What can a co-operative do

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.

Where to next?

Updated: 01 Jun 2020