Difference between revisions of "Surplus"
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The '''Surplus''' in a [[FairShares Enterprise]] is calculated as follows (see Clause 37): | The '''Surplus''' in a [[FairShares Enterprise]] is calculated as follows (see Clause 37): | ||
| − | [[Profit]], less [[Pay]] including their [[Associated Costs]], less [[ | + | [[Profit]], less [[Pay]] including their [[Associated Costs]], less [[Corporation Tax]] |
For example, if Profit is £100,000, and Pay is £60,000, and Associated Costs are £8,000: | For example, if Profit is £100,000, and Pay is £60,000, and Associated Costs are £8,000: | ||
| Line 10: | Line 10: | ||
Surplus is £32,000 less £6,400 = £25,600 | Surplus is £32,000 less £6,400 = £25,600 | ||
| − | + | In a FairShares Company or Co-operative, this [[Surplus]] would then be allocated to [[Reserves]], [[Labour Share Dividends]], [[User Share Dividends]] and [[Investor Share Dividends]] as defined in the [[FairShares Articles of Association]]. | |
| + | |||
| + | In a FairShares Assocation, the [[Surplus]] is allocated to [[Investor Accounts]] where they cannot be withdrawn from the association. Members can allocate their share of surplus to projects created by executive and/or board members. | ||
In the above example, using the default values set in v2.0 of the [[FairShares Model]]. | In the above example, using the default values set in v2.0 of the [[FairShares Model]]. | ||
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£10,000 would be allocated to reserves, leaving £15,600 for dividends. | £10,000 would be allocated to reserves, leaving £15,600 for dividends. | ||
| − | * 35% (the [[Labour Share Fraction]]) would be allocated as [[Labour Share Dividends]] (£15,600 x 35%) = £5,460 | + | * 35% (the [[Labour Share Fraction]]) would be allocated as [[Labour Share Dividends]] (£15,600 x 35%) = '''£5,460''' |
| − | * 35% (the [[User Share Fraction]]) would be allocated as [[User Share Dividends]] = £5,460 | + | * 35% (the [[User Share Fraction]]) would be allocated as [[User Share Dividends]] = '''£5,460''' |
| − | * 0.5 of 30% (1 - [[Capital Gain Fraction]] x [[Investor Share Fraction]]) would be paid as dividends to existing [[Investor Shareholders]] = £2,340. | + | * 0.5 of 30% (1 - [[Capital Gain Fraction]] x [[Investor Share Fraction]]) would be paid as dividends / credits to existing [[Investor Shareholders]] / [[Investor Accounts]] = '''£2,340'''. |
(under [[IPS]] versions the [[FairShares Model]], 2,340 [[Investor Shares]] would be issued to existing [[Investor Shareholders]] in proportion to their existing holdings. This would be a much smaller amount than the [[Member Shares]] issued to [[Labour Shareholders|Labour]] and [[User Shareholders]]. | (under [[IPS]] versions the [[FairShares Model]], 2,340 [[Investor Shares]] would be issued to existing [[Investor Shareholders]] in proportion to their existing holdings. This would be a much smaller amount than the [[Member Shares]] issued to [[Labour Shareholders|Labour]] and [[User Shareholders]]. | ||
Latest revision as of 03:15, 21 June 2014
The Surplus in a FairShares Enterprise is calculated as follows (see Clause 37):
Profit, less Pay including their Associated Costs, less Corporation Tax
For example, if Profit is £100,000, and Pay is £60,000, and Associated Costs are £8,000:
- Nett Profit would be £100,000 less £60,000 less £8,000 = £32,000
- UK corporation tax would be £32,000 x 20% = £6,400
Surplus is £32,000 less £6,400 = £25,600
In a FairShares Company or Co-operative, this Surplus would then be allocated to Reserves, Labour Share Dividends, User Share Dividends and Investor Share Dividends as defined in the FairShares Articles of Association.
In a FairShares Assocation, the Surplus is allocated to Investor Accounts where they cannot be withdrawn from the association. Members can allocate their share of surplus to projects created by executive and/or board members.
In the above example, using the default values set in v2.0 of the FairShares Model.
£10,000 would be allocated to reserves, leaving £15,600 for dividends.
- 35% (the Labour Share Fraction) would be allocated as Labour Share Dividends (£15,600 x 35%) = £5,460
- 35% (the User Share Fraction) would be allocated as User Share Dividends = £5,460
- 0.5 of 30% (1 - Capital Gain Fraction x Investor Share Fraction) would be paid as dividends / credits to existing Investor Shareholders / Investor Accounts = £2,340.
(under IPS versions the FairShares Model, 2,340 Investor Shares would be issued to existing Investor Shareholders in proportion to their existing holdings. This would be a much smaller amount than the Member Shares issued to Labour and User Shareholders.
Return to the FairShares Glossary.
