What is a Cooperative Corporation

Cooperative (co-op)

• A jointly owned commercial enterprise (usually organized by farmers or consumers) that produces and distributes goods and services and is run for the benefit of its owners

Cooperative corporation

• A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.

A worker cooperative is a cooperative owned and democratically controlled by its employees. There are no outside or consumer owners in a worker cooperative -- only the workers own shares of the business. Only one membership share may be issued to a member. One membership share is the equivalent of one vote. Membership is not compulsory for employees, but only employees can become members.

History of Cooperatives

Historically, worker cooperatives rose to prominence during the industrial revolution as part of the labour movement. As employment moved to industrial areas and job sectors declined, workers began organizing and controlling businesses for themselves. Most early worker co-ops did not adhere to clear cooperative structures or ideologies. Starting in the 1830s, worker cooperatives were formed by hat makers, bakers, and garment workers.

In the United States there is no coherent legislation regarding worker cooperatives nationally, much less Federal laws, so most worker cooperatives make use of traditional consumer cooperative law and try to fine-tune it for their purposes. In some cases the members (workers) of the cooperative in fact "own" the enterprise by buying a share that represents a fraction of the market value of the cooperative.

When the current cooperative movement resurfaced in the 1960s it developed mostly on a new system of "collective ownership" where par value shares were issued as symbolic of egalitarian voting rights. Once brought in as a member, after a period of time on probation usually so the new candidate can be evaluated, he or she was given power to manage the coop, without "ownership" in the traditional sense. In the UK this system is known as common ownership.

Some of these early cooperatives still exist and most new worker cooperatives follow their lead and develop a relationship to capital that is more radical than the previous system of equity share ownership.

What is a Cooperative Corporation | Internal Structure | History of Mondragon | Creation and Use of Social Capital | The Future of Cooperative Corporations |