Legal Framework of Cooperatives

The legal framework of a cooperative is linked to whether it is incorporated or not. Many cooperatives choose to do so and fall under federal, state or provincial legislation, depending on how and where they want to operate. 

Types of cooperatives

Cooperatives can be found all across the business sector. The most common areas for cooperatives are healthcare, retail, housing, agriculture or art.

The advantage of cooperatives is its membership. Membership can vary from five to 5 million but all members contribute actively to their cooperative because they are part of it and have an interest in it. Cooperatives can easily operate locally or globally and often serve a commonly shared or community purpose, which brings members together. 

Founding, membership and dissolution of cooperatives

When founding a cooperative, certain criteria need to be fulfilled. 

  1. A first meeting of the charter members/incorporators
  2. File articles of incorporation
  3. Creating and approving bylaws for the cooperative
  4. Appointing or electing a board of directors
  5. Writing down the results of the first meeting
  6. Obtain relevant (business) licenses and permits
  7. If necessary: hiring employees

Generally, all cooperatives, despite their varying legal structures in the US and Canada, have a general meeting open to all members and a board of directors who run the cooperative on behalf of the members. More committees can be constituted in the bylaws.
Learn more about board of directors elections in cooperatives!

To become a member, persons must be founding members or join the cooperative. They fill out a membership application to legally verify that they are members of the cooperative. Members usually have a voting right at the Annual General Meeting, depending on the bylaws. 

Dissolution of the cooperative 
The legislation in the various states and Canadian provinces suggests that a cooperative can be dissolved at a general meeting if a quorum is reached and a majority votes in favor of dissolving the cooperative. The cooperative’s assets go to the person or organization determined in the bylaws. 
The details for dissolving your cooperative should be verified with your local business and cooperative laws. 

POLYAS-Tip: If the bylaws allow it, you can hold your annual general meeting online. Let your members vote directly online and increase voter turnout in your cooperative. Learn how you can include online voting in your bylaws now!

Online voting in cooperatives

Give your members the option to vote online on resolutions and their board of directors. Members who are not able to attend the general meeting can still exercise their voting right.

Lead your cooperative into the digital future.

Our online voting experts are happy to help you in conducting online elections in your cooperative. Contact us now!