Is co-regulation the way forward?
When the Community Shares programme was launched, back in January 2009, our aim was to learn how to do it; the “it” being a successful community share offer. Less than two years on, the programme aims have expanded from how to do it, to how to regulate it.
The offer of withdrawable share capital is currently exempt from regulation. Societies can sell shares to the public without having to bear the cost of expensive advisers, or of producing highly complex prospectuses.
As reported in this, our second newsletter, there have been a record number of new registrations of societies that plan to offer community shares. With this growth in activity comes the concern that the reputation of community shares depends on societies maintaining high standards of practice.
Last July we published the Practitioners Guide to Governance and Offer Documents containing guidance on four different types of share offer. This includes simple membership offers where the investment is nominal, as well as time-bound offers that seek to raise substantial amounts of capital. Some societies need pioneers who will invest high-risk capital to be spent on getting investment-ready, while other societies need to continuously attract new members and new capital to replace members who leave or that need to withdraw some of their share capital.
Our concern now is to encourage all practitioners to adopt and develop this guidance on a voluntary basis. We want to work with the FSA, HM Treasury, and other parts of government to identify and promote good practice, and at the same time, ensure that community share offers remain a viable and affordable option for communities. Co-regulation, based on a voluntary partnership between government, practitioners and development agencies, is the best way forward. A fully functioning co-regulatory body would be an excellent legacy for the Community Shares programme, which comes to an end in March 2011.
Jim Brown, Community Shares Newsletter editor.
Record number of new registrations
With one month still to go before the end of the year, registrations of new co-operative and community benefit societies planning community share offers has already set new records. By the end of November, 37 new societies had been registered, compared with 26 new societies registered in the whole of 2009, and just 9 societies in 2008.
Of the 139 societies listed on the Community Shares Directory, just 76 were registered before the Community Shares programme began, and some of these, such as Lincolnshire Co-operative Society, date back to the mid-nineteenth century. This means that the number of societies will have doubled during the lifetime of the programme, if just another 13 are registered before the programme ends in March 2011.
More than a quarter of the new societies registered since the start of the Community Shares programme are renewable energy schemes, with local food and farming initiatives accounting for more than a fifth of new societies. Community shops, pubs, and land trusts also feature significantly among these new societies.
Further evidence of the success of the Community Shares programme is provided by the way in which the term community shares has caught on. The term was coined at the beginning of the programme, because it was easier to understand than ‘withdrawable share capital’ or ‘industrial and provident society’. A Google search for the term ‘community shares’ now generates over 120,000 results, showing just how widespread the idea has become.
The following new societies, all of which are planning a community share offer, have been added to the Community Shares directory since the previous newsletter in October 2010:
New share offers
The following societies have recently launched community share offers:
Recently completed offers
The following societies have recently completed their share offers: