14.1 We had heard so much about ‘the Rules’ that we decided to attend a lecture by The Partnership’s solicitor on the subject.
14.2 "This is going to be a long and boring exercise being lectured on dry-as-dust rules. I wonder if I’ll fall asleep and be an embarrassment," I thought on the way to the lecture theatre.
14.3 With these thoughts still running through my mind, I took my seat and prepared to pay attention. To my surprise, the solicitor didn’t have a flat, monotone voice, and his opening remarks were rather stimulating. "Ladies and gentlemen, thank you for your interest as evidenced by your attendance. This lecture is for new partners, and for those who wish to bring their knowledge of the Rules up to date."
14.4 "We cannot expect to live harmoniously with our neighbours unless our rights and responsibilities are known and agreed upon. In a close relationship such as a partnership, this is particularly so."
14.5 "The Rules of The Partnership provide a framework within which rudimentary industrial justice accrues to the partners. It is a prior condition of partnership that a proposed partner studies and agrees to abide by the Rules before being admitted into partnership. The partners try not to exploit each other and many of the rules reflect this. Within The Partnership therefore there is a degree of industrial justice that has developed over the decades to which each partner has free recourse. The seeker of justice does not have to purchase it here. Just practice doesn’t just happen; it is based on pre-considered reason. What happens naturally is unjust practice based on the self-interest of people with the power to make rules in their interest. Outside The Partnership, the fact that people work hard and industriously does not necessarily ensure their security or their being accorded industrial justice. For these they must also ensure that their labour is profitably directed and that others do not appropriate the surplus produce of their labour. How can people ensure these things that are usually the prerogatives of remote rich and powerful people? Ultimately only by becoming a partner."
14.6 "Below average people are often pushed below by people above them, but they still have the same needs as everyone else: love, food, clothing, housing, ... - unfortunately they are usually more subject to exploitation. Only in partnership is it in the interests of the strong to protect the weaker partner in an interdependent long-term relationship."
14.7 "Every producer co-operative has to have a registered name. ‘The Partnership’ is ours." The solicitor handed out "The Rules of The Partnership" to each of us, and started with Rule 1.
1 In these rules, unless the context otherwise requires:
Expressions used have the same meaning as those ascribed to them by the Act.
"The Act" or "Co-operation Act" means the Co-operation Community Settlement Act, and Credit Act, as amended.
"Month" means calendar month.
"Special Resolution" means a resolution passed in a manner set forth in Section 80 of the Act.
Words in the singular include the plural and vice versa.
Words importing masculine gender include females.
"Prescribed" means prescribed by the Act or by regulation.
"Regulation" means regulation under the Act.
"The Registrar" means the Registrar of Co-operative Societies or Deputy Registrar.
2.1 In accordance with Section 73 of the Act, the Rules of The Partnership shall bind The Partnership and all the partners thereof to the same extent as if each partner had subscribed his name and affixed his seal thereto, and there were contained in the Rules a covenant on the part of each partner and his legal representatives to observe all the provisions of the Rules subject to the provisions of the Act.
14.8 "Does this mean," asked a partner, "that if I disagree with a decision taken by The Partnership’s board of directors, that I am still bound by and have to obey that decision? If the decision is about religion or politics or something quite different from the manufacturing sector of The Partnership, does this rule still apply?"
14.9 "The answer to both your questions," replied the solicitor, "is yes. Decisions by the board on matters of religion or politics or any other subject are not differentiated from decisions in other sectors. If you wish to remain a partner, you are bound to co-operate in executing the board’s decisions even if you disagree with them."
14.10 The solicitor drew our attention to Rules 2.2-2.4.
2.2 The Rules of The Partnership shall not be altered unless the alteration has been approved by special resolution. No such alteration shall have effect until the Registrar has registered the alteration. An alteration includes addition to a rule and rescission of a rule.
2.3 Any partner shall be entitled on demand to a copy of these Rules upon payment of such sum as the board may from time to time determine.
(b) The surplus shall be distributed quarterly and equally.
(c) Individual drawings shall be determined by the board in accordance with the quality and quantity of work done, and the board shall advise in writing to each partner the drawings of every partner. The ratio of the maximum to the minimum drawing shall not exceed ten. All the work of The Partnership shall be done by the partners personally or by formal written contracts for the supply of goods and services. The Partnership shall have no employees and shall at all times endeavour to have all The Partnership’s work done by the partners: only that work which the partners cannot technically perform due to lack of necessary skills and or equipment shall be contracted out - this provision shall apply irrespective of the prices ruling outside The Partnership.
14.11 "Why don’t you contract work out and hire labour as you see fit?" asked a visitor in a challenging tone. The visitor coaxed, "Surely it is reasonable to send out the dirty jobs that no partner wants to do. Christians shouldn’t hoard work for themselves in these hard times. If you just hired a few people or let a few contracts for the dirtiest and most repetitive jobs, you would be providing a job for one of our unemployed and saving yourselves a lot of unnecessary hard work. Some of the sweatshop prices for component manufacture are so attractive that I think you are foolish not to take them. In the long run you could all retire and live off hired labour and contractors. All that’s stopping you is this rule!"
14.12 The solicitor considered his adversary and measured his words: "A very perceptive, persuasive argument on precisely the point in question," said the solicitor as he prepared The Partnership’s defence. "We’re a Christian enterprise. We’re not about to live off the exploited. We aim to lighten the load of the poor and the oppressed, even if ever so slightly, not to increase it. This is why our founders put this rule in all those years ago, and if you look up the minutes of those early meetings you will see exactly the same arguments raised. The rule may be old, but the partners believe it is still appropriate and have no intention of amending or rescinding it. Anyway, it does none of us any harm to do the menial jobs on a roster basis, and it is a good incentive for us to admit into partnership those who will achieve their potential in menial tasks."
(d) The net capital worth of The Partnership shall be determined annually by an independent valuation of stock, property, goodwill, and all other capital assets. The part owned by each partner is that partner’s retirement fund. Where x is the number of partners and parts in The Partnership, the net capital worth divided by (x+1) shall be the incoming capital required of a prospective partner, and on receipt it shall be distributed in full by direct cash transfer to the existing partners equally.
14.13 "Why not put this capital into The Partnership’s liquid reserves?" asked a student. "This would allow The Partnership to undertake capital expenditure on a particular project without having to make a call on the capital resources of the partners."
14.14 "One reason for this requirement," answered the solicitor, "is that it represents a considerable incentive for the existing partners to admit additional partners. Remember that there have to be a lot of incentives before the existing partners will admit into The Partnership additional partners: they have to give up a proportion of the ownership and control and profits, and they expect cash in hand and less work if they take such a decision. Although they have well developed personalities and a life-style that enhances co-operation and suppresses competition, they still respond to conventional motivators."
(e) In order to survive in periods of reduced income, The Partnership shall reduce drawings as necessary until all partners are receiving the minimum drawings.
14.15 "This is a hard rule," commented a partner. "I’m drawing nine times the minimum and in the last recession I found myself with house payments and commitments in proportion to my income, and suddenly that income was drastically cut. I had to make a considerable adjustment downwards in my living standard, and my family didn’t like it. Why not have all salaries reduced on a percentage basis? That would be fairer. In the last recession the lowest paid partners took no reduction in their drawings at all, and the highest paid partners took the full burden of the recession."
14.16 "You adjusted didn’t you?" replied the solicitor firmly. "Poor people simply do not have the resources available to rich people, and this rule reflects that fact. Partners on the minimum drawing need all they get to live - in some partnerships this is the poverty line. We can’t, as Christians, reduce a breadwinner’s earnings below the poverty line except when there just isn’t enough money to pay. In deep depressions the rich partners subsidise The Partnership out of their own pockets. This is in accordance with the direction that those who would be the greatest among us shall be the servants of all, and the rule is firmly based on Matthew 23:11."
14.17 "I have certainly learned my lesson," continued the partner. "I now live on the minimum drawings. It’s not a bad way to live either. I find that I have a much greater personal surplus. I never buy on credit now, and I always buy for cash, usually through The Partnership store at discount prices. I have found an economic freedom that allows me to participate more fully in the wider work of The Partnership."
14.18 "I believe," concluded the solicitor, "that we have adequately covered the reasons for this rule. Shall we proceed? Look at the next rule for capital formation."
(f) Initial and new capital shall be drawn from all partners equally. However the board shall have the power to approve interest free loans, repayable to The Partnership by withholding the surplus due, up to 95% of the capital required.
14.19 This was the rule I had been waiting for - the rule that allowed the poor into The Partnership. But there was no comment - it was simply accepted.
3 The name of the partnership shall be The Partnership.
4 The registered office of The Partnership shall be at:
Partnerville or such other place as the board of The Partnership may determine. The board shall in accordance with Section 72(5) of the Act cause notice of any change thereof to be transmitted to the Registrar in the form prescribed within fourteen days after the change.
5 The objectives of The Partnership shall be:
(a) To function as directed by the partners via the manufacturing and or hiring of goods and or other activities as approved by the board from time to time.
(b) To ensure that all partners share equally in the ownership, control, privileges, responsibilities and obligations of The Partnership.
(c) To bring within The Partnership any manufacturing that may initially have to be performed by contract, and to expand the number of partners as necessary to cope with the consequent increasing labour requirement.
