Investor Shares
Investor Shares are shares owned by a member who invests unremunerated labour or equity capital entitling him or her to participate in governance and receive a share of assets and profits. Investor Shares are issued in FairShares companies and cooperatives only.
From V3.0, the FairShares Rules Generator allows the renaming of Investor Shares to 'Supporter Shares', 'Ordinary Shares', 'Community Shares' or another label of the Founders' choosing. Their characteristics, however, are identical.
Clause/Article 10 defines them in the following way.
10. Investor Shares: issued to any natural or legal person; issued at a fair price to investors of equity capital upon payment; issued to providers of unremunerated labour in proportion to their labour contribution; issued to customers / service users in proportion to the value of their trading activity; one vote per shareholder at General Meetings (as defined in Clauses/Articles 23 and 24); redeemable after three years or termination of membership or retirement or death or insolvency by transfer (with compensation at the current ‘fair price’ (in companies) / 'par value' (in coops)) to one of the following:
a) An 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;
b) A 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;
c) A Community Interest Company or Community Benefit Society created or selected to purchase (redeem) members’ investor shares and manage the income from them to make social investments in a community.
(N.B. The language and precise legal forms to which shares can be transferred varies across versions of FairShares and the countries within which it is used. For example, in the USA, the term ESOP is substituted for Employee Benefit Trust, and B-Corporations are recognised instead of Community Interest Companies).
From V2.1 onwards, there are additional clauses for transferring shares in companies and cooperatives to crowd-funding platforms and social investment funds that have been proposed and approved by members in General Meeting.
In FCA approved rules (pending), the crowd-funding organisation and social investment fund must accept the rules of the co-operative before a share transfer can take place. Secondly, the rules define Eligible Member as a current or former Founder, Labour or User member. This restricts voting rights to Investor Shareholders who have been active in the co-operative, and prevents financial speculators (and passive supporters) from voting in General Meetings.
Whilst there are no restrictions on who Investor Shares may be issued to, all sets of model rules encourage the selling and distribution of Investor Shares to User and Labour Shareholders. Clauses 15(a) and (b) define the conditions of internal share offers to existing members.
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