Spolu 5: The Re-Investment Obligation

When a spolu is profitable, it will be obligated to re-invest some of those profits into buying shares in other spolus.

When a profit distribution is declared by the senior management, a formula will tell how the spolu must invest into other spolus. Funds will be set aside. The senior management team (or a committee) will investigate the share offerings on the Spolu Exchange and select the spolu shares that create a good investment for the spolu. The spolu can acquire shares of customers, suppliers, and even competitors. It can invest in spolus that are not directly connected to them. While the amount is obligatory, the actual shares bought are a choice belonging to the spolu.

When the funds have been used in this way, the spolu’s re-investment obligation is complete. The spolu can buy more shares if it wants.

The purpose of the re-investment is four-fold.

First, the investing spolu will be building a future source of regular cash flow. This cash flow would come from profit distributions of the spolus they have invested in. While the cash flows would be small, they could be useful in hard business times.

Second, the spolu shares could be sold if the spolu experiences harder times. This would help the spolu remain solvent and survive to reach better times. The Spolu Exchange…