Minutes of the Special General Meeting held at 7.00pm on Thursday 8th July 2021
Present:
Dick Stainer
Chairman
Robin East
Director
Roger Thomas
Director
Robert McCurrach
Secretary
Apologies fromMark Edwards
Director
And approximately 60 members, including some seated outside.
1. Chairman’s Opening Remarks
Chairman welcomed members and others to the meeting, and introduced Pen Hadow, the Fundraising Coordinator
2. Presentation by Pen Hadow
Pen emphasised that the work done by the FMCLT was a team effort and that the way forward was for the community to work together to provide a secure home for the shop in the future. The shop had been supported by the community for the last 150 years, and in turn had provided a high level of service, especially during the pandemic. He pointed out that it was estimated that proximity to local shop was worth between 1% and 5% of the value of a property, equating to between £5,000 and £25,000 in Fontmell Magna.
3. Chairman’s summary of progress so far
The Chairman introduced the other Directors. He described the work of the Village Shop Working Group, which had researched other shops in the area, had examined the proposals to set up a hub around the Village Hall, and had come to the conclusion that acquisition of the freehold of the Village Shop and Post Office presented the best chance of securing the shop’s future. He also explained that discussions had been held with the shop’s owner, who had verbally agreed to give FMCLT until the end of December to fund a purchase.
4. Members’ Questions
Louise Murchie said that the shop provided an essential service to villagers, as well as a location where people could meet. She was sure that if everybody contributed, the project could succeed.
Lorna McCurrach asked how the project would be managed. The Chairman explained that a Property Management Group would be set up. Its Terms of Reference would specify its objectives. It would need some professional skills, such as accounting and legal. If these could not be found from volunteers, they would be sourced externally.
Barry Roberts asked how much had been pledged to date, to which the answer was approximately £135,000.
Simon Man asked how the funds would be treated in the event that the property was sold at some future time. How could shareholders or donors be assured that their money would not be put into another scheme? Chairman pointed out that any new project would need members’ approval. The Prospectus dealt with the possible sale of the property, and explained how members would have the right to request withdrawal of their shares on such a disposal.
5. Resolution
The Chairman explained that the resolution had been worded to give directors the authority to proceed, to complete the necessary legal formalities, and to satisfy the requirements of any grant providers and financial institutions.
The following resolution was put to members:
Fontmell Magna Community Land Trust should:
(a) proceed with the collection of pledges to build up enough funds to complete the purchase;
(b) at the same time negotiate a final price with the freeholder, contract with him, with banks and other financial institutions, with charities and with other potential providers of financial support for the project;
(c) complete the purchase if the conditions set out in the prospectus are met to their satisfaction.
On a show of hands, the Resolution was approved by 53 members, and no votes against.
6. Fund Raising Update and Project Team Volunteering
Pen Hadow explained that it was essential to move quickly, and to reach a target £200,000 by the end of July. This would put FMCLT in the position to approach grant providers, with the further aim of raising £400,000 in total, if possible without resorting to mortgage finance.
He said more fund raising events were needed, for example an auction of promises in the autumn, or a musical event at Springhead.
Members were all given a pledge form to complete as soon as possible.
Roger Thomas gave a brief account of dealing with the freeholder. This emphasised the difficulty of negotiating with him and he urged everyone to act now to make sure that we do not miss this opportunity.
This is to advise you that we shall hold a Special General Meeting on Thursday the 8th July in Fontmell Magna Village Hall, at 7.00 pm, following the positive response to our previous letter.
The formal agenda for the meeting will follow shortly, as well as a Prospectus which explains how members can buy additional shares in FMCLT or make donations, to enable us to purchase the freehold of the Village Shop.
We have an indication from the freeholder that he is prepared to sell to us.
The main purpose of the meeting is to bring you fully up to date with our plans for the purchase of the freehold of our Village Shop, to provide an opportunity for questions, and to request:
A formal vote giving agreement from our members to negotiate formally with the freeholder and, if successful, to conclude the necessary legal formalities with him and with other necessary entities;
An indication from members that they are prepared, collectively, to contribute towards a sum of at least £260,000 to enable us to reach agreement with the freeholder.
As we have stressed in the past, we are only proposing to acquire the freehold, and not the business of the shop.
This very significant meeting will be an opportunity for you to question the Management Committee, and to express your views. It is probably our last opportunity to secure a home for our Village Shop, with its Post Office & Banking Services, Café & Tea Garden. A number of you have replied to our letter of the 21st May, and have expressed strong support for the project.
We urge you to attend and we look forward to seeing as many of you as possible on the 8th July.
We are delighted and honoured to be able to report that Sir John Eliot Gardiner CBE Hon FBA has kindly agreed to be Patron of our fund-raising project. Sir John Eliot, as a world-renowned musician and conductor who was born and lives in Fontmell Magna, appreciates the importance to the community of its village shop, and we are very grateful for his support.
The initial response to the work of Pen Hadow, our Fund-raising Coordinator, has been most encouraging, and we have already secured pledges for over £90,000 from members and other residents.
