Community Shares

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Description

"There is no legal definition of community shares. The term is used here to refer to a unique form of share capital called ‘withdrawable shares’ which can only be issued by co-operatives or community benefit societies registered with the Financial Services Authority. Co-operative societies are for the mutual benefit of their members, whereas community benefit societies are for the broader benefit of the whole community. Both types of society can issue withdrawable shares, and they work to similar principles. A withdrawable share can be withdrawn from investment, subject to the terms and conditions of the society concerned. This provides a straight forward way of getting your money back when you want to cash-in your shares.

Withdrawable shares are very different from ‘transferable shares’, which are the type of shares normally issued by companies. To cash-in transferable shares you must first find a buyer to whom you can ‘transfer’ (i.e. sell) your shares, at an agreed price. Shares in larger companies are bought and sold through stock markets, but these markets do not cater for smaller companies where there are very few buyers or sellers. Finding someone willing to buy shares in a small venture can be very difficult. Co-operative and community benefit societies can issue transferable shares, or shares that are both withdrawable and transferable" (http://www.microgenius.org.uk/pg/faq-24#what_are_community_shares)


Examples

UK

Leo Sammalathi:

"UK coops that have received investment have a 92% survival rate. This refers to coops that have raised funding via community shares, an instrument tailored for coops to do equity crowdfunding.

There are three tech/platform co-ops that have raised funding this way I am aware of - CoCars for electric car-sharing, Signalise for sign language interpreters and Equal Care Coop for social care."

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