What is a cooperative?

The different types of cooperatives

Cooperatives are grouped into four main sectors, according to the types of members they have:

Production cooperatives

In these cooperatives, producers organize in order to derive economic benefits from procurement of the goods and services they require to engage in their profession. Such services include product processing, marketing and supply. These cooperatives are chiefly found in the agri-food sectors, the taxi industry and maple syrup production.

Consumer cooperatives

These cooperatives provide goods and services to their members, and can be found in a variety of sectors including savings and credit, food, educational goods and services, child care services, cable television, funeral services, utilities, services to aboriginal communities, education and recreation.

Work cooperatives

These cooperatives are designed to provide work for their members. They are active in such various sectors as the forestry industry, consulting services, computer services, communications, goods production, high technology, and arts and entertainment.

The law also permits the establishment of shareholder work cooperatives. These cooperatives can acquire and hold the capital stock of a company if the said acquisition allows their members to work in that company. Although this is a relatively new type of cooperative, it includes some leading businesses, notably in forestry, mining and communications.

Solidarity cooperatives

These cooperatives allow for the operation of an enterprise whose board of directors is made up of representatives of the clients (users), the workers and local socio-economic organizations. This type of cooperative has only recently been included in the Cooperatives Act.

A cooperative is a legal person in which persons having economic and social needs in common unite for the prosecution of an enterprise to meet those needs, according to the rules of cooperative action.

In this definition, the meaning of the following words is of particular importance:

Legal person : A distinct juristic entity (this limits the risk to the investment that the member makes in his or her cooperative).

Persons : This does not mean a pool of capital, as in traditional enterprises, but persons – who may be legal (artificial) or natural (private individuals).

Needs : A cooperative is created to meet a need, unlike a traditional enterprise which is created to respond to an opportunity.

Enterprise : This means an economic enterprise, and in most cases does not involve a not-for-profit enterprise. The cooperative may not have a mission of profit maximization, but it must nonetheless be cost-effective in order to ensure its survival and procure economic benefits for its members.