Community Shares

(Allocations, Interest Payments and

Withdrawals) Policy
Version 1.1 Signed off: May 2024

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1. Introduction

1.1. Community shares are defined by the Community Shares Unit as non-
transferable, withdrawable shares in an independent society with a voluntary or
statutory asset lock that is owned and democratically controlled by the
community it serves. The term is applied to societies that have at least 20
members, who together hold at least £10,000 in share capital in the society.
1.2. Shareholders have the right to withdraw their share capital, subject to the terms
and conditions stated in the society’s rules and share offer document. They
cannot sell or transfer their shares or liquidate the business in order to achieve a
capital gain.
1.3. The Society should exercise caution in how it determines share interest rates,
setting it at the lowest rate sufficient to attract the capital it requires, and making
it clear to members that this rate will only be paid if it is affordable to the society.
1.4. The payment of interest on share capital held in the Society is regarded as
discretionary operating expense and not as distribution of profit.
1.5. A profitable society that is accumulating reserves may use these reserves to
finance share withdrawals and reduce its liability for share interest.

2. Allocation

2.1. The Society may from time to time make a public share offer and any such offer
may specify a minimum number of shares.
2.2. Valid share applications will be accepted on a first-come, first-served basis.
2.3. Shares shall be paid for in full on application or at the discretion of the
Management Committee.
2.4. Membership is based on “one-member, one-vote.” Applications in joint names
will be allocated (Member) to the first-named applicant.
2.5. Online transfers and cheques will be recorded in the Share Register when they
clear the bank.
2.6. The offer period may be extended by one month, at the discretion of the
Management Committee, if the optimum target is not achieved.
2.7. If the minimum target is not achieved after two months, the offer process will
have failed and applicants will be refunded their subscription monies.
2.8. The offer period will close early if the maximum share target is achieved during
the initial one-month period.
2.9. Unsuccessful applicants, who submitted a valid application after the closure of
the offer period (for whatever reason), will be offered a place on a waiting list.
2.10. The waiting list will be registered on a first-come, first-served basis for the next
purchase opportunity.

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3. Interest Payments

3.1. The Society may, but is under no obligation to, pay interest to holders of shares,
as compensation for the use of such funds, subject to the following:
3.2. Any payment of interest must be from operating surpluses and is at the
discretion of the Management Committee having regard to the long-term interest
of the Society, the need to maintain prudent reserves and the Society’s
commitment to community benefit.
3.3. The Management Committee shall determine the basis for calculating and
paying interest to members the rate of interest to be paid in any year and this
decision is to be approved by resolution of the Members at the Annual Members’
Meeting. The agreed rate shall not exceed 5% or 2% above the base rate of the
Bank of England whichever is the greater.
3.4. In the business plan of the Society, interest payments at a target rate of 3% on
share capital have been included for illustrative purposes in respect of the year
ended 31 April 2028 and subsequently.
3.5. The Management Committee may decide that interest shall not be paid in
relation to holdings of shares below a minimal level.

4. Withdrawals

4.1. As set out in the Society’s rules it should be noted that withdrawals will only be
permitted if sufficient surplus funds exist and then only at the Management
Committee’s discretion. This is consistent with the expectation that investing in
the business is a long-term investment in the community rather than for short
term or personal gain.
4.2. Shares may be withdrawn by Members who have held them for a minimum
period of three years or such other period as the Management Committee
decides.
4.3. Application for withdrawal shall be made on not less than three months’ notice,
on a form approved by the Management Committee.
4.4. The Management Committee in its absolute discretion can waive the notice
required for a withdrawal and may direct payment to be made without notice or
on such shorter notice as it considers appropriate.
4.5. The Management Committee may specify a maximum total withdrawal for each
financial year.
4.6. All withdrawals must be funded from operating surpluses, reserves or new share
capital raised from Members, and are at the absolute discretion of the
Management Committee having regards to the long-term interests of the Society,
the need to maintain prudent reserves, and the Society’s commitment to
community benefit.

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 4.7. If any withdrawal is to be funded from reserves, the Management Committee
must be satisfied that:
 As a result of such withdrawal there will no ground upon which the
Society could then be found to be unable to pay its debts;
 The Society will be able to pay its debts as they fall due during the year
immediately following the withdrawal.

4.8. All withdrawals shall be paid in the order in which the notices were received, up
to a maximum total withdrawal specified for the financial year, following which no
further withdrawals may be made until the following financial year.
4.9. Except where a Member intends to terminate their membership, they shall not be
permitted to withdraw shares leaving them with less than the minimum required
by the Rules.
4.10. The Management Committee may suspend the right to withdraw either wholly or
partially, and either indefinitely or for a fixed period. The suspension shall apply
to all notices of withdrawal which have been received and remain unpaid at the
time. Where the suspension is for a fixed period, it may be extended from time to
time by the Management Committee.
4.11. During any period when the right of withdrawal has been suspended, the shares
of a deceased Member, may, if the Management Committee agrees, be
withdrawn by their personal representatives on giving such notice as the
Management Committee requires.

5. Administrative Fees

5.1. The Society may deduct such reasonable sum to cover administrative costs of
withdrawal from the monies payable to a Member on the withdrawal of shares.

6. Reviewing this policy

This policy will be reviewed annually to take account of any resolutions from the
membership or changes in legislation.

7. References
7.1. Rountons Community Hub Limited Rules
7.2. Community Share Handbook Published by the Cooperative society 8th January
2024

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