2.2.2 Withdrawable shares

Community shares are non-transferable, withdrawable shares in a society with a voluntary or statutory asset lock. Members are allowed to withdraw this type of capital, subject to the rules of the society. The rules can specify the terms for withdrawal, such as a period of notice of the intention to withdraw, the proportion of total share capital that can be withdrawn at any one time, as well as the right of the management committee to suspend withdrawal or to offer applicants only a fraction of the value of their share capital.

International accounting standards require that if withdrawable share capital is to be recorded as equity for accounting purposes, the society must have the discretionary powers to suspend or refuse withdrawal clearly stated in its rules. If a society does not have these powers, then withdrawable share capital must be treated as a long-term liability.

There is a legal limit on the amount of withdrawable share capital that can be held by an individual member, currently standing at £100,000. The purpose of the limit is prevent a member having undue financial influence, or for the society to be overly dependent on a small number of members.

Withdrawable shares are not normally transferable, unless a member dies, in which case their shares are transferred as part of the member’s estate. Society legislation makes specific provision to allow members to nominate the person or persons who will benefit from their property in the society, including withdrawable share capital.  

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