Open Capital Partnership

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Description

"An OCP is a “new” (since 6th April 2001) UK Limited Liability Partnership ("LLP") the purpose of which is to acquire and develop Capital assets in the UK or elsewhere.

An "OCP" has two Members:

(a) the "Investee"- or Capital User; (b) the "Investor" - or Capital Provider;

and the Investee has the right of indefinite use of the Capital for so long as he pays an agreed Rental.

Both the Investor and Investee may itself be a group of individuals or other legal entities. The OCP creates a form of Property of indefinite or indeterminate duration which is neither Permanent Ownership (eg freehold property or closed Equity “shares”) nor temporary Use (eg leasehold/tenanted property or Debt finance) but a hybrid.

Once a Capital asset such as Land and Property is within an OCP there is no reason why it need ever again be sold, although Investees and Investors may both change over time in accordance with the OCP Agreement. Within the OCP Capital and Revenue are continuous: to the extent that an Investee pays Rental in advance of the due date he becomes an Investor." (http://www.moq.org/forum/chriscook/ifnotglobal.html)


Typology

"There appear to be three classes of Land/Property Investment for which the OCP may be suitable: •“Commercial” based upon Hilton-type deals; •“Public” with potential to improve upon PFI/PPP type deals; and •“Personal” eg “Property Investment Partnerships”; developed below.


Property Investment Partnerships (“PIP’s”)

A PIP is an Open Capital Partnership between and one or more Investors and one or more Occupiers/ Investees of the property it acquires, eg a property purchased for £100,000, of which £80,000 is financed: the Occupier/Investor receives 20 shares and the Financier/Investor 80 shares at a value of £1k each. (or 200/800: 2000/8000 etc - it is the 20%/80% proportions which matter, there being no par or nominal value to these shares)

There is an Exchange of Value: in return for the use of the Property, the Occupier(s) pays a Rental to the Investor (s) for the use of the Capital, eg a rent of £6,000 pa is agreed for two years for the above property: the Occupier pays net £4,800 pa; the Investor receives net £4,800 pa. After two years, the Occupier wishes to invest £12k in the Property: at £120k valuation he purchases a further 10%: at £96k valuation he purchases 12.5% and so on." (http://www.moq.org/forum/chriscook/ifnotglobal.html)


Discussion

"t is possible to envisage a Society within which individuals are members of a portfolio of Enterprises constituted as partnerships, whether limited in liability or otherwise. Some will be charitable, or voluntary, to which individuals give their services, or other value freely. Others will be ‘social’ where individual citizens will invest in and subscribe to (say) health, education, transport and other utilities through functionally decentralised partnerships operating at the neighbourhood, community, area, regional or national levels. These will essentially be partnerships between co-operatives of service providers and co-operatives of service consumers ie the public. Finally, individuals will be Members of ‘Commercial’ enterprises of all kinds aimed at co-operatively working together to maximise value for the Members.

A pipe-dream? In fact, the process has already begun. The current form of competitive Capitalism was not planned: it is what is known as an ‘emergent’ phenomenon which continues to exist because it has demonstrated itself to be superior – despite its manifest and documented flaws – to all other models, such as Socialism.

It can only be replaced by another ‘emergent’ phenomenon, which is adopted ‘virally’ because any Enterprise which does not utilise it will be at a disadvantage to an Enterprise which does. By way of example of ‘emergent’ phenomena, we have seen how a 19 year old US programmer has single-handedly destroyed the entire business model of the global music industry through inventing on-line sharing of music in a network which grew to 60 million users within 18 months. In the same way, the small but powerful community of traders in physical oil moved their negotiations from the telephone into Yahoo instant messaging “chat rooms” without their management even being aware of the fact. They did so because it was free, because they could, and because it worked.

The ‘Open’ Corporate Partnership is: capable of linking any individuals anywhere in respect of collective ownership of assets anywhere; extremely cheap and simple to operate; and because one LLP may be a Member of another it is organically flexible and ‘scaleable’. The phenomenon of “Open Capital” – which is already visible in the form of significant commercial transactions - enables an extremely simple and continuous relationship between those who wish to participate indefinitely in an Enterprise and those who wish to participate for a defined period of time.

Moreover, the infinitely divisible proportionate “shares” which constitute ‘Open’ Capital allow stakeholder interests to grow flexibly and organically with the growth in Value of the Enterprise. In legal terms, the LLP agreement is essentially consensual and ‘pre-distributive’: it is demonstrably superior to prescriptive complex contractual relationships negotiated adversarially and subject to subsequent re-distributive legal action. Above all, the ‘Open’ Corporate Partnership is a Co-operative phenomenon which is capable, the author believes, of unleashing the “Co-operative Advantage” based upon the absence of a requirement to pay returns to “rentier” Capitalists.

So perhaps in the “Open” Corporate form of the LLP – the unintended consequence of a 21st Century UK legislative initiative arguably implemented for the wrong reasons in the wrong way - we now have the means to create a truly Co-operative alternative form of “Open” Capital which will make obsolete the current “toxic” form of Global Capitalism." (http://www.moq.org/forum/chriscook/ifnotglobal.html)