The agenda for our meeting, which begins at 7.00pm, is as follows:
Chairman’s opening remarks;
A short presentation by the Management Committee, which will outline the work undertaken to assess the project to purchase the freehold of the Village Shop, and the action needed to bring the project to fruition;
Members’ Questions;
A resolution, to be voted on by members, that FMCLT should proceed with negotiations with the freeholder
A resolution, to be voted on by members, that FMCLT Directors should be authorised to contract with the freeholder, with banks and other financial institutions, and with charities and other providers of financial support for the project;
Any other business.
We hope you will be able to attend the meeting and we look forward to seeing you there.
We are pleased to report that it has been a busy and productive time since our well attended members’ meeting on the 8 July. The overwhelming support for our project to buy the freehold of the village shop property was greatly appreciated.
Since that meeting membership of FMCLT has increased from 106 to 153 and the total sum pledged so far now exceeds £198,000. It is also pleasing to welcome the members from outside the parish, in Sutton Waldron, Twyford & Compton Abbas.
We are grateful to those of you who have already made a pledge as it shows tremendous support for our project. The share offer has now arrived at the closing date of the 5th of August. Our fund raising efforts are now focused on the government’s Community Ownership Fund. This has just been opened after the announcement in the last Budget and, now that we have seen the guidance and application form, we believe we have a good case to receive a grant from the Fund. Together with your pledges to date, if our application is successful, we will have 100% of the funds we need to proceed with the purchase of the freehold. We should know more by early September.
We will be contacting those of you who have made pledges to make your pledge payment, by the 16th August please, preferably by bank transfer to:
Account Name: Fontmell Magna Community Land Trust Ltd.
Account Number: 21099383
Sort Code: 16 58 10
Please call Robert McCurrach on 01747 812077 if you would prefer to pay by cheque or if you need more time to transfer the funds.
FMCLT confirms that pledges made for this specific project will be refunded in full if the project does not proceed to completion.
The negotiations with the freehold owner were concluded satisfactorily and we can confirm the agreed price is as set out in the prospectus. The intention is to complete the purchase before Christmas. Woolley & Wallis and Symonds and Sampson have confirmed that the accepted offer is in line with their valuations of the property. Due to a family member’s health, Pen Hadow needs to take a step back from his active day-to-day involvement with this project. Not only was he the catalyst for action in the first place, his considerable efforts and enthusiasm since then have made a massive contribution to getting us to where we are today. He remains fully supportive of our objectives, strategy and team and we look forward to his further input as soon as he is able to do so. On your behalf we thank him for all he has done to safeguard the future of our village shop, and we wish him and his family well.
Finally, we are now getting closer to the ‘acquisition’ phase. We are looking to set up a small working group (5–7 people) reporting to the Management Committee to assist with and oversee the necessary processes. Once completed the acquisition group will hand over to the working group responsible for the day to day management of the property. It is also envisaged that FMCLT would co-operate with an independent “Friends of the Village Shop” group to ensure we meet our aim of a ‘Community Partnership’ with the shop tenants..
To take this project forward FMCLT needs the support of community members willing to take an active role in its future management’
to paraphrase Lord Kitchener “YOUR COMMUNITY NEEDS YOU!”.
If you are willing to help in either working group and want more information please do not hesitate to contact me or any of the directors, details below.
Village Shop Fundraising Patron: – Sir John Eliot Gardiner CBE, Hon FBA
Foreword by Pen Hadow, Explorer & Conservationist (Bedchester)
Two years ago, someone casually mentioned that they had read online that our Village Shop’s business was for sale. It turned out it had already been for sale for 12 months. But with the present Village Shop owners recently informed that the current lease will not be extended beyond March 2028, buyer interest for the business has evaporated.
This means they are now unable to sell this important and viable business. In brief, unless we buy the freehold and extend the lease, we’ll lose the Shop, its Post Office with Banking Services, and Café & Tea Garden and that could be sooner rather than later. Our Village Shop has been providing a range of household services and supplies for over 150 years. The Shop’s premises have also acted as a social hub helping to hold our community together. For some, it’s just always been there, with what you need when you need it. For others, it’s been a big reason for moving to Fontmell, along with the school, the pub and the church. And for some of us, including the most vulnerable in our community, it’s both a lifeline for essential foods within walking distance and it’s a convenient place to meet village friends. Be under no illusion, our Village Shop is a precious community resource, as 98% of us confirmed in the May 2016 Neighbourhood Plan survey, and an invaluable asset in so many ways as recent Covid times have proved. Following two years of extensive research, overseen by our Fontmell Magna Community Land Trust (FMCLT), this document outlines the best solution to ensuring our Village Shop, together with its Post Office & Banking Services, and Café & Tea Garden, stay open for us all – until the community decides otherwise. Our choice is this: buy the property’s freehold NOW, modify (if needed) the terms of the lease, and keep supportively engaged with the tenants (present and future) on the viability of the Village Shop – and in so doing create the possibility of an annual income for local community projects. Or do nothing, and lose the Shop,with the property then going through a change-of-use to residential-only.
We’re only getting one chance to save our Village Shop – and it’s NOW.
So please read this document which explains the whole situation, and how you can buy the shares that will bring the Village Shop property into community ownership.
Ladies and Gentlemen, it’s show-time!
