Investing in community shares is a simple, direct and engaging way of supporting businesses that serve your community. We have produced a simple guide to investing in community shares so you can learn more.
Community shares can only be issued by co-operative and community benefit societies. Members have just one vote, regardless of how much they invest, and there are limits on how much you can invest, to prevent the society being dependent on a handful of large investors. Your shares can never be worth more than you paid for them, but they could go down in value if the society gets into financial difficulties.
The main reason why people buy community shares is to support a community purpose, not to make a financial gain, which is why this type of share offer is not subject to financial promotion regulations. Being unregulated reduces red tape and helps to keep the cost of making a share offer affordable for communities. But it also means your investment is not covered by the Financial Services Compensation Scheme, and you have no right of complaint to the Financial Ombudsman.
In order to help societies make great community share offers, the government has funded the Community Shares Unit. It works with societies and community share practitioners to develop national standards of good practice. These standards are set out in the Community Shares Handbook and form the basis of the Community Shares Standard Mark.
Share offers bearing the Standard Mark have to:
- Have offer documents and application forms that are easy to understand
- Provide investors with all the facts they need to make an informed decision
- Give investors access to the annual accounts and/or business plan for the society
- Do not say things that are purposefully incorrect, confusing or misleading.
Societies are asked to sign a Code of Practice requiring them, among other things, to give you a right of complaint to the Community Shares Unit, if you think there is something wrong with the share offer.
This site has lots of information on community shares to help you understand what to look for in a community share offer, including the Community Shares Standard Mark.