Co-operatives

Forms of Business Ownership

What is a co-operative?

A co-operative is a business owned and run by its members who have a common bondTo become a member a person must buy at least one shareEach member has one voteThe profit is distributed among the membersMembers have limited liabilityCo-ops are managed by a management committee

Formation of Co-ops

Seven people are requiredApply to the Registrar of Friendly SocietiesCertificate of Incorporation is issuedThe co-op must report annually to the Registrar of Friendly Societies

Advantages of Co-ops

Members have limited liabilityOne vote per memberThe members own the co-op, which is a big incentive to do business with the co-opProfits are distributed among the members

Disadvantages of Co-ops

Lack of financeNo incentive to buy more sharesThe management committee may not have the business expertise to run a modern business

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

Types of Co-ops

Consumer Co-ops – these co-ops buy directly from the manufacturer and sell to members

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)

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

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