Is a Co-Op a Legal Entity

The number of co-operatives in the United States varies by sector and type. For example, there are between 300 and 400 worker cooperatives in this country. Worker co-operatives employ about 7,000 people and generate nearly $400 million in annual sales. In general, all members are expected to use or contribute to their co-op and have an equal voice in the operation of the organization. Cooperatives are subject to the national and territorial legislation of the National Cooperatives Act. A cooperative is a legal business entity, an organized structure through which members carry out their activities. This is not the case with cooperatives. Since justice and equality are among the founding principles of a co-operative, each member-owner of a co-operative receives one vote. The opinion of one member of the co-operative carries no more weight than that of another member of the co-operative. People who join co-operatives or are founding members of a co-operative often share the same common values, meaning they are willing to work together towards a common goal. One of these goals is to create a better world by working together and shifting the focus of business to put people above profit in order to build a more inclusive economy. Why are there cooperatives? The purpose of a co-operative is to meet the economic, cultural and social needs of the organization`s members and the surrounding community.

Co-operatives often have a strong commitment to their community and focus on strengthening the community in which they exist or serve. When a co-operative performs well financially or economically, the community it serves does not just benefit a small group of shareholders. The International Co-operative Alliance adopted seven co-operative principles in 1995. These guiding values are based on a set of principles known as the Rochdale Principles, created in 1844. Co-operative principles create guidelines that co-operatives can follow and allow co-operatives to put their values into practice. Introduction to the projectWe are preparing a legal guide for worker cooperatives to meet the demands of worker centres and community organizations in predominantly low-paid immigrant communities. The guide is developed by the Urban Justice Center, the National Labour Law Project and the Community Economic Development Clinic at Fordham University School of Law. Our offices represent low-wage workers and have developed expertise on worker cooperatives in low-wage immigrant neighborhoods, primarily in New York City. The guide will feature successful and struggling worker cooperatives that strive to bring higher income, dignity and control over working conditions to low-paid, vulnerable and immigrant workers. In addition, the guide discusses important considerations to be assessed when setting up a worker cooperative.

It will contain numerous bibliographies of annotated resources. Here we excribe the section of the guide that deals with options for corporations to create worker cooperatives. We welcome your comments, questions or suggestions about this section and our broader project. This section is a work in progress, based on our experience in New York as well as initial research and discussions on other parts of the country. Tell us about the law and practice in your area. Email your feedback to edebarbieri@urbanjustice.org.Introduction to Legal Entity Options for Worker Cooperatives Each state`s laws provide for certain general forms of legal entity, and some states offer additional options. Each form of entity imposes demands on the organizational structure, the responsibilities of the members among themselves, the cooperative and the outside world. Factors to consider in deciding whether to create a legal entity, at what stage to establish it, and which business structure is most appropriate include: (1) the nature of the industry, (2) sources of capital and financing, and the degree of control of the persons or companies providing capital; (3) structural flexibility, in particular where a non-profit organisation wishes to retain a role in the management of a worker cooperative it has created and incubated; (4) the tax consequences; (5) consequences under migration law; (6) the importance of using the words «cooperative» or «cooperative» in the name of the enterprise; and (7) the Group`s ability to meet tax and other reporting requirements imposed on different types of entities; and (8) any other state-specific considerations that may arise.