What do we need from a legal entity? Issue City Block cohousing needs: Contracts, Risks, Debt Yes - We will need to enter into major contracts: house buying, professional fees, permanent staff. Limit liability Yes - We would like to limit the liability of Directors Primary purpose Benefit members only, or wider community and members equally. Membership We will have members in addition to our management board. We may have different categories for tenants, lease holders, owners, and investors Member involvement We want democratic member control ie one member one vote at AGM. Members vote for Board so control/influence every aspect of the development and management. Charitable No – trading not charitable, not for particular disadvantaged group Asset Lock Proceeds from assets can only be used to further objects. (No CLT, but no surplus for members) Assets on dissolution If we get wound up we give the assets to a similar organization (ie keep them in some form of common ownership). Would Directors be paid? Yes - It needs to have sufficient scale to run services well so management would need to be paid. Board members would be paid if they are running the business. Maybe not for governance though. Will it trade Yes - we will be selling housing and property related services. Use of surplus For social mission Raise finance Yes - we want maximum flexibility to take out mortgage and other bank finance, loans from members and others, and community share offer (probably withdrawable shares, not transferable). Pay interest / dividends We expect to pay interest on loans, maybe interest to shareholders but no dividends Key: orange = questions / discussion needed Key: green = clear / decided

Legal entity options CIC register Financial Conduct Authority Charity Commission Companies House CIC register Financial Conduct Authority Ltd Liability Partners Plc Registered Societies (used to be IPS) Companies Charitable Incorporated Organisation CIC Co ltd by guarantee Co ltd by share Bencom Must be charitable Can register <£5k Bone fide No regulator One member one vote One share one vote Members Community Unincorporated Organisation Not charitable Not charitable Potentially has charitable status Can be charitable Can register as charity > £5k Can be charitable Can register as charity > £5k

Membership (involvement) YES depends on rules YES (acc % shares) This table only includes limited liability options Charitable Incorporated Org Community Interest Company Company Ltd by Shares Company Ltd by Guarantee Registered society: for Benefit of Members Registered society: for Benefit of the Community Example: Community Centres Threshold Springhill Barracks Lane, Lancaster Phone Coop LILAC Cultivate, Bridport cohousing, LCH Contracts YES Primary purpose Charitable Social mission Not charitable Can be charitable Benefit members Benefit comm & members Membership (involvement) YES depends on rules YES (acc % shares) YES (typically 1 member 1 vote) YES (1 member 1 vote) YES (1 member 1 vote) optional stakeholders NO Usually Can be Asset Lock Maybe Assets on dissolution To other similar To shareholders As defined in rules To members Pay directors Will it trade Use of surplus Charitable objects Social purpose Shareholders Members Members or as defined in rules Able to raise finance? YES but no share capital YES can issue share capital YES withdrawable shares 100k limit YES withdrawable shares 100klimit Interest/div-idends? YES but capped Interest, no div Limited int and div Limited int, no div Regulator (and applicable law) Charity Commission (Charity law) Companies House & CIC regulator (Co law) Companies House Charity Commission & Co House FCA FCA & poss Charity Comm in future if charitable Taxation Exempt Not exempt Exempt if charitable

City Block cohousing options A co-operative society is set up to pursue the interests of its members. Does this rule it out? (NB recent FCA guidance confirmed that coops can have investor members). Other options with social and community mission and asset lock are: Community Interest Company (asset lock) Community Benefit society (may have asset lock) Company limited by guarantee Ben comm: Conduct of business must be entirely for the benefit of the community. Can be a defined community but this must not inhibit benefit to society at large. Benefits must not be contingent upon membership. No capital gains for members. (FCA definition). Coop: An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Must follow cooperative principles. No asset lock. Members can benefit. (FCA definition) Co (limited by guarantee): A private company but controlled by members not shareholders. Can be charitable. Usually not-for-profit. CIC: Non-charitable and non-political form of private company with assets locked for use to further social mission. Must meet community interest test. May have charitable objects but cannot register as a charity or gain exemption from tax.

Pros and cons Community Benefit society Cooperative society Highly democratic one member one vote Registration process slower (15 days, need sponsor, £450-£900) Less cumbersome legislative requirements than ltd company No member/shareholder dividends (interest ok) Easy to demutualise ie change to ltd company Can have asset lock (removes investor speculation) Asset lock can be added to rules but can never be removed Cooperative society Pros Cons Highly democratic one member one vote Registration process slower (15 days, sponsor needed, £450-£900) Less cumbersome legislative requirements than ltd company No asset lock – members can benefit on dissolution Easy to demutualise ieg change to ltd company Operates on cooperative principles Company limited by guarantee Pros Cons No restrictions on how to operate Cannot issue shares Cheap and easy to register Less beneficial and inspiring Asset lock Legislative requirements same as for private company Well known Community Interest Company Pros Cons No restrictions on how to operate Report to CIC regulator as well as Co House Cheap and easy to register Cannot transfer to a company structure later Community interest test and asset lock Legislative requirements same as for private company