Cooperative

A cooperative (also co-operative or co-op) is an association of persons who join together to carry on an economic activity of mutual benefit, in an egalitarian fashion.

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The term may be used loosely to signify its members' ideology (as in 'jazz coop') but a mainstream cooperative comprises a legal entity owned and democratically controlled by its members, with no passive shareholders. It thus combines the equal control characteristic of many partnerships with the legal personality conferred on corporations. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join. Unlike a union, in some jurisdictions a cooperative may assign different numbers of votes to different members. However most cooperatives are governed on a strict "one member, one vote" basis, to avoid the concentration of control in an elite. Economic benefits are distributed proportionally according to each member's level of economic interest in the cooperative, for instance by a dividend on sales or purchases. Cooperatives may be generally classified as either consumer or producer cooperatives, depending largely on their membership. Classification is also often based on their function or trade sector.

Related Topics:
Legal entity - Passive shareholder - Union - Vote - Economic interest

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In the United States most cooperatives are corporations or limited liability companies (LLCs) but other legal entities may also be used. Cooperatives may be for-profit or non-profit.

Related Topics:
Corporation - Limited liability companies (LLCs)

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In the United Kingdom the traditional corporate form taken by cooperatives is the 'bona fide co-operative' under the Industrial and Provident Societies Acts. Since the 1980s, however, many have incorporated under the Companies Acts, limited either by shares or by guarantee. In a bid for sustainability, many cooperatives adopt the principle of 'common ownership', and have a zero or nominal share capital, along with a clause stipulating altruistic dissolution. This means that the cooperative cannot be wound up and its assets distributed for personal profit (see: asset stripping). The facility to legally 'lock' a cooperative's assets in this way was brought into force in 2004.

Related Topics:
Industrial and Provident Societies - Guarantee - Common ownership - Capital - Asset stripping

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In the European Union, the European Cooperative Statute will come into force in October 2006, to provide a corporate form for cooperatives with individual or corporate members in at least two of the EU member states.

Related Topics:
European Union - European Cooperative Statute - 2006 - EU member states

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Worldwide, some 800 million people are members of cooperatives, and it is estimated that cooperatives employ some 100 million people. The cooperative movement often has links and associations with Green politics or Socialist politics, with socially responsible investing, and with the social enterprise movement.

Related Topics:
Green politics - Socialist - Socially responsible investing - Social enterprise

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