(d) To eventually own all the necessary means of production including industrial land and capital plant, and to produce only finished commodities for direct sale to end-users, except that The Partnership may make components for a commodity produced by a federation or consortium of partnerships and/or co-operatives.
(e) To ensure that each partner attends The Partnership premises or other place as directed and works there an average of at least fifteen hours per week net excluding travelling time to and from work. If a partner fails to achieve this minimum consistently for a period of twelve months, and if after written board advice as to the gravity of this failure, that partner fails in the last three months of this twelve month period to achieve an average over this last three months of fifteen hours net working time per week, then that partner’s part of The Partnership shall be purchased by The Partnership except: the board shall have the power to extend in periods of three months the above twelve month limit in the event of extenuating circumstances such as protracted illness and the board must advise the partner in writing each three months whether the limit has been extended or not.
6 The Partnership shall have the power to do the following things as incidental to its objectives:
(a) To dismiss a partner from The Partnership under the provisions of Rule 5(e).
(b) To dismiss a partner from The Partnership if on a secret ballot of at least 80% of the partners, two thirds of the vote is in favour of dismissal.
(c) To payout a dismissed partner in exactly the same way as if the partner had retired.
14.20 Here then was the mechanism for ridding The Partnership of an incompatible or incapable person. It seemed a hard rule and the solicitor commented, "I suppose you think this is a tough rule for Christians to adhere to. But there has to be ways of getting rid of incompetent partners. We’re committed to maintaining a strong, healthy and vibrant enterprise."
7 The Partnership may, in accordance with Section 64 of The Act, acquire by lease, purchase, donation, devise, bequest or otherwise any real or personal property for any objects of The Partnership and may sell or lease any such real or personal property.
8 Subject to the provisions of Section 52 of The Act, The Partnership may, with the consent of a partner, purchase that partner’s part. A part so purchased shall be cancelled and that partnership shall cease.
By mutual agreement between the board and the partner whose part is to be sold under this rule, payment shall either:
(a) be made within one month of the agreed date of sale,
or (b) not become immediately payable, but instead an interest bearing debenture for the amount shall be issued in his favour subject to:
(i) the provisions of Section 65 of The Act;
(ii) interest to be paid quarterly at a mutually agreed rate;
(iii) such debenture to be non-transferable;
and (iv) The Partnership shall redeem the debenture at the expiration of one year from the date of issue, except that, by mutual agreement between The Partnership and the debenture holder, such debenture may be redeemed in whole or in part at an earlier or later date.
9 The funds of The Partnership may in accordance with Section 68 of the Act be invested in any of the following ways:
(a) securities authorised by law for the investment of trust funds;
(b) deposit in any bank prescribed by the regulations or in any society which is authorised to receive deposits;
(c) shares of, or deposits in, a building society registered under The Permanent Building Societies Act 1967;
(d) securities prescribed by regulation;
(e) other securities allowed by the Act;
or (f) in any way as decided by The Partnership’s board.
10 The Partnership may, in accordance with Section 77 of the Act, make a contract with a partner for any specified dealings for a fixed period.
The Partnership may by special resolution from time to time request partners to enter into such contracts as may be determined by such special resolution.
14.21 "This seems a rather unusual rule," murmured a visitor. "Yes," replied the solicitor, "it’s often needed because many of the partners have much more than their labour to sell."
11 The Partnership shall, as required by Section 72(3) of the Act, have its name inscribed in legible characters upon a seal. The seal shall be kept in the registered office in such custody as the board shall direct.
The device of the seal shall be the name of The Partnership within two concentric circles and encircling the word "seal".
The seal of The Partnership shall not be affixed to any instrument except by the authority of a resolution of the board of directors and in the presence of two directors and the secretary or such other person as the board may appoint for the purpose. Every instrument to which the seal of The Partnership is affixed shall be signed by and in the presence of two directors and such third person.
12 All books of accounts, securities, documents and papers of The Partnership other than such as the board may direct to be kept elsewhere, shall be kept at the registered office, in such manner and with such provision for their security as the board shall direct. In giving any direction the board shall comply with Section 75 of the Act.
13 Every partner shall own one and only one part of The Partnership, and every part shall have equal worth, value and status.
14.22 "Before I proceed, I would like to point out that every partner has the same rights, the same degree of control and the same one part as every other partner. Powerful, rich, educated people have always objected to this principle on the grounds that weak, poor, uneducated people do not have the capacity to govern themselves, to see what is in their best interests, or to understand their position. We have found by experience that with adequate training, food, clothing and housing this is not the case. We also found that the people who espoused this view usually had vested interests in keeping these people in a poor and oppressed state; very often it was a case of the rich and powerful maintaining their position as a direct consequence of ‘their’ peoples’ poverty. Living off the poor is still common outside, and it comes in various guises - usually devices that involve the something for nothing principle, such as land speculation, buying cheap and selling dear, or gambling of one sort or another. In some countries there is still the primitive police state with rule by force, terror and torture, but these tactics have mostly been replaced by the more subtle and effective Western practices. I would recommend the chaplain’s lecture on the subject to anyone interested in this line of thought. To keep abreast you should attend his course once every five years or so - the same as is recommended for my course on the Rules."
14.23 "In practice we have found that below average partners may not understand the full technical arguments involved, but they listen to the other partners weighing the arguments for and against and they use the mutual trust between the partners. If there is a divergence of opinion between the partners, and this rarely occurs on matters of policy since all the partners have very similar economic interests, we usually find that the partners who cannot or will not inform themselves on an issue simply take the position of an informed partner that they respect."
14.24 "So you do have inequality between the partners," I said flatly. "Obviously all the partners are not equal if some merely go along with the views of the strongest."
14.25 "Your observation is partially true," replied the solicitor. "We’re not gods here: we can’t make people all the same and we don’t try to; we accept the individual differences of people and are usually thankful that they exist. Outside, the practice is for strong, rich and powerful people to exploit the weaknesses of others. Here a partner’s weaknesses are covered by other partners’ strengths. For example, I know the Rules and some of the reasons for them and I am trying to pass on this information to those interested partners who do not."
14.26 "Some partners are not interested in certain subjects such as international politics and economics. Furthermore they see no good reason why they should be forced to develop an interest when they know and trust other partners that have such an interest who can advise them on the way to vote and be good citizens in these respects when required. As a group our behaviour at the country’s polls is more responsible than almost any other group of citizens selected at random, since uninformed partners base their decisions on sound, accurate information from informed partners."
14 Applications for a partnership shall be lodged at the registered office on or to the effect of the prescribed form, together with a deposit of 5% of the value of a part. The board shall consider every such application and if approved the board shall allot a part to the applicant and the applicant’s name together with the part allotted, date of allotment and any other information required by regulation shall be entered in the register of partners. The applicant shall be notified in writing of the allotment and of the entry in the register and shall thereupon be entitled to all the privileges of partnership.
The board may at its discretion refuse any application for partnership and need give no reason for such refusal.
15 A partner shall in accordance with Section 50 of the Act be liable to The Partnership for the amount, if any, unpaid on the part held by him, together with any charges payable by him to The Partnership, as prescribed by these Rules.
16 A person shall cease to be a partner in any of the following circumstances:
(a) Where his part is transferred in accordance with these Rules and the transferee is registered as a partner in his place.
(b) Where his part is forfeited in accordance with these Rules.
(c) Where his part is sold by The Partnership under the power conferred by these Rules and the purchaser is registered as a partner in his place.
(d) Where his part is purchased by The Partnership in accordance with the Act and these Rules.
(e) Where he is expelled in accordance with these Rules.
(f) Where the amount paid upon his part is repaid to him in accordance with these Rules.
(g) Where he becomes bankrupt, and the proper officer disclaims in accordance with the provisions of the law.
(h) On death, provided that his estate shall remain liable until his nominee, executor or administrator, or some other person is registered as a partner in his place, or until The Partnership pays the value of his part in accordance with the provisions of the Act.
(i) Where the contract of partnership is rescinded.
(j) On the ground of insufficient hours worked.
14.27 "Expulsion of partners is a delicate subject, but we all have to be aware of the rules regarding expulsion. Education is the best defence in this area, so pay attention."
17.1 A partner may be expelled from The Partnership by special resolution to the effect that:
(a) he has failed to discharge his obligations to The Partnership, whether prescribed by these Rules or arising out of any contract;
or (b) he has been guilty of conduct detrimental to The Partnership.
In either case written notice of the proposed resolution shall be forwarded to the partner fourteen days before the date of the meeting at which the special resolution is to be moved, and he shall be given the opportunity of being heard at the meeting.
17.2 The part of any partner expelled shall be cancelled as at the date of expulsion and the cancellation shall be noted in the register of parts. The Partnership shall pay to the expelled partner the latest valuation of his part at the time of expulsion unless the accounts of The Partnership disclose a deficiency.
For the purposes of this rule "deficiency" shall mean the amount of loss or deficiency shown in the last preceding balance sheet of The Partnership. Where such a deficiency exists there shall be deducted from the amount of capital due to the expelled partner the proportion of the loss or deficiency appropriate having regard to the number of parts in The Partnership.
