Redemption Fund

The Redemption Fund is created by allocating part of the Surplus to a special reserve fund for the creation of mutuals, co-operatives and charities that can buy members' Investor Shares. Without a Redemption Fund, members would have to borrow capital to create the institutions defined in Clause 10(a)(iv).

As defined in Clause 10(a), a FairShares Company plans, from the outset, to create one or more of the following:

1. A FairShares Labour Association, Employee Benefit Trust or Co-operative Society established for the purpose of buying and selling (redeeming) Labour shareholders’ investor shares and managing the income from them for the benefit of employees;
2. A FairShares Association, Charitable Trust or Charitable Company established for the purpose of buying and selling (redeeming) members’ investor shares, and managing the income from them to support charitable projects;
3. A FairShares User Association, Community Interest Company, Community Benefit Society, FairShares Company or FairShares Co-operative created or selected to purchase (redeem) members’ investor shares and manage the income from them to make social investments in a community.

The Redemption Fund provides the start-up capital for these organisations. Thereafter, they are funded by income derived from their shareholdings in FairShares Companies.

Outside the UK

Not all countries will have laws for the creation of employee benefit trusts or charitable trusts, but they may have alternative laws that enable organisations for employee, community and public benefit to be created. When incorporating in other countries, refer to the legal forms that permit decisions to be taken in the interests of the workforce, community or public.

In the US there will be varying levels of state-level provision for:

Non-Profit Corporations (Non-Profit Law)
Employee Share Ownership Plans / Trust (ESOPs and ESOTs)
Benefit Corporations (Company Law)
Co-operatives (Co-operative Law)

In Japan there is national provision for:

Specified and Certified Non-Profits (Non-Profit Law)
Social Responsibility Corporations (Company Law)
Co-operatives (Co-operative Law)[1]

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Return to the FairShares Glossary.