4.3 Equity match
The equity match investment, of up to £100,000, is made by Co-operatives UK, which will become a shareholder in, and member of, your society. Co-operatives UK is itself a society, so there are no legal limit on the amount of share capital it can hold in another society. Co-operatives UK will be an active institutional investor in your society, with the long-term aim of enabling you to generate sufficient capital from your individual members, without reliance on institutional support. This means that in the long-term, Co-operatives UK will aim to reduce its shareholding in your society to zero, but only when this will enhance the sustainability of your business as an independent society.
Equity match applications for up to £100,000 will also be assessed in tandem with a Standard Mark assessment, with a decision made prior to launch of the share offer. The award of equity match is not conditional upon, or guaranteed by, the award of the Standard Mark.
Equity match will be offered on the following terms:
- It will be made as an investment in withdrawable, non-transferable share capital into the community business, held by Co-operatives UK, on the same terms and conditions as outlined in the society’s share offer document, and on equal terms with other community investors.
- The equity investment will not exceed more than 50% of the society’s overall withdrawable share capital up to a maximum of £100,000.
- The share offer must meet its minimum investment target (which can include the agreed equity match).
- If your share offer is successful in meeting its targets, priority will be given to applications from individual members, with the equity match reduced pro rata, until it reaches zero when the maximum target is achieved by applications from individual members.
- Booster equity match cannot be used to match other institutional investment (i.e. where an investment is above the maximum individual shareholding limit stated in the offer document and/or is subject to its own terms and conditions)
- Any requests by Co-operatives UK for share withdrawals will be limited to no more than the maximum any other member may request. So, if the society has adopted a voluntary limit on the maximum shareholding a member can have below the statutory limit of £100,000, this voluntary limit will apply to any share withdrawal request by Co-operatives UK.
Co-operatives UK aims to be an active investor in societies. The active investor role will comprise of the following:
- becoming an active member of each society and so, according to Society’s rules, fully asserting membership rights regarding access to information as any other community investor would;
- scrutinizing and supporting good governance, and also offering advice and guidance, encouraging societies to become members of key bodies associated with the Booster Programme and beyond;
- requesting quarterly reports in the first year and reserving the right to extend this beyond the first year; and
- as a member of the Society, Co-operatives UK will attend general meetings, including AGMs.
Beneficiary societies will receive this support through the wider Co-operatives UK advice team on the basis of the programme funding dedicated advice packages for each of the societies.