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 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

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

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

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

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