Member Shares
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 Member (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 law 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. There is no 'Fair Price' in a FairShares Co-operative).
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
Registered supporters of the FairShares Association can obtain spreadsheets with worked examples.
Return to the FairShares Glossary
