Share Capital

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Share Capital is normally associated with private companies. It normally represents the financial capital provided by members to sustain and develop the enterprise. Shares in private companies vary in value whilst shares in (UK) co-operatives are issued at 'par value' and do not vary in value.

A FairShares Enterprise issues par value shares (Founder Shares, Labour Shares and User Shares) and allocates capital gains as Investor Shares. A table summarising the way shares are acquired, transferred and cancelled in a FairShares Company/Co-operative can be viewed below:

V2.0 - FairShares Company - Share Types

V2.0 - FairShares Co-operative - Share Types


Investor Shares vary in value and number in a company. Their current value is based on the Fair Price calculated from the value of fixed assets and the previous Investor Share of dividends.

Investor Shares vary in number in a co-operative. They are issued during years of surplus and may be cancelled during years of deficit.



Unlike a conventional private company, the rationale for issuing shares is based on the relationship a member has to the enterprise.

  • Founder Shares are issued only to the people who incorporate the organisation. No more Founder shares can be issued after incorporation.
  • Labour Shares are issued only to the people who do the work of the organisation. Labour shares can be issued to suppliers, producers, workers and employees if they make qualifying contributions.
  • User Shares can be issued to customers and users of the organisation’s products and services if they make a qualifying contribution.
  • Investor Shares are issued to Labour and User shareholders when their interactions with each other create surpluses, and when members contribute financial (risk) capital.


By default, all voting is on a one-person, one-vote basis irrespective of the number of shares held, or the number of shareholder groups to which a person belongs. However, when a special resolution is required, a person’s vote will be counted in each shareholder group to which they belong because a special resolution requires majority support from each group to pass.

In a private company, ordinary shares are the equivalent of investor shares in a FairShares Company. They are usually the only type of share issued to founder members at incorporation. In a FairShares Enterprise, only Founder shares are issued at incorporation to initial subscribers. No Investor Shares (ordinary shares) are issued, unless founders invest risk capital.

To acquire Labour, User and Investor shares, founders enter into contractual commitments to provide labour, buy (use) services or supply financial capital. New members can also make these commitments and acquire Labour and User Shares. Labour and User Shareholders supply financial capital through their interactions with each other in markets, and are allocated a share of surplus each year. Subject to Ordinary Resolution, where it serves members' interests, members may agree to issue Investor Shares to non-Labour, non-User shareholders who contribute financial capital providing the providers of capital do not usurp democratic member control (ICA Principle 3).

The only type of shares that can be redeemed in a FairShares Enterprise are Investor Shares. These can only be redeemed when sufficient [[Surplus|surpluses] have been generated and allocated to a Redemption Fund or when the profitability of the organisation is sufficient to borrow money to create the institutions needed to redeem members' shares (see Equity Capital Stakes).



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