Important member and share capital information

HF Holidays is governed by the Rules of the Society, a full copy of which can be found on our website at hfholidays.co.uk/membership. Please consider the Rules and direct any questions to the Society Secretary, Manuela Gordea, at manuelagordea@hfholidays.co.uk.

Before you commit to purchasing shares, please note that HF Holidays Limited, Unit 1, 1st Floor, Imperial Place, Maxwell Road, Borehamwood, Herts WD6 1JN (‘the Society’) complies with the Code of Best Practice developed by Co-operatives UK with the agreement of HM Treasury (the ‘Code’). The Code can be found here. HF Holidays also complies with The Community Shares Handbook and the Community Shares Finance Guide published by Co-operatives UK.

Shares issued by the Society are classed as Withdrawable Share Capital (WSC). It’s important to note that this kind of share capital is fundamentally different to those shares traditionally issued in a company, for example. An explanation of the differences is provided below in ‘Withdrawable Share Capital (WSC): Key Information’.

As an introduction, shares in the Society are withdrawable but generally not transferable unless under specific circumstances, such as after the death of a member. Where a member holds shares in the Society, they may be eligible to receive the payment of interest on that share capital, but withdrawable share capital is not speculative in value and the shares themselves do not increase or decrease in value.

The Code sets out the minimum standards of good practice that a consumer retail co-operative society should observe in its use of WSC. In accordance with the Code, the Society is obliged to provide the following statement to members of the nature of their financial interest in the Society and any change affecting it. You should consider these points carefully before deciding to invest in the Society’s shares.

As a member of the Society, you are the owner of one or more shares in the Society. If the Society is unable to meet its debts and other liabilities, you risk losing the amount you hold in shares in the Society. Hence the Society’s shares are known as risk capital. This may make it inappropriate for you as a place to keep your savings.

• Members should regard their shareholding primarily as a means of supporting HF Holidays and its purpose and its objects, rather than as a savings or investment product. There are various important differences between WSC and company shares, and these are set out in WSC - Key Information referred to above. For example, holding shares in the Society may entitle a member to receive interest, but those shares will not increase in value.

• The Financial Services Compensation Scheme, which covers bank, building society and credit union accounts, does not apply to your shareholding with the Society, so you cannot claim compensation under the Scheme in the event of the Society not being able to meet requests for withdrawal of shares. This is because the Society does not require authorisation under the Financial Services and Markets Act 2000 to operate WSC. Societies are therefore not subject to supervision either by the Prudential Regulation Authority or by the Financial Conduct Authority in relation to WSC.

• The Society’s rules allow for a member to request the withdrawal of share capital by giving one month's notice in writing. However, the Society’s rules also provide the Board with the power to suspend withdrawals wholly or partially, either for a fixed period or indefinitely, where necessary.

• The Financial Ombudsman Service does not apply to your share account or your relationship with the Society, but under the Society’s rules disputes arising under the Rules may be referred to the Board for determination and, if either party is dissatisfied with that determination, may subsequently be referred to the County Court in accordance with Rule 31. The decision of the Board of Directors or, where relevant, the County Court will be binding and conclusive on all parties.

The following are the key differences between WSC and shares in a company:

• The cash value of WSC may only be realised through withdrawal and shares cannot be sold or transferred.

• WSC does not increase in value, but may be entitled to interest.

• WSC does not give the member a share in the underlying value of the society.

• WSC does not form the basis for the distribution of any surplus of the Society.

• All members of the society hold one vote regardless of shareholding. Holding greater amounts of share capital does not entitle a member to further votes.

• Important: Shares in HF Holidays are withdrawable share capital(WSC), and this is considered risk capital. If the Society is unable to meet its debts and other liabilities, members may lose some or all of the money held in shares. Shares should not be regarded as a savings account.

Withdrawal not sale

There needs to be a mechanism for a member to realise (turn into cash) the value of their shares in a society. In companies, this is done by selling the shares to somebody else. Generally, in co-operative retail societies this is different, because the shares are not transferable. Instead, shares are withdrawable, and a member can realise the value of their shares by withdrawing the money held in shares from the society, subject to any restrictions contained in the society’s rules.

No increase in value

Shares remain at the same (par) value. In other words, a member is entitled to their money back, but no more. This is different from a company, where the value of shares can increase or decrease. The reason for this difference is explained in the next point below (Underlying Value).

Nominations

Members may nominate one or more persons to receive their shareholding on death in accordance with the Society's Rules and the Co-operative and Community Benefit Societies Act 2014. Information and nomination forms are available from HF Holidays. Members are encouraged to keep any nomination under review and update it when their circumstances change.

Underlying value

WSC does not give the member a share in the underlying value of their society, which is why WSC remains at the same value. By contrast, shares in a company do give shareholders a share in the underlying value of the company, which means that if the company was wound up whilst solvent, shareholders would receive a proportionate share of that underlying value (which might be more or less than what was paid for the shares). The model rules of UK consumer retail co-operative societies provide that on a solvent winding up, members are entitled to repayment of their WSC, but any remaining surplus after that is transferred to another cooperative society or Co-operatives UK. The rules of the Society provide that any remaining surplus upon winding up or dissolution of the Society, after discharge of liabilities and repayment of share capital, shall not be distributed to Members of the Society, but shall be disposed of in such manner as may be decided by a general meeting of the Society.

Complaints

If you have a complaint concerning share capital, please contact HF Holidays in the first instance to the Society Secretary at manuelagordea@hfholidays.co.uk. Details of dispute resolution are contained in the Society Rules.

Distribution of surplus

The primary purpose of a co-operative share capital is to support the activities and long-term objectives of the society. Whilst a society may choose to distribute surplus to members in accordance with the Rules, interest paid on share capital is compensation for the use of members’ funds and is not a mechanism for sharing profits in the same way as company dividends.

Democratic control

Co-operative societies operate on the basis of one member, one vote, not like many companies where there may be one vote per share. This means that greater power and influence cannot be achieved in the Society by owning more shares. Each member has one vote regardless of the number of shares they hold.