Cooperatives

What is a Cooperative?

Globally co-operatives are broadly defines as autonomous  associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises.

What is a member's liability?

The liability of a member of a co-operative is limited to an amount equal to the nominal value of the shares, for which the member has not paid, that the member holds in the cooperative.

 

Benefits of a Co-op?

 

uCo-operatives are community enterprises

uCo-operatives promote democracy

uCo-operatives build open markets

uCo-operatives raise human dignity

uCo-operatives are systems for development

Categories of co-ops?

u“A primary co-operative’’ means a co-operative formed by a minimum of five natural persons whose object is to provide employment or services to its members and to facilitate community development.

u“A secondary co-operative’’ means a co-operative formed by two or more primary co-operatives to provide sectoral services to its members, and may include juristic persons.

u“A tertiary co-operative’’ means a co-operative whose members are secondary co-operatives and whose object is to advocate and engage organs of state, the private sector and stakeholders on behalf of its members, and may also be referred to as a cooperative apex.

Principles of Co-ops ? Section 3

uVoluntary and open membership: recognizes that co-operatives are

voluntary organizations, open to all persons able to use their services

and willing to accept the responsibilities of membership, without

gender, social, racial, political or religious discrimination;

uDemocratic member control: recognizes that co-

operatives are democratic organizations controlled by

their members, who actively participate in setting their

policies and making decisions;

uMember economic participation: recognizes that

members contribute equitably to, and democratically

control, the capital of their cooperative.

uAutonomy and independence: recognises that co-

operatives are autonomous self-help organizations

controlled by their members. If they enter into agreements

with other organizations, including governments, or raise

capital from external sources, they do so on terms that

ensure democratic control by their members and maintain

their co-operative autonomy;

uEducation, training and information: recognizes that 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

 

uCo-operation among co-operatives: recognizes

that co-operative serve their members most

effectively and strengthen the co-operative

movement by working together through local, national, regional and international structures;

• Concern for community: Co-operatives work for the sustainable development of their communities through policies approved by their members.

 

Values of a Co-op?

uCo-operatives are based on the values of :

uself-help,

uself-reliance,

uSelf responsibility,

udemocracy,

uequality,

equity and solidarity. In the tradition of their founders,

co-operative members believe in ethical values of trust,

honesty, openness, social responsibility and caring for

others.

 

Types of Co-ops?

uCo-operatives are basically classified according to their type rather than their economic activity. Below is the clarification of the types of primary cooperatives found as outlined in the Schedule 1 of the Co-operatives Act No.14 of 2005.

 

Registration process

uBefore a co-operative can apply for registration, there

must at least be one preliminary meeting of interested

persons

uThe persons present at this meeting must adopt the

constitutions  (sec 13) of the co-operative and elect the

first directors of the co-operative

uAfter this meeting, the group must then submit an

application for registration to the Registrar of Co-

operatives

uThe minimum number of members who must support

the application is different for different levels of co-

operatives:

uPrimary co-operative – at least five people

uSecondary  co-operative – at least two primary co-

operatives

uTertiary co-operative – at least two secondary co-

operative

uA very simple definition of a co-operative would be

to say it is a business where a group of people get

together voluntary to address their common needs. 

uA co-operative is a distinct form of enterprise that

provides services and/or 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.

uBy registering a co-operative, you are creating a

legal entity with certain powers to act on its own and

certain responsibilities. Before registering a co-

operative, take note of the important record-

keeping that need to be done by a co-operative.

uBefore you decide to register a co-operative you

need to have a formation meeting to decide on

common purpose and agree to register a co-

operative.  At the formation meeting the members

have to decide on the form and type of co-

operative. There must be at least five founding

members (people) in order to form a primary co-

operative.  Co-operatives have certain principles,

and are expected to include certain values in all the

work that it undertakes.  Click on the links below for

further detail:

 

uBefore registering a co-operative, a formation meeting needs to be held with all persons

that are interested in establishing the co-operative.

uThe Chairperson outlines the aims and objectives of the proposed co-operative

uThe Chairperson answers all the arising questions

uThe Chairperson invites everyone to join

uThose interested should be given an application form for Membership to complete

uThe persons that have completed the above-mentioned application form decide how

many persons will be required to manage the co-operative

uThe members will then elect the board of directors (the board of directors will be the

management or steering committee of the co-operative)

u Also discuss and agree on the following:

uThe Objectives (exactly what the co-operative will do)

uThe equipment, premises and other materials needed by the enterprise

uWhere will the premises (co-operative office) be located

uHow will the co-operative be financed? How will the funds be obtained?

uDraw-up an initial business plan

uChoose a name for the co-operative (propose and choose alternative names).

uThe constitution of a Co-operative is the document which contains all the rules for how a

Co-operative should be structured and managed. The constitution should include:

uOfficial document - Procedures and Regulations in the Constitution

uMeetings

uMembership

uGeneral Matters

uThe Annual General Meeting (AGM)

uThe Board of Directors;

uDecision making

uManagement

uFinances

uAny other rules that agree with the Co-operative principles

uEvery member has to read the constitution of the Co-operative carefully and understand

all the regulations in it.  Alternatively, the Board of Directors must explain all the rules of the

constitution to the members and ensure that they understand them.

uCIPC can provide you with a model constitution especially designed for co-operatives. 

You may use this model for your own co-operative or amend it to suit the requirements of

your own co-operative.