Equity Capital Stakes
Clause 10 defines types of share capital, and Clause 12 defines the mechanism for issuing and acquiring Equity Capital Stakes. This includes the rights of User and Labour members to purchase investment capital in a FairShares Company or FairShares Co-operative.
By default, any producer, worker, employee, customer or service user who has made a qualifying contribution has a right to participate in (and purchase) equity capital. In FairShares documentation, the concept of a qualifying contribution is used to delineate the conditions under which membership (and Labour / User shares) are offered. No qualifying contribution is required for Founder Shareholders or Investor Shareholders. Founder Shares are automatically issued to the founder shareholders whose names appear on incorporation documents, and investor shares are issued automatically through the mechanism for member shares to existing labour and user shareholders, or through a share issue to new investors.
- For a producer/worker/employee member, equity capital comprises Labour Shares, issued at par value (£1), proportionate to their Labour contribution, and an opportunity to buy Investor Shares at the Fair Price up to 15% of the value of their annual contract.
- For a customer/service user, equity capital comprises User Shares, issued at par value (£1), proportionate to their usage of company services, and an opportunity to buy Investor Shares at the Fair Price up to 15% of the value of their annual contract.
Labour/User Shares influence both the distribution of Labour and User Share Dividends and the issue of Investor Shares to [[Labour Shareholders|Labour] and User Shareholders.
The organisation may lend money at 3% above a designated bank base rate for the purpose of helping a member buy equity capital. (A monthly standing order for 12 equal payments for the repayment of capital and interest direct to the organisation is recommended if the amount is not deducted through payroll or from dividends).
The system for issuing Labour and User shares is decided in General Meeting. For examples, see the page for qualifying contributions.
Each member receives one vote, irrespective of the size of their shareholding.
Investor Share Purchases by [[User Shareholders|User] and Labour Shareholders
- A Labour Shareholder employed at £20,000 a year would (upon completion of their probation) be entitled to purchase Investor Shares to the value of £3,000.
- A Labour Shareholder employed at £40,000 a year would be entitled to purchase Investor Shares to the value of £6,000.
- A Labour Shareholder employed at £60,000 a year would be entitled to purchase Investor Shares to the value of £9,000.
- A User Shareholder contracting to purchase £100 / yr of services would (upon the anniversary of the contract) be entitled to purchase Investor Shares to the value of £15.
- A User Shareholder contracting to purchase £10k / yr of services would be entitled to purchase Investor Shares to the value of £1,500.
- A User Shareholder contracting to purchase £1m / yr of services would be entitled to purchase Investor Shares to the value of £150,000.
User Shareholdings need to be viewed in the context of public service commissioning arrangements that may either involve large-scale contracts for health provision, or many small contracts purchased by patients using 'personal budgets'.
N.B. The principle followed is that a producer, worker, employee, customer and service user is only entitled to buy Investor Shares and receive Labour / User Shares commensurate with their qualifying contributions. Members may decide collectively they want to extend further offers to purchase Investor Shares, but these are not a product of individual member rights. Equity Capital Stakes operationalise members' right to economic participation (ICA principle 3).
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