Jo Bird Cooperative Business Consultants Sept 2013 Grants Supply chain Loans Equity Core project sponsorship Prepayment credit in kind Secured unsecured bond Withdrawable transferable ID: 232202
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Slide1
Community Shares
Jo Bird
Co-operative Business Consultants
Sept 2013Slide2
Grants
Supply chain
Loans
Equity
Core, project, sponsorshipPrepayment, credit, in kindSecured, unsecured, bondWithdrawable, transferable, mutual
Raising FinanceSlide3
Slide4
1844, Rochdale Pioneers set up co-op shop 28 founder members £1 each to rent a shop and buy initial stock
£1 worth c£100 today – this was a community share issue
Successful model taken up by thousands
But tradition lost in last centuryHistory – UK Consumer Co-ops Slide5
Rochdale Pioneers, 1844Slide6
Voluntary and open membershipDemocratic member control
Member economic participation
Autonomy and independence
Education, training and informationCo-operation among co-operativesConcern for communityCo-operative PrinciplesSlide7
The Return of Community SharesSlide8
Community shares has mushroomed300 Societies registered120 share offers completed
Over £20 million raised from 24000 people
Average amount raised £200k
Average 240 members investing £900Many share offers offer 3-8% interestFrom 2009 onwardsSlide9
Key Sectors for Community SharesSlide10
Four types of share offer
Membership offer
: To recruit members Nominal share capital.
Pioneer offer: Small group of founder members raise high risk capital. Ideal for Seed EIS.Target-bound offer: To raise a target amount. Ideal for S/EIS.Open offer: To maintain open membership and allow withdrawals, supported by track record.Slide11
Community shares: key elements
Community
SharesSlide12
Regular communication with members – mailing list, newsletters, facebook, website
Maintaining momentum
Public meetings –to introduce the idea, and to launch
Local and national media coverageActivities, campaigns and working groupsBuilding a community around the co-op Slide13
Members
Member engagement
Activist
CustomerVolunteerInvestorService userWorkerSupplier
DirectorExpertSlide14
Enterprise Investment Scheme
HMRC scheme
30% tax relief with EIS
50% tax relief with Seed EIS, <2 yrs trading, up to £150,000 share offerLoss reliefMore return than a cash ISACannot withdraw shares for 3 yearsSome sectors are excluded inc financial services, on-lending, farming, land, propertywww.hmrc.gov.uk/eis/ Slide15
Underwriting offers:Appraisal report and due diligence Community reassurance
Enable asset purchase
Fills shortfall, max a third up to £50,000
Enables monthly instalmentsArrangement fee 2% and interest 8%Slide16
Not possible for Company Limited by Guarantee to issue shares
Expensive for Company Limited by Shares
Community Interest Companies
Regulated by FCA under FSMA 2000.CompaniesSlide17
Only Co-op and Ben Com
Societies
A unique form of capital
One-member-one-vote not one-share-one-vote£20,000 maximum holding of withdrawable sharesWithdrawable shares cannot increase in value, but can decreaseWithdrawable under certain conditionsInterest can be paid on sharesMostly outside remit of FSMA 2000Slide18
But share offers are still covered by the Misrepresentation Act 1967The share offer document must offer a fair view of the proposal on which people can rely
The FCA still has an interest – good practice guidelines have been developed with the Community Shares Project
Exemption From Regulation, But ...Slide19Slide20
Tree work and wood fuel businessPart buy out of sole trader in 2012Raised £140,000 from 140 members
Minimum £200 investment
Gained EIS afterwards
Case Study – Tree StationSlide21Slide22
FC United of ManchesterSlide23
Football club formed due to rising ticket prices and market failure2,000 fans attend non-league matches
3 teams
Raised £1.7m from 3,000 members
EISShare offer still openMinimum £200£5m blended finance inc grants and loansCase Study – FC United of Manchester Slide24Slide25
Pub in village of Hesket Newmarket, Cumbria
Came on the market in 2002
Concern about future of last pub in village
The community bought the pub a year later124 members with an equal stake of £1,500Members elect a Board of between 3 and 15 The co-op appoints a licensee – experienced local pub manager – to run the pubTurnover increased from £90k to £250kNow provides 12 local jobsCase Study - The Old CrownSlide26Slide27Slide28Slide29
Set up to install a 65kw water turbine on River Leith in the small town of Balerno
near Edinburgh
Will generate electricity, sold to National Grid, income from Feed In Tariff (FIT)
Members elect a Board, but 3 Directors appointed by Balerno Village TrustTotal financial package of £313,000Raised over £150k community shares, plus grants and loansSeed EIS tax releif £60k a year for community projectsCase Study – Harlaw HydroSlide30
Free
grant for
advice and support From the Co-operative Group To set up or grow co-operative enterprise Registration as a co-operative Membership, democracy, decision making Business and financial planning Community share issues Can re-apply after 12 monthswww.co-operative.coop/enterprisehubSlide31
Further resources
Community Shares
www.communityshares.org.uk
Co-operatives UK www.uk.coop Co-operative and Community Financewww.coopfinance.coopCo-operative Business Consultantswww.cbc.coop