STEP 1: CHOOSE YOUR PHILCO MODEL

• Option 1: “The minority-investor” model. 10-20% of shareholding owned by foundation. Examples: Reed, EQ Investors, John Good Group
• Option 2: “The investor-plus” model. >20% of shareholding owned by foundation. Examples: Raspberry Pi Holdings PLC
• Option 3: “Wholly foundation-owned” model. 100% of shareholding owned by foundation. Examples: Guardian Media Group, Lloyd’s Register
• Option 4: “Double-foundation” model. Two foundations to split out economic & voting rights. Examples: Patagonia, Bosch
• Optional inclusion: “Golden-share”. Voting veto rights to preserve mission-orientation. Examples: Tony’s Chocolonely

STEP 2: ESTABLISH A CHARITABLE FOUNDATION

For UK PhilCo’s, a new charitable foundation may be needed (if existing foundation is not in place) to take on the role of the PhilCo shareholder*. Some considerations include:

• Legal structure to adopt e.g. CIO, Charitable company limited by guarantee
• Charity constitution stating your chosen PhilCo model
• Charitable purposes; there are 13 to choose from
• Trustees & members; recommend at least 3 trustees including trustees independent from the business, will they also be members?
• Key documentation e.g. charity application, agreements with the company, policies etc.
• Submission to Companies House / Charity Commission / HRMC

We recommend seeking professional advice at this stage.

*If a foundation already exists, the foundation will need to conduct due diligence / approval processes on whether accepting your company’s shares is in the interests of the charity, before they can accept your donation.

STEP 3: TRANSFER OR ISSUE SHARES TO THE FOUNDATION

• Option 1: Gift from an existing shareholder. This requires one or more existing shareholders to decide to gift shares to the foundation (at least 10% in total). Consult articles / shareholder agreements closely, to check if consent is needed from other existing shareholders.

• Option 2: A new issuance of shares. Will need shareholder buy-in. May dilute existing shareholders. A different class of share could be considered with more limited rights. Need to consider issue price and funding of share subscription.

There may also be wider legal and commercial implications (e.g. voting rights, tax/accounting implications, stakeholder management, charity law) and we recommend seeking professional advice at this stage.

BECOME A KARMA CAPITALIST. JOIN THE PHILCO MOVEMENT

For more advice on how to become a PhilCo we recommend seeking professional advice.

This guidance has been produced with input from Bates Wells, the first UK law firm to be a certified B Corp – bateswells.co.uk

WHAT NEXT?

• Download this guide as a PDF
• Sign up for updates on the PhilCo movement or register your company if it meets the definition of a PhilCo.