Co-operatives can be involved in a variety of social and commercial activities. A Co-operative may carry out any activity defined within its rules. Co-operatives generally fall into four categories:
- consumer - buying and then selling goods to members at a competitive rate
- marketing - branding, marketing and distributing members' products and services
- service - providing services to members, such as health, electricity or housing
- community - resource, information and skill sharing encouraging ownership and participation.
Distributing and Non-distributing Co-operatives
Co-operatives can be a distributing or non-distributing organisation. You need to specify the type of Co-operative you wish to establish.
A distributing Co-operative:
- may distribute any surplus funds to its members
- must have share capital and at least five active members. If there are less than five active members, the Registrar must give permission to form
- can distribute part of its surplus to members by way of bonus shares, dividends or rebates. Each member must buy the minimum number of shares stated in the Co-operative's rules. Members receive a return on the capital they invest if the Co-operative is wound-up.
A non-distributing Co-operative:
- will use surplus funds to support its activities, rather than distribute to members. It is likely to be more appropriate for a community organisation
- must also have at least five active members, but cannot distribute surpluses to members. If the co-operative is wound-up, the most members can get back is the original value of their shares.