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Steps to convert to a co-operative

The proposal is to convert the successful Macleod Organics business from a private company into what is known as a 'multi-stakeholder' co-operative - meaning that more than one stakeholder group is represented within its governance. In this case there would be three such groups (customers, employees, and Suppliers).

Co-operatives are traditionally run on the basis of one member one vote regardless of the number of shares held. However, while retaining this principle, it is possible for the votes of different groups in a multi-stakeholder co-op to be weighted to reflect their relative importance and ensure that the views of one group are not simply overridden on every issue. So, for instance, the votes of employees - although small in number - could be allocated from 25-50% of the votes (with 26% being enough for them to block any 'special resolution' requiring 75% of the total votes).

This is important to ensure that both/all groups have a corresponding sense of ownership in the co-operative, and are committed to its success as a collective venture.

While multi-stakeholder co-operatives are still relatively unknown in the UK, they are more common in other countries such as the USA and Spain (where control of the giant Eroski supermarket co-operative, part of the Mondragon group, is divided 50/50 between customers and employees).
The process for moving to this set-up would be that the shareholders of the existing company (Donnie Macleod, Sheena Fraser, Morven Macleod and Miho Macleod) would pass a resolution to convert the company into a co-operative society. Conversion rather than setting up a new co-operative should ensure a seamless transition with no disruption to business operations.

Co-operative societies are registered  with the mutuals section of the Financial Conduct Authority (FCA), so the next step would be to draw up and register rules for the co-operative. The umbrella body Co-operatives UK has model rules for a multi-stakeholder co-operative, which could be adapted in accordance with the wishes of the steering group for the project and then registered.
At this point the steering group - or at least some of them - would also become shareholders and directors of the co-operative. It would be important by this stage to ensure that the employees are also on board with the project and represented accordingly.

Meanwhile the steering group, with external consultancy support, would also have been preparing a business plan with Donnie's assistance to map out future development and growth prospects - and the finance needed. This would include repayment of the loans currently provided by the Macleod family as working capital.
With a business plan in place, the final stage to bring as many customers as possible into membership would be to launch what is known as a 'community share offer', encouraging investment in the co-operative in order to raise the amount of finance needed. Depending on the financial projections for the business, it may be possible to offer a limited amount of interest (2-4%?) in return for investment.

Establishment of the co-operative has so far been supported by Co-operative Development Scotland (part of Scottish Enterprise), with the community share offer likely to be supported by Community Shares Scotland - including a grant of up to £5,000 for marketing materials.

Anyone wanting to be kept updated please email ----   donnie@macleodorganics.co.uk

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