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Home > Associations and non-profits > Cooperatives > What is a cooperative?

What is a cooperative?

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Queensland has around 180 registered cooperatives operating in industries as diverse as sugar, dairy produce, horticulture, housing, retailing and recycling.

Cooperatives allow members to pool resources to achieve greater benefits than they could as individuals. Cooperatives belong to, and are operated for, the benefit of members who generally share investment and operational risks, benefits and losses.

A cooperative has the legal capacity of an individual. A cooperative may sue and be sued in its corporate name.

The nature and extent of cooperatives´ operations depend on member support, such as the amount of capital contributed, the personal efforts of directors and officers and members´ patronage of their cooperative.

Being a member of a cooperative gives individuals some protection against being held personally responsible for the organisation´s debts and liabilities. In return, they must meet legal and reporting obligations.

A member of a cooperative is not under any personal liability to the cooperative except for the unpaid amount on shares and any charges payable under the rules.

Cooperative structure

There are three tiers to a cooperatives´ structure: primary, secondary and tertiary.

  1. At least five proposed members are required to form a cooperative, which is the first tier of cooperatives´ structure known as the primary level.
  2. Two or more cooperatives as members form an association of cooperatives, which is the second tier of cooperatives´ structure known as the secondary level.
  3. Two or more cooperative associations as members form a federation, which is the third level of cooperatives´ structure known as the tertiary level.

Types of cooperatives

Trading cooperatives

This cooperative has share capital and its rules allow returns or distributions on surplus or share capital. This type of cooperative maximises returns by undertaking commercial functions that an individual could not.

Trading cooperatives differ from incorporated associations because they can be formed to establish a business that makes a profit for its members.  Unlike private companies, cooperatives do not have an upper limit on membership numbers.

Their ´one member, one vote´ system also differs from public companies where voting rights are linked to share ownership.

Non-trading cooperatives

A non-trading cooperative´s rules do not allow returns or distributions on surplus or share capital to members, other than the nominal value of shares (if any) at wind-up. The cooperative´s rules assign the shares´ nominal value.

A non-trading cooperative can still trade and make profit, but cannot distribute profits to members, and can only use profits to further their primary activities. These cooperatives enable members to carry out functions collectively, which reduces the individuals´ costs.

Non-trading cooperatives with share capital

A non-trading cooperative with share capital has additional rules and processes regarding shares.

What cooperatives do

Cooperatives work in a wide range of social and economic activities, including retailing, food, housing, education, health, worker, child care and rural industries.

Rural cooperatives are involved in most areas of rural industries. A rural cooperative can:

Cooperative principles

Cooperatives work under seven principles of cooperation that are central to their establishment and operation.

  1. Voluntary and open membership: Anyone can accept the responsibilities of membership.
  2. Democratic member control: Each member has one vote.
  3. Member economic participation: Cooperative operations focus on servicing the members´ needs. A trading cooperative distributes surpluses to its members in proportion to the business done with the cooperative.
  4. Autonomy and independence: Cooperatives are autonomous, self-help organisations controlled by members.
  5. Education, training and information: Cooperatives provide education and training for their members, elected representatives, managers and employees so everyone can contribute to the cooperative´s development.
  6. Cooperation among cooperatives: Local, state, national and international networks enhance the cooperative movement.
  7. Concern for the community: Cooperatives work for the sustainable development of their communities through policies accepted by the members.

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Last reviewed 09/12/2011

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