17.3 Payment to an expelled partner shall be made at such time as shall be determined by the board in its discretion but not later than twelve months from the date of expulsion.
17.4 Upon expulsion the relevant part shall be cancelled.
17.5 No expelled partner shall be readmitted except by special resolution.
17.6 A partner so readmitted shall not have restored to him the part which was cancelled on his expulsion.
17.7 For the purpose of this rule the value of net assets, that is the net capital worth of The Partnership, shall be taken from the value of the assets and liabilities disclosed in the last balance sheet of The Partnership.
18.1 The capital of The Partnership shall be raised by the issue of parts which shall be of one class, all ranking equally. The Partnership's capital shall vary in amount according to the value of the parts from time to time. Every Partner shall own one and only one part.
18.2 The parts of The Partnership shall not be quoted for sale or purchase at any stock exchange or in any other public manner whatever.
18.3 If The Partnership needs new capital beyond its liquid reserves, all partners shall make equal contributions as in Figure 1(f). A partner may elect to make his payment from his part of the surplus, but if he is unwilling to pay he must resign from The Partnership.
19 Every person whose name is entered as a partner in the register of partners shall, without payment, be entitled upon application to a certificate under the seal of The Partnership stating the part held by him and the amount paid up thereon. If a partnership certificate is defaced, lost or destroyed a duplicate may be issued by The Partnership on payment of such fee, not exceeding five dollars, and on such terms as to evidence and indemnity as the board thinks fit.
20 The board may from time to time make calls upon the partners provided that no call shall exceed one tenth of the current value of a part, or be payable in less than one month. Each partner shall, subject to receiving at least fourteen days notice specifying the time or times of payment, pay to The Partnership at the time or times so specified the amount called on his part.
If a sum called in respect of a part is not paid before or on the day appointed for payment thereof, the partner from whom the sum is due shall pay interest upon the sum at the rate of six per cent per annum above the general inflation rate from the day appointed for the payment thereof to the time of the actual payment, but the board shall have the power to waive payment of that interest wholly or in part. The board's determination of the general inflation rate shall be final.
For the purposes of these Rules it is assumed that all parts are fully paid up - any parts owned by new partners that are being paid off by withholding surplus or other means are still liable for the same capital requirement as parts that are fully paid up.
21.1 If a partner fails to pay any call or instalment of a call on the date appointed for payment thereof, the board may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.
14.28 "You will note," commented the solicitor as he directed our attention to the rules relating to calls on parts, "that the word ‘call’ is used slightly differently to the way it is conventionally used. Here we mean by ‘call’ a call by The Partnership on the personal capital reserves of the partners. The word ‘call’ usually refers to calling up unpaid capital on shares, but here we mean the marshalling of new capital from the partners in accordance with Figure 1(f). When we bought, for example, the capital equipment for the cannery we did a feasibility study which determined the type of plant required and we found the capital needed for the first stage of the project was $750,000. The Partnership had liquid reserves that provided most of this capital, and the difference was raised by calling on the partners under the provisions of this rule. The Partnership’s credit is good and we could have got the capital from the bank, but this would have meant the disclosure of some of our business activities to an arm of the State. Many of the partners disliked this to the point of preferring not to have the money - also interest rates are high and we prefer to finance all our activities internally and maintain complete autonomy. You should note that if a partner fails to pay as called, and if the general rate of inflation is 14%, the interest rate payable is 14 plus 6, that is 20% per year compound."
14.29 "You can see that it’s advisable to keep your own affairs in order in the expectation of having to meet calls from time to time. Calls are not uncommon it would be rare for a year to go by without one. The Partnership does not have capital reserves like a building society and its working capital is kept to a minimum since the partners want the surplus."
14.30 "Although this rule may seem risky since there is really no limit to the amount a partner may be called upon to pay, in practice there is very little friction because the partners know that the capital they contribute is adding to the net capital worth of The Partnership and is therefore building up their income now, and adding to the amount they will be able to collect when they retire. There’s also satisfaction in seeing in tangible capital assets the plans and decisions of the past - like monuments to past achievements that continually reminds us that we live in a continuum and that very soon the plans and dreams we have will take their place in tangible form next to those of past generations."
14.31 "Except for new partners who have not had time to adjust to partnership life, it is very seldom that a partner fails to pay a call, and then it’s as often the richer partners that fail to pay on time. On rare occasions a partner is temporarily unable to pay because of family or other commitments, but the love and care in this place is such that real problems of a serious nature are already being solved and the partner in trouble is never asked to pay if it is known that it would cause hardship. What often happens is that the board sends to the partner who is unable to pay a letter similar to that which is sent to the other partners except that it says that the call in his case is waived until such time as the board thinks fit and that interest under Rule 21 is waived also."
14.32 "Let us continue with Rule 21," said the solicitor returning to the rules.
21.2 The notice shall name a further day (not earlier than the expiration of fourteen days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the part in respect of which the call was made will be liable to be sold to The Partnership and consequently the partnership corresponding to that part is liable to cease.
21.3 If the requirements of any such notice as aforesaid are not complied with by the partner, any part in respect of which the notice has been given may at any time thereafter before the payment required by the notice has been made, be sold to The Partnership by a resolution of the board to that effect.
22 A partner whose part has been sold for a default in payment of calls shall cease to be a partner, but shall, notwithstanding, remain liable to pay to The Partnership all moneys which, at the date of sale, were presently payable by him to The Partnership in respect of that part.
14.33 "This means a partner has to meet his current obligations to The Partnership, and the price payable by The Partnership shall be the net capital worth divided by the number of partners (as in Figure 1) less any outstanding moneys due by the partner to The Partnership."
A statutory declaration in writing that the declarant is a director of The Partnership and that a part of The Partnership has been sold to The Partnership on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the part.
14.34 "It seems to me," contributed a partner, "that there is real power in Rules 21 and 22 and that they could be used to victimise a partner."
14.35 "Yes, I suppose they could," replied the solicitor. "Firstly though a majority of the board would have to be party to the victimisation, and this has never happened in any of the Christian partnerships we know. The spiritual aspect of this partnership is probably essential to our continued success. There is, however, nothing to stop non-Christians trying to live in partnership according to these Rules. Partnerships, like people, can get sick and fail to work efficiently. This is when equitable rules are needed - when people lose the love for each other that is characteristic of Christian partnerships and when partners start to want to get out. We hope this never happens to us, and we try to keep our relationships in good repair, but if we fail to keep good interpersonal relationships the Rules are there for our mutual protection."
Parts sold to The Partnership for default in payment of calls shall be cancelled and a notation of the cancellation entered in the register of parts.
23.1 The Partnership shall, as provided in Section 57 of the Act have a charge upon the part or interest in the capital and on the credit balance of a partner or past partner, and upon any surplus, dividend, bonus or rebate payable to a partner or past partner in respect of any debt due from the partner or past partner to The Partnership, and may set off any sum credited or payable to such partner in or towards payment of the debt.
14.36 "In other words, a partner has to pay his share of things up to the time he ceases to be a partner, and what he owes when The Partnership buys him out will be taken off what he gets," explained the solicitor.
23.2 The Partnership may sell in such manner as the directors think fit all or any parts on which The Partnership has a charge, but no sale shall be made unless some sum in respect of which the charge exists is presently payable nor until the expiration of fourteen days after a notice in writing demanding payment of such portion of the amount in respect of which the charge exists as is presently payable has been given to the registered holder for the time being of the part or the person entitled thereto by reason of his death or bankruptcy. The said notice shall indicate that upon failure to make payment of the sum demanded within the time stipulated the part would be sold to The Partnership.
There shall be no right of inheritance of any part of The Partnership. A partner may bequeath only the cash value of his part and the person so receiving this inheritance shall have no greater right to a part of The Partnership than any other person outside The Partnership.
14.37 "Note particularly the inability of even the most highly respected partner to lever into partnership one of his chosen sons on his death. This rule is designed to eliminate the admission to The Partnership on the ground of inheritance. We admit into The Partnership people on their merits, our collective need, and their needs."
From the proceeds of any such sale The Partnership may deduct the expenses, if any, associated with the sale and apply the balance in reduction of the liability of the partner provided however that should a surplus remain after such deduction the same shall be payable to the partner whose part was so sold.
To give effect to any such sale, The Partnership’s seal must be affixed to the instrument of sale.
24 The instrument of transfer of any part shall be executed by or on behalf of the transferor and the transferee, and the transferor shall be deemed to remain the holder of the part until the name of the transferee is entered in the register of partners in respect thereof.
Parts shall be transferred in the following form or in any usual or common form that the board shall approve:
A part may not be sold or transferred without the consent of the board.
The board may decline to register any transfer of a part to a person not qualified to be a partner or of whom they do not approve and may also decline to register any transfer of parts on which The Partnership has lien or charge. If the directors refuse to register the transfer of a part they shall, within one month after the date on which the transfer was lodged with The Partnership, send to the transferee their notice of refusal.
The board may decline to recognise any instrument of transfer unless: a fee of one dollar is paid to The Partnership in respect thereof; the instrument of transfer is accompanied by the certificate of the part to which it relates, and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer.
14.38 "This last condition seems unnecessarily onerous," said a partner. "Wouldn’t you agree that we know all the partners well enough to delete it?"
