There is a strong history in Yorkshire of people coming together to raise money through the Co-operative movement and building on the tradition of inward investment. There is a growing interest in the principles behind co-operatives and their use as a tool in financing a range of initiatives from bakeries to renewable energy, local shops and pubs. Community shares can be made available to less well off people as the history of the co-operative movement shows – growing from a few people savings small amounts of money on a regular basis to the might of the Co-operative movement which grew to encompass activities such as wholesale, insurance, funeral services, banking and farms worldwide
What is a community share offer?
A community share offer can be defined as the offer for sale of shares or bonds which will
- Raise a total of £10,000 or more
- From communities of at least twenty people
- To finance ventures serving a community purpose.
A community can be defined as either:
- Community of geography – people who live or work in an area with clear boundaries.
- Community of interest – people who share a common interest or purpose
Shares and Bonds
Shares
A share is simply a divided-up unit of the value of a company and gives a legal right to membership and part-ownership of an organisation in return for an investment. There are different types of shares with different rights which are determined partly by the terms and conditions attached to the shares (the share agreement) and partly by the legal form of the organisation itself.
Some types of organisation, such as registered charities or companies limited by guarantee, cannot issue shares. (For this type of organisation the alternative is to issue bonds.)
Organisation types which can issue shares are
- Private limited company
- Public limited company (plc),
- Community Interest Company (CIC)
- Community Benefit Society (CBEN)
Bonds
A bond is a sort of loan – the legal agreement between the organisation issuing the bond and the person purchasing, which states the amount of interest to be paid on which dates and when the loan will be repaid.
It is a form not commonly used in the third sector and is mainly used when an organisation cannot issue shares e.g. charities.
Bonds carry a fixed rate of interest unlike shares where the interest is decided by the members each year.
Bonds are subject to the same regulation and exemptions as shares.
All types of organisation can issue bonds and it is possible for an eligible organisation to issue shares and bonds.