Notes from our Founder: Fuelling the Social Investment Revolution
All my career, I have been a strong believer in the power of business to change the world for the better, and I have sought to live that dream by investing what I can of my own money into the UK’s leading social businesses. Over the years I have come to meet more people like me and, with the boost Ethex has recently given to the positive investing movement, I now see that individuals with money to invest can play a huge role in the democratisation of finance as a whole, if they are willing to try to make their money do good.
Founded 21 years ago, and with over 1,200 shareholders in its own right, the Ethical Property Company has always been at the vanguard of this social investment revolution. We were one of the first to offer to the public a purpose driven, property backed investment with a clear social and environmental benefit. And now that we are so well established, we have the maturity and knowhow to continue to break new ground.
We want to take the revolution to the next stage by addressing two of the biggest barriers that that the movement to democratise social finance faces – how to ensure that social businesses stay social as they grow; and how to make it as easy to buy and sell our shares as it is for a company listed on the London Stock Exchange.
Positive investing has never been easy. It’s hard to find what is out there, and when you do come across opportunities, it’s difficult to know if you are making the right decision. Ethex has started to address these challenges, but it is still not easy to buy and sell our shares when you want to, outside of a share offer.
We are proposing to solve this by the Company putting money into a liquidity pool so that the Company can, in effect, trade its own shares. This will mean that every month there will be money available to buy back shares, pretty much guaranteeing that investors can sell a certain number of shares each month. Then the Company will sell on these shares to any new investors, thereby replenishing the pool. And the share price will be transparent too. We plan to run a share offer every single year, for which a formal share price will be set, and all Company trades will take place at that price.
We think that making it easier to sell our shares will make it more attractive for people to buy them in the first place. But we are also conscious that the main reason that people choose to invest in us is because of our social impact. So how can we protect our social mission and purpose in the long term?
We think the best way to safeguard our social mission is to make the Company more accountable to its shareholders. We want to create a virtuous circle, in which investors are attracted to buy shares in us because of our social mission, and having done so will be committed to safeguarding it.
We propose to make our social purpose, which is so well summarised in the Quintessentials, part of the Company’s articles so it can only be changed by a 75% majority vote, not by the Board of Directors acting alone, as is the case now. We also want to require the Company to present its social audit to the shareholders at the AGM and for them to vote to receive it, as happens now with the financial audit. And, most radically of all, we want to require that, for any vote to be passed, both a minimum of 15% of shareholders (rather than a minimum percentage of shares) would have to cast a vote, and 50% or more of the shareholders voting would have to vote in favour of the change. So this helps to make sure that the smaller shareholders get some say alongside the bigger ones.
We believe these changes will help more people to buy our shares, and will help fuel the social investment revolution. But before ploughing ahead with these innovative proposals, we want to hear what you think. So do visit our consultation page, where you can read more about our plans and take a survey giving us your views.