Oikocredit confirms changes to capital-raising model for existing investors in Canada

Oikocredit confirms changes to capital-raising model for existing investors in Canada

AGM-2019-17.jpgFebruary 15 | 2023

Under the new model, Oikocredit will issue participations instead of shares. Canadian investors will see their existing investments transferred to the new model in two phases.

Until 2020, investors in Canada were able to invest indirectly in OIKOCREDIT, Ecumenical Development Cooperative Society U.A. (Oikocredit) through Stichting Oikocredit International Share Foundation (OISF). OISF is a member of Oikocredit. It holds member shares in Oikocredit and issued depository receipts for those shares to investors in Canada.

OISF ceased its offer in Canada in late 2020 but continues to serve existing investors. The introduction of the new capital-raising model will lead to changes for those existing investors. Oikocredit will introduce this new model beginning 1 March 2023. New investments are unfortunately not possible.

Implementation to take place in two phases

The new model will be rolled out in two phases in the coming months. In the first phase, starting as of 1 March 2023, Oikocredit will convert the member shares held by OISF to participations. Participations are non-voting equity instruments and are materially similar in financial terms to the current member shares and depository receipts issued for member shares (for more details, see the table below). From this date on, the underlying product of all depository receipts held by existing Canadian investors will become a participation instead of a member share.

In the second phase, from 1 April 2023, all depository receipts will be exchanged for participations and all existing Canadian investors will have a direct investment in Oikocredit. Investors don’t have to take any actions to convert the underlying product or exchange their depository receipts.

If investors disagree with the aforementioned changes, they can request a redemption of their investment. To request a redemption, investors should complete and return a redemption form (organization redemption form or individual redemption form).

New model expected to unify Oikocredit’s work and increase its impact

Participations will replace the shares issued by Oikocredit, the depository receipts issued by OISF for member shares it holds, and the other investment products that Oikocredit's support associations offer in other countries. This will allow Oikocredit to simplify its investment offer and enable it to use more resources in partnerships and projects that benefit low-income communities, and in promoting sustainable development together with its global network of investors, members and partners.

Investors can read more about the new model in the comparison table below and in the Frequently Asked Questions page here. Key documents describing this change, including the amended terms and conditions for OISF depository receipts, as well as the participation terms are now available here.

Comparison of key features of the current depository receipts and the participations

Depository receipts (current product) Participations (new product)
Issuer Stichting Oikocredit International Share Foundation (OISF), based in Amersfoort, the Netherlands. OIKOCREDIT, Ecumenical Development Cooperative Society U.A. (Oikocredit), based in Amersfoort, the Netherlands.
Type of investment Non-voting depository receipt issued by OISF for a share issued by Oikocredit. Non-voting equity instrument issued by Oikocredit, called a ‘participation’.
Redemption price Nominal value (EUR 200, CAD 200) or net asset value, whichever is lower. This means that the redemption price cannot exceed EUR 200 or CAD 200, but can be lower. Same as for depository receipts. It has been made explicit in the participation terms how the NAV in foreign currencies is calculated should the net asset value fall below the nominal value. Read more here.
Dividend As decided by Oikocredit’s members at the annual general meeting. Past dividend levels have included 2%, 1% and 0.5% (see recent dividend figures in the 5-year overview table in our annual report). There have also been years in which no dividend has been paid. Same as for depository receipts.
Costs for investment administration Allowed in principle, but none are in place. Allowed in principle, but none are in place.

Risks of continuing to

hold depository receipts

An investment in depository receipts carries financial risks typical for an investment in the equity of a company. An investment is fundamentally associated with considerable risks and can lead to the complete loss of the invested capital. Oikocredit seeks to protect the capital of the investors through careful business decisions and diligent provisioning for expected losses, although a residual risk can never be completely ruled out. Since Oikocredit began in 1975, no investor has lost any of their capital. However, past performance is not a guarantee of future results. Please note that the depository receipts are no longer available for sale to, or subscription by, (prospective) investors for Canada. For further information, click here. The risk profile is the same as for depository receipts. Please note that participations will not be available for sale to, or subscription by, (prospective) investors in Canada.
Redemption You can submit a redemption order by filling in a redemption form at any time to request your money back. Redemption requests are processed on a monthly basis. Investment redemptions are always at Oikocredit’s discretion. As is the case with depository receipts, you can submit a request for redemption, redemptions are processed on a monthly basis and are always at the discretion of Oikocredit. In addition, Oikocredit can also decide to redeem in case an investor no longer meets the eligibility requirements or holds less than one participation.
Liability Investors’ liability is limited to the amount they have invested. This means an investment is subject to full loss, but investors cannot be held liable for debts of the cooperative beyond the amount they have invested. Same as for depository receipts.

This is an updated version of the news item published on December 9, 2022, available here.

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