Here are some answers to common questions. If you don’t see an answer to your question please get in touch!
What is a community pub?
A community pub is just as it sounds – a pub business owned and controlled by the community for the benefit of the community. Since the first community pub opened in the UK in 1982 there are now around 100 community pubs open and trading, several in Oxfordshire. To date, no pub that has transitioned to community ownership has closed.
How are community pubs funded?
Community pubs are typically funded through a public share offering allowing members of the community and other 3rd parties the opportunity to invest. There are usually minimum and maximum investment thresholds. All shareholders (or members) have a say in the running of the business on the basis of one-member-one-vote.
What the benefits of community ownership?
In many cases, community pubs have been established as a means to save pubs that were otherwise destined for closure. Frequently these are the last surviving pubs in the towns and villages they serve. As well as safeguarding the ongoing availability of a key service, the additional benefit of community ownership is that members may then have influence over the types of service provided by their pub. This may be related to the manner of the running of the pub, or the types of services on offer. For example, the facility may provide additional services, such as a community meeting place, café or local shop.
Why form a community pub, why not allow it to be privately owned and run?
Aside from the obvious benefits of being to own and run the pub by the community for the community, there is always a risk that private investment may not be forthcoming. Over the last two decades more than 13,000 pubs have closed in the UK, with the land typically being sold for change of use, often ending up as housing. Once local pubs close they are lost for good.
Why should I buy community shares?
We need your investment to help purchase the White House. Without sufficient investment from the community we will be unable to establish the business and ensure that the pub continues as a community asset for the long term.
Who will benefit from this project?
The residents and friends of Bladon will benefit directly from having a vital amenity preserved for future generations, both through the use of the facility itself but also because the White House will play a part in making Bladon a stronger, more vibrant and cohesive community in which to live.
Is this a good business proposition?
We expect and will require the business to be a profitable venture. We have carefully evaluated its strengths and weaknesses and our projections show that we can establish it as a successful business. It is well proven that communities that work together to set up such an enterprise will support it in the future. Of all the Community owned pubs none have failed to date. For more details about our business case please read the business plan, which can be requested from the treasurer on email@example.com.
Will you be paying a fair price for the White House?
We have had an initial valuation of the building, but have, as yet, not entered into formal negotiations with Greene King. However, you can be assured that we will attempt to achieve the lowest possible price.
What are the implications on the business plan if the purchase price is higher than budgeted?
As noted in the business plan, to bring in additional capital we could choose to extend the share offer, take out a larger commercial mortgage than budgeted or solicit loans at favourable rates from members of the community.
Who are the people behind this project? Do they have a personal interest?
The Management Committee consists of a group of local residents who care passionately about the White House and what it could mean for the community. They donated money to help register the company and will be investing in shares. They will have no personal financial interest in the project, above and beyond their own investment in community shares. They have voluntarily contributed a large amount of time to the project and this has been supplemented with advice and considerable support from many people and organisations.
Who will run the White House and make the day-to-day decisions about the business?
The Management Committee will appoint a tenant to manage the day to day running of the business. We will work closely with the tenant to ensure that our vision for the White House is delivered, however we will not micro-manage the tenant and ultimately all decisions regarding the management of the pub and therefore all associated business risks will be the tenant’s.
Do my shares give me voting rights?
Yes, they do. Everyone has an equal voice, regardless of the size of their investment.
How do I get my money back?
Our rules do not allow you to withdraw your shares in the first three years. After that, you will need to give at least three months’ notice. We do not anticipate and have not budgeted for being able to allow any withdrawals before year 5. You cannot sell or transfer your shares, and withdrawals must be funded from surpluses or new capital raised from members. The Committee may suspend withdrawals depending on the long-term interests of the Society, the need to maintain adequate reserves, and the commitment to the community we serve.
Does Greene King have to sell the White House to us if we raise enough money?
No, they are under no obligation to sell the pub to us. The Asset of Community Value rules mean that they can’t sell to anyone else before 13th of March 2020, but they don’t have to accept an offer from us. Our best chance of success is therefore to raise the required amount as quickly as possible and then make an offer in advance of the cut-off date. So if you wish to invest, please do so promptly!
