How a Cooperative Business Works

What Is A Cooperative Business?

It is the non-profit associative company, in which the workers or users, as the case may be, are simultaneously the contributors and managers of the company, created in order to jointly and efficiently produce or distribute goods or services to satisfy the needs of its associates and the community in general.

It is presumed that an associative company is non-profit, when it meets the following requirements:

  1. That it establishes the irreparableness of the social reserves and, in the event of liquidation, that of the remaining equity.
  2. That it allocates its surpluses to the provision of services of a social nature, to the growth of its reserves and funds, and to reimburse its associates part of the same in proportion to the use of the services or participation in the work of the company, without prejudice to amortize the contributions and keep them at their real value.

Every cooperative must meet the following characteristics:

  1. That both the income of the associates and their retirement are voluntary.
  2. That the number of associates is variable and unlimited.
  3. That it works in accordance with the principle of democratic participation.
  4. To carry out cooperative education activities on a permanent basis.
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  6. That it guarantees the equality of rights and obligations of its associates without regard to their contributions.
  7. That his patrimony is variable and unlimited. However, the statutes will establish a minimum amount of non-reducible social contributions during the existence of the cooperative.
  8. That it establishes the irreparableness of the social reserves and in case of liquidation, that of the remainder.
  9. That it has an indefinite duration in the statutes, and
  10. That integration be promoted with other organizations of a popular nature whose purpose is to promote the integral development of man.

No cooperative will be allowed:

  1. Establish restrictions or carry out practices that imply social, economic, religious or political discrimination.
  2. Establish, with companies or commercial persons, combinations or agreements that make them participate, directly or indirectly, in the benefits or prerogatives that the laws grant to cooperatives.
  3. Grant advantages or privileges to the promoters or founders, or preferences to any portion of the social contributions.
  4. Carry out activities other than those listed in its statutes, and
  5. Become a commercial company.

Cooperatives will have limited liability. The responsibility of the associates is limited to the value of their contributions and the responsibility of the cooperative to third parties, to the amount of the social patrimony.

Cooperatives will accompany their company name with the words “Cooperativa”, or “Cooperativa”. These denominations may only be used by entities recognized as such by DANSOCIAL, and in all public manifestations such as notices, publications and propaganda, they must present the number and date of the resolution of recognition of legal personality or of the registration that DANSOCIAL regulates otherwise. .

In developing the cooperative agreement, cooperatives will be constituted by private document and their legal status will be recognized by DANSOCIAL. The constitution of any cooperative will be made in a constitution assembly, in which the statutes will be approved and the administration and oversight bodies will be named in priority.

The Board of Directors appointed therein will appoint the legal representative of the entity, who will be responsible for processing the recognition of legal status.

The minutes of the constitution assembly will be signed by the founding associates, noting their legal identification document and the value of the initial contributions.

The minimum number of founders will be twenty, except for the exceptions enshrined in special regulations.

The following may be associates of cooperatives:

  1. Legally capable natural persons and minors who have reached fourteen (14) years of age or, who without having fulfilled them, associate themselves through a legal representative.
  2. Legal persons of public law.
  3. Legal entities of the cooperative sector and other non-profit private law entities.
  4. Companies or economic units when the owners work in them and family or associated work prevails.

The above requirements apply to cooperatives in general, except for associated work cooperatives.

The administration of the cooperatives will be in charge of the General Assembly, the Board of Directors and the Manager.

The general assembly is the highest administrative body of the cooperatives and its decisions are binding on all members, provided they have been adopted in accordance with the legal, regulatory or statutory rules. It is constituted by the meeting of the able associates or the delegates chosen by them.

As a general rule, the decisions of the general assembly will be taken by an absolute majority of the votes of the attendees. For the amendments to the statutes, the setting of extraordinary contributions, the amortization of contributions, the transformation, the merger, the incorporation and the dissolution for liquidation, the favorable vote of two thirds of the attendees will be required.

The election of plural bodies or bodies will be made through the procedures and systems determined by the statutes or regulations of each cooperative. When the one of lists or plates is adopted, the electoral quotient system will be applied.

