A co-operative as a business entity

1. What is a co-operative?

A co-operative is an independent association of persons who join forces to meet their economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise, organised and operated on co-operative principles.

The co-operative provides services and products to its members. Profits, known as surpluses in a co-operative, are divided among members in relation to the amount of the business each member did with the co-operative.

2. What are the characteristics of a co-operative?

• It is an association of persons
• Membership is voluntary
• Mutual or common economic, social and cultural needs
• Jointly owned and democratically controlled by the member
• Operate according to Co-operative principles

3. What are the principles of the co-operatives?

• Democratic member control
• Voluntary and open membership
• Autonomy and independence
• Educational training and information
• Co-operation among co-operatives
• Concern for community
• Member economic participation

4. What are the benefits?

• Achieve what one cannot achieve on his own
• Provides easy access to needed services
• By pooling resources, each member pays less for inputs, marketing, distribution and selling of produce
• Process products if necessary

5. How do you start a co-operative?

There are three main steps in the formation of a co-operative.

Hold a meeting to establish if there is enough interest in the proposed project.

• The Chairperson reads part of the business plan which outlines the aims and objectives, as well as the business prospects to all present in the formation meeting
• Answer all the questions arising
• Invite everybody to join
• Those interested should be given an Application Form For Membership to complete
• Those that completed the Application Forms For Membership will then choose the Board of Directors
• The co-operative is now legally formed

Have a formation meeting

• Identify the objectives (Exactly what the co-operative wants to do)
• Equipment, buildings, and other materials needed in the enterprise
• Financial requirements (How are you going to obtain this?)
• Premises (Where will the co-operative be located)
• Choose a steering committee for the purpose of driving the formation process further
• Draw-up an initial plan of operation
• Obtain a constitution (statute) which will lay down the procedures to be followed by the co-operative in executing its aims and objectives. (see bottom of this page for models that could be used)

Furthering the process

• First meeting of the board
• Registration process
• Completion of registration forms & constitution
• Filing documents with the Registrar of Co-operatives for consideration
• Certificate of Registration
• Registered constitution
• Start operating!

6. Who can be a member?

• Anyone who has completed a membership application form
• Anyone who shares the same interests in the group (co-operative)
• Any person above the age of eighteen

There are various forms that have to be lodged with the Companies and Intellectual Property Commission (CIPC) to register your Co-operative. For this information you can visit the Co-operatives category on the CIPC website.