A form of corporate structure in the United Kingdom for the conduct of life or health insurance, pension fund or education-related business.
In the development of common law related to independent legal person, corporations which are not profit-seeking, nomenclature throughout common law jurisdictions has not been consistent. For what at the core represents a non-profit corporation, the terms used by jurisdictions include society, not-for-profit, non-profit, association and co-operative.
The legal history of friendly societies was set out by the British Friendly Societies Commission in a 1999 paper entitled Fact Sheet and as follows:
“The origins of friendly societies can be traced back to the time of the Roman Empire when associations known as collegia were formed for a variety of mutual purposes including the payment of burial expenses of members. These collegia evolved over the centuries into the craft guilds of the Middle Ages. Members of these guilds usually lived in the same community or engaged in the same occupation. Grants were available to members for relief during periods of financial hardship or sickness and to cover the cost of a decent burial. The guilds eventually disappeared and were replaced by sickness or burial clubs. It was out of recognition of the need to regulate and to legitimise these clubs, or "friendly societies", as they became known during the 18th century that the Friendly Societies Act 1793 was born.
“During the 19th century societies grew rapidly as they were effectively the only means by which the working population was able to protect itself against loss of income through sickness or to make provision for retirement.”
The Commission describes a friendly society as:
“A mutual organisation which exists to provide its members (or their relatives) with benefits such as life and endowment assurance and with relief or maintenance during sickness, unemployment and retirement.”
In Halsbury’s Laws of England, Volume 19(1), 4th Edition, page 66, a friendly society is described as:
“... a voluntary association of individuals, unincorporated or incorporated, subscribing for provident benefits.”
Friendly societies as developed in England are the precursor to what other jurisdictions refer to as non-profit, not-for-profit, associations, cooperatives or societies, and are creatures of statute, commencing with the British Friendly Societies Act of 1793, substantially amended in 1875, both in keeping with the historic development of colleges and universities, trade guilds, and the more recent development of trade unions; all of which fitted poorly within the model of for-profit corporations.
Friendly societies legislation provide for creation of a separate legal person in the form of a non-profit corporation, with the endorsement by the government of a registration or incorporation application submitted by a set number of persons (eg. 5 or 7), who generally then become the first members.
The funding for a friendly society is, as with all non-profits, by membership fees or voluntary subscriptions from members of the society.
As friendly societies are creatures of statute, they have no inherent powers and must find authority for their actions within enabling legislation. Some of the more common powers generally made available to corporations, for-profit or non-profit, are the ability to act as a person at law; to sue or to defend a suit, and to contract which includes to own property and to hire and terminate employment contracts.