4.4.3 Contents

Pioneer offer documents need to address the following matters:

Capital-at-risk warning: The offer document should contain a prominent warning that the society has no business plan and will need to raise substantial, additional capital before it can start trading. Any commitment to pay share interest or allow the withdrawal of share capital is wholly dependent on the future profitability of the enterprise, and its ability to recover early stages losses resulting from the development costs outlined in this offer. Investors could lose some or all of the money they invest without recourse to the Financial Services Compensation Scheme or the Financial Ombudsman.

Purpose of the investment: A brief description of the proposed new enterprise, its proposed business, industry or trade, the scale of the enterprise, and the estimated amount of start-up capital required. ,

Development costs, targets and contingencies: The CSU has a template for summarising the forecast development costs and comparing these costs to the fundraising targets, other sources of development funding available to the society, and the contingency arrangements associated with these targets. 

Tax relief: Pioneer share offers may be eligible for tax relief under the Seed Enterprise Investment Scheme, the Enterprise Investment Scheme or Social Investment Tax Relief (see Section 8). However, offering tax relief at this stage may severely constrain the future actions of the society, committing it to engage qualifying business activities and requiring it to commence trading within two years of receiving the eligible investment. The society should seek professional tax advice or advance assurance from HMRC before offering tax relief in a pioneer share offer.

Terms and conditions: Details of the type of share capital being offered, and the terms and conditions that apply to this class of share. The indefinite suspension of withdrawal rights should be clearly stated, as should the reliance of this offer on the success of future share offers for there to be any prospect of pioneer members getting a return on their investment.

Timetable: The target date for closing the offer, together with a commitment not to spend any of the finance raised by the offer until the minimum targets or contingencies have been met. An estimate of how long it will take to get investment-ready, raise the capital required, and establish the society as a profitable enterprise.

In most cases, pioneer offer documents will be no longer than 1,500 to 2,000 words.


If you have any questions or suggestions for new information you would like to find in the Handbook, contact the team by email at communityshares@uk.coop