Food Connect Shed ran a successful equity crowdfunding campaign in November 2018.
Food Connect connects local buyers with local producers. They work hard to pay farmers and workers a fair price and shorten food miles. They even incubate small food businesses. In the past fourteen years, they’ve won environmental awards and been recognised for their ethical trading practices.
When Emma-Kate and Rob wanted to involve the community in owning the infrastructure that housed Food Connect, they set up Food Connect Shed.
They ended up raising over $2m from their crowd.
One question that Emma-Kate and Rob tackled in doing their raise was:
How can you make sure that a company stays true to its mission?
This is the question that is at the heart of many social enterprises.
Their answer: they built it into their constitution.
Here’s a bit of a breakdown of how they did that for Food Connect Shed.
It all starts with the social mission of the company:
…the Company’s social mission is to:
(a) create and construct local food hub infrastructure that supports an equitable and resilient regional food system for all, using the principles of net positive and regenerative design;
(b) acknowledge First Nations epistemology in all aspects of governance;
(c) provide a long term, place-based model of community ownership that creates local employment and economic resilience, with a particular focus on marginalised groups; and
(d) create a community space for citizens, growers and makers to facilitate democratic participation and affordable access to healthy food.section 4.1, Food Connect Shed constitution
But where it gets cool is how the constitution is worded to protect the social mission:
Notwithstanding any other provision of this Constitution, the Board, the Company and the Shareholders (acting in such capacity) must not pass any resolution or undertake any matter, action or thing which in any way limits or derogates or could reasonably be expected to limit or derogate from the Company’s ability to give effect to the Social Mission (Limiting Act)section 4.2(a), Food Connect Shed constitution
TL;DR the company can’t make a decision that limits the company’s ability to carry out the social mission.
This might have been enough…but things can get messy at board meetings. So they’ve added the concept of the Foundation Share.
The Foundation Share is a single fully paid share held by the Foundation Shareholder. The Foundation Shareholder is only entitled to attend meetings relating to, and vote in respect of a resolution in connection with:
- a Limiting Act (see above)
- a Major Asset Decision; or
- any amendment of the Company’s constitution which would amend or delete the sections of the constitution dealing with the Social Mission and the Foundation Share and vary rights attaching to the Foundation Share.
The Foundation Shareholder (or its appointed director) must be present at any meeting held to consider any of the above matters.
And here’s the kicker:
The way that the constitution is worded effectively gives the Foundation Shareholder a veto right over anything that limits the company from pursuing its social mission.
The Foundation Shareholder is Food Connect Foundation Limited. This is an entirely separate entity. Check out how they describe how the different entities interact:
Want the full legal? Check out their constitution. You’ll need to look at section 2.1 for the definition of Foundation Shareholder. Then check out rules 4 and 5.
You can also get the low down in plainer language in their offer document (see section 2.10.2) to see how they explained this to potential shareholders.
You can also see how their equity crowdfunding campaign played out in our Case Study.