Co-operatives
What is a co-operative?
What legal form should a co-operative adopt?
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A co-operative (or 'co-op') is a business organization owned and operated on a democratic basis by a group of individuals for their mutual benefit. Virtually any type of business can be run as a co-op, and there is no legal requirement to register that business as such (as there is with, for example, companies or charities). Although there is, therefore, no official 'regulating body', co-operatives in the United Kingdom are represented by Co-operatives UK. This is a federation to which co-operatives can sign up for a fee and which promotes the interests of its members, as well as the idea of co-operatives in general. On a wider scale, co-ops are represented by the International Co-operative Alliance (to an extent, they are also governed by this body, as it sets out guidelines as to how co-operatives should be run in general terms). Co-operatives can be incorporated bodies or unincorporated associations.
There are various different 'types' of co-operative. Some of the more common types include:
- Consumer co-operatives,owned and controlled by their customers;
- Worker co-operatives, owned and controlled by their employees;
- Community co-operatives, owned and controlled by people belonging to a particular community, which will usually carry out activities that are of benefit to the whole community;
- Co-operative consortia, co-operatives formed by a number of independent businesses, organisations or individuals, and owned and controlled by them.
Unlike most 'types' of business, which are registered and run according to sets of rules enshrined in law, co-operatives are not given legal status as such by process of registration. What makes a co-operative a co-operative is the manner in which it is run on a day-to-day basis and the rules which it adopts in its governing document. Of course, if a co-operative is registered as a company, it will in addition be subject to the same rules and regulations as any other company registered under the Companies Acts (similarly, if it is registered as a CIC, then it will have additional responsibilities to the CIC Regulator, and so on).
What legal form should a co-operative adopt?
There is no pre-defined legal form for co-operatives in the United Kingdom, and so organisations wishing to become co-ops may choose to incorporate as (for example) limited companies, CICs, or IPSs. Alternatively, some co-ops may wish to remain unincorporated. Co-operatives UK recommends that the Industrial and Provident Society is the most suitable legal form to use, as its inherent structure (for example, provisions dictating that each member will have only one vote) echoes many of the characteristics of good co-operative governance.
We are able to advise on various different aspects of the process of setting up as a co-operative, and in particular we have experience in dealing with co-operatives which are formed as social or community-based enterprises. We provide a range of services including registration with Companies House, the FSA or the CIC Regulator (as appropriate) and also undertake solutions and secretarial work on behalf of co-operatives. For more information or a quote, please contact us.
Co-operatives UK
The International Co-operative
Alliance
The Financial Services Authority pages on IPSs
Community Interest Companies
Industrial and Provident Societies
Community and Charitable Solutions
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