Save the Railway Arms Pub Pledge Form

Help Save the Railway Arms Pub by buying shares

 

Our application to establish a Community Benefit Society called The Saffron Walden Community Pub Ltd has been accepted by the Financial Conduct Authority.

If you think that you would be interested in becoming a member of CBS and investing in the company, please complete the details below. 

See the home page for the details and the latest documents. 

 

It is currently intended that the shares purchased will pay an attractive rate of interest and that they must be held for a minimum of three years.

If you would like more information please email Dave Kenny [Chairman] at: davekenny@gmx.com

What is it all about?

  • A community purchase of the freehold of the Railway
  • To secure and safeguard the future of a key community amenity
  • To gain community control

Why do it now?

  • The pub is closed
  • It has been put up for sale
  • The pub has been registered an Asset of Community Value [ACV]
  • The community has until 19th June to decide whether we want to make a community bid, and until 8th November to raise the money

How would it be done?

  • We have established a ‘Community Benefit Society’(CBS) registered with the Financial Conduct Authority [FCA]
  • Raise funding via a community share sale, grants and mortgage finance.
  • Maximise the share sale as it will make us more attractive to grant awarding bodies and is cheaper than mortgage or loan finance
  • Follow the path identified by the Plunkett Foundation who has assisted other communities to do this.

How does the share sale work?

  • Share prospectus will be issued.
  • Subscriptions invited for shares of £50 nominal value
  • Minimum subscription £50 (1 share), maximum up-to £50,000 (1,000 shares) (subject to level of interest in the share offer)
  • Shares bear interest at initial rate up to 3% per annum, paid gross
  • Rate fixed annually based on market conditions and performance of CBS
  • Shares must be held for minimum of 3 years
  • After 3 years shares are eligible for withdrawal, by request to CBS
  • Conditions for withdrawal include 3 months notice period. Withdrawal may be declined or amount reduced if withdrawal threatens the future of the CBS.
  • Share sale may benefit from inclusion under Enterprise Investment Scheme –‘EIS’. This could enable income tax payers to reclaim tax equal to 30% of their investment in CBS.
  • We will be seeking Advance Authorisation for EIS status.

Will CBS be viable?

  • A new business model
  • More customer [community] focused
  • Operated on a lower cost basis
  • Income would come from rent from tenant, and from other sources/enterprises which may include:
    • maintaining a beer tie.
    • letting rooms or s/c facilities
    • joint ventures
  • Exploit all the buildings on the holding to increase income and improve the services provided.

Frequently Asked Questions

  1. Why should I become a shareholder?

It is important that as many members of the community as possible participate in the venture and help to raise the funds required to purchase the Railway. The greater the level of shareholding the more profitable the society will become as the cost of share interest is lower than the cost of mortgage finance.

  1. Who will benefit from this venture?

The community living close to the Railway and the surrounding area.

  1. Will the society be viable?

Based on the current status, we believe the rental income and the income from the sale of beer to the tenant will comfortably support the business model we propose and will provide a surplus for ire-investment and contingencies.

  1. Who is organising this? Do they have a personal interest in the pub?

STRAP is a local interest group that aims to protect public houses from closure through seeking to nominate them as ACVs and in promoting organisations to allow communities to raise finance and be able to make a bid.

STRAP has a membership of over 140 members and is governed by a committee with a range of skills and currently comprises, Dave Kenny, (Chairman), Tom Bennett (Treasurer), Kenny Wright, Tim Walker, Bob Eastham, and Jules Hales.

They will have the same financial interest in the CBS as all other investors.

  1. Are there restrictions to becoming members?

Members must be aged 18 or above. There is no requirement to be a resident of Saffron Walden.

  1. Is there a difference between being a member and a shareholder?

There is no difference between being a shareholder and a member. The purchase of the minimum subscription automatically confers membership.

  1. What voting rights would I have?

All members have one vote, regardless of how many shares they have bought. This is an underlying concept of the Community Benefit Society structure.

  1. If I invest do I take on any other liability?

No. Your liability is limited to your investment.

  1. Will there be any changes in the way the pub is run?

It is important to remember that the day-to-day pub business and the associated risks remain with the manager/ tenant. The society and its management committee will not be running the business. However the society will expect to have regular meetings with the tenant to discuss how the business is going and act as a channel for suggestions from members and customers

  1. Are there limits to how much I can invest?

The minimum investment is £50 and the maximum will be determined on the level of interest in the share purchasing. The aim is to spread the ownership to as many members of the community as possible

  1. Can my investment increase in value?

Shares in the CBS can never be worth more than their nominal face value. If the business fails, the value could fall. (See 14. Below)

  1. Can I sell my shares?

Shares in the society cannot be sold. They are a special sort of share known as ‘withdrawal shares’ and the only way you can recover their value is to apply to the society to withdraw any shares.

