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.

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