The term 'community shares' refers to withdrawable share capital; a form of share capital unique to co-operative and community benefit society legislation. This type of share capital can only be issued by co-operative societies, community benefit societies and charitable community benefit societies.
Community shares can save local shops and pubs, finance renewable energy schemes, transform community facilities, support local food growing, fund new football clubs, restore heritage buildings, and above all, build stronger, more vibrant, and independent communities.
Since 2009, almost a 120,000 people have invested over £100m to support 350 community businesses throughout the UK.
What are Community Shares?
Investing in Community Shares
Investing in community shares is a practical way of supporting a business that serves your community. The share capital will help finance the business. In return, you might receive limited interest on your investment. And if you want your money back, you have the right to withdraw some or all of your share capital, subject to terms and conditions.
Community shares can only be issued by co-operative and community benefit societies. Members have just one vote, regardless of how much they invest, and there are limits on how much you can invest, to prevent the society being dependent on a handful of large investors. Your shares can never be worth more than you paid for them, but they could go down in value if the society gets into financial difficulties.
The main reason why people buy community shares is to support a community purpose, not to make a financial gain, which is why this type of share offer is not subject to financial promotion regulations. Being unregulated reduces red tape and helps to keep the cost of making a share offer affordable for communities. But it also means your investment is not covered by the Financial Services Compensation Scheme, and you have no right of complaint to the Financial Ombudsman.
In order to help societies make great community share offers, the government has funded the Community Shares Unit. It works with societies and community share practitioners to develop national standards of good practice. These standards are set out in the Community Shares Handbook and form the basis of the Community Shares Standard Mark.
Share offers bearing the Standard Mark have to:
Have offer documents and application forms that are easy to understand
Provide investors with all the facts they need to make an informed decision
Give investors access to the annual accounts and/or business plan for the society
Do not say things that are purposefully incorrect, confusing or misleading.