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What are cooperative corporations?

We've got a Co-op 101 information session for you, as part of the Community Ownership Collaborative's latest webinar on employee-owned businesses.

Ian Shewan, from Lerners Lawyers, gets into the nuts and bolts of cooperative enterprises. What is a cooperative?

"People getting together to conduct a business enterprise they could not do on their own," says Sherman, who thinks the cooperative concept is a great model but is underutilized in Ontario.

Cooperatives can take many forms, from Gay Lea Foods Cooperative to local brewery co-ops. Shewan says there are three things that distinguish coops from other enterprises:

  1. The way members vote: one member, one vote.

  2. The way money is raised: co-ops can raise money through an offering statement.

  3. The way profits are distributed to the members: a co-op can issue patronage—the more business you do with the co-op, the more you get back.

For the purposes of community ownership, Shewan says there are two options: worker co-ops and traditional community-owned co-ops.

A co-op is different from a standard, traditional business: it can be incorporated with or without share capital. The co-op would find its capital through government grants, funders, or borrowing from members. What's more common is the share capital co-op, which offers membership shares (gives you the right to vote) and preference shares (which can be held by membership but also people who want to invest).

For co-ops, the shares are issued for par value, Shewan says.

"A co-op is there for sustainability—you're not there to become rich with your shares, you just want to ensure the co-op is there to provide the service."

How do you raise money as a co-op? You can go to banks or issue an offering statement. Shewan lays out the terms of an offering statement in greater detail in this downloadable powerpoint presentation.

Download PDF • 1.02MB


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