SHARE OFFER SUMMARY
Fontmell Magna Community Land Trust Limited (FMCLT)is proposing to sell ‘Community Shares’ (“shares”) to fund the purchase of the freehold of The Post Office House, Church Street, Fontmell Magna (“the property”).
The offer will open following Members’ approval at the next Special General Meeting at the Village Hall on Thursday 8th July 2021 and close at midnight on the 5 August 2021 or when the maximum target is reached, whichever is sooner.
The Management Committee reserves the right to extend the offer beyond this initial period, if they believe that by doing so, they will increase the chances of reaching the target.
FMCLT needs to raise a minimum amount of £255,250 up to a maximum amount of £382,000 for the purchase to proceed.
The shares are a social investment to provide benefits for the community of Fontmell Magna and its neighbourhood. The shares will not pay dividends or interest and cannot be traded or sold so will not generate income or capital gains.
The minimum investment per person is £25 and the maximum is the legal limit per individual member of £100,000.
This offer is not eligible for Social Investment Tax Relief or Gift Aid.
Before you invest, it is important that you understand that although your Community Shares are withdrawable, they are fully at risk and you could lose some or all of the money you subscribe. You have no right to compensation from the Financial Services Compensation Scheme, nor any right of complaint to the Financial Ombudsman Service.
If you already anticipate wanting to withdraw your investment, this is probably not an investment for you because the intention of FMCLT is to hold the freehold of the property in perpetuity, to provide a stream of income to deliver a community benefit.
For more information see the Business Plan on our website at fmclt.org
This share offer document sets out the Proposals:
Background
Key Points of the Proposal
What are the Main Risks?
Financial Information
Why you should support this proposal.
Appendix A – What is Fontmell Magna Community Land Trust Limited?
Appendix B – FAQs
BACKGROUND
The Parish of Fontmell Magna sits in a very attractive area of Dorset, but it is in the bottom 40% of areas on the Government’s index of deprivation for England, largely because of the limited public transport and access to shopping, postal and other services in the surrounding area.
If that statistic were not proof enough that the loss of the Shop/Post Office would be a severe blow to our community, then the pandemic over the last year has proved it beyond doubt. The shop was a lifeline for many in the community who were shielding or isolated during the lockdown. It had always provided some free deliveries but, with the assistance of community volunteers, it was able to support many more. It was also able to source food and household supplies that were otherwise in short supply at the supermarkets in the early weeks of the Covid lockdown. It is estimated that over half our community relied upon these services at the peak of the first lockdown.
The Shop is currently trading satisfactorily, but there is a substantial threat to its long-term future. The present shop business owners have been told that their lease will not be extended beyond March 2028. This has severely limited the prospects of selling the business. As a result, they may retire without waiting to sell on the business. However, they have said that if FMCLT were the freeholder, able to work with them and new tenants on the lease, then they would prefer to continue running the business until a suitable buyer could be found to take over the shop.
If the current shopkeepers retire without selling the shop business, then the property owner will be free to seek permission for redevelopment for residential use. Even if the community could prevent such redevelopment, there is no guarantee that the property would be leased to someone wanting to run a Village Store and Post Office (assuming Royal Mail would reinstate the Post Office).
Following initial discussions, the owner has confirmed by email his willingness to sell to FMCLT. As the rent is fixed under the terms of the lease until March 2028 and our ability to borrow sustainably is dependent upon the rent, we believe we have a limited opportunity to acquire the property now while the current owner is willing to sell, interest rates are relatively low and property prices make it feasible.
As we get nearer to 2028 and the expiry of the current lease, the owner may prefer to hold out for the possibility of a development premium on the property and, if there were a rise in property prices or interest rates, the costs are likely to be beyond the capacity of the community to provide the additional funding that would be needed.
With FMCLT members’ support we will be able to open negotiations on the purchase price and, once financing is in place, proceed with the acquisition of the freehold.
2. KEY POINTS OF THE PROPOSAL
We are proposing that FMCLT acquire the freehold of The Post Office House, Church Street, Fontmell Magna (“the property”) for the benefit of the community. We are not proposing to buy the business of the Shop or to be directly involved in the management of the shop’s day to day activities. Owning the freehold will give the community control of the property and its future use. Our intention is to work with the present and future tenants and build a “Community Partnership”, a mutually beneficial relationship which aims to ensure the property continues to be used for its current purposes.
We are proposing that FMCLT acquire the freehold of The Post Office House, Church Street, Fontmell Magna (“the property”) for the benefit of the community. We are not proposing to buy the business of the Shop or to be directly involved in the management of the shop’s day to day activities. Owning the freehold will give the community control of the property and its future use. Our intention is to work with the present and future tenants and build a mutually beneficial relationship, one which aims to ensure the property continues to be used for its current purposes.
FMCLT has already carried out a full structural survey and taken advice on the value of the property and its condition. Quotes of £20,000 have been obtained for the necessary repairs.
We propose that a further £21,000 (equal to a full year of rent under the current lease) of the money raised will be held as a contingency fund against the risks of any loss of rent between tenants, and unexpected legal and other costs that may arise in future years.
Taking these figures into account we estimate that, if we require a mortgage, we need to raise a total of £405,250 to acquire the freehold of the property, carry out the backlog of repairs, and establish a contingency fund to mitigate the impact of possible risks.