What happens if the purchase of the White House falls through?
It is possible that we will proceed with the project but after incurring some costs, find we unable to complete the purchase, even after we have an in-principle agreement with Greene King and have secured the funds. In the unlikely event that this happens we will seek donations to cover any costs incurred. Our intention is to return in full any payments received for the purchase of shares.
Will I get my investment back if the White House fails?
All the business’s assets, including the freehold of the building, would be sold and the proceeds of the sale (after paying any creditors) divided between the shareholders up to the value of their shares. You might receive the full value of your shares back or you might lose part or all of your investment.
Are joint applications allowed?
Yes. However, you should note that only the first named investor on the application form will be a member of the Society with voting rights. If, for example, a couple would both like to be members then each person should make a separate application.
Can I invest on behalf of my children or grandchildren?
Yes, shares can be held for children. An adult must complete the first applicant section of the application form and enter the child’s details in the relevant section. The shares and vote will be transferred to the child as soon as they reach 16 years of age. In the meantime any adult who does not already have a vote may vote on the child’s behalf.
What happens to my shares if I die?
Your shares will form part of your inheritance and can be transferred under the terms of your will. Make sure you complete the relevant section on Page 2 of the application form.
Why are there two types of share?
We are aware from feedback received that quite a few members of the community would like to make a philanthropic investment to ensure the future of The White House and are not concerned about receiving interest payments or being able to withdraw their shares in the future. Of course, there’s nothing to stop people making donations, but we decided to introduce ‘B’ shares so that people can in effect make a donation and also be members of the Society with a voice in how it is run. Both class of shares will be re-paid in the event of a sale of the property, as long as sufficient funds are available.
Can I buy both ‘A’ and ‘B’ shares?
Yes, a mix of share classes is fine. Just indicate on the application form how much you want to invest in each class and make the appropriate payment.
What are the minimum and maximum investment amounts?
The minimum that you can invest is £50 (i.e. one share at £50 each) if you live within a 5-mile radius of the White House, although we hope that most investors will invest considerably more than the minimum. If you live more than 5 miles from the White House, the minimum you can invest is £250 (i.e. five shares at £50 each). The maximum that can be invested in class A shares is £50,000 and the maximum that can be invested in class B shares is £100,000, which is the legal limit for individual investments in community benefit societies.
What happens if the share offer is under-subscribed?
If the minimum raise target of £335,000 is not achieved, we will review whether to proceed. We reserve the right to do so if the financial model remains viable, for example, if we have received additional donations or confirmation of grant funding.
What happens if the share offer target is reached?
If the share offer target of £515,000 is reached we will close the share offer, and we will not accept any further applications.
What redress do I have if the business fails and I lose the value of my shares?
This share offer is unregulated, as it is exempt from the Financial Services and Markets Act 2000 or subsidiary regulations, which means there is no right of complaint to the Financial Ombudsman, nor can you apply to the Financial Services Compensation Scheme.
Will I receive interest from my shares?
We aim to pay a reasonable interest rate to our members. For instance, our business plan assumes we will pay 2% interest from year 3, but this will always be dependent on the success of the business. Interest will be paid gross and it is each member’s responsibility to declare such earnings to HMRC if appropriate.
Can I buy shares on behalf of a company I own?
Yes, there are a few options.
- You could buy A shares on behalf of your company with voting rights and be interest paid once viable. Any interest would have to be paid to the company.
- You could buy B shares on behalf of your company with voting rights but no interest paid.
- You could provide a charitable donation. If the bid is unsuccessful, the donation would go to other community projects.
Who will have access to my share investment information?
Only those committee members who require access for the purposes of their committee role will have visibility of the names of investors and the amount invested. Both the current Chair and Treasurer will have access to the information, at this time those in position are James Mallick and Julie Bignone respectively.
The other committee members that currently have access to this information are Rachel Guest and Tom Davison, this is due to the share information being collected through our website (bladoncommunitypub.org) of which both are administrators.
When will I receive confirmation of my share purchase?
Yes, you will receive an automatic confirmation email when you submit an online application form. In addition, the treasurer will email you directly within 5 working days of your application to let you know that the bank transfer or cheque has been received.
Can I have a paper copy of the share prospectus and application form?
