The Social Enterprise Mark (SEM) Company has sought legal advice about how to handle members of Rise who have publicly objected to plans to dissolve the organisation and transfer its assets to SEM.

Lucy Findlay, managing director of SEM, told civilsociety.co.uk that the Rise members have presented an inaccurate picture on the internet and in other public places in a way that could damage the company and reputation of individuals.

“We have taken legal advice on this and are considering further action in terms of libel," she said.

Last year, it was announced that Rise, a development body for social enterprises in the South West of England, would be dissolved, and a legacy trust formed with its assets transferred to SEM, which was created as a subsidiary of Rise two years ago.

The proposal was put to the Rise membership at a general meeting, with the required majority (75 per cent) agreeing to close the company. However, a decision regarding the redistribution of assets to SEM only received a 70 per cent majority, less than the 75 per cent required for the special resolution.

Rise obtained legal advice and asked the whole membership to suggest other resolutions as to what should happen to the assets of Rise.

Findlay said two other proposals were put forward, one to delay and hold another meeting, and the other for the assets to go to a “democratically controlled fund to provide support to social enterprises”.

She said that these two proposals, and the proposal to transfer Rise’s assets to SEM, were put to a postal vote. The required majority (76 per cent) voted in favour of transferring assets to SEM and setting up a new legacy trust to hold the shareholding. A total of ten members (12 per cent of those voting) voted for either of the other two resolutions.

However, three members who object to the plans have told civilsociety.co.uk that they believe the process has not been carried out fairly or correctly.

MJ Ray, from software.coop, called the process the end of a “longer loss-of-member-control story”, which includes Rise giving free membership to clients of the Social Enterprise Mark company, then trebling the annual fee for other members in mid-2011.

Opponents claim lack of transparency and communication

Paul Martin, director of a co-operative in Cornwall, and Brian Titley, from the Co-operative Assistant Network, both say they have some sympathy with the board of Rise, and didn’t wholly object to the plans, but contend they haven’t been given enough information about the plans and have no way of knowing that Rise’s residual assets are being transferred to a viable business.

.“I don’t know the social or business case for the proposed organisation,” says Martin. “and I don’t know the business plan.”

“If it is a wholly-owned subsidiary of Rise why can’t I get the business plan?” he asked.

Martin also says proposals he sent to the board on the future of Rise’s assets were changed without his consent.

All three members say some aspects of the communication with the Rise membership was lacking, including holding a general meeting requisitioned by members to discuss the matter on the last working day before Christmas.

SEM response: activists have a 'vested interest'

In response, Lucy Findlay, managing director of SEM, has said the terms of the new legacy trust were clearly set out in the information that was sent to Rise members. She also said that the business case for SEM was also sent out as part of the voting process.

She added that the minority of members which civilsociety.co.uk have spoken to have a vested financial interest in discrediting the board proposal that was put out to members.

She also said they fundamentally disagree with SEM as they are social enterprises which would not qualify for the Mark.

Responding, Ray from software.coop advised the opposition is not about financial gain: “Before we lost the original Rise dissolution vote, we had a financial interest, but no more than other shareholders – less than ones who hold the SEM, in fact. Since we lost, it’s actually slightly better for us financially if the SEM were to succeed as described. We opposed it because it’s far worse socially.”

Software.coop has the following statement on its website: “We do not support the Social Enterprise Mark Company mark (the yellow coffee mug rings), mainly because we believe all co-ops are social enterprises and their label is not compatible with our co-operative values.”

Findlay has said the members making the case above have “spent a lot of time” trying to discredit the SEM, its staff and board:

“We have evidence that commercial and personal information has been used and distorted to try to present an inaccurate picture on the internet and in other public places in a way that could damage the company and reputation of individuals.

“We have taken legal advice on this and are considering further action in terms of libel.”