What is a Co-operative (Co-op)?
A co-op is a business that is jointly owned and controlled by the people who form the co-op. Each member runs and owns their own separate business. They meet at regular intervals, hear detailed reports and elect directors among themselves.
The directors in turn hire management to manage the day-to-day affairs of the cooperative in a way that services the members’ interests.The directors must be elected from the members.
If a co-operative produces a profit, the profit is divided among the members according to use. This means that those who use the co-ops services the most get the bigger share.
It’s important to remember that members are free to also pursue profit generated from their own businesses which they keep separate from the co-operative. Co-ops are governed by the Co-operatives Act 91/1981.
How to register a Co-op
Collect or download the necessary forms from the Cipro website. It is very important that all forms are completed correctly. Complete the following:
- Form CR1
- CR4 (appointment of auditor) or
- CR8 (application for exemption from compliance with auditing requirements.
Present these documents along with a copy of any written contract (if any) entered into before the incorporation of the co-operative
Pay the prescribed fees:
R215 – application fee
R50 – registration of a name fee
How long does it take to register a Co-op?
The registration process takes on average two to four weeks to be completed.
The pros and cons of Co-operates
Pros
- Good for a group or a whole community – who want to start an enterprise where everyone benefits equally
- Profits are equitably shared with everyone
- They are operated and managed with the same discipline and systems that apply in any business
Cons
- Registration process is extensive
- If a co-operative isn’t set up in the right way – it can easily fail
- Must have a minimum of five members to become a co-operative
Do co-ops have to submit an annual return to Cipro?
Co-operatives do not have to submit an annual return.
Is it possible to convert from Co-Op to a CC?
If members decide to close down their co-operative and bring the business of the co-operative to an end, this is referred to as “winding up” or de-registering the co-operative.
Reasons why co-ops de-register
These are generally the reasons why a co-operative would be de-registered:
- A co-operative may be ordered by a court to wind up its business if it has debts that it is unable to pay.
- Not doing the business for which it was formed
- Not following the rules of its constitution
- If the co-operative has committed fraud to get registered
Voluntary de-registration
For voluntary de-registration of a co-operative, 75% of members have to vote in favour of a special resolution to wind up the co-operative.
How to de-register
To do this, complete form CR9 to inform the Registrar of Co-operatives that the members have voluntarily decided to de-register their co-operative.
How to close a co-op
To close a co-op, it has to be de-registered. If members decide to close down their co-operative and bring the business of the co-operative to an end, this is referred to as “winding up” or de-registering the co-operative.
For further information on registering visit the CIPC website.