Yes, we delivered paper copies to each household in early January. Please get in touch via firstname.lastname@example.org if you would like another copy or additional paper application forms.
At the meeting we attended in November, there was an intimation that under unspecified circumstances, Blenheim might invest. Can you provide an update?
Blenheim have been very supportive of the project to date, including selling our calendars and assisting us with other marketing activities. They are currently reviewing the business plan and we will update the community when we have a response.
What is the current level of commitment to buy shares? Can this be updated on the website?
Regular updates are being shared through our mailing list and our website, the latest update can be found at this link: https://bladoncommunitypub.org/what-happens-next
The plan is predicated on Greene King accepting the valuation you have been given. Have you been able to establish the appetite of Greene King to negotiate a substantial reduction in their asking price? Do you have any intelligence on Greene King’s practices in such circumstances?
The Committee is working on the basis that we will offer a price that is commensurate with the value of the White House as it stands. Once we have finalised the level of share investment we will be able to make a further assessment of our negotiating position.
The prospectus indicates that should the required minimum subscription be achieved and negotiations commence but ultimately fail, any expenses incurred would have to be recovered either from donations or deducted from the share money returned to subscribers. Have you modelled the potential exposure in such a scenario?
We have included this clause to provide cover for all eventualities however, as it stands, we have raised enough through donations and events (such as the Jingle Mingle) to cover all anticipated pre-purchase costs.
Does the constitution of the Community Benefit Society make provision for the remuneration of or reimbursement of expenses incurred by the Management Committee?
Our Society rules do not make provision for any form of remuneration but they do allow expenses to be reimbursed. All committee members have contributed to a float to cover marketing activities and other costs such as the surveyor, these are being repaid from the various grants and donations we have received.
The Business Plan states that your surveyors have calculated that an annual turnover of £312,000 is achievable. Do you know or have a rough idea of the current turnover? What community pub have you benchmarked the White House against which validates the scale of turnaround forecast?
Greene King are unable to provide current turnover data as they pub is leased to a private business which does not need to declare its accounts. We have met with a number of community pubs in Oxfordshire, all of which have out-performed their forecasted numbers. However, we have maintained a cautious approach to our forecasting and allowed 3 years for the tenant to get to the maintainable turnover level outlined in the valuation report. Our tenant lease structure fixes the rental amount for the first three years which should provide added incentive for the tenant to over-perform as they will keep 100% of the profits over and above our forecast.
The surveyor is an expert in this field and has advised over 80 pubs on their current and potential value and viability, he is also highly recommended by the Plunkett foundation which guides community pub projects across the UK.
Do you have a monetised analysis of what the current tenant is failing to do to achieve the forecast £312k turnover?
Whilst we cannot monetise the additional revenue streams available at this stage, we are confident that we can work with a tenant to help drive local custom to pub by offering some of the services that have been requested through our market research. In addition to the increase in local residents using the pub, the two local tourist centres of Blenheim (over 900,000 visitors per year) and Bladon Chains (over 15,000 visitors per year) have both pledged their support to help promote and recommend the White House should it become a community-owned pub.
Will future meetings of the management committee be scheduled, open to members to attend and minutes published?
Yes, once we have formalised the ownership of the White House, committee meetings have minutes made available to the Bladon Community Benefit Society members (shareholders). Until then we will continue to keep the community updated at the regular briefing sessions, through our mailing list and through our web and Facebook pages.
Should a major structural issue become apparent once the purchase is complete, are the shareholders liable for the cost of repairs?
No, Bladon Community Benefit Society is a limited liability entity so the total liability for shareholders is the value of their shares. If there was a catastrophe at a later date, we will have the choice to put in more money to take it forward, or let it fail and recover some, or all, of the capital.
How can I find out more about the project?
You can find our business plan, the Rules for our Society and further contact details at www.bladoncommunitypub.org
Who should I speak to if I have any further questions?
Please contact either:
- James Mallick (Chair) on 07808 871236 or email@example.com
- Mike Edwards (Committee Member) on 07703 345607 or firstname.lastname@example.org
For a copy of the business plan please contact
- Julie Bignone (Treasurer) on 07980 589824 or email@example.com