Difference between revisions of "Member Shares"

Revision as of 14:42, 16 February 2014

Member Shares are earned by Labour and User Shareholders when a FairShares Company or Co-operative generates a Surplus.

The number of Member Shares issued each year depends on:

• The Capital Gain Fraction
• The change in the Reference Value of the organisation
• The new Fair Price (if operating under Company Law)

Worked Example – Calculating Free Investor Shares and the New Fair Price

Assumptions

• Investor Shares Issued: 45,000
• Capital Gain Fraction: 0.5 (50%)
• Reference Value: £60,000 (Existing fair price = 60,000/45,000 = £1.33)

New Value = [Fixed Assets] + (20 x Most Recent [Investor Share])

In this example, the New Value is calculated as £75,000, triggering the following calculations:

Workers’ Gain = [New Value] - [Reference Value] * [Capital Gain Fraction] / 2

(£75k - £60k) * 50% / 2 = £3,750

Users’ Gain = [New Value] - [Reference Value] * [Capital Gain Fraction] / 2

(£75k - £60k) * 50% / 2 = £3,750

New Fair Price = [New Value] - [Workers' Gain] - [Users Gain] / [Investor Shares Issued]

(£75k - £7,500) / 4,500 = £1.50

(In a FairShares Co-operative incorporated under society in the UK, shares have a par value of £1 and therefore the number of shares issued is the sum of Workers’ Gain and Users’ Gain to the nearest £1).

Number of Member Shares: = ([Workers Gain] + [Users Gain]) / [New Fair Price]

7,500 / 1.5 = 5,000

(in the above example, 7,500 investor shares would be issued in a FairShares Co-operative).

Investor Shares (Revised): = [Investor Shares Issued] + [New Investor Shares]

45,000 + 5000 = 50,000

See worked examples in the attached spreadsheet: Media: V2.0-WorkedExamples.xls

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