Notes: Free online reference and decision support for charities, social enterprises and co-operatives. Get Legal was developed by NCVO with the support of BWB to provide organisations with access to information and advice on the most appropriate legal form and governance structure to achieve their objectives. Choosing a legal form for your co-op can be confusing, but as you likely will, you don`t necessarily need to understand all the technical details. Get advice from people who like to think about such things, for example Radical Routes and Co-operatives UK and similar existing co-operatives, why they chose their legal form and how it works for them. This guide provides a brief comparison of the legal forms available for common types of cooperatives. For more information on choosing a legal form for your cooperative, see the series “How to create… ” by Radical Routes and “Simply Legal” by Co-operative UK. All organizations (including cooperatives) have a legal form – what type of company it is within the meaning of the law, e.g. a company limited by guarantee, a cooperative or a limited liability company. Here in the UK, there is no legal form that is always used by cooperatives. Instead, cooperatives choose a basic legal form and then define how they will work cooperatively in a so-called governmental document or constitution. A big question for your co-op when choosing a legal form is who owns the assets. Many cooperatives decide that the means of production, as well as all other capital and assets, should not belong to individuals or enterprises, but to society in general. This is called common ownership.
If your co-op is jointly owned, as a member, you are a trustee of the co-op and its assets, you benefit from it, but you also take care of future generations. In practice, this means that when your co-op is dissolved, the remaining assets will be transferred to other co-ops or similar organizations and will not be divided among members. If you want to ensure that your co-op is jointly owned, you must choose a legal form that does not allow the issuance of shares. This guide explains why legal structures are important, the advantages and disadvantages of incorporation, a summary of unregistered and registered legal forms, forms of organization, ownership, and non-profit status. Notes: The website contains a range of information for cooperatives, including information on cooperative enterprises of common interest and a governance code for worker cooperatives. A document called Simply Legal is at your disposal, which covers different legal forms and organizational forms for joint ventures. When you register on the website, you can also use the “Select a structure” tool. This table shows the legal forms that are often adopted by different types of cooperatives. Note: These are the most common options – you can choose a different form for your co-op than shown here. Most registered companies have limited liability – meaning that individual members` liability for the cooperative`s debts is limited – often to a nominal amount such as £1 or £10. If the company goes bankrupt, the people involved do not have to raise the money themselves to pay all the cooperative`s debts. This means that your savings should be safe even if your co-op goes bankrupt.
There are various guides to Scottish and Northern Irish co-operatives registered as charities. Legal forms may or may not be registered. When your co-op is formed, the organization is considered a person by law, which means it can enter into stand-alone contracts. For example, a registered co-operative may employ individuals and purchase or lease real estate on behalf of the co-operative. Unregistered groups such as associations and partnerships cannot sign contracts on behalf of the organization. Instead, one or more members must do so on behalf of the co-op and are personally liable for breach of contract.