Circle Holdings Plc is a public limited company in law, and the media characterisation of Circle as a “mutual” is at best disingenious, at worst misleading.

Mutual or public limited company?

A Guardian article recently explained the issue well. Circle appears classified as a “mutual” by the current government because 51% of the company is owned by investors, with the rest given over to workers. Co-operatives are businesses owned and run by, and for, their members. Whether the members are customers, employees or residents, they have an equal say in what the business does and a share in the profits. As a minimum, 75% of the co-op should be owned by the members – if not 100% – with democratic control.

Strictly speaking, a “mutual” exists with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services to all members of the organisation or society. A mutual is therefore owned by, and run for the benefit of, its members – it has no external  shareholders  to pay in the form of dividends, and as such does not usually seek to maximise and make large profits or capital gains. Critically, mutuals exist for the members to benefit from the services they provide and often do not pay  income tax.

Circle chief executive Ali Parsa, in the language of mutuals, talks about “surpluses” not profits when talking on Newsnight, but talks about profits and dividends (this company is allowed to pay out dividends legally when it has distributable profits) to his shareholders in the annual reports.

The public of course would much prefer to hear about the ‘social enterprise’ ‘mutual’ end of Circle, rather than the public limited company end of it, with its share price here, and its financial reports here. When I was at medical school, a Professor of Medicine taught me about how to make a diagnosis: “If it looks like a duck, and quacks like a duck, it probably is a duck”. There’s a similar adage that a clip-clop noise outside of your house is probably a horse not a zebra.

In my view, it’s not a mutual – Circle overall is fundamentally a public limited company.

Shibley is a member of Labour, and a member of the Socialist Health Association. He has postgraduate degrees in medicine, natural sciences, law and business.

Dai Powel HCT Group’s Chief Executive takes a similar view of Circle

Circle’s financial strategy