However, if we can raise all the funds and proceed without a mortgage then because the costs and risks will be reduced, we would need to raise a lower total of £382,000, This is largely because a contingency fund can be built up in year 1 from the much larger cash surpluses.
This share sale is a key part of the funding of this project. We will also be seeking donations and grants from external funds, charities, government bodies, etc.
If we raise the minimum target of £255,250 then we would expect FMCLT, after payment of mortgages/commercial loan(s) and other necessary expenditure, to have some £3,000 surplus cash every year for the next five years. If we can raise the maximum amount of £382,000 then we would expect that surplus to be approximately £11,000 a year after the first two years. At the discretion of the directors this can be applied to benefit the community in other ways, build up additional reserves or repay shares if requested.
The Management Committee will not recommend that the projected purchase proceeds unless we raise the minimum of £255,250 and any necessary mortgage is approved.
Any pledges for community shares or donations for this specific project, received prior to completion, will be held in a holding account and Shares will only be issued if the project is finalised. If the project fails these funds will be returned in full.
As a Community Benefit Society, FMCLT is under a legal obligation to use profits to support and provide other benefits for the community. To maximise the benefits to the community we do not propose to pay interest or dividends on the shares.
You should also note that the shares cannot increase in value because the assets of a Community Benefit Society can only be applied to benefit the community, not shareholders. You should therefore not see this as an investment to make a financial return: it is a social investment purely for community benefit.
If the FMCLT purchases the freehold but circumstances lead to a membership vote of approval to sell the property, it is the intention of FMCLT to repay the community shares, to the fullest extent possible if a member so requests, as set out in FMCLT rules – see FAQ 11 for more information.
3. WHAT ARE THE MAIN RISKS
No investment is without risk. A comprehensive review of potential risks and mitigations has been conducted. Full details can be found in the Business Plan Risks Analysis on our website at fmclt.org. This plan will be reviewed and updated regularly by the FMCLT Management Committee. We have identified the following as the main risks to the proposal:
Loss of rental income. The biggest risk to the project is the loss of rental income either because the current or future tenants cannot pay, or there is a significant gap between tenants. If this happens then FMCLT will face insolvency and repossession of the property as it will be unable to pay its mortgage and other expenses. To mitigate this risk it is proposed to have a contingency fund of £21,000 (12 months’ rent) to give enough time to find a new tenant or, if no tenant can be found, to give the community time to decide the fate of the property. The current Management Committee think that if a new tenant cannot be found then the most likely and simplest course of action will be to sell the property with a community supported development plan with any gains being used to benefit the community. If the property is acquired without a mortgage then gaps between tenants present a much-reduced financial risk as expenses are much lower without the mortgage costs.
Interest rates rise. The extent of this risk depends on the timing and level of interest rate rises. From the outset FMCLT will have sufficient cash surplus to cover an increase in the mortgage interest rate of at least 2.5%. As the mortgage is a repayment mortgage, in the medium to long term if rents rise or refinancing is an option a larger increase may still be sustainable. However, if the increase in mortgage interest rate still exceeded FMCLT’s ability to pay, the contingency fund will provide the same mitigation of the impact and options as for the loss of rental income. If the property is acquired without a mortgage then increases in interest rates will not present a financial risk as FMCLT will have no debt.
Falls in property prices. As the intention is that FMCLT hold the freehold of the property indefinitely, a fall in property prices does not present a risk to the success of the proposal unless FMCLT is forced to sell the property due to loss of rental income or interest rate rises. In the worst case scenario, a forced sale could result in the insolvency of FMCLT if it were unable to repay the mortgage, but the most likely outcome would be that FMCLT would not have sufficient funds to repay the community shareholders in full.
FMCLT is unable to raise the funds required. Should this happen no money transfers will be accepted from those offering to buy shares and the proposal will not proceed.
FMCLT may be unable to administer the ongoing management of the property. In such a case this service will need to be outsourced. We have been advised that the likely cost of this service would be 12% of the rental income. This is already included in the financial projections.
4. FINANCIAL INFORMATION
The following is a summary of the key financial matters. See the Business Plan Financial Projections on our website at fmclt.org for more information.
Freehold – Post Office House
£ (with loan)
£ (no loan)
Freehold purchase price Legal and Professional Fees Stamp Duty Land Tax Mortgage fees Essential Repairs per quotes Contingency
350,000 5,000 7,000 2,250 20,000 21,000
350,000 5,000 7,000
20,000
Estimated Total Capital Maximum Mortgage
405,250 150,000
382,000 0.00
Funding Required
255,250
382,000
The maximum capital requirements have been estimated as in the table above
Based on the current lease and rent of £21,000, we believe that the maximum mortgage should not exceed £150,000.
This proposal therefore requires a minimum contribution from the community shares, grants and donations of £255,250 if it is to proceed.
Our 5-year financial projections (Profit & Loss and Cash-flow) show that with a £150,000 mortgage, FMCLT should be profitable and there will be around £3,000 p.a. surplus cash available for community projects. This is after taking into account:
Current mortgage interest rates of 4.1% and capital repayments over 25 years.
