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  1. johnofwessex

    johnofwessex Resident of Nat Pres

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    Hence though my suggestion that we look at ways of either reducing the costs of maintaining shares - via a nominee account OR offer the travel privileges for a lump sum payment but again without the compliance costs
     
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  2. Forestpines

    Forestpines Well-Known Member

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    Why do you think running a nominee account would be cheaper? How do you think the railway should comply with the FCA regulations around such scheme?
     
  3. johnofwessex

    johnofwessex Resident of Nat Pres

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    Well, in a nutshell I am not familiar with the details but if someone can explain the rules that would help.

    But I am looking for a discussion on how money can be raised via shares or something that gives similar benefits to the purchaser without the ongoing costs to the organisation
     
  4. ghost

    ghost Part of the furniture

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    One suggestion would be something along the lines of the A1/P2 'clubs' where someone donates a fixed amount to a specific appeal and gets defined benefits from it. An example could be the 'Milepost 10' club where donors each put in say £500 for the relay of the track around milepost 10 on railway X. In return, they get free travel for 5 years (or similar attractive benefit). The railway would have admin costs for 5 years but after that no further costs.

    Keith
     
  5. Jamessquared

    Jamessquared Nat Pres stalwart

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    On many railways, that is simply managed by being a member of the supporters organisation, which comes with certain benefits - for example discounted travel, shop purchases etc. Life membership typically costs more but might have higher benefits (for example, if I choose to use it, my life membership of the Bluebell includes free first class travel).

    Critically though, those benefits don’t transfer. If I join the society, I get the benefits only while I remain a fully paid up member.

    More generally, one of the issues I have with share ownership models is that technically you have to treat them as an investment when clearly they aren’t an investment, and in all likelihood the person subscribing doesn’t see them as such. If what is really being solicited is a donation, then my preference is that you make it explicitly just that - a donation.

    There is also an issue that could be interesting to research about why people donate to appeals. In my case, the “reward” is seeing an objective I agree with progress to fruition: seeing progress is reward in itself and I’m not too fussed about other “benefits”. Others might see things differently - it’s an area I suspect societies would do well to understand for their specific donor base.

    That is possible, though you have to remain observant of rules on Gift Aid if you are using a charity as the umbrella under which the club exists. In brief, if the donation comes with benefits beyond purely nominal cash value, then it would not be eligible for gift aid. Not an issue if a company does it, but would be for a charity if it also wanted to reclaim the GA. For example “donate £1000 to this loco restoration and get a footplate experience when it enters service” would fall foul of the Gift Aid rules, since the footplate experience is likely to have a cashable value of hundreds of pounds.

    Tom
     
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  6. 35B

    35B Nat Pres stalwart

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    I'm not a fan of (1), and a brief consideration of the battles for control of the WSR suggests why that consolidation of voting rights may be unwise.

    On (2), you seem to be describing a debenture - a down payment for a particular set of rights. Picking up on one of @Jamessquared's comments, this would almost certainly forsake the tax advantages of a pure donation; while such schemes need to be handled with a little care. The AELTC make it work very profitably, but then the right to x tickets for Wimbledon is probably a higher value investment than an equivalent number of days on a preserved line;) Meanwhile, the occasional controversies over the behaviour of debenture holders at the Royal Albert Hall suggest that the effort to set up such an appear may not be much less than a share issue, even if the ongoing costs may be less.

    But, thinking around this issue in a different way, I wonder if there would be benefit in preserved railways asking shareholders to donate their shares back to the railway (or, better, it's supporters association)? Given that many of the shareholders will already be connected with the railway in some way, or the shares will no longer be owned by the original purchaser, this may make savings for the railway by appealing to the owners' altruism.
     
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  7. ghost

    ghost Part of the furniture

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    I think this is something to be seriously considered by railways who have issued shares in the past. A circular sent with the annual accounts could be a good way to bring those shares back 'in house' and reduce the admin overhead.

    Keith
     
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  8. Forestpines

    Forestpines Well-Known Member

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    This is also the issue with trying to set up your own nominee account. I am not a lawyer but I suspect such a scheme would need to be regulated by the Financial Conduct Authority, which is rather onorous. The main issue would be complying with the anti-money-laundering regulations, which would probably require all staff and volunteers to pass compulsory AML training annually (for example, all staff at the RAC have to pass AML training even though only about 1-2% of them work in the part of the business that requires FCA regulation). There are other nuisances too - when I worked for an investment wrapper firm one of my jobs was updating the list of notorious international criminals barred from using British financial services; and the company decided to reject any business from anyone entitled to US citizenship because it was easier than complying with the American tax authorities' claim of jurisdiction over any financial affairs of any Americans anywhere.

    I'm waiting for the posts in reply that say "ah but that wouldn't affect us, we're just a railway," but if you want to start a share nominee scheme then, yes, I suspect that would be enough of a financial service to mean you are operating a financial services firm
     
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  9. aldfort

    aldfort Well-Known Member

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    I'll wade in here with a very personal view.
    Shares are entirely the wrong way to support a heritage railway. The admin cost of small shareholdings wipes out the benefit after a very short space of time.

    So how to solve this.
    1) Only have shareholders who can invest a large 5 figure sum. That makes the admin cost bearable. It also provides a measure of control which those making such large commitments might wish to have. (Note the risk in this BTW!!!)
    2) Small shareholders should leave their shares in their will to one of the supporting charities. That removes the problem of shares ending up in limbo. Eventually it will lead to a small number of large shareholders.

    For those not able to manage large 5 figure sums.

    1) Join the support organisation and pay an annual sub. . ( On the WSR that's the one that sends you a journal 3 times a year to keep you up to date. Note it's published by WSRA but is a pan-railway publication so you will always know what's going on. )
    When you renew your sub add a healthy donation to the fund of your choice (with gift aid if you are in the position of paying UK tax). This lets you support the railway in the most tax efficient way and ensures your gift goes to the things you want it to go to.

    2) When it comes to estate planning you will ensure your legacy gets maximum bang for the buck by leaving it to one of the supporting charities. Ask your FA or your solicitor, it is the most tax efficient way to leave a legacy and, again, you can say exactly what you want the money to be used for. With a charity you have complete certainty that your wishes will be respected.
     
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  10. ghost

    ghost Part of the furniture

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    The problem with that approach is, that for special appeals such as the WSR rail appeal or GWSR chicken curve, buying shares or some other kind of special scheme for an emergency appeal will gain support from general railway enthusiasts. Whereas simply joining the WSR or GWSR seems rather more mundane and less appealing (pardon the pun!) unless you have a specific interest in the WSR or GWSR.

    Keith
     
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  11. 35B

    35B Nat Pres stalwart

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    I recall similar issues affecting the drafting of the prospectus for a Bluebell share issue.
     
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  12. aldfort

    aldfort Well-Known Member

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    Actually no, you are wrong on this occasion. There is nothing to stop people who are not members of the charity contributing to specific appeals. That is exactly what happened with the Rail Appeal we ran last year (...and I hope the same thing will happen this year). Non-members contributed to the appeal and we were still able to claim the gift aid which is of great help to the railway.

    A total aside but here is the comparison:- I am a governor of the RNLI (It's the top level of membership.) I also contribute to the various appeal each year and make the odd, off the cuff, donation. That does not stop the RNLI putting out those collection boxes and folks who are not members but who have a passing interest putting a few quid in them. Same with the TV appeal they have run this winter, you can contribute a few quid to their appeal without needing to join the RNLI.

    I was talking about a situation where people want to "belong" in some way to their chosen railway and to support it. I stick with my original contention that this is better done via membership of a supporting charity for the already reasons stated
     

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