A share is literally like a slice of ownership. If you buy a share in a co-operative, you will then own a part of a capital value of the co-operative and the amount that you own is determined by the size of your share and the capital value of the co-operative.
Think of buying a slice of cake: the whole cake may be on sale for R20-00, but if it is cut into 10 slices and you buy one slice for R2-00, you will probably eat it straight away.
However, if you contribute R2-00 to buying the ingredients for the cake before it is baked, then you will own a 10% share of that cake in advance. Now your share has the potential to increase in value. For instance, once the cake is baked someone might be willing to pay R30-00 for the whole cake. The value of your share would therefore increase to R3-00, so you will make a 50% profit. Of course you also face the risk that your share could lose its value. If the cake doesn’t taste good, you might not be able to sell it and then your share will be worth nothing. So, it is in your interest to get involved in baking that cake and making sure that it is delicious.
Issuing shares – how does it work?
If the capital value of a co-operative is worth R100 000, the members may decide to create 1,000 shares for sale at a value of R100 each in order to raise more money for developing the business. If you buy 10 of these shares, you will pay R1,000. You will then own 1% of the capital value of the co-operative. When the capital value of the co-operative increases, the value of your shares will increase as well. You may sell your shares back to the co-operative when you resign from the co-operative and you will be paid out the value of your shares at the time of sale.
A co-operative must give share certificates to all members who hold shares in the co-operative. It must also give certificates to members who have made loans to the Co-operative.
To increase or decrease shares the following supporting documents must be included:
- Complete the CO-OP 6.1 form
- Deposit R17.50 click here for bank details
- The original written resolution or statement of consent to change the clause on shares, signed by all members of the co-operative
- A declaration that all membership shares issued are of the same class and ranking for all purposes including rights, liabilities and interest payments.
- Certified identity copy of the chairperson of the meeting
- Power of attorney (if applicable)
NB: Lodgement of a passport copy is only accepted as proof of identity for non-residents of South Africa. For South African residents a green bar-coded/ smart ID copy must be lodged.
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