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Forming a Cooperative

ArticleID 142  
Writer Isaac Thuku
Category Personal Article



A cooperative is an association of persons who voluntarily cooperate for their mutual, social, economic and cultural benefits. A co-operative or co-op includes non-profit community organizations and businesses that are owned and managed by the people who use its services. Their purpose is to benefit members as profits or earnings generated are distributed among them.


A consumer cooperative is formed by the people who work there. A worker cooperative is formed by the people who live there .A housing cooperative is formed as hybrids such as worker cooperative that are also consumer cooperatives or credit unions. There are multi-stakeholder cooperatives which include civil societies. The most common significance of cooperatives is that they all deliver community needs to members.


In a cooperative a group of people come together to meet the common needs and aspirations of its members and sharing ownership decisions in level grounds. Cooperatives create value for customers instead of only making big profits for shareholders.

Cooperative businesses are owned and run by members who can either be customers, employees or residents. These members use cooperative services or are employed there and can provide products and services. Cooperatives are flexible businesses as they can be set up in different ways. Before forming a cooperative, a certain protocol needs to be followed. Members must agree on a common strategy to meet their needs. Files with articles of incorporation are necessary as they legitimize your cooperative. They also include crucial information like the name, location, purpose, duration of existence, names of incorporators and capital structure.


By-laws need to be created after the cooperatives’ approval. They should comprise of member requirements, duties, responsibilities and other operational procedures. The Attorney needs to confirm whether the by-laws comply with state laws.


A membership application should be created to recruit members legally and verify that they are part of the cooperative. The membership application should be issued with names, signatures of the board of directors and member rights and benefits.


A character member meeting should be conducted in order to elect directors. Here the character members discuss and amend the proposed by-laws. These character members should vote to adopt the by-laws. Unnamed board of directors in the articles of incorporation must be designated during the character meeting.


Various licenses and permits should be obtained in order to run the cooperative. This varies with industry, state and locality. Before hiring employees, federal and state regulations for employees should be followed strictly. In case you want to start a cooperative but you don’t understand some clauses, consult an attorney, your secretary of state or the state corporation commissioner.


Cooperatives are increasing on daily basis as they are less taxed and provide funding opportunities with governments offering sponsored grants to new and existing cooperatives. They reduce costs and improve production of products and services. Cooperatives are very democratic as member opinions are highly appreciated and respected. Both new and existing cooperatives obtain capital through investors who are interested in the future prospects.


Forming a Cooperative
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