The Co-operative Group is to recruit a smaller board of nine directors with “high standards of competence” as part of radical governance reforms announced today.
The mutual, which received the backing of members to begin the changes at a landmark meeting in May, will also establish a 100-member council to act as guardian of the group’s values and to hold the board to account.
Other changes include a move to one-member-one-vote on significant matters such as the election of directors and major transactions.
The Co-op, which last year racked up a £2.5 billion loss following the worst period in its 150-year history, said the reforms will be put to a vote at a special general meeting on 30 August.
Interim chief executive Richard Pennycook said approval of the governance changes will mark the end of the rescue phase of the group following recent progress in shoring up its balance sheet.
Co-op chair Ursula Lidbetter added: “These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health.”
Under a transitional structure, the Co-op’s board will reduce from 18 to nine as soon as the rules are agreed.
It will then look to appoint a new board consisting of a chairman and five independent non-executive directors, plus two executive directors, including the chief executive, and three member nominated directors.
The Co-op said: “All board directors will be expected to meet the high standards of competence commensurate with the needs of a business of the scale and complexity of the group and a demonstrated commitment to Co-operative values and principles.”
The changes are based on the four-point resolution proposed by Lord Myners and voted on by members at the special meeting in May.
The former City minister previously warned that the Co-op, which has around eight million members and a 90,000-strong workforce, faced a bleak future unless it took urgent steps to replace its “dysfunctional” board structure.
Myners, who has since stepped down from the Co-op board after he was appointed a director in December, said it was apparent from the first time he attended a board meeting that not one of its members had the ability to address the complex issues faced by a group with £1.4bn of debt.
His “plc and beyond” structure met an initially hostile response from some parts of the movement but then won unanimous support at the vote.
The council, which will act as guardian of the Co-op values, will be composed of a maximum of 100 members and led by a president, who will be elected for a term of two years. There will also be a senate to co-ordinate the activities of the council and act as a link with the board and members.
The board of the Co-op is recommending that members vote in favour of the changes, while the structure also has the support of Co-operatives UK.