What is a co-operative?
A co-operative is an entity voluntarily owned and controlled by the people for whom it was established and who use its services. It may be formed for the provision of goods and services to its members or for the supply of goods and services to the general public.
A co-operative is a body corporate. It can be formed by 5 people or corporations and must be registered. Unlike companies, its main purpose is not for profit for its members, but to advance the co-operative's activities.
Why form a co-operative?
- A co-operative enterprise is suited for meeting the needs of its members, whether they are producers, consumers or workers.
- Each member has an equal say in co-operative matters. That is, one member one vote.
- A co-operative can mean increased buying/selling power and reduced processing/handling costs.
- Seven principles of cooperation apply to the operation and establishing of co-operatives.
- Voluntary and Open Membership - to all willing to accept the responsibilities of membership.
- Democratic Member Control - active co-operative members each have one vote.
- Members' Economic Participation - ensures that the operations of the co-operative are focused on servicing the members' needs. In a trading co-operative, surpluses are normally distributed to members in proportion to business done with the co-operative.
- Autonomy and Independence - co-operatives are autonomous, self-help organisations controlled by their members.
- Education, Training and Information - co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives.
- Cooperation between Co-operatives - at a local state, national and international level, to enhance the co-operative movement.
- Concern for Community - while focusing on member needs co-operatives work for the sustainable development of their communities through policies accepted by their members.
Types of co-operative
There are two types of co-operatives:
- Trading co-operatives
- Must have share capital and at least 5 active members. It can distribute part of the surplus of the co-operative to members by way of bonus shares, dividends or rebates.
- Non-trading co-operatives
- Must have at least 5 active members, but must not distribute any surplus to members. It may or may not issue shares to members.