Issuing Shares Proposal

[John Mulkerrin]

We're looking to gather views on the CIC Association shares and how best to utilise them. A decision will be taken after The Regulator has announced her findings from the Dividend cap review.

Ok, to get the ball rolling I propose offering every CIC who joins a voting share, and MAYBE to invite the key stakeholders to take a share (doesnt have to be a voting share,one per org/key individual) We can also use this to distribute a proposal to attract investment from the public (i'll invest). We can use the process as a case study and open learning tool for all key audiences.

In a wider sense the focus is on CIC companies owning the association, a kinda modern mutualisation, and we can then keep the decision making to a proxy vote and annual AGM system. That frees it up to be a low budget member led organisation.

Potentially huge upsides to awareness, investment, providing active data and perspective of CICs. Have spoken to most key groups and its all pretty do-able.

Any thoughts? feel free to contact me privately

[Terri Hills]

It sounds like a good idea, rather like a co-operative, but what will be the governing objects?
Also, one drawback with any co-operative is that whilst the 'mutualisation' and proxy vote may reduce costs, it could become so remote as to not being really representative of members' views.
Just a thought. Perhaps it might be constructive to draft the Memo & Arts with this in mind.
Sincerely,
Terri Hills. LLB(Hons). Moondance.

[Trevor Lockwood]

I like the idea that the CIC Association (for want of a better name) should become a CIC. That it should be a CIC that issues shares also has sense. Then there are several issues that need to be clearly defined.

Are we, as an association, intent on trading? If so, what will be the scope and intent of our trading activities?

Shareholding to be granted automatically to all CIC company members also makes sense, but only if we intend to trade: what's the use of shares unless we get some return on that investment? I'm presuming each CIC will have full voting rights.

Issuing shares to key stakeholders pushes us further into the legal mire. Who will be a 'key stakeholder'? Will these shareholders have voting rights? That could result in an effective takeover at a later stage. I'd be wary of allowing that to happen.

Offering such funders (is that what 'stakeholders' really are?) a return on their investment seems logical and attractive. It fits in with a changing mood, of social enterprise, where voluntary and community service providers don't just hold out their hands for grant support but should create at least some of their own funds.

Extending that to the general public is equally attractive - but before then we must really decide upon the function of this association. Is it to be a gentle meeting of like minds? Perhaps a campaigning group pressing our case wherever necessary? A source of information and support? A marketing arm for its membership?

Each prospect (and there are others) needs careful consideration. It's easy to walk before we can run, and to be filled with enthusiasm. However our initial structure will in many ways set the scene for the future, and so it needs some consideration.

Assuming that our business plan is open-ended and will allow us to cover the four main areas I've outlined: club, campaigner, informer, and marketeer then our intentions within each sector needs to be properly described.

My assessment, at this stage, is that we need to decide upon our structure first. Are we to be a CIC? Would a cooperative be more suitable? Or some other form, perhaps an unincorporated membership association.

Whilst making that decision we need to look forward to the stage when we have a large membership, and an accepted standing within the sector. What will be required of us then?

Finally, there's no reason why we should consider one entity. We could be a membership association, that is attached but separated from its trading arm. That's a common enough approach.

We have a way to go yet.

[Steve Blake]

Hi

Now we are all stuck in the mire we need a life line of positive ideas.

Not sure if my thoughts here are positive

1 Who will be our 'members?' Individuals? CIC’s? Anyone who cares to sign up on the website? There is of course no reason why we cannot have more than one membership class each with or without voting rights etc.

2. Trading, well I would hope there would be some trading activity even if it is just the obligatory tee-shirt and golfing umbrella with the Association Logo on. In the longer term an advice and registration service along with special rate business insurance could also be offered.

3. I do feel we need to have a campaigning/repressive role for the sector. I am not sure how we can do it as a CIC thou. My understanding is that campaigning groups cannot be registered as CIC’s (I am sure you will al correct me if I have not understood that correctly). Still we need to have a concerted voice that can speak for the sector, with Government, CIB, Chamber of trade and commerce and other Business organisations.

4. Disseminating information is another role we should take on, especially information about help and funding available, Regulations and how the effect the sector; where to find basic services. We have found that some insurance companies who provide business insurance will not insure CIC’s.

