The reforms were necessary after a £1.5bn black hole in the Co-operative Bank’s finances were discovered earlier this year.

In an announcement to the stock exchange, it said the detailed proposals have been drawn up based on the four key principles of reform agreed unanimously by members at the Special General Meeting on 17 May 2014:

•     The creation of a Board of directors elected by members that is individually and collectively qualified to lead an organisation of the size and complexity of the Co-operative Group

•     The establishment of a structure that gives the Co-operative Group’s members appropriate powers to hold the Board properly to account for the performance of the business and adherence to co-operative values and principles

•     A move to the concept of ‘one member one vote’ with appropriate representation for Independent Society Members

•     The inclusion of necessary provisions in the Rules of The Co-operative Group to protect against de-mutualisation

Co-operative Group chairman Ursula Lidbetter said: “These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health. This has been a process built on co-operation, focusing above all on creating a Society where every member has a voice in shaping the group’s future.

“I would like to thank our members for their engagement in building a governance structure that strengthens the society and enhances member engagement and our unique democracy.”

Interim chief executive Richard Pennycook said: “The executive team welcomes today’s announcement and supports the proposed reforms. This is a significant step towards meaningful reform and, if accepted by members at the forthcoming SGM, will mark the end of the rescue phase for the group, following the necessary balance sheet repair that we have recently completed.

“We look forward to the support and challenge that will be provided by the highly competent and independent Board that is proposed, and to working closely with the new council to ensure that the group once again becomes a champion of its members.”

The group will publish its half year results on 4 September, a few days after the special general meeting.

The proposed constitutional structure would see the creation of:

•     A board composed of a majority of independent directors including; an independent chairman, five independent non-executive directors, two executive directors, including the group chief executive and three member-nominated directors

•     All 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

•     Following approval of the rules, an interim transitional board structure will be in place

•     The board will reduce from 18 to nine as soon as the new rules are registered

•     Recruitment of the new board members will begin immediately

•     The interim transitional board structure will remain in place until the earlier of the new board members being recruited or the society’s Annual General Meeting in 2015

•     A Council to represent members and to act as guardian of the group’s purpose, values and principles and the society’s constitution, with the power to hold the group board to account

•     The council will be composed of a maximum of 100 Members

•     The council will be led by a president, elected for a term of two years

•     A senate, elected by the council, to help co-ordinate the activities of the council and to act as a nexus for interactions between the council, the board, the executive and members

The board of the Co-operative Group has approved the proposals and recommends that members vote in favour of the governance changes.