoners or only active commoners are eligible to be members and also whether the land owner is to be a member. The benefit of allowing non grazing right holders to become members is that it will broaden the skill base of the membership and potentially provide an additional supply of professional skills.
Form and number of meetings: including the AGM and the committee. Most Associations meet only once or twice a year with committees meeting more frequently. It is usual for the AGM to be advertised in advance and the agenda to include election of officers and presentation of annual accounts. It should be considered whether the finances should be independently inspected prior to the AGM.
Subscription: most associations charge a small subscription to cover expenses such as room hire, advertising and postage. The constitution should refer to the subscription and also make allowance for this to be changed at an AGM.
Voting Procedure: this is usually one member one vote with the extent of right ownership having no bearing. The constitution should state whether voting will be by show of hands or if requested by a secret ballot. The Chairman is usually given a deciding vote.
Tip - Costs can be reduced if you can base your constitution on that of another Association – but beware not to breach any copyright issues.
Umbrella groups or Federations
The key task is to establish the level of support for the proposal and the willingness, or otherwise, of individuals to contribute financially to the group. The establishment and running costs of such groups are high and consequently, there needs to be a large potential membership willing to pay an annual subscription. Umbrella groups usually employ a parttime member of staff to carry out administrative duties such as issuing newsletters to members and managing committee and members’ meetings. A constitution and formal meeting structure are essential, as is the need to have properly inspected accounts. Grants may be available towards set up and establishment costs.
The Foundation for Common Land and existing umbrella groups will be able to offer advice and guidance.
Legal agreements
Legal agreements can be drawn up by a land agent or other consultants but must be verified by a solicitor, preferably one with experience of common land law. The costs may be covered by a common land supplement paid under agri-environment schemes.
The agreements usually bind the signatories to deliver an agri-environment agreement for an agreed share of the annual payment. They tend to last only for the lifetime of the agrienvironment agreement but provide security for the individual signatory of the agreement with Natural England. This means that, should a member of the group not comply with the requirements of a scheme, then that member can be held legally responsible for his noncompliance. It is usual for each member to indemnify the other parties to the agreement against this eventuality.
Tip - Where a legally constituted group runs in parallel with a voluntary association there can be confusion as to which body is meeting and the rules which apply. It is important to distinguish between the two and to ensure that the wider membership of the association is not disenfranchised due to the establishment of the smaller legal group.
Limited companies and Community Interest Companies
Articles of Association need to be prepared by accountants and registered at Companies House. Company law requires that a Company holds an AGM, appoints a Board of Directors which then elects a Chairman and appoints a Company Secretary. It is possible for the Chairman also to be the Company Secretary. Accounts must be presented to the AGM where members also have the opportunity to put forward resolutions.
A decision will need to taken as to whether all commoners or only active commoners are eligible to be members and also whether the land owner is to be a member. In some cases, such as at St Cleer and District in Cornwall non commoners have been appointed to the Board of Directors. The benefit of allowing non grazing right holders to become members is that it will broaden the skill base of the membership and potentially provide an additional supply of professional skills.
There are costs associated with the establishment of the company and ongoing expenses relating to remuneration of the Company Secretary and Board members plus professional fees associated with auditing accounts, completing a Companies House return and an annual tax return. Some or all of these costs may be covered by the common’s supplement received under the agri-environment agreement. At Black and White Combe in Cumbria a limited company was established to enter the ESA and subsequently HLS. A number of commons on Bodmin have also established companies limited by guarantee to administer stewardship payments; these include Blisland Commons Limited and St Cleer and District Commons Ltd mentioned above.
The main benefit of the Limited Company approach is that the liabilities of the Directors are limited by guarantee.
A more recent option for commoners is to establish a Community Interest Company (CIC). The company can still be limited by guarantee but must also produce an annual Community Interest Statement and Report; this must state that the company will serve the community rather than operate for private profit motives. The report will explain what the CIC has done to benefit the community and how it has involved shareholders in its activities The other distinguishing feature of a CIC is the asset lock; under these provisions the assets and profits of the company must be permanently retained within the CIC and used solely for community benefit.
The choice between a CIC limited by guarantee and a straightforward company limited by guarantee is technical and will require professional advice. For groups considering going down the limited company route, it is worth exploring the benefits of each option.