14.39 "Perhaps we do know all the partners, and then again maybe we don’t. The families of the partners have merged with The Partnership so fully and effectively that it’s not as easy as you might think to differentiate between partners, friends, relations and adherents. There is no boasting about being a partner, and over the years faces of non-partners become so familiar at the store and at socials and the wider work of The Partnership that some could easily be mistaken as partners. It would be interesting to test the partners at The Partnership store some time and ask them who of the customers are partners and who are not - I’ll bet there would be a few mistakes! You certainly couldn’t tell the difference by the obvious work output. Some of the non-partners do more work than some of the partners! And some of the projects that have received board approval, and therefore qualify as contributing to the necessary hours a partner must put in, are so remote from the generally accepted idea of Partnership work, that some partners are not obvious by their work output. This is one of the reasons that we have training courses - so that the partners can be kept informed as to what each partner is contributing to The Partnership and therefore act responsibly when the decision has to be made each month as to how to split up the amount of money available for drawings among the partners. Our training courses are life-related: they are directed to the relevant parts of the partners’ lives and deal with issues including how the Rules operate under which we live, the history of The Partnership and its divergence from the mainstream of industrial history, the Christian vision of industrial organisation, and ‘how to’ courses like the economist’s on effective risk-taking - or more bluntly how to gamble effectively."
The board shall cause a record of all transfers to be made in the books of The Partnership.
The board may suspend the registration of transfers during the fourteen days immediately preceding the annual general meeting in each year.
25 Any person becoming entitled to a part in consequence of the bankruptcy of a partner shall, if qualified, and upon such evidence being produced as may from time to time be required by the board be admitted as a partner in respect of the part, or, instead of being admitted himself, may make such transfer of the part as the bankrupt person could have made; but the board shall in either case have the right to decline admittance as they would have had in the case of a transfer of the part by the bankrupt person before bankruptcy.
14.40 "The person who happens to hold the bankrupt partner in debt may be entirely incompatible with The Partnership and therefore inadmissible by the board. This rule is current but has not been applied since the partners have never allowed one of their number to be declared bankrupt. Help is always provided before this point is reached."
A person becoming entitled to a part by reason of the death or bankruptcy of the owner shall be entitled to the same income and other advantages to which he would be entitled if he were the owner of the part, except that he shall not, before being admitted as a partner in respect of the part, be entitled in respect of it to exercise any right conferred by partnership in relation to meetings of The Partnership.
26 On the death of a partner any part or interest contingent or otherwise he may have in The Partnership shall be dealt with in accordance with Sections 58 and 59 of the Act. The value of the part of the deceased partner shall be his part of the net capital worth of The Partnership as determined by The Partnership’s auditor at the most recent valuation.
27.1 A general meeting of The Partnership to be known as the "Annual General Meeting" shall, as provided in Section 85 of the Act, be held each year on such date and at such time being within three months after the close of the financial year or within such further time as may be allowed by the Registrar or prescribed by regulation, and at such place as the board may determine.
27.2 In default of such meeting being held within the period of time mentioned any five partners may convene the Annual General Meeting to be held within such time as the Registrar may allow and such meeting shall be convened as nearly as possible in the manner by which such meeting should have been convened by the board. The Partnership shall refund any reasonable expenses incurred in the calling of any such meeting to the partners incurring the same. The Partnership shall retain any sums so paid out of any sums due or to become due from The Partnership by way of fees or other remuneration in respect of their services to such directors as were in default.
All other general meetings of The Partnership shall be special general meetings.
28.1 The board may, whenever it thinks fit, convene a special general meeting of The Partnership.
28.2 The board shall, on the requisition of not less than one fifth of the partners being the owners of parts upon which calls or other sums then due have been paid, forthwith proceed to convene a special general meeting.
28.3 A requisition for a special general meeting shall state the objects of the meeting and must be signed by the requisitionists and deposited at the registered office of The Partnership, and may consist of several documents in the like form, each signed by one or more requisitionists.
28.4 If the board does not, within twenty-one days from the date of deposit of the requisition, proceed duly to convene a meeting the requisitionists or any of them may convene the meeting, but any meeting so convened shall not be held after the expiration of three months from the date of such deposit.
28.5 A meeting convened by requisitionists in pursuance of these rules shall be convened in the same manner as nearly as possible as that in which such meetings are convened by the board.
28.6 Any reasonable expenses incurred by the requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionists by The Partnership, and any sum so repaid shall be retained by The Partnership out of any sums due or to become due from The Partnership by way of fees or other remuneration in respect of their services to such of the directors as were in default.
14.41 "Let’s pause. Are there any questions?" asked the solicitor.
14.42 "Yes," responded a new partner. "Are your services as a solicitor available to the individual partners and if so on what terms?"
14.43 "That’s quite a digression!" exclaimed the solicitor. "In general, all of the partners are available to each other on a mutually co-operative basis something like the way country people assist each other. For example, if you want a ten-minute advisory talk you simply approach me and we do it then or at some mutually convenient time. But if you have a more difficult problem, or you want a lot of work done, such as the conveyance of land, then I expect to be paid for this work either by Partnership time credits or by personal payment by you. I earn my living by running a clinic like the medic’s, advising The Partnership on legal matters, and conducting courses such as this."
14.44 "Do you mean to tell me that I have direct access for personal problems to all the partners’ skills just for the asking? Can I go to the mechanic and get my car fixed? Can I go to the medic and get a 'flu shot? And is all this free?" rejoined the new partner.
14.45 "Nothing is ‘free’: When people co-operate to earn their living, all that each can expect is that it will be significantly easier for them to get that living as co-operators. The price of access to others’ skills is their access to yours on a mutually available basis. My time is worth seven times the minimum rate. If you look at Figure 1(c) you will see how we account for the individual differences of the partners. We share time between the partners in the same proportions as we split up drawings - or at least that’s the theory of it. What usually happens in practice after a new partner has been with us for a few years is that there is really no account kept of partners’ time-sharing, and the partners with the highest drawings simply give their time to the poorer partners - or perhaps it’s the poorer partners who give their time to the richer partners. Come to think of it, we have not kept our time-sharing records up to date since no one has shown sufficient interest in this area of accounting. Every second generation or so there is a resurgence of interest by the partners in ensuring that the time sharing principle is strictly administered, but I confess that this is not one of those generations. Even in the hard times this present lot of partners gave without counting the cost. Personally, I hope they will continue to do this: it is good cement for interpersonal relationships."
29.1 Seven days’ notice at least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which the notice is given) specifying the place, the day, and the hour of the meeting, and, in case of special business, the general nature of that business shall be given of any general meeting in manner hereinafter mentioned, to such persons as are under these Rules, entitled to receive such notices from The Partnership; but the non-receipt of the notice by any partner shall not invalidate the proceedings at such general meeting.
29.3 Any partner, having a resolution to submit to a general meeting shall give written notice thereof to The Partnership not less than twenty-one days prior to the date of the meeting.
29.4 The board shall cause to be inserted in any notice convening a general meeting any business of which notice of his intention to move has been given by a partner in accordance with these Rules, provided that notice from the partner shall be received before the notice of the meeting has been issued.
30.1 The ordinary business of the annual general meeting shall be:
30.1.1 to confirm the minutes of the last general meeting, whether it was the annual general meeting or special general meeting;
30.1.2 to receive from the board, auditors, or any officers of The Partnership reports upon the transactions of The Partnership during the financial year, including the balance-sheet, trading account, surplus and loss account, and the state of affairs at the end thereof;
30.1.3 to announce the surplus;
30.1.4 to determine the drawings of the directors;
30.1.5 to elect the auditors and determine their pay.
30.2 The annual general meeting may also transact such special business of which notice has been given to partners in accordance with these Rules.
30.3 All business shall be deemed special business other than such business of the Annual General Meeting as is by this rule termed ordinary business.
31.1 No item of business shall be transacted at any general meeting unless a quorum of partners is present when the meeting is considering that item.
31.2 Except as herein otherwise provided, five partners personally present shall be a quorum. If within half an hour after the appointed time for the meeting a quorum is not present, the meeting, if convened upon the requisition of partners, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour after the time appointed for the meeting the partners present shall be a quorum.
32.1 The chairman, if any, of the board shall preside as chairman at every general meeting of The Partnership.
32.2 If there is no such chairman, or if at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman the partners present shall choose someone from their number to be chairman until such time as the chairman being in attendance is willing to so act.
The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the unfinished business of the meeting from which the adjournment took place. When a meeting is adjourned for fourteen days or more a notice of the adjourned meeting shall be given as required for an original meeting. It shall not be necessary to give any other notice of an adjournment or of the business to be transacted at any adjourned meeting.
33 The following standing orders shall be observed at The Partnership’s meetings:
33.1 The mover of a proposition shall not speak for more than ten minutes; subsequent speakers shall be allowed five minutes, and the mover of the proposition five minutes to reply. The meeting may however by simple majority extend in a particular instance the time permitted by this rule.
33.2 Whenever an amendment is proposed upon an original motion, no second amendment shall be taken into consideration until the first amendment has been disposed of.
33.3 If an amendment is carried, the amended motion shall displace the original motion and become the motion to which any further amendment may be moved.