  1. How can I get back my money?

You must hold your shares for a minimum period of three years after which time you can apply for your shares to be withdrawn. The management committee will determine, based on the liquidity of the society at the time, the extent to which shares can be withdrawn.

  1. What happens if the society fails?

In the unlikely event that the society fails, all the assets would be sold and the proceeds of the sale would be used to repay any debt (e.g. mortgage). Thereafter, shareholders would be repaid and any remaining surplus would be put to community use. The assets of the society, if the purchase proceeds, will include the Railway building and its surrounding land.

  1. How does the share issue work and what guarantees do I have for my investment?

The company that will be established is a Community Benefit Society for the benefit of the community. It operates on the basis of ‘one member, one vote’. This should be viewed as a long-term investment for community benefit. It is not the same as investments made in ‘for profit ‘enterprises where investors hope to share in success through both dividends and capital appreciation. Whilst the shares in the society will pay interest, the underlying value of the shares cannot increase and could be reduced if liabilities exceed assets. However, as the society is a ‘corporate body’ there can be no further liability for investors. The shares cannot be sold but withdrawal can be requested after a minimum of three years after the date of the share issue.

  1. As a shareholder will I have a say in the way the pub is run?

The day-to-day business of the pub will continue to be the responsibility of the manager/tenant, not the society. However, the management committee will meet regularly with the manager/tenant to discuss issues including business performance and will make recommendations and suggestions, in part based on comments from members and the customer base. The committee will act as a channel for comments from customers and members. The society will hold regular meetings with members including an Annual General Meeting.

  1. I would like to support the society’s efforts but am not sure I can currently provide financial support. Can I help in other ways?

Yes. If we are successful in acquiring the pub, practical help will be needed to carry out planned improvements. This will help us to contain costs. Also we would welcome any assistance with fundraising. Perhaps supporters could arrange quiz evenings, table-top sales, sponsored activities etc.

  1. What are the planned projects you mentioned above?

At this stage the committee has identified a small number of projects it believes would be possible to implement in the near future. Some will be required for safety reasons, others to improve the quality of the pub. These include, an extended and improved dining area , developing and providing more amenities from the external buildings.

  1. Has this sort of thing been done elsewhere?

Yes. There are a number of existing community pubs; none have closed. Currently there are a number of other communities seeking to do this. Elsewhere, for example, both locals and people living outside Toppersfield in Essex, successfully raised £289,000 to buy their local pub, the Green Man. They also established a community brewery. Many of you may have recently read about the George & Dragon in Hudswell, Yorkshire, a community owned pub that was awarded the CAMRA pub of the year.

  1. What happens on the death of a shareholder?

In accordance with the law any shareholder may nominate a person or persons to whom their property shall be transferred on death. Such nomination will be valid to the extent for the time being provided by the law and on death the society will in accordance with the law transfer or pay the value of the shares to the nominated person.

  1. Will the beer be cheaper if the community owns the pub?

The aim is to provide a range of drinks and meals at a range of affordable and attractive prices that are affordable to all sections of the community.

  1. Can companies invest in CBS?

Yes, subject to the same limitations as all other investors with regard to minimum and maximum amount that can be invested and the minimum investment period.

  1. Can you explain how the Enterprise Investment Scheme works?

The CBS will, at the appropriate time, seek Advance Authorisation for the share sale to fall under the auspices of the Enterprise Investment Scheme (‘EIS’). Basically the EIS is a means by which individuals are encouraged to invest in start up enterprises by receiving a tax break on their investment. EIS allows for eligible investors (income tax payers) to claim back from HMRC 30% of the amount of their investment provided the shares are to be held for a minimum of 3 years. We are unable to give specific advice and we recommend that for further information speak to HMRC, your accountant or another suitably qualified person.

  1. Will CBS have to pay VAT on the purchase price?

Yes, the owner’s agents have advised that the asking price for the Railway is in the region of  £300,000 plus VAT [£60,000]. The VAT payable is reclaimable once the pub is trading.

  1. What price do you think owners will sell the Railway, given we all feel £300,000 [excl. VAT] is too much?

We do not wish to discuss publicly the price we believe is appropriate nor the price we believe the owners may sell at. However we would seek the lowest possible price and certainly considerably less than the asking price.

  1. Who will be the licence holder?

This is something we will be looking into in greater detail as things progress and we will seek expert advice. Our belief is that it should not be a major problem.

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