What is a Co-operative? 2

Upon completion of this module the reader will know and understand the following:

  1. What is a co-operative?
  2. What are the 7 basic principles of co-operatives?
  3. What are the characteristics of a co-operative?
  4. What are the benefits of a co-operative?
  5. How to start a co-operative?



External Resources

How to do it

While most small businesses are started by individuals for the benefit of those individuals and their families, co-operatives are started by groups of people, or in some cases entire communities for the benefit of everyone involved. If Co-operatives are set up in the right way, they can play a major role in providing jobs and fighting poverty. In this edition we will guide you through the steps of establishing a Co-operative. For your benefit we have divided all of the steps into modules for easy reference. Included are resources that will assist you with additional research.

The following training is conducted by Arise South Africa. If you are looking to establish a co-operative in a different country than the Republic of South Africa please use this module as a guideline only and refer to your country’s rules and regulations on establishing a co-operative.

What is a co-operative?

A co-operative is an autonomous association of persons united voluntarily to meet their mutual economic, social and cultural needs and aspirations, through a jointly owned and democratically controlled enterprise organised and operated on co-operative principles.

The 7 co-operative principles

  • Voluntary and open membership
  • Democratic control
  • Common ownership
  • Autonomy and Independence
  • Education, Training and Information
  • Co-operation among co-operatives
  • Social aims alongside economic aims

What are the characteristics of a co-operativeß

  • It is an association of persons
  • Membership is voluntary
  • Mutual or common economic, social and cultural needs
  • Jointly owned and democratically controlled by the member
  • Operate according to co-operative principles
  • Based on trust and guided by the Co-operatives Act (South Africa) as well as the co-operatives constitution
  • Members must enhance their entrepreneurial capabilities and skills
  • They must take full control of the business
  • Governance and management especially financial management and control is important to the success of the business

What are the benefits of a co-operative?

  • A co-operative business assists persons to achieve in a group what they would most likely not be able to achieve on their own
  • It provides access to needed services
  • By pooling resources members pay less for input, marketing, distribution and selling of produce
  • Income for individuals, who previously did not derive any income
  • Social impact ; the improvement of the quality of life for members
  • Able to contribute to the economy of the country

How to start a co-operative?

Identify the co-operative Members

  • To find out whether there is enough interest in the proposed project
  • If there are enough people who are interested, you should :

Hold a formation meeting

  • Present the aim of the formation meeting
  • Identify the aims and objectives of the co-operative (exactly what the co-operative wants to do)
  • Once the members have been identify, the group will choose the Directors that will steer the process
  • The members will each fill out an membership application form.

Formation: The process further

  • Registration process
  • Completion of the registration forms and constitution
  • Studying the Co-operatives ACT 14, 2005 (South Africa)
  • Filing documents with the Registrar of Co-operatives for consideration (South Africa)
  • Certificate of Registration acquired
  • Registered constitution acquired

How to register the co-operative (South Africa)

  • Go to the CIPC offices and they will assist you with the registration process
  • Make sure that you have the following details at had
    • Identity document
    • Address of the Co-operative ( physical as well as postal)
    • Landline or cell phone number

Registration process

  • On average it takes 2 to 6 weeks for the registration process to be completed, if all forms and the constitution are completed correctly.
  • When the co-operative is registered, the Secretary will receive the certificate of registration and the registered constitution, through the post.
  • The co-operative can now start operating.

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