Investment in worker co-ops

Thanks for the clarification, I think it is always wishful thinking on my part that I misremember it as 25%, i'm getting old....

It's not misremembered (is that a word?!) There was an FSA policy paper on non-user member investors that said 25% somewhere, but that was superseded by the 2015 Guidance that gave no percentage.

I thought it was still 25% too @johnatherton !

WRT tax relief, the problem with a worker co-op "managing" this mythical pub is that the detail of the management agreement would have to satisfy HMRC that the CBS is not merely raising the money to then lease out the premises. (and the FCA that the CBS is involved in a trade)

Yep, the leasing issue in SITR is what I alluded to above. It's a real barrier to SITR as a tool for supporting community investment and ownership. The FCA and trade point is different I think. What about CBS CLTs? These trade/transact/lease land and satisfy the FCA. And there are already CBSs that lease out the pub to tenants so the FCA has been satisfied before.

GO-OP Co-operative is a multistakeholder based on the Somerset Rules. There are categories of membership: User and Non-User. The Users (i.e. in the case of GO-OP passengers and employees) the main beneficiaries of the co-operative’s services, play the principal role in the direction of the co-operative and hold a maximum share of voting rights at the AGM. Non-users (investors, supporters, or otherwise interested parties) do not have such relevant transactions with the co-operative, are subject to limits on their powers and voting rights. So the co-op benefits from investment by non-users who receive interest on their shares, while it is democratically controlled and majority share owned by the passengers and employees.

All good ides and comments. Excellent. In the work I did for Co-ops UK in a 2014 report on Social Co-operatives that are growing across Europe in many countries, in Italy (about one in 2 are worker co-ops and the others multi-stakeholder) there were several financing tools we identified that are impressive.. Together they form a viable democratic financing system. The Solid Fund is one of these as you know. A second is the Mutual Guarantee Societies that I was involved in helping set up in the 1990s in England and Wales before the financial regulator said we needed an insurance license and had to post £70 million for this. Thus we had to shut down the six or so MGSs set up. So tragic. With Co-ops UK we have been lobbying for an MGS system to be allowed as in the 1990s Italy was the pioneer and now since some 19 European countries have worked out ways to replicate them. They pool risk premiums and enable via this extra insurance for lower cost loans and capital to be secured from co-op banks or other banks. Also thanks to the MGS system and how effective it has proven to be to reduce cost of capital, co-op banks in Italy have been more willing to make equity loans for start up worker co-ops and when new worker members join they can get these individually to bring capital with them into the co-op. These loans are repaid via payroll deduction. Another mechanism is that the social co-op movement in the 1990s led the establishment of a new co-op bank for the Solidarity Economy. Local authorities and social enterprises supported this. This is Banca Etica Popolare. Somewhat like Charity bank and specialising in the social economy but as a Co-op bank it is very supportive of co-op economy development. I mention this because the new Community Savings Bank Association in the UK is working on the development of new regional co-op banks. We are working with the Wales Co-op Centre and a broad based coalition here in Wales on either a public bank for Wales or a regional co-op bank like this and find interesting the CSBA work. I would not discount public banks as they can and in many countries have invested strategically and successfully in co-op development. The Worker Buy Out funds in France and Italy have had endowed capital or can secure capital from a public bank. Labour as you know is working on a National Investment Bank as part of its industrial strategy and a dozen regional banks. We need to engage in the debate with the Labour party and the Italian viable system has lots to commend it. The proof is in the pudding and the numbers in Italy - almost 24,000 worker and social co-ops and 1 million new jobs and most created since 1991. Our latest report, Working Together (launched last month) for Co-ops UK and the Co-op College talks about these financing tools and how we need to bring them together as a viable system. It would gives us a full set of wheels not just a unicycle. Co-ops UK has helped develop a private members bill for the MGS to be legalised and has had discussions with the Treasury.

Some great and semi-contradictory quotes in "Ours to hack and to own" a US slant on the rise of platform co-operatives that I'm reading at the moment:

"This kind of shift in focus means leaving behind some of the cherished emphasis that the last cooperative wave put on autonomy and independence; instead co-operative developers have been enthusiastically exploring ways to partner with city governments, labor unions, forward-thinking philanthropy, and impact investors to finance and support the work of building a more democratic economy. Cooperative purity can easily become an obstacle to achieving meaningful scale and inclusive impact." John Duda

"Despite the contradictions involved, eschewing capital has become a matter of activist identity.
Others meanwhile, expect that the same sources of capital that back exploitative platforms should or would fund their more co-operative work. This prospect is not only unlikely, it is also destructive." Carmen Rojas

Whilst supportive of partnership working, I favour the second quote.

That's really useful James. Is there anything we can do to help?

Re non-voting shares of non-user members, would we still be
talking about withdrawable shares?

Your analysis of the worker co-op tenant/manager is correct re
SITR. I'm mainly thinking about this as a 3yr plus succession
option for community owned pubs that have had tax relief or as an
SITR compliant initial offer.

The FCA Guidance on non-user investors doesn't get specific about the type of share capital. I take that to mean it could be withdrawable or non-withdrawable. The CCBSA certainly doesn't specify anything on voting rights for the different types of share capital (or say much of any use about voting rights at all really...). Ian Snaith says in the Handbook that they could be withdrawable or otherwise.

On asset locks, any thoughts on this short paper, regarding possible research, would be helpful:

https://www.dropbox.com/s/moyidcw70xn9uk7/rules-based%20asset%20lock%20research.docx?dl=0