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Workshop 2, process and documentation

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Workshop 2, process and documentation

  1. 1. Gareth Nash ofCo-operative & Mutual Solutions Limited
  2. 2. Business model CommunityGoverning Communitydocument Shares building Offer document 2
  3. 3.  Co-operatives  Community Benefit ◦ Can pay dividends based ◦ Can opt to have a on transactions as well as statutory asset lock interest on share capital ◦ Cannot pay dividends ◦ Cannot opt to have a ◦ Must have broader statutory asset lock community objectives ◦ Can be for mutual benefit only 3
  4. 4. Unique attributes include: Withdrawable share capital One-member, one-vote Upper limit on individual member investment Flexibly capped interest, not dividends, on share capital Optional statutory asset lock Currently exempt from costly regulation 4
  5. 5.  Societies have major advantages over companies for community share issues A company share issue must be approved by an authorised investment advisor. A society share issue does not. A company share issue means forming a plc which is more heavily regulated. A society share issue uses the same form of society. Company shares mean one share one vote. Society shares mean one member one vote. Society shares are easily withdrawable. Company shares are not. 5
  6. 6.  Crisis? Ethical thinking Greening the local economy Utilise local resources to benefit the community1. Can community needs, interest, ambitions/aspirations be met through a social business model2. If the business model is appropriate and the venture needs capital, community investment might be an ideal way of building community involvement 6
  7. 7.  First approaches/responses Assessment/feasibility and barriers Developing commitment/momentum and support Technical and environmental assessment Business development and planning Going through the planning process Raising finance (and funding) Legal and governance Systems and pre-trading activities Recruitment of board and staff 7
  8. 8.  The offer may be exempt from the Financial Services and Markets Act but there are still legal duties You must present an accurate summation of the business case You must make clear this is an investment and what the risks and rewards are You are asking people for money – if the share offer document is not professional it will cause concerns 8
  9. 9.  General (in all documents) ◦ Risk capital ◦ Membership rights ◦ Withdrawable share capital ◦ Share price ◦ Interest on share capital ◦ Financial Services Authority ◦ Directors declaration 9
  10. 10.  Specific: (tailored to each organisation) ◦ Type of Industrial and Provident Society ◦ Purpose of the offer ◦ Risk factors ◦ Investment targets and timescales ◦ Minimum and maximum investment ◦ Withdrawal of share capital ◦ Financial returns ◦ Social returns ◦ Tax treatment ◦ Directors and Advisors ◦ Application forms 10
  11. 11. Offer documents and development phasesDevelopment phase Types of offer documentPre-start Pioneer offer: a high-risk offer,Start-up aimed at known Membership offer: Time-bound offer: supporters, to raiseAcquisition and where the purpose offer to invest in an funds to spend ontransfers is to recruit ‘investment ready’ getting ‘investment members rather project subject to ready’Early-stage growth than raise target amount and Open offer: where investment capital timescale for the offer is not completion of offer. subject to a targetLater-stage growth Investors refunded if amount orand consolidation targets are not met timescale, but share capital is liquid 11

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