The general assembly shall exercise the following functions:

  1. Establish the general policies and guidelines of the cooperative for the fulfillment of the corporate purpose.
  2. Reform the statutes.
  3. Examine the reports of the administration and oversight bodies.
  4. Approve or disapprove the year-end financial statements.
  5. To allocate the surpluses of the fiscal year in accordance with the provisions of the law and the statutes.
  6. Set extraordinary contributions.
  7. Elect the members of the board of directors and the supervisory board.
  8. Elect the statutory auditor and his alternate and set their remuneration, and
  9. The others indicated by the laws and statutes.

The board of directors

The powers of the Board of Directors will be those necessary to carry out the corporate purpose. Implicit attributions are those not expressly assigned to other bodies by law or the statutes.

The manager will be the legal representative

The assets of cooperatives:

It will be made up of individual and amortized social contributions, permanent funds and reserves, and donations or aid received for the increase in equity. Article 47 of Law 79 of 1988 determines that ordinary or extraordinary social contributions made by associates can be paid in money, in kind or conventionally valued work.

The social contributions of the associates will be accredited by means of certifications or certificates issued as provided by the statutes and in no case will they have the character of securities. They will be directly affected from their origin in favor of the cooperative as a guarantee of the obligations they contract with it.

Such contributions may not be taxed by their holders in favor of third parties, they will be unattachable and may only be assigned to other associates in the cases and in the manner provided by the statutes and regulations.

Work regime

The work of the cooperatives will preferably be in charge of the members themselves. Cooperative workers shall have the right to be admitted to them as associates, if the nature of the social activities allows it and the conditions that associates must meet for this purpose.

In the associated work cooperatives in which the capital contributors are at the same time the workers and managers of the company, the work, pension, social security and compensation regime will be established in the regulations because they originate in the agreement cooperative and, therefore, will not be subject to the labor legislation applicable to dependent workers and the differences that arise will be submitted to the arbitration procedure provided for in Title XXXIII of the Code of Civil Procedure or to ordinary labor justice. In both cases, the statutory norms must be taken into account as a source of law.

The compensation for the work contributed and the return of the surpluses provided for in article 54, numeral 3. of the law, it will be done taking into account the function of the work, the specialty, the performance and the amount of work contributed. Only in an exceptional and duly justified manner, non-associated work cooperatives may link occasional or permanent non-associated workers. In such cases, these relationships are governed by the rules of current labor legislation.

In cooperatives that are not associated work, the ordinary labor regime will be fully applied to dependent workers and workers who are also associated.

Cooperatives may agree or contract with associated work cooperatives the execution of the total or partial work that they require to carry out the activities of their corporate purpose.

Cooperative classes

Cooperatives, due to the development of their activities, may be specialized, multi-active and comprehensive.

Specialized cooperatives

They are those that are organized to meet a specific need, corresponding to a single branch of economic, social or cultural activity. These cooperatives may offer different services from those established in their corporate purpose, by signing agreements with other cooperative entities.

In specialized consumer cooperatives, the link must be open to all people who can make use of their services and who accept the responsibilities inherent to the association.

Multi-active cooperatives

They are those that are organized to meet various needs, through concurrence of services in a single legal entity. The services must be organized into independent sections, according to the characteristics of each specialized type of cooperative.

Comprehensive cooperatives

They are characterized by being those that, in development of their corporate purpose, carry out two or more activities related and complementary to each other, of production, distribution, consumption and provision of services.

In any case, l-Agent: rativas may include in their corporate purpose the provision of welfare, assistance and solidarity services for their members.

Associated work cooperatives

They are those that link the personal work of its associates for the production of goods, execution of works or the provision of services.

They will be constituted with a minimum of ten associates and those with less than twenty in the statutes or regulations must adapt the administration and surveillance bodies to the particular characteristics of the cooperative, especially to the size of the associated group, to the possibilities of division of labor. and the application of direct democracy, as well as to the specific activities of the company.

Agricultural, agroindustrial, fish farming and mining cooperatives

They may be of workers or of owners or of both modalities and to their constitution the provisions of article 71 of Law 79 of 1988 will be applicable.

Agricultural cooperatives may develop their activities through the collective or individual exploitation of the IT, offering goods linked to it, within the broadest contractual concept, and may even enter into trust contracts with associates or third parties.