Co-operative Registration

There are 4 types of Co-ops namely: Primary, Secondary, Tertiary and Apex.  The base type or starting point is a Primary Co-op as Primary Co-ops can group together to form Secondary Co-ops.  Secondary Co-ops can group together to form Tertiary Co-ops which can in turn group together to form an Apex Co-op.  This is to get greater representation when dealing with government.

You need a minimum of 5 members to register a Co-op, two of whom must be appointed as directors. Co-ops can have employees who are not members. 

Yes, but then there must be a minimum of two companies. The companies will have the same voting rights as the other members. 

Two

This depends on 2 factors, namely, what the members have agree to and what is stated in the constitution. If some members own more shares than others, then they will be entitled to more profits. The constitution may also state that the profits are based on a user patronage principle and again this will mean that some members will be entitled to greater profits. Alternatively, if the members choose to make equal share contributions or scrap the share contribution altogether and only rely on raising money through the entrance fee then everyone should have made equal contributions to raising the money and therefore own equal shares in the Co-op. In such a scenario the profits are distributed evenly. The method of profit distribution should be cleared up during the planning phase.   

Yes, all primary Co-op members have one vote regardless of how many shares each member has.

This is when the profits are paid out according to the amount of business each member does with the Co-op and not according to the amount of shareholding. 

If some members use the Co-op equipment more than others, then they must pay proportionally for the use of the equipment. For example, if a combine harvester is owned by an Agricultural Co-op and only a few members use the asset then they will pay proportionally for the running costs of operating it. 

Planning is an essential element of any Co-op’s success.  It is so important that we have developed an online Co-op planning tool to help you understand the process and run potential scenarios.  For example: How many shares must be authorised? What value should the Par Value shares be fixed at? Should the members raise the money by contributing to shares or using the entrance fee or both? Once you have resolved these questions you should draw up a business plan and familiarise yourself with the standard constitution for your specific industry, before you register your Co-op.

It is not necessary as CIPC has drafted 6 different standard sector constitution which cover all industry types, you need only select the most appropriate one. 

Only if the annual turnover exceeds R25 million.  However, CIPC requires annual returns to be paid which will depend on the turnover of your Co-op which will be categorised into one of the following 4 groups. The category will determine what information you need to supply to CIPC.   Category Turnover Responsible Person Documents A1 Less than R1m Director Financials, Co-op forms 7,8 and 15.1 A2 Between R1m – R10m Director Financials, Co-op forms 7,8 and 15.2 B Between R10m – R25m Independent Reviewer Financials, Co-op forms 4, 7 and 8 C More than R25m Auditor Financials, Co-op forms 4, 7 and 8  For example, your Co-op’s turnover is less than R1m a year, it will be classified as category A1.  The Directors will need to complete the Co-op forms 7, 8 and 15.1 which must be supported by an income statement and balance sheet and submitted to CIPC on an annual basis. Form Co-op 8 includes annual fees which must also be paid to CIPC as failure comply with any of these requirements will result in the Co-op being non-compliant which will attract penalties and may be deregistered by CIPC. 

Yes, absolutely. They are required to be accepted by the directors and pay the entrance fee and or the share contribution as stipulated by the constitution.  It is a good idea to withhold a portion of the authorised share capital so that it can be issued to the new members. 

No, Co-operatives (Co-ops) operate more like for-profit companies, with the key distinction that each member has one vote, regardless of how many shares they own. This democratic structure ensures equal decision-making power among members.

Non-profit companies, as the name suggests, are not designed to generate profits for distribution. Instead, any surplus income is reinvested into the organization’s activities, used to pay reasonable salaries to staff or directors, or donated to other organizations with a similar mission.