Because pioneer share offers are targeted at existing members, and not at the general public, the offer document does not have to explain the purpose of the society or provide basic information about the terms and conditions of membership. However, it remains vital that high standards of accuracy, transparency and care are applied to drafting the document because the promoters are still legally liable under contract and civil law. Pioneer offer documents need to address the following matters:
Eligibility: The document should clearly state that the offer is only open to existing members of the society.
Purpose of the investment: A brief description of the proposed new enterprise, the reasons why development finance is required, and an estimate of the current amount of development finance available to the society.
Development costs, targets and contingencies: An analysis of the development costs, the target amount to be raised, the contingency plans if less than the target amount is raised, and what will be done with the surplus if more than the target amount is raised.
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 investors 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 [email protected]