33.4 If an amendment be lost, a further amendment may be moved to the original motion; but only one amendment shall be submitted to the meeting for discussion at anyone time.
33.5 The mover of every original motion, but not of an amendment, shall have the right of reply, immediately after which the question shall be put from the chair, but no other partner shall speak more than once on the same question, unless permission be given to explain, or the attention of the chairman be called to a point of order.
33.6 Motions and amendments shall be submitted in writing when requested by the chairman.
33.7 Any discussion may be closed by a motion, "that the question be now put," being moved, seconded, and carried. Such resolution shall be put to the meeting without debate.
14.46 "Why can’t we as Christians get along with each other without pedantic little rules like this?" asked a partner with a degree of frustration in his tone. "I’ve been on the board of The Partnership for three years now, and in all that time we have never needed to resort to these detailed rules."
14.47 "I think you have indirectly answered your own question," replied the solicitor. "The Rules must encompass the rare situation. You will excuse me for saying, but the last three years have been rather placid: the country has not been under threat of war, business has been satisfactory, and the surplus has been maintained at a satisfactory level. When there is violent disagreement between the partners on a particular matter after dialogue has taken place - that is, when there has been a meeting of minds on the matter and each partner’s view has been received and understood - that’s when rules such as these have to be applied. This is when we reap the benefits of having attended regular courses on the Rules: we know how to apply them appropriately in emergencies. The next rule on voting illustrates the point. Most matters are determined by consensus because of good relations between partners, but it’s on matters such as pacifism and group behaviour dictated by the pacifist stand that the chairman finds it necessary to apply the Rules laid down by the founders and honed by their successors."
34 At any general meeting a resolution put to the vote shall, as provided in Section 86 of the Act, be decided on a show of hands unless a poll is demanded before or on declaration of the result of the show of hands by at least five partners. Unless a poll is demanded, a declaration by the chairman that a resolution has, on show of hands, been carried or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of The Partnership shall be evidence of that fact.
34.1 On a show of hands or on a poll every partner present at any meeting shall have one vote.
34.2 All resolutions shall be determined by simple majority except in the case of special resolutions or as otherwise provided in these Rules.
34.3 In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall be entitled to a second or casting vote.
35.1 If a poll is duly demanded it shall be taken by secret ballot in a manner which the chairman directs, and unless the meeting is adjourned the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The numbers for and against shall be duly recorded in the proceedings of The Partnership.
14.48 "Why the secret ballot?" asked the factory manager. "I like to know who’s for and against me. It’s frustrating to come away from a board meeting with a defeated motion, and not even know the people who defeated it."
14.49 "Most of the business of The Partnership is conducted informally by show of hands," replied the solicitor, "but it is important to be able to fully release the thought power of all the partners on the board when contentious issues have to be decided. We are all different: some have overbearing and dominating personalities; others are quiet, reticent, reflective types. We need a correct decision, not action based on the dominance of a few. All the extremely important decisions are taken by secret ballot - all those decisions that can affect the course of The Partnership's history for generations to come. Take for example the building of the chapel: there was a strong preference by some partners to have it in their denomination. The chairman ensured that the partners complied strictly with the Rules and after extensive discussion they decided by secret ballot to make it Christian to the exclusion of all other religions, but not of any denomination."
14.50 "This is overt discrimination against non-Christians and there's a law against the exclusion and discrimination of people on the ground of religion!" said a non-Christian partner hotly. "How do you justify this stand?"
14.51 "You're a partner aren't you? We admitted you didn't we?" replied the solicitor rhetorically. "I suppose if enough partners felt strongly anti-Christian, they would have to form a splinter group and develop their own non-Christian partnership. But we would not allow them to break up our Christian partnership. This Partnership is a product of centuries of Christian thought and practice, and although there is nothing in the Rules overtly demanding that partners be Christian, the Christian influence is so strong that if non-Christians are admitted to partnership it is usually not too long before they either leave or accept The Partnership’s Christian way of life. We regard the law you refer to as anti-Christian. If the State enforced it we would have to consider harsh options such as liquidation, relocation to a less oppressive environment or operating outside the law of this country but inside the law of God. Early Christians faced very similar options and we, like them, do not have the option of becoming non-Christian. Fortunately we have considerable influence, and have been able to have the Government accept that this law discriminates against Christian organizations, but you are right the law still stands. It is one of our politician's main tasks to have it repealed."
14.52 "No apology is made by The Partnership for their Christian stand on matters of importance," continued the solicitor. "We have found fewer and fewer countries willing to accept our Christian practice. Usually, however, if a government can accept us as pacifists it can accept the rest of our Christian behaviour. I am forced to say that all the partners have to face the probable necessity of forced migration in the face of extreme right or left wing governments coming into power, and this is one reason we take a keen interest in the country's politics and have a politician partner with board approval for much of his political work. The partners want to be aware of the political climate for a variety of reasons from market changes to social changes."
14.53 "Are there any more questions on voting?" asked the solicitor. "What about proxy voting? What if I can’t make it to a meeting and want someone to vote for me?" asked a new partner. "Proxy voting," said the solicitor, "has been and is the cause of so much abuse and corruption outside that we have never allowed it. If a partner cannot or will not attend a meeting, then that partner must accept the decision of the partners who did attend."
35.2 A poll demanded on the election of a chairman, or on a question of adjournment, shall be taken forthwith.
36.1 A special resolution means a resolution which is passed by a majority of not less than two thirds of the partners as being entitled to vote in person at any general meeting of which notice specifying the intention to propose the resolution has been duly given in accordance with these Rules.
36.2 A special resolution shall have no effect until registered by the Registrar.
37 There shall be a board of seven directors all of whom shall be adult partners in The Partnership.
38 The qualifications of a director shall be that he owns a part of and has been admitted to partnership in The Partnership.
39 The first directors shall be elected at the meeting for the formation of The Partnership.
40 At the first annual meeting of The Partnership three of the directors shall retire and at the annual meeting in each subsequent year the directors shall retire in rotation of four and three.
41 The directors to retire in any year shall subject to the provision as to filling casual vacancies be those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot. In each case the order of retirement shall be the order in which the names are withdrawn.
42 A retiring director shall be eligible for re-election for a maximum of five consecutive years, then shall be ineligible for five years, then eligible for five years, and so on.
43 The Partnership at the general meeting at which a director retires in the manner aforesaid may fill the vacated office by electing a person thereto. Nominations for candidates to fill the vacant positions shall be sought in such manner as the board determines. The election of directors shall be conducted at the meeting in such usual and proper manner, as the board shall direct.
44 If at any general meeting at which an election of directors ought to take place the places of the retiring directors or any of them shall not be filled, the meeting shall stand adjourned till the same day in the next week at the same time and place, and such adjourned meeting may receive nominations and elect directors to the vacancies. If at any adjourned meeting the places of the retiring directors are not filled, the retiring directors or such of them as have not had their places filled shall be deemed to have been re-elected at the adjourned meeting.
45 The Partnership may by resolution remove any director before the expiration of his period of office, and by simple majority appoint another person in his stead; the person so appointed shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director.
46 Any casual vacancy occurring on the board may be filled by the board, but the person so chosen shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director.
47 The office of a director shall be vacated in the circumstances set out in Section 84(11) of the Act, in particular:
47.1 if he becomes bankrupt, or assigns his estate for the benefit of or compounds with his creditors;
47.2 if he becomes an incapable person, protected person or a patient within the meaning of the Mental Health Act, 1958, as amended;
47.3 if he is convicted of any offence and the board decides that the offence warrants his removal from the board;
47.4 if he absents himself from three consecutive ordinary meetings of the board without its leave;
47.5 if he ceases to be a partner in The Partnership;
47.6 if the board accepts his resignation after he has given one month’s written notice of intention to resign;
47.7 if he is removed from office by resolution of a general meeting of The Partnership;
47.8 if he, his employer, or employee is, or acts as, auditor to The Partnership.
48 The directors’ drawings shall be determined at a general meeting of the partners and all necessary expense incurred by them in The Partnership’s business shall be refunded to them.
49 The board may meet together for the despatch of business, adjourn, and otherwise regulate their meetings, as they think fit, but providing a meeting of the board shall be held at least once quarterly. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of votes the chairman shall have a second or casting vote. The chairman or any two directors may, and the secretary on requisition of the chairman or any two directors shall, at any time, summon a meeting of the board.
Except in special circumstances determined by the chairman forty-eight hours notice shall be given of all meetings of the board.
50 The quorum for any meeting of the board shall be five.
51 The continuing directors may act notwithstanding any vacancy in their body, but, if and for as long as their number is reduced below the number fixed by or pursuant to these Rules as the necessary quorum of directors, the continuing directors may act only for the purpose of increasing the number of directors to that number, or of summoning a general meeting of The Partnership, but not for any other purpose.
52 The board may elect a chairman of their meeting and determine the period for which he is to hold office, but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting until such time as the chairman being in attendance is willing to so act.
53.1 The board may delegate any of its powers to committees consisting of a partner or partners as they think fit.
53.2 Any committee so formed shall in the exercise of the powers so delegated conform to any conditions or stipulations that may be imposed on them by the board.
