What are Community Shares?

In a nutshell, Community Shares are a way for community businesses and co-operatives to raise finance in a flexible and affordable way from individual investors in order to help them develop and grow. They are also known as ‘withdrawable shares in a Community Benefit Society.’

Community shares are withdrawable shares that cannot be sold, traded or transferred between members, unlike shares in a typical company. Shareholders become members of the business or organisation they invest in. All members are entitled to one vote – regardless of how many shares they hold. Members can be paid interest on their shares if the Board believe it would be sensible to do so, and can also withdraw their shareholding, along with any interest accrued, again subject to the approval of the board. 

Unlike shares in companies, you don’t get a dividend, but an annual target interest rate. It is not possible to sell them to someone else. Instead, investors can request to withdraw their money from the society, but the Board can only approve this if the society has sufficient cash reserves to let them do so.

As community shares invest your capital into the delivery of a business, the ability to have the cash to hand when investors might like to have it returned to them will depend on the business trading successfully. That’s the real secret of community ownership – making the rewards of success something that can be shared with the people who matter the most.

What are the risks?

When you invest in Community Shares, your capital is at risk. You could lose some or all of the money you invest. You have no right to compensation from the Financial Services Compensation Scheme, nor any right of complaint to the Financial Ombudsman Service. Please don’t invest any money you can’t afford to lose.

Why invest in community shares?

Besides the potential for financial returns, Community Shares are a great way for people to invest to support businesses they believe in. Since 2012, over £155m has been raised by over 104,203 people in community shares across the UK.  Community shares have been invested into over 450 co-operative and community businesses including shops, pubs, renewable energy schemes, housing projects, community hubs and much more.

Investments offered on the Ethex platform are not readily realisable, which means that they may be difficult to sell and you may get back less than you originally invested. Investments are not covered by the Financial Services Compensation Scheme (FSCS) and returns are not guaranteed. If you are in any doubt, you should contact an Independent Financial Adviser.

Investments offered on the Ethex platform are not readily realisable, which means that they may be difficult to sell and you may get back less than you originally invested. Investments are not covered by the Financial Services Compensation Scheme (FSCS) and returns are not guaranteed. If you are in any doubt, you should contact an Independent Financial Adviser.