A pioneer share offer is a way of accessing high-risk capital at a very early stage in a project, to get ‘investment-ready’. Often those who are passionate about a project are prepared to put their hands in their pockets before the project is fully formed; defining this start-up capital as pioneer shares therefore offers such individuals at least the same rights and benefits as other shareholders, should the project succeed. Because pioneer investors are asked to take far higher risks than subsequent investors, consideration should be given to establishing a separate class of “pioneer shares” with different terms and conditions, such as a higher rate of financial return, or a preferential right to withdrawal ahead of other classes of share. Introducing more than one class of share can have an impact on the attractiveness of future share issues.
The pioneer offer document should make it clear that withdrawal of share capital is suspended indefinitely, or until it is superseded by the terms and conditions for the withdrawal of share capital set out in a subsequent offer document.
It is recommended that pioneer offers should only be made to existing members, or to known supporters of the society, who should be required to become members on the same basis as existing members, prior to investing in a pioneer offer. Pioneer offers should not be promoted to the wider community through websites, social media or at public meetings.