53.3 A committee may elect a chairman of their meetings. If no such chairman is elected, or, if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the partners may choose one of their number to be chairman of the meeting.
53.4 A committee may meet and adjourn as they think proper. Questions arising at any meeting shall be determined by a majority of votes of the partners present, and in case of an equality of votes the chairman shall have a second or casting vote.
54.1 The business and operations of The Partnership shall, in accordance with Section 84(1) and (2) of the Act, be managed and controlled by the board, and for that purpose the board, except as hereinafter provided, shall have and may exercise the powers of The Partnership as if they had been expressly conferred on the board at a general meeting of The Partnership.
54.2 The powers of the board shall be subject to any restrictions imposed thereon by the Act or by these Rules.
55 Every director acting in the business or operations of The Partnership in pursuance of a resolution duly passed by the board shall, in accordance with Section 84(3) of the Act, be deemed to be an agent of The Partnership for all purposes within the objects of The Partnership.
56.1 The board shall cause minutes of meetings to be made in books provided for the purpose. The minutes shall include:
56.1.1 all appointments of officers made by the directors;
56.1.2 the names of the directors present at each meeting of the board and of any committee of the board;
56.1.3 all resolutions and proceedings at all meetings of The Partnership and of directors and of committees of directors and of committees of partners.
Such minutes shall be recorded in the minute book within fourteen days of the date of the meeting the proceedings of which they record.
The confirmation of such minutes shall be taken as the first business at the next meeting of The Partnership, board or committee as the case may be.
56.2 Every director present at any meeting shall sign his name in a book to be kept for the purpose.
57 The board shall, in accordance with Section 75 of the Act, cause to be kept at the registered office of The Partnership, and open at all reasonable hours to inspection by any partner, without fee:
57.1 a copy of the Act and the regulations;
57.2 a copy of the Rules of The Partnership;
57.3 a copy of the latest balance sheet, surplus and loss account, and auditor’s report;
57.4 the prescribed register of directors, partners and parts;
57.5 the prescribed register of loans raised, securities given and bonds issued by The Partnership;
57.6 a copy of the last valuation of the net capital worth of The Partnership, wherein all the capital assets and liabilities of The Partnership are detailed at the current values ruling at the time of the last valuation;
57.7 the prescribed register of stock.
58 Without prejudice to the general powers conferred on the board by the Act or these Rules, the board shall have power to appoint and, at its discretion, remove or suspend officers, clerks, agents, servants and partners, and to fix their powers, duties and remuneration.
The board shall ensure that The Partnership does not engage in any business that exploits human weaknesses.
The board shall ensure that The Partnership operates on a cash only basis with credit neither being given nor received.
14.54 "This rule has cost us a lot of business," commented the economist, "and it is obsolete: business generally operates on credit; some businesses could not survive if suppliers refused them credit; manufacturers generally don’t like dealing with us because we will not make a delivery without being paid beforehand or at delivery - and conditions are severe outside. Sometimes our customers have insufficient working capital to make these instant payments, especially if the order is large."
14.55 "I'm sure you could go on for some time adding to the list of reasons why we should delete the no credit rule," interjected the solicitor. "Regularly once every ten or fifteen years this question is raised by a partner at board level, and always the answer is the same: The Partnership retains the rule as is."
14.56 "You may be interested in some of the reasons," continued the solicitor. "This was one of the rules of the early pioneers in co-operative practice way back near the start of the industrial revolution. We may lose business, but the business we lose is the unstable, unreliable, slow-paying variety that we can do without. We have fewer headaches than our outside competitors since we have no bad debts, consequently no ill will, no court cases to do with bad payments and disputed claims, and far less paper work. The reduction in administrative costs is significant in a fiercely competitive environment. The partners say we cannot afford to add the cost of credit to our selling price."
14.57 "But it's embarrassing to refuse delivery until payment has been made or guaranteed at delivery!" exclaimed a partner. "It's primitive when the rest of the business community hardly ever see money. We seem to be out of step with the world at large."
14.58 "Perhaps it is not a bad thing for religious people to be out of step with the world - I certainly don't have much respect for the majority of businessmen outside. True, it's embarrassing when we refuse to deliver, but we have to do it. It's even more embarrassing when a partner arrives at a customer's premises to make a delivery and finds that payment is not waiting! The partner then has to refuse to leave the goods and advise the customer that a bill will be coming for an abortive delivery. This is our form of customer training: customers that want our products quickly learn our no credit rule. Our base market is the partners - they have to obey this rule, so you can believe me when I say that it is highly unlikely that the partners would allow outsiders to break it. There is also another aspect: working capital costs money and the rate of interest now is very high; this has resulted in putting many businesses that extend credit in order to get custom into severe liquidity problems. The partners believe that the money for a good has been earned when it is delivered and consequently they have the right to payment at delivery. An alternative is to charge interest at the current high rate on outstanding debts, since the partners believe the interest on the outstanding capital should accrue to them and not the customer. This would present an administrative nightmare with more disastrous implications for customer relations! No, we have to accept this rule and the slowdown in the rate of growth of our business that it causes."
14.59 "As for dealing with other manufacturers, we do not favour this type of business. In general for a variety of reasons The Partnership depends primarily on the production of finished commodities sold direct to end consumers. The Partnership peg for example. Our view of supplying other manufacturers is this: we will sell to them, but we will not be tied or obliged to them - we expect them to have a similar policy to ours and that is to eventually bring in all the work that has to be contracted out. Certainly, we would not want to become dependent on sales to other manufacturers since in general we do not have very much respect for them and they do very little to earn any respect. It may surprise you, but there are some positive aspects of the no credit policy: our contractors can be relied upon to give us priority when we need it, and sometimes we do because we, like other mass-producers, sometimes have bottlenecks in production due to a shortage of components; there's something about consistent cash payment to our suppliers that with time has added to our position of trust in the outside community. When The Partnership places an order everyone knows that if the order is obeyed, payment is prompt and automatic."
14.60 "It's largely a matter of customer training," concluded the solicitor. "All our customers, except the new ones, have accepted this rule. Any enquiry from a potential customer is given special attention: we go to considerable lengths to honestly explain the price, the quality, and the no credit rule. In practice most people accept the policy since they see how it reduces the price to them by reducing our administrative costs. They realise that if they want to buy from The Partnership, this is one of the conditions of purchase. If we once relaxed the rule for anyone, it would probably cause great discontent among others. And the majority of our customers who are cash-buying end users would be subsidising the often wealthier people to whom credit is given."
59 The board shall cause every officer or person having the receipt or charge of any money of The Partnership to give security as prescribed in such amount as the board shall determine. The Partnership shall pay all premiums in respect of such security.
The board shall arrange insurance against loss, or damage to or liability of The Partnership by reason of fire, accident or otherwise.
60 The financial year of The Partnership shall end on the thirtieth day of June.
61 The board shall cause to be prepared a statement of the accounts of The Partnership up to the end of the financial year, and shall submit it, with the auditor’s report thereon, to the annual general meeting of The Partnership. The board shall also send a copy to each partner with the notice of the meeting in accordance with Section 89(7) of the Act.
62 The board shall cause to be opened a banking account or accounts in the name of The Partnership into which all monies received shall be paid as soon as possible after receipt.
All cheques drawn on such accounts and all drafts, bills of exchange, promissory notes, and other negotiable instruments for and on behalf of The Partnership, shall be signed by two of the directors and countersigned by the secretary or other person authorised by the board.
63.1 One or more auditors shall be appointed at each annual meeting to hold office until the next annual meeting.
63.2 The first auditors of The Partnership may be appointed by the board at any time before the first annual general meeting and, if appointed, shall hold office until the first annual general meeting, unless previously removed by a resolution of the partners at a general meeting, in which case the partners at that meeting may appoint auditors to act until the first annual meeting. At any time prior to the board exercising its power under this subsection the partners may in general meeting appoint the first auditors and thereupon the said powers of the directors shall cease.
63.3 If an appointment of auditors is not made at an annual general meeting, the board shall appoint auditors of The Partnership for the current year.
63.4 The partners may at any general meeting terminate the appointment of the auditors and at such meeting elect auditors to fill the vacancy so created.
63.5 None of the following persons shall be qualified for appointment or to act as auditors of The Partnership:
63.5.1 an officer or servant of, or partner in, The Partnership;
63.5.2 a person who is a partner of, or in the employment of, or the employee of, an officer or servant of The Partnership;
63.5.3 a body corporate.
63.6 A person, other than a retiring auditor, shall not be eligible to be appointed auditor at an annual general meeting unless notice of an intention to so nominate that person has been given by a partner to a partner on the board not less than fourteen days before the annual general meeting. The Partnership shall send a copy of any such notice to the retiring auditor, and shall give notice thereof to the partners, either by advertisement or in any other mode allowed by the Rules, not less than seven days before the annual general meeting. Provided that if, after notice of the intention to nominate an auditor has been so given, an annual general meeting is called for a date fourteen days or less after the notice has been given, the notice, though not given within the time required by this provision shall be deemed to have been properly given for the purposes thereof and the notice to be sent or given by The Partnership may, instead of being sent or given within the time required by this provision, be sent or given at the same time as the notice of the annual meeting.
63.7 The board may fill any casual vacancy in the office of auditor, but while any such vacancy continues the surviving or continuing auditor or auditors, if any, may act.