If the community raises the full sum required with NO loans needed:
The financial projections show it is possible to complete the purchase with a lower capital fund requirement of £382,000. This is because there would be no mortgage fees and a reduced contingency fund requirement of £12,000 which would be built up from the first year’s rental income.
The projected annual cash surplus available for community projects would rise to around £11,000 p.a. after the first year.
5. WHY YOU SHOULD SUPPORT THIS PROPOSAL
The impact of the Covid-19 pandemic has clearly demonstrated the importance of a local and readily accessible shop in particular to those with less access to transport and online shopping. It delivers not only the benefit of a Shop and Post Office with Banking Services, Café and Tea Garden, but also provides a venue which brings people together and enhances the social fabric of our community. Its role as part of the social life of our community has no value to a property developer but is invaluable to us.
In addition to providing a long-term home for the Village Shop, FMCLT will use any surplus income for the benefit of the local community. This will be by donations to other community projects or direct expenditure for the benefit of the community.
The Directors thank you for your interest in this project. We are ready, subject to a vote of approval by the members of FMCLT, to enter negotiations with the present landlord as soon as the necessary finance is in place.
FMCLT’s Management Committee wishes to acknowledge the following for their assistance in this project:
The contribution to the project costs kindly made by the Plunkett Foundation in the form of two days of paid consultancy from MMT Enterprise Support to help with the share issue.
The free advice generously provided by Woolley & Wallis, Symonds & Sampson & Farnfields Solicitors.
Fontmell Resident, Barry Roberts, for a detailed and thorough structural survey.
The Grosvenor, Shaftesbury for the free provision of meeting facilities.
The many residents who have contributed through time and effort in the development of this project.
Les and Glenys Barrett in the Post Office and Shop in the 1950s talking to local customer Howard Edwards.
Appendix A
WHAT IS FONTMELL MAGNA COMMUNITY LAND TRUST LIMITED (FMCLT)
FMCLT is registered with the FCA – its legal format is a ‘Community Benefit Society’ – see our website fmclt.org/documents
FMCLT was formed in May 2019 to acquire and manage assets for the benefit of the community. The community comprises the full parish of Fontmell Magna and residents from the surrounding area including Compton Abbas, Sutton Waldron, and Ashmore.
The initial prompt for its formation was an imminent risk of the community losing its Village Shop.
FMCLT is owned by its members. Membership is open to anyone who supports our aims and is aged 16 or above. Currently there are 95.
FMCLT is run by a Management Committee, which has overall responsibility for policy. The current committee members (Directors) are:
Dick Stainer Chairman
Robin East
Mark Edwards
Robert McCurrach Secretary
Roger Thomas For more information on the Management Committee members see the Business Plan on our website at fmclt.org
FMCLT is run democratically, and all members can participate by attending the Annual General Meeting (and other members’ meetings), voting on a one-member, one-vote basis to elect members of the Management Committee and on any proposals put to the meeting.
Members can also stand for election to the Management Committee, volunteer to serve on committees and offer their services to the FMCLT.
FMCLT has limited liability status, so members are only liable up to the value of their share investment in the event of FMCLT’s insolvency.
Full details of the Rules governing the FMCLT can be found on the Documents page on our website fmclt.org/documents
Appendix B
FREQUENTLY ASKED QUESTIONS
What is a Community Benefit Society?
A Community Benefit Society (CBS) is the legal structure chosen by the FMCLT as we think that it is the most suitable format for the potential projects that we may wish to undertake.
As a CBS, FMCLT is a community-led social enterprise owned and run by its members.
A CBS is managed by a Management Committee elected by the members of FMCLT at the first and subsequent AGMs. By subscribing for shares issued by FMCLT in this share offer, you will become a member of FMCLT.
What are Community Shares? Community shares are withdrawable shares that subject to FMCLT rules may be repayable on request.
What is the difference between a Member and a Shareholder?
None. As a shareholder you automatically become a Member of FMCLT.
Membership of the Fontmell Magna Community Land Trust Limited (a Community Benefit Society) is attained by making the minimum share investment of £25.
What voting rights do I have as a Shareholder?
You will be able to attend and vote at FMCLT meetings, stand for and vote for the Management Committee and propose resolutions for consideration by the meeting.
In a Community Benefit Society, the rule is one member one vote, so no matter how large or small their shareholding, all members have an equal voice.
Who can buy shares?
Any individual over the age of 16 who agrees to be bound by the Rules can buy shares in Fontmell Magna Community Land Trust Limited and become a member. You do not have to live in Fontmell Magna or the surrounding villages.
The Management Committee may refuse any application for membership at its absolute discretion.
Groups of people including families, clubs or companies can also buy shares, but they will be held on behalf of the group by whoever makes the payment.
Can I buy shares in the FMCLT through my business?
Your business can buy shares in the FMCLT, although you need to have a named individual who is the member.
FMCLT is a Community Benefit Society, not a charity, so your business cannot claim tax relief on a charitable payment.
Can I buy shares as a gift? If you wish to buy shares as a gift, the easiest way to do this is for you to give the person you are buying the gift for the cash and ask them to apply for shares.
Can I pass my shares on to my family? Yes. Members may nominate a beneficiary who can inherit their shares upon their death but must notify us who that beneficiary is.
What happens to shares on member’s death?
