At Honest Weight’s October 23 Membership Meeting, one of the items on the ballot was to amend the Articles of Incorporation’s Par Value statement. The HWFC Articles of Incorporation initially set the par value (book value) of a share at $100.00, which is the same value that a share costs each shareholder. One hundred dollars is not only the purchase value but also the redeemable value of each share. However, if your par value equals your purchase and redeemable value, you need to take that $100 times each Shareholder and keep that amount in reserve, or otherwise unavailable to the Co-op. In Honest Weight’s case, that would mean we would need to multiply $100 times each of our 12,000 Shareholders and have a total of $1.2 million set on reserve, or kept in a virtual “Shoe Box.”
The Co-op sells shares to get money to invest in the store. In practice, the Co-op is not keeping $100 in reserve for each share that it sells because it is not good business practice to keep that much money in reserve.
Kate Doyle, Treasurer of the Board of Directors, explained to the Member-Owners on October 23 that since the Co-op was not holding $1.2 million in a “Shoe Box,” the Co-op is in violation of the Original Articles of Incorporation. To be in compliance with the Articles and the applicable New York State law, member-owners needed to set a new par value.
Kate Doyle, the CFO, and the Co-op’s legal advisors and accountants recommended that the Co-op change the par value to $1.00. By having the amount of money that the Co-op keeps in reserve correspond accurately with the new par value, the Co-op will be in compliance with our Articles of Incorporation and State law.
The ballot was a simple “YES” or “NO” to amend the Articles of Incorporation’s Par Value. The change passed with 137 “YES” votes and four “NO” votes. That is how NOT to keep $1.2 million in a Shoe Box!