5. A directory of all registered CIC’s with information on what their aims and objectives are would be really useful. Of course a basic list of Names and contact details would be a good start; this could then be built into a more detailed directory over time. This way we might find partners in our individual community purposes, exchanging information of interest between CIC’s with similar aims.

6. A Club, well network, both nationally and locally, bringing people together exchanging ideas and concerns. The online part of that is here and could be expanded to include discussion groups on specific issues, local and regional issues.

A big issue in my view how to persuade other business that we are a real business, not just micky mouse let’s play businesses today organisations.

Then on the other hand, people like Microsoft that offer to charities discounted software and service should be offered to CIC’s. BT offers special phone rates to charities and not for Profit groups but not CIC’s. Some energy companies will give special rates for charities and not for profit groups, but again not CIC’s

Businesses tend to not see us as ‘real’ business, and some who give offers to not for profit groups tend to see us only as business. The truth is we are both rolled into one (not expressed very well but I am sure you understand me here). In fact in some senses we are the ultimate Not for Profit organisation as we aim to become self-funding and then to use those funds by-in-large to benefit the communities we live and work in.

So I would agree with Trevor Lockwood that our first priority is to decide what we are going to be, and we can be ‘club, campaigner, informer, and marketer’ or we can decide to be only one or two of those. We have to decide which and with what priorities, prepare our business plan and take the association forward in a positive way.

[John Mulkerrin]

i'll be outlining more on this on Monday, but quickly, Point 3 isnt a problem,although we do have to ensure we stay within the regulations. We are starting to be taken seriously as a group of businesses, as well as a social business opportunity, which I think just as important (starting to!) and we'll probably be going the limited by guarantee route, which will give members power thru voting rights etc (similar to nationwide voting process) I'll be posting a Memo and Arts after Mondays event for opinion and development.
Best
John

[Steve Blake]

Ok That Sounds Great. I was a bit concerned about point 3.

As for the rest we shall await moree information.

[Bob Northey]

Hi John

As an association I can appreciate the value of 'members' having voting influence in terms of the appointment/re-appointment of directors. However I am unclear as to "CIC companies owning the association", surely the directors own the business/association and accept their responsibility under mandate from the members. If members are given 'ownership rights through equity shareholding, then you probably mean named individuals in their own right rather than CICs. Unless you can offer clearer explanation...

I think the key issue is about defining the role of the members, requirements of members, the question of either CIC directors or CIC employees as the named contact.

Terri and Trevor have flagged up other interesting points.

Bob Northey

[Adrian Ashton]

so - to maybe muddy the waters some more, or hopefully clarify positions and situations:

incorporating the association seems a logical choice: although its not trading per se, it would give it more credibility when representing the CIC sector to others;

what's been described and alluded to in the various comments to date seem to me to indicate that it would be a consortia co-operative (its members/owners being other businesses who've formed it to act on their behalf and in their interests in ways which they'd be unable to do themselves individually, and allows all to be equally involved and responsible for it, also gives it more of a mandate in its actions). And beng a co-op doesn't meant having to incorporate it as a Society - co-ops can be incoprrated in lots of different ways (some co-ops have registered themselves as CICs) - I'll try and start a new thread on the forums about co-ops and CICs to expand on this further...

the issue of directors as individuals vs the member CIC - an incorporated entity (eg a company) beomes a legal person in law, as such any organisation can have 'corporate members'; in turn these members nominate a person to represent and speak on their behalf within the group that they are a member of. So when sitting around the table, although it would all be 'natural people', they'd be speaking on behalf of a member CIC and not representing their own personal interests.

and the question of issuing shares - i'm not sure that it would be best to incorporate the association as a share CIC. Shares are a useful way to raise private equity, but usually confer voting rights in different proportions, but given that the association is wanting to ensure a voice for all its members, and will be incorporating primarily to enhance its credibility with other bodies and agencies, using a guarnatee model may be more advantageous (and less administratively demanding)

(and as an aside there are a few social enterprise loan funds that I know of who won't lend to you if you're a share company even if you do have CIC status)


hopefully that helps to clarify some of the questions that are floating around here, but probably added a few more....


happy to respond to any queries that this post may raise, but probably best to do some within this forum to make sure we all keep up to date with each others thinking?



Adrian