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Mon 9 Oct 2017 8:02AM

A Simple Explanation of FairShares

R Rory (FSA) Public Seen by 76

Dear FairSharers - I've tested this learning resource with people in the FairShares Labs project. It helps to explain that there are four different interests recognised and integrated by FairShares, but this does not necessarily mean there are four different groups of people.

Read, share, feedback - tell me what you think because it is going into a new textbook on the social economy (which will be published in Japan).

Best
Rory

DW

David Wren Mon 9 Oct 2017 11:20AM

I like it, relevant and easy to associate with.

GB

Graham Boyd Mon 9 Oct 2017 2:32PM

Very helpful!

a 3 minute video of this would be a good thing to put up on the FS website

GC

Gordon Casey Tue 10 Oct 2017 5:38PM

It's great @roryridleyduff - clear and to the point. I can see that you've worked hard to keep it a single page. It might be more readable if it were spaced/sized a bit more generously though. :)

I would love to see a table at the end, as a summary of the differences. Personally I find them quite helpful as a visual tool to recall the details that were covered in paragraph form. And of course a video or any visuals are always ideal - a thousand words and all that. (Not that I can think of the most efficient visual myself, of course.)

JK

Jumbo Klercq Tue 10 Oct 2017 8:58PM

Good and simple explanation - each one can follow the examples - although I think that "membership"

in reality is to simple as solution - what you mean by membershps can also be constituted in in different forms, even in private companies.

But explaining this would need another article.

Greetings

R

Rory (FSA) Sat 14 Oct 2017 4:54PM

Jumbo - yes, you can prepare private company rules so implement membership - it would complicate this explanation, but I accept your argument. The point I would make is that private companies are now designed to share wealth and power (they are designed for wealth extraction in the majority of cases). However, ironically, it is the flexibility of the company form in many countries/cultures that makes it the best vehicle for a mutual association operating as a cooperative company!

KC

Kim Cosmos Sat 14 Oct 2017 11:31AM

Misses the point. You don't explain why it is important that founders get special rights beyond their time in order to persuade them to share their industrial secrets. **You can sell veto equity to lenders (& IP contributors). They are never allowed a class majority to propose and pass actions but they can veto alone. ** It really is that simple and normal but still a huge change for co-ops. Your explanation is very complicated. It merely lets you borrow more using 2 classes of veto as security (veto shares). Other than that it is nothing new

R

Rory (FSA) Sat 14 Oct 2017 5:06PM

Sorry Kim - do not understand your argument. Founders do not get special rights - they get the same rights (as a class) as any other interest group.

KC

Kim Cosmos Sat 14 Oct 2017 9:16PM

Founders get labor rights for their contribution plus founder class rights for their IP (which is a risk that may not pay off if the venture fails). What makes it special is that they get both. Also Founder and investor classes are minority classes, even combined, yet they get veto rights. That is special... Fair shares is only mutual if you assume a veto is not a control. I can't remember if there is restriction on speculative share trading (I assume there is). Fairshares is like a common pool resource management tool where leveraged growth is enabled by preferential veto shares. Its a semi anti-usury tool. It probably works because it is harder to corrupt. But hey... at least the workers and consumers get access to more capital, especially from ethical investors wanting more security. Big demand for that

R

Rory (FSA) Sun 15 Oct 2017 1:10PM

There are mistakes in Kim's post which need correcting. Founders do not get labour rights for their IP. Founders get founder rights for founding the enterprise, and labour rights for labouring. Anyone who contributes IP has rights over their IP (although the story only talks about the IP contributed by the founder). So Labour members would get IP rights too if they contribute more IP to the venture.

All classes are minority classes (if you stick with the model rules). And even if classes combine, you are right that other classes can exercise a veto - but only if a majority of the class pass a class resolution to turn an ordinary resolution into a special resolution, so there is not automatic veto right unless you can get the support of a majority of members of a class. Also, those veto right exist for all classes, not just founders and investors and the logic behind that is to make cooperative/collaboration pay, and attempts to hoard power fail. We learned that from the Mondragon Coops - 2 UK directors kept asking "But what if [the workforce] do not agree with [the consumers / managers / etc.]. The response was always the say "We have to cooperate". Cooperation was not a 'nice to have if you can manage it', it was an absolute necessity and the structure reinforced that collaboration was the only way to progress in moments of disagreement.

FairShares is the same.

KC

Kim Cosmos Sat 14 Oct 2017 11:53AM

Now, in between regular equity and preferential nonvoting shares there is... tada... preferential veto shares

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