63.8 The remuneration of the auditors of The Partnership shall be fixed by The Partnership in general meeting, except that the board may fix the remuneration of any auditors appointed by the board.
63.9 The board may cause the auditors to have access to all books, accounts, vouchers, securities, and documents of The Partnership, and to be furnished with such information and explanation by themselves or any other officers as may be necessary for the performance of their duties as auditors.
63.10 The auditors of The Partnership shall be entitled to attend any general meeting of The Partnership, to receive all notices of and other communications relating to any general meeting which any partner in The Partnership is entitled to receive, and to be heard at any general meeting on any business of the meeting which concerns them as auditors.
63.11 The auditors shall comply with Section 89(4) of the Act.
14.61 "As we are coming to the end of this lecture, perhaps now would be a good time to break for questions. New partners and visitors should note the locations of the two coffee machines in the theatre before they are obscured by the older partners now moving towards them." With these words the solicitor joined one of the coffee groups. Not wanting to miss the opportunity of a few personal words with the solicitor, I made my way to him and waited for an opportunity to ask a few questions and make his acquaintance.
14.62 I queried the tough labour rules. "Are the strict rules about the hiring of labour and requiring all the actual physical work to be done by the partners really necessary? Why don't the partners change: they own the enterprise?"
14.63 "One of the partners raised this earlier - perhaps you missed it. We were discussing Rule 2.4(c) and I indicated the spiritual dimension to this rule ... if we were not spiritually developed we would probably have deleted this rule long ago and degenerated to a lot of old partners living off contractors and hired labour. We recognise this hazard and retain the rule because we need mechanisms that allow young people in and necessarily therefore that ease old people out when they become ineffective. This may sound hard on the old partners that have given their lives to The Partnership, but what more equitable options are there? I know when I can no longer work my fifteen hours per week I will be asked to retire, and I tell you, I will retire long before that time arrives! The policy of doing all work in-house adds to the labour requirements of The Partnership and to the pressure for allowing new partners in."
14.64 "Where did these rules come from?" I asked. "Did you develop them from practice over the years?"
14.65 "No," laughed the solicitor. "We cannot claim to have been the originators of these Rules. The Rochdale Pioneers laid down the fundamentals in the nineteenth century. They originally intended to produce co-operatively as we do, but times were hard then and they failed as manufacturers. The Rules, however, remained to be used for co-operative manufacturing as they were intended. All we have done is to hone and adapt them to our time and technology. The principles involved are essentially the same since they are based on human nature and behaviour that doesn’t seem to change much with the centuries."
14.66 "Suppose I want to leave The Partnership, but it hasn’t got the cash to pay me my part of the net capital worth. What happens then?" asked a partner.
14.67 "Rules 5(e), 6(c), 8, 13 and 17 cover this aspect. Essentially the situation is this: you are entitled to receive your money within one year of your formal withdrawal of your partnership. The Partnership is obliged to pay your part of the net capital worth based on current prices which accounts for inflation. This can be paid from liquid reserves, by raising a bank loan, or by personal gift or loan from the partners. If all these methods fail to raise the necessary capital, The Partnership must be wound up and distributed amongst the partners in accordance with these Rules."
14.68 The coffee break over, the solicitor asked us to resume our places and consider the remainder of the Rules.
64 The funds of The Partnership shall be applied in carrying out the objects of The Partnership. Any surplus resulting from its operations during a financial year, after providing for depreciation in the value of The Partnership's property, tax, contingent liability, working capital, wider Christian and co-operative work, etc., shall be applied in accordance with Figure 1 as follows: cash payment of surplus to each partner (equal to The Partnership's surplus, S, divided by the number of partners, x), distributed quarterly.
65 The board shall make all reasonable efforts to enhance co-operative, altruistic and Christ-like behaviour of The Partnership and the partners and to suppress competitive, selfish and devilish behaviour. To assist the board in this endeavour, 10% of The Partnership's surplus shall be used each year on Christian and co-operative work outside The Partnership such as the advancement of partnership and co-operative behaviour, partnership and/or co-operative and/or Christian education programmes, the support of missionaries in these fields and their projects. This money for wider work shall be an essential operating expense and shall be part of "other" expenses in Figure 1(a). If the surplus is negative, such 10% of the surplus shall be regarded as nil.
14.69 "Working capital is so important that specific board responsibility has been written into the following rule for its maintenance," commented the solicitor.
66 Working capital shall at all times be maintained at a level deemed adequate by the board, and the board shall transfer to working capital such funds as it thinks fit before determining and distributing the surplus.
67 Partners shall pay no bond and be entitled to 20% less than the competitive market rate applied to outsiders.
68 Unless authorised by the board, all partners shall keep confidential all accounts, performance data, surplus and loss figures, production costs, and other data that could be detrimental to The Partnership in the hands of competitors or government. Only the legal minimum of data shall be released to government.
69 Notice of the surplus, S, and surplus per partner, s, as declared by the board shall be given by displaying same at the registered office so that it can be easily understood by the partners but not by the public, and in such other manner, if any, as the board may determine.
70 The number of partners shall not exceed two hundred.
72.1 Disputes between a partner in his capacity as a partner and The Partnership shall be settled by arbitration in accordance with The Arbitration Act, 1902, as amended, from time to time.
72.2 Notwithstanding the above, any party may in accordance with Section 91(3) of the Act refer the dispute to the Registrar, provided that the dispute has not been referred to arbitration in accordance with these Rules, or provided that, if the dispute has been so referred, one month has elapsed without an award being made.
72.3 Nothing in this rule shall extend to any dispute as to construction or effect of any mortgage or of any contract contained in any document other than these Rules.
73.1 A notice may be given by The Partnership to any partner either personally or by sending it by the post to him at his registered address, or, if he has no registered address in the State, to the address, if any, within the State supplied by him to The Partnership for the giving of notices to him.
73.2 Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter containing the notice, and to have been effected in the case of a notice of a meeting at the expiration of 72 hours after the letter containing the same is posted and in every other case at the time at which the letter would be delivered in the ordinary course of post.
73.3 If a partner has no registered address in the State and has not supplied to The Partnership an address within the State for the giving of notices to him, a notice addressed to him and advertised in a newspaper circulating in the neighbourhood of the registered office of The Partnership shall be deemed to be duly given to him on the date on which the advertisement appears.
73.4 A notice may be given by The Partnership to the person entitled to a part in consequence of the death or bankruptcy of a partner by sending it through the post in a prepaid letter addressed to him by name, or by the title or representative of the deceased, or trustee of the bankrupt, or by any like description, at the address, if any, in the State supplied for the purpose by the person to be claiming to be so entitled or (until such address has been supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.
73.5 Notice of every general meeting shall be given in some manner hereinbefore authorised to:
73.5.1 every partner in The Partnership except those who, having no registered address within the State, have not supplied to The Partnership an address within the State for the giving of notices to them;
73.5.2 every person entitled to a part in consequence of the death or bankruptcy of a partner, who, but for his death or bankruptcy, would be entitled to receive notice of the meeting.
Except as provided in Rule 63.10, no other person shall be entitled to receive notices of general meetings.
73.6 For the purposes of this rule "registered address" means the address of the partner as appearing in the register of partners and parts.
74 The winding up of The Partnership shall be carried out in accordance with Part V of the Act.
14.70 "That concludes the formal part of this lecture," said the solicitor. "I hope that you have found it sufficiently stimulating to return in not more than five years for a refresher course. Most of you have a copy of the book on which this enterprise is based, entitled appropriately ‘The Partnership’, and if you refer to it, you will find the contents to the Rules. Are there any questions?"
14.71 "I am interested in that rather glib little statement in Rule 2.4(c) that requires the board to determine drawings on the basis of ‘the quality and quantity of work done’. What are the mechanics of this? Isn’t it a source of friction?" asked the mechanic.
14.72 "It will soon be your turn to do a term on the board," said the solicitor, "and then you will be in a better position to understand the responsibility of the board in setting drawings. Outside it is a mark of status to be on the board of a profitable and successful enterprise and many men nominate because of the power and status conferred but this is not the case with The Partnership. Perhaps we started off with a small residual element of these motives, but as the years passed people started to view a place on the board in a different perspective. We started to realise that the board serves and is not served, that it’s time-consuming setting the agenda, organising the meetings, settling disputes, typing and checking the minutes. For many of the partners it became an onerous commitment and they were glad when their term was through. What, you may ask, does this have to do with setting drawings? It is the culture of the board - the culture of The Partnership - the spiritual approach and leading of our deeply committed religious people on and off the board that makes it possible for these decisions to be taken without significant friction and with a reasonable degree of justice and equity. Partners on the board are there because they have been rotated in, and they give their best knowing it will soon be their turn to receive the same justice they have now to mete out."
14.73 "But that does not answer my question on the mechanics of setting drawings," said the mechanic. "How do you measure the quality of work done? I know we all measure the quantity of work done by the time sheets we have to fill in each day, what about the quality?"
