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The Surplus in a FairShares Enterprise is calculated as follows (see Clause 37):

Profit, less Pay including their Associated Costs, less Corporation Tax

For example, if Profit is £100,000, and Pay is £60,000, and Associated Costs are £8,000:

  • Nett Profit would be £100,000 less £60,000 less £8,000 = £32,000
  • UK corporation tax would be £32,000 x 20% = £6,400
Surplus is £32,000 less £6,400 = £25,600

In a FairShares Company or Co-operative, this Surplus would then be allocated to Reserves, Labour Share Dividends, User Share Dividends and Investor Share Dividends as defined in the FairShares Articles of Association.

In a FairShares Assocation, the Surplus is allocated to Investor Accounts where they cannot be withdrawn from the association. Members can allocate their share of surplus to projects created by executive and/or board members.

In the above example, using the default values set in v2.0 of the FairShares Model.

£10,000 would be allocated to reserves, leaving £15,600 for dividends.

(under IPS versions the FairShares Model, 2,340 Investor Shares would be issued to existing Investor Shareholders in proportion to their existing holdings. This would be a much smaller amount than the Member Shares issued to Labour and User Shareholders.

Return to the FairShares Glossary.