Co-operatives

1. Co-operatives Forms of Business Ownership

2. What is a co-operative? • A co-operative is a business owned and run by its members who have a common bond • To become a member a person must buy at least one share • Each member has one vote • The profit is distributed among the members • Members have limited liability • Co-ops are managed by a management committee

3. Formation of Co-ops • Seven people are required • Apply to the Registrar of Friendly Societies • Certificate of Incorporation is issued • The co-op must report annually to the Registrar of Friendly Societies

4. Advantages of Co-ops • Members have limited liability • One vote per member • The members own the co-op, which is a big incentive to do business with the co-op • Profits are distributed among the members

5. Disadvantages of Co-ops • Lack of finance • No incentive to buy more shares • The management committee may not have the business expertise to run a modern business

6. Types of Co-ops • Producer Co-ops – mainly agricultural co-ops. They collect the raw material from the farmers, e.g. milk, process it and sell the finished product, e.g. cheese

7. Types of Co-ops • Consumer Co-ops – these co-ops buy directly from the manufacturer and sell to members

8. Types of Co-ops • Worker Co-ops – are set up where businesses close down and the workers decide to pool their money and set up a co-op, e.g. Carrigdhoun Pottery, Greencaps (Dublin Airport)

9. Types of Co-ops • Financial Co-ops, e.g. credit unions – set up by people sharing a common interest, e.g. live/work in the same area. They encourage saving and provide loans

10. Summary • What is a co-op? • How is a co-op formed? • What are the advantages and disadvantages of a co-op as a form of business ownership? • Outline the different types of co-ops in existence in Ireland