In the event of the death of a member, shares of up to £5,000 can be transferred to another person nominated by the member before their death. Shares above £5000 in value can only be transferred under the terms of the settled will and testament of a member under probate law. The detailed rules on this are in the FMCLT’s rule book which is available in ‘Documents’ on our website fmclt.org
If FMCLT has the funds and the Management Committee agrees, the shares may be withdrawn by the nominee.
Will I get a share certificate? Yes. Every Member will receive a share certificate.
How do I get my money back if and when I need it?
Shareholders may request to withdraw their investment by giving 180 days’ notice, (FMCLT Rule 7.3). However, the shares will only be repayable if the directors are satisfied that FMCLT has sufficient financial resources.
The FCA’s new registration guidance, published in November 2015, says that a society should only allow the withdrawal of shares if it has trading surpluses that match or exceed the value of shares involved, and the directors believe that the society can afford to pay its debts taking into account all of its liabilities (including whether it will be able to pay its debts at the date of withdrawal, and for a year after that, any contingent or prospective liabilities), and the society’s situation at the date of the transaction.
If there are insufficient funds to satisfy a demand for repayment the directors may limit the amount to be repaid until such funds are available (FMCLT Rule 7.7).
It is not expected that FMCLT will have the capital to fund substantial withdrawals until any mortgages or loans taken out for the purchase of the property have been repaid in full or the property has been sold.
Who will benefit from this investment?
The community of Fontmell Magna and surrounding villages will benefit directly from having a Village Shop secured for the future.
Any surpluses, after investment in the business will be used to benefit the community in accordance with FMCLT’s rules.
Is there a business plan? Yes – this prospectus is supported by a Business Plan – copies will be available on our website fmclt.org
What are the minimum and maximum amounts I can invest? The minimum is 25 x £1 shares costing £25. The legal maximum for an individual investment is 100,000 shares costing £100,000.
Is my investment guaranteed?
No. This is a long-term social investment for the benefit of the community.
It is not the same as the more familiar investment in a private sector business where investors hope to receive income and make capital gains from an increase in the value of shares held which are freely marketable.
The value of shares in FMCLT cannot increase beyond their nominal value of £1 per share and may be reduced if liabilities exceed assets. However, because the shares are issued by a corporate body, no further liability can fall on you as a shareholder.
FMCLT cannot and does not guarantee a return on your investment.
Will my investment increase in value?
Community Shares cannot increase in value above their original price.
The purpose of this investment is to provide benefits to the community not a return to the investor.
Will the shares pay interest? The shares will not pay interest.
What is my liability, should I invest? Your liability is limited to the value of your shares.
What happens to my shares if the business fails?
If at some point in the future a tenant cannot be found it may be necessary to sell the property to repay external borrowings.
In the case of a solvent winding up, FMCLT’s assets would be sold and, after creditors are paid, shareholders may be repaid up to the value of their shares.
Any surplus must by law be put to community use. If FMCLT’s liabilities are more than its assets, then the shareholders will lose part or all of their investment.
What if you raise more than £255,250 in the share offer?
The share offer will close if we reach our maximum target of £382,000.
People who express an interest in subscribing for Community Shares in FMCLT but are unable to do so will be kept informed of our intentions with regard to future share offers.
What if we do not reach the target?
The target minimum is £255,250
Any sums pledged and paid to the FMCLT for this project will be held in a separate account until the project is finalised at which point shares will be issued. If the project does not proceed pledged money will be returned.
What is likely to be the effect of an investment for my tax liability?
The investment will NOT qualify for tax relief under the Social Investment Tax Relief scheme because it will be used to acquire and hold property.
FMCLT is a Community Benefit Society, not a charity, so you cannot use Gift Aid. Your professional tax adviser will be able to advise you further.
If FMCLT is successful in this project as a CBS, what will it be responsible for?
It will form a Property Management Group (PMG) to monitor and ensure the efficient and effective administration of the property upon completion of the purchase.
Maintaining prudent reserves to ensure the sustainability of the holding of the freehold of The Post Office House.
Maintaining a commitment to support and invest profits into projects that benefit the local community.
We last reported to the members at the Special General Meeting on the 30th of October 2019. At that meeting we presented a report on the Village Shop and Post Office which set out various options for involvement by FMCLT in supporting a village shop.
After participating in meetings about a Village Hub with various interested groups we decided that the CLT would not take a lead role in this project. We felt that planning to start a shop in a different location could be damaging to the current shop and possibly leave us in a situation where there was no shop at all. Following on from this we decided to investigate the possibility of purchasing the freehold of the village shop. A survey conducted amongst the members showed that there was strong support for this option.
Towards the end of 2019 the freeholder of the shop was contacted and in a meeting with directors he indicated that he would be willing to consider an offer for the purchase of the property (shop and dwelling).
At the start of 2020 we discussed an alternative suggestion to fund the purchase of the shop property. This involved developing it after purchase as a separate dwelling and shop premises. After research by Mark Edwards into this idea we came to the conclusion that property development, with the involvement of third parties providing finance, was not an objective that the CLT should support. It would be difficult to assure the community benefit duty of the CLT in this type of arrangement.
We agreed not to pursue this idea but to concentrate on the purchase of the freehold of the property by the CLT.
