Internal Share Trades
Learn how members request capital share purchases and redemptions, the verification and lockup rules that apply, and how approved trades post to the ledger.
Internal Share Purchases & Redemptions
Cooperative shares aren't traded on an outside market: members buy additional capital from the cooperative and redeem it back to the cooperative. The Share Trades module handles these internal transactions with board approval and liquidity safeguards.
1. Requesting a Trade
A member requests a capital purchase (buy) or redemption (sell) for a dollar amount. Administrators and finance staff can also submit requests on a member's behalf. Each request starts as Pending Board Approval.
2. Verification & Liquidity Safeguards
Before a request can be submitted or approved, OwnFold checks:
- Identity Verification: The member's KYC status must be Verified in the Member Ledger, and trading stays disabled until the cooperative's business verification (KYB) status is verified.
- Class Lockup: Redemptions are blocked until the lockup period set on the member's class in the Ownership Designer has passed.
- Balance & Annual Cap: A redemption can't exceed the member's available capital balance, and total redemptions in a calendar year are capped at 5% of all member capital to protect the cooperative's cash position.
3. Board Approval & Ledger Postings
An administrator approves or rejects each pending request; administrators can't approve their own trade while another administrator is available. Approval updates the member's capital account and posts to the general ledger:
- Purchase Approved: Dr. Cash, Cr. Member Capital Accounts.
- Redemption Approved: Dr. Member Capital Accounts, Cr. Cash.