14.74 The solicitor responded, "Let’s deal with the easiest aspect first: the quantity of time put in by each partner. In this partnership we have enough work to enable people to work as much as they want - we believe one of the prime functions of management is to provide sufficient productive paid work for the partners. If a partner who wants to work long and hard is allocated insufficient work to do, then this is accepted as a management failure. As we know from Rule 5(e), there is a minimum fifteen hours per week to be worked by each partner, but you will note that there is no maximum. People have different needs: some need a large income for dependent family members, or for the support of one or many personal needs. We don’t officially ask why a partner needs more money, although The Partnership is so close knit that if a partner is in trouble, or has some costly interest, we all usually know because the partner tells us. If a partner wants more money to pursue the world’s materialist goals, we don’t ask about that either. Partners are free - they choose their personal goals and provided they are prepared to contribute their labour to support their claims for additional money from The Partnership, then it is regarded as The Partnership’s obligation to provide productive fully paid work for them in the same way as work is provided for another to pursue an altruistic goal. I must add that materialism as outsiders practice it has almost disappeared from the behavioural patterns of the partners - they have developed beyond the crass materialist phase and, using their secure incomes and relationships as springboards, they usually work toward higher goals. New partners often bring with them strong ownership attitudes and materialist goals, but after five or ten years they get tired of working long hours for money and with careful nurturing by the older partners start to bear the fruits of the Spirit. Thus the reason for the time sheets: only to inform the board of how many hours each of the individual partners has elected to work."
14.75 "One point of interest here," digressed the solicitor, "is that The Partnership seems to have the reverse problem to outside firms in that we have trouble getting the partners to record the full number of hours to which they are entitled. The partners often don’t seem to care that they have not recorded hours that are worth money. Often board members have to plead with partners to tell them what they are doing in The Partnership’s name, so that the board will be informed, and the partners justly rewarded. This is a problem since the goals of The Partnership have merged with the goals of the individual partners to such an extent that ‘work’ has a very wide meaning, and without accurate information the board is unable to pay in accordance with the quantity of work done."
14.76 "The quality of work is a far more difficult and subjective matter. It is one of the main preoccupations of the board. In the end we simply have to use the brains God gave us to make a fair and reasonable estimate of the relative worth of each partner’s time. We are faced each month with a certain amount of money to split up among the partners in accordance with the quality and quantity of work done. We have the relative quantities from the time sheets, but the quality factor reduces to knowing what each partner has been doing, knowing the abilities of each partner and making a judgement. It’s not really as hard as it sounds - you’ll soon get used to it when you get on the board. Figure 1(c) and Rule 2.4(c) give some guidance: no partner can draw more than ten times the minimum rate per month [Figure 1(c)]. If a partner works 160 hours in a month that partner draws 160 times that partner’s hourly rate, and partners who work the minimum 60 hours draw 60 times their respective hourly rates - but they both get the same share of the surplus when it is distributed since their individual differences have been taken into account in the variable hourly rate, as in Figure 1(c), and the variable hours worked. Precedent also helps a lot: we only have to determine a partner’s hourly rate on entry and when there is a change in productivity, and usually it’s a reasonably easy value judgement based on the hourly rates of the other partners. I am convinced that many of the partners are being underpaid because they do not tell the board what they are doing. Partners with creative streaks are more likely to start putting in a large amount of time and even some personal capital, and we only find out about it when one of us meets with them, perhaps socially, and they bubble over with their new interests. If this happens we cannot make retrospective payments since all the income has already been divided and distributed, but we can adjust future drawings. This is one reason for our strong bias to training - we want people to tell us what they are doing in The Partnership’s name so that others can contribute and co-operate, so our skills and resources can be deployed to the best advantage, and so that our people are rewarded for the quality of their work. We realise the value of creativity, and we foster and develop it."
14.77 "I have been thinking about Rule 2.4(c) requiring all The Partnership’s work to be done in-house as far as possible," commented a partner, "and I wonder how splinter partnerships are viewed in the light of this rule?"
14.78 "That is an excellent question. In practice this rule is taken to mean that all work should be taken inside a co-operative productive partnership - we try not to compete with other co-operatives and we try to assist and co-operate with them in the business of earning our living. There has been a certain amount of reciprocity in this regard over the years too - the most significant inter-co-operative work that is currently under way in this country is The Partnership Bank. We are trying to have the strong partnerships cover the weaknesses of the fledglings, to bring interest rates under our control, and to centralise liquid reserve deposits. I must say that we are having a certain amount of trouble with the government getting this project started because of the partners’ insistence on confidentiality ... we are refusing to release any data to the government on the level of our liquid reserves or personal data on partners that the government wants to enter into their central computer ... and autonomy ... we are refusing to allow the government any control at all in the use of our capital reserves either in peace or war. It may be that we will just have to continue on in the same way as we have in the past: an informal arrangement, the regular inter-partnership conferences which most of us regard as enjoyable holidays ... and they are, and they should be ... and the preparedness to assist in Jesus’ name when called upon. Notwithstanding, there is a strong desire to formalise inter-partnership ties perhaps by co-operating to design and build more complex products, with components from various partnerships."
14.79 "I notice that The Co-operation Act talks about ‘society’ and ‘member’ where our Rules use ‘partnership’ and ‘partner’. Why is this? What’s the history?" asked the accountant.
14.80 "The truth is we are genuine partners in partnership, not shareholders in a company or members of a society," answered the solicitor. "The founding partners were not prepared to compromise truth by signing any agreement that said otherwise merely to fit existing laws - so they changed the wording and worked to frame and interpret law to accommodate truth. Most countries now have an act applicable to extended partnerships constructed in accordance with a co-operative productive design. When the Rochdale Pioneers wrote the basic rules, they had uppermost in their minds the co-operative productive form of enterprise ... unfortunately they never realised their ambitions. They were sidetracked somehow into becoming a retail and wholesale organisation ... there were many pressures on co-operators in those difficult days. Then co-operative acts were modified over a lengthy period to suit non-productive non-profit organisations such as credit unions, building societies, wholesale and retail co-operatives. Eventually, after much struggle, The Partnership’s founders managed to get our government to accept the use of the model Rules and the Act as they were originally intended, but the Act still uses ‘society’ and ‘member’ since there are still relatively few partnerships. When the Act is interpreted for a partnership, the precedent has been set long ago to merely substitute ‘partnership’ and ‘partner’. There are some grey areas in applying the Act to an extended partnership, or co-operative, but in the main it is routine now."
14.81 "Reverting to your personal involvement in The Partnership," I said, "how do you fill in your time? Do the demands of this course and the legal aspects of partnership life really justify a full-time solicitor?"
14.82 "Most of my time is consumed in conveying property," replied the solicitor. "The Partnership’s computer had excess capacity for the routine work, and the partners entered data on their properties for sale. The business has grown to include the general public. Buyers pay us for a computer output of properties available in the area and a price range of their choice. Sellers pay to put their property on our website. I don’t do very much routine work since the forms and formalities are all dealt with by a clerk. My input is confined to problem solving in the non-routine areas of contract interpretation and disputation. The prices being charged by outside solicitors and agents became intolerably high as they adhered to their percentage take as inflation increased, and so The Partnership entered the real estate business in the usual way: first serving the partners, then the public. The Partnership sets the fees to allow for costs plus a reasonable profit - we do not charge according to the property values involved since the amount of work we do is not related to the property value. It was really surprising to see how the business flourished: people were very pleased that The Partnership had entered the field and the trust shown by our regular customers, and the lower prices they enjoyed, soon spread. There is work for two solicitors, but, with our practice of work distribution and job rotation, I cope. Clients who use our computer service are not obliged to use us to convey their properties - they can use outside solicitors or cut costs by making an agreement between buyer and seller to use a cheap do-it-yourself kit, but I do not recommend this latter course as a mistake can result in ruin."
14.83 "Perhaps I should add one further point about the necessity for contracts due to the darker side of human nature," went on the solicitor. "Labour contracts are common in some countries, non-existent in others. Building contracts are common the world over. Slavery was deemed necessary when the terms were too harsh for the weaker party to agree given free will. People tend to renege on onerous obligations while demanding benefits - hence the necessity for a contract so that each person knows their obligations, rights and benefits before entering upon a venture. Humans have a great ability to rationalise in their favour, to exploit if the terms of the contract allow it, to see their side as the right side. Even if a person starts a venture with the best of good will, time goes by and if there is no written contract then time erodes the memory of a verbal agreement. A contract is necessary to anchor people to their commitment to a stated and agreed goal."
14.84 "You have learned that The Partnership pays the partners in accordance its capacity to pay, thereby relating directly the partners’ labour input and its reward. Capital in The Partnership acts as a cement which strengthens the internal bonds over time as the capital invested by each partner increases."
14.85 "Since the partners get all there is in the form of drawings and surplus, they cannot argue that they should get more as they already get all there is. All they can argue about is the distribution of The Partnership income among themselves, and they determine that. The reason for the conventional strike is therefore non-existent in The Partnership. In a wealthy partnership such as ours there is a big difference in the amount received by a partner based on the genuine capacity of The Partnership to pay, and the amount the partner would receive as an employee in a conventional for-profit company where payment is based on ‘work-value criteria’ that are usually not honestly related to the productivity of the enterprise."
See the Contents to the Partnership's Rules.
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From The Partnership, by Graeme Doel.
Converted to HTML by Simon Grant, 2003.