Our ability to keep members informed by public meetings has been limited by the pandemic although we have continued to issue Members Updates. As a further result of the pandemic our progress has been slowed by having to hold meetings virtually but some significant work was carried out by Mark Edwards on this project. By the end of the year we had agreed on the proposal to have a withdrawable share offer to finance the purchase of the freehold with the balance of the money being raised by a mortgage on the property.
As a possible separate project we met, in October of 2019, with representatives of Pennyfarthing Homes (who are planning the 30 home development on South Street) and Wessex Community Assets to investigate the possibility of CLT involvement in the provision of affordable homes on the site. This has not led to any progress at the current time, although we have recently agreed to recontact Pennyfarthing for a further attempt at involvement.
At the start of the first lockdown during March Jim Highnam resigned as a director and we would like to thank him for his work leading the Village Shop Group. Mark Edwards was appointed as a director in October.
Current emphasis of our work has been on preparing a prospectus for the share offer and a business plan to accompany it.
We would welcome any help that our members can offer towards any aspect of this project.
We have been waiting for the opportunity to hold an open meeting of the Society, to bring you fully up to date with progress and to give the opportunity for you to ask questions of the Directors. You will appreciate that present circumstances have made this impossible to achieve in the normal way.
Under the Rules of the Society we are required to hold an Annual General Meeting each year, and in order to do this we are planning a virtual meeting.
Please take this email as formal notice of our intention to hold a virtual Annual General Meeting at 7.00pm on Thursday the 4thMarch. Please will you let me know if you would like to attend, (by email to fontmellclt@gmail.com ), and I will send you an invitation with log-in details shortly before the meeting.
The Agenda for the meeting, as laid down in Rule 28.4 of the Rules, will be:
Consider the Directors’ Report
Approval of the Accounts for the period ended 31st March 2020
Vote on audit exemption
Consider any resolutions proposed by members for the AGM in accordance with Rule 28.3
Election of Directors
Any Other business.
Any resolutions for the AGM must be received by the secretary at least 14 days before the AGM.
I attach:
the Society’s Accounts for the period 3rd May 2019 to 31st March 2020, and the certificate of audit by Roy Foster. These were submitted to our Regulator, the Financial Conduct Authority, on the 21st June 2020;
a form for prospective board members.
We will send the Directors’ Report shortly before the meeting.
Please contact any of the Directors if you would like more details.
Village Shop Project – Members’ Update – 14th November 2020
In our June update, we advised you we were satisfied with the due diligence to date. It identified no reasons why we should not proceed to prepare detailed plans for the purchase of the freehold of ‘The Post Office House’. We informed you that the Shop Project Working Group (SPG), chaired by Mark Edwards had been tasked to produce a work plan for taking the project forward.
Unfortunately, the Covid pandemic has meant we have been prevented from calling a public meeting of our FMCLT Members, so this note is to bring you up to date.
We take this opportunity to remind you that we are managing this project on the Members’ behalf and, most importantly, it is you the Members who have the final say on whether or not this project proceeds to completion. It is, of course, subject to FMCLT Rules, see website https://fmclt.org/documents/
Funding Requirements:
As stated, we have done the necessary investigations, business planning and due diligence into the project’s viability and it continues to have our full support. We hope it will receive your support too.
It is estimated that the amount required to buy the freehold of the property noted in the Land Registry as ‘The Post Office House’ (aka our village shop), which comprises the Post Office, café, tea garden and domestic residence is circa £385,000 (Note: this includes the capital cost of the freehold of the building, stamp duty, all relevant professional fees and a realistic contingency fund).
We are continuing to research the options for funding, including mortgage finance, grants and, most especially, local community support. On the latter point we have decided, as part of the overall funding package, to form a specific Fundraising Team to work under the direction of the FMCLT Directors. The Team’s brief is to work within the community to raise funds for this project.
We are pleased to report that the Plunkett Foundation has been most helpful and, more importantly, supportive of this project. They have agreed to fund the preliminary work regarding the legal aspects of the Community Share Offer which provides one of the key mechanisms for funding from local residents. We thank them for their support.
Your Help Please:
Regrettably, Mark Edwards has had to take a break from his role for the next few months. His huge contribution to this project in time, enthusiasm, and expertise have been much appreciated.
For that reason and as this project is approaching its mission-critical funding phase, the SPG urgently needs support from any Member (or non-member) willing to contribute time, energy and/or experience. In particular we are looking for support with fundraising and from those with expertise in property finance and legal matters.
If you can help in any way with this project please contact me, or email your contact details to fontmell.clt@gmail.com and we will contact you to discuss how you can help with this project.
The Next Steps:
We remain keen to hold a Members’ meeting as soon as possible, however, being realistic that is unlikely to be before the New Year.
We shall be tasking the Fundraising Team to contact you to explain why this project matters to the community and to discuss with you how you can help.
This year has provided clear evidence that our village shop is a key community asset, providing a significantly expanded range of products alongside its Post Office facilities, which now include banking services.
Now is the time for our community to take the necessary action to secure and protect its future by acquiring the freehold to the property.
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As before, if you have any questions, concerns or would like further information on this project or other FMCLT matters please do not hesitate to contact me or any of the directors, details below.
We are writing to provide an update on the due diligence aspect of the FMCLT project to purchase the freehold of the village shop premises (business and residential) The Post Office House in Church Street. (q.v. Members’ updates – 24 April 2020 & 4 April 2020)
This task has been the in the hands of the Shop Project Working Group (SPG), chaired by Mark Edwards, under the Terms of Reference agreed by the FMCLT Board.
You will be pleased to note that the SPG has made significant progress in this task without incurring any cost. We wish to record our thanks to Barry Roberts and Ryan Holmes (Symonds & Sampson) for their time and support in providing the essential and important information needed to advance this project.
Barry Roberts carried out a comprehensive structural survey and has presented his findings in a detailed report. The structural survey has identified a number of issues and the priority they should be given, but overall the building appears to be structurally sound. The defects identified are manageable and most are of a routine nature.
We have sought quotes for the work listed in Barry’s subsequent ‘Outline Schedule of Work’ document and whilst these are not negligible, they are within a range that we feel can be negotiated on with the current freeholder.
The valuation prepared by the Symonds & Sampson provides further crucial information.
The SPG has presented the board with a detailed report of the risks and opportunities it had identified from its review of this project. It has also provided preliminary costing models.
Having reviewed this information your directors are satisfied that the due diligence to date has not identified any reasons why the work to prepare detailed plans for the purchase of The Post Office House should not proceed.
The board has therefore instructed the SPG to consider and report on the following:
the total monetary amount needed to complete the purchase.
the options to fund any such purchase and, if felt necessary, a contingency fund.
options to cover funding by internal (members) and external (commercial) sources.
the availability of and conditions for grants.
how to administer the fund raising, tenancy and other ongoing matters.
its view on the lease for existing/new tenants.
any other relevant investigatory work deemed appropriate by the SPG.
Once their task is completed, a report will be presented to the board. Any proposals arising from that report will be put to the members for a vote before being acted upon.
We are sure you will appreciate that certain information resulting from this work is commercially sensitive, in particular the costings, valuations and financial projections that will affect any future negotiation with the current freeholder, and we must respect that but, we also recognise the interest of the community in this matter. If you would like more information on this specific matter, please contact:
We will keep you informed of any further developments and assure you that it remains our intention to call a members’ meeting as soon as we are able to do so.
Meanwhile please take care and stay safe, hopefully this cloud is beginning to lift, and times may be getting easier. Let’s hope so. As before, if you have any questions, concerns or would like further information on FMCLT matters please do not hesitate to contact any of the directors, details as below.
We should like to thank all those who responded to the members’ update of 4 April, which asked whether members agreed in principle that it would be beneficial to the community for FMCLT to purchase the freehold of the village shop premises (business and residential) in Church Street.
44 members responded, 2 members did not support the principle; 31 were in support; 11 more also supported the principle but registered one or more caveats.
In summary the caveats were:
• Financing issues – 7
• The future of the shop – 7
• More detailed information – 4
• Guidelines on voting – 1
The board acknowledges the members support.
It has asked Mark Edwards to chair a Shop Project Working Group (SPG), which has been tasked to conduct AS SOON AS CIRCUMSTANCES PERMIT a comprehensive due diligence of the project. This will include:
• Arranging a professional valuation and structural survey with, if needed, estimates of potential repair costs. The risks to property valuations in the present circumstances will, as far as possible, be identified and evaluated.
• Conducting a thorough review of the short, medium and long term risks and opportunities relating to the ownership of the freehold by FMCLT.
• Reviewing and if necessary, determining a contingency planning strategy.
• Assessing the project’s financing options.
• Obtaining legal advice as needed.
• Considering other relevant investigatory work deemed appropriate by the SPG.
Where there are costs to this work, we will seek the members’ approval before we incur any significant expenditure.
In order to minimise any costs associated with this project the SPG would welcome the input of any member with specific property related skills, particularly building and renovation, fundraising, finance, legal or any other skills that might be helpful. Please contact Robin East (01747 812349 – robinm47@gmail.com) or Mark Edwards (07401 190 701 – mark@markedwards.email) if you are willing to assist with the work of the SPG.
We will keep you advised as the due diligence progresses. You can be assured that it remains our intention to call a members’ meeting as soon as we are able to do so.
Regrettably we should advise you that Jim Highnam has stood down as a Director, due to business commitments. We are most grateful to Jim for his help and hard work – and we hope that when life returns to normality he may, as he also wishes, be able to join us again.
Finally, for your information, the bank balance at the 31st March 2020, the FMCLT’s financial year end, was £1,814.50. We shall be submitting a full financial report to the FCA and to members in due course.
We hope you are managing to stay safe and are finding ways to cope with the stresses of these difficult and unprecedented times. As for this project, if you have any questions, concerns or would like further information please do not hesitate to contact any of the directors, details as below.
Thank you and regards, the Directors, FMCLT
Dick Stainer: 01747 811153 email:dickstainer@phonecoop.coop
Robin East: 01747 812349 email: robinm47@gmail.com
Robert McCurrach: 01747 812077 email:robertmccurrach@aol.com
Roger Thomas: 01747 811440 email: drthomas.mfh@gmail.com
