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Choosing a ‘Co-op Type’ and its Impact on Your Business 

The type of co-operative you create is defined by who owns the co-op. In Canada, there are four generally recognized types of co-operatives that are consistent across provinces: 

  • Consumer 
  • Producer 
  • Worker 
  • Multi-stakeholder

Each province requires that you identify what kind of co-op you’re starting and, depending on where you incorporate, that might impact your business. Each province has its own regulations for co-operatives, and every province places additional regulations on certain kinds of co-ops. So, it’s worth your time to understand which type best fits your business and how that’ll shape your operations.   

Important to note here that co-operatives are largely expected to regulate themselves. That means the government likely won’t check that you’re adhering to legislation. In most cases, they’ll leave that to the co-op’s members and their auditor to flag and address any concerns.    

British Columbia  

BC’s Cooperative Associations Act is the most flexible piece of co-op legislation in Western Canada. The province provides clear instructions for completing the memorandum of association (similar to articles of incorporation) and a template for the rules of association (similar to bylaws).   

In BC, co-operatives must identify the type of co-op they’re creating in Article 2 of their memorandum alongside their purpose statement. This option can be as general (e.g. producer) or as specific (e.g. art marketing) as you prefer. When you file your incorporating documents through BC Registries, you’ll be asked to identify the type of co-op you’re incorporating, and you’ll need to pick from three options: community service co-op, housing co-op, or other

  1. Housing co-operatives: Part 11, Division 1 of the Act regulates key processes for housing co-ops dealing with evictions and winding up the co-op. 
  2. Certain Producer Associations: Part 11, Division 2 primarily regulates a ‘cooperative marketing contract’ between a producer co-op and its members.  
  3. Community Service Co-ops: Part 11, Division 3 of the Act prohibits community service co-ops from issuing investment shares, restricts its purpose to a charitable purpose, and sets out conditions on its dissolution that align with non-profit corporations. This section also highlights what community service co-ops need to include in their incorporating documents.

Alberta  

Alberta’s Cooperatives Act strikes a helpful balance in that it affords co-operatives greater freedom to create unique co-ops while still prescribing key procedures. The province provides some directions for completing the incorporating documents but requires users to reference the Act for guidance.   

Alberta’s Information for Incorporation form requires co-ops to identify the type of co-op they’re creating based on a list of 23. Co-ops that do not fit within those options can list an “other” option. In a co-op’s articles of incorporation, they’ll need to identify whether they’re a ‘specific cooperative’ that is subject to additional regulations set out in Part 18 of the Act:  

  1. Housing Co-operatives: Division 1 clarifies key procedures that housing co-ops need to include in their articles and bylaws including items dealing with withdrawal or termination of membership, evictions, occupancy, and tenant rights. The Act also restricts the co-op’s purpose to providing non-profit housing; this purpose cannot be amended. 
  2. Employment Co-operatives: Division 2 sets out important restrictions for employment co-ops. Importantly, 80% of members must be employees, cost of membership in the co-op cannot exceed more than 50% of an employee’s expected annual wages, the co-ops name must include some variation of the word employment, and 75% of employees must be members. The Act sets out key procedures detailing how to handle lay-offs, terminations, and dissolution.  
  3. Multi-stakeholder Co-operatives: Division 3 identifies key items that need to be included in the co-op’s articles and bylaws clarifying how key procedures work with distinct stakeholder groups. In particular, stakeholder groups can vote on resolutions together and must elect at least one director each. 
  4. New Generation Co-operatives: Division 4 clarifies some processes for New Generation Co-ops that give members the right to deliver products to the co-op to add value in ways that are distinct from ordinary producer-owned co-ops. 

 Saskatchewan  

Saskatchewan’s Co-operatives Act places similar restrictions on special-purpose co-ops as Alberta. The province does not provide instructions or templates for incorporating documents.  

The Information Services Corporation, the provinces corporate registry, requires co-ops to indicate what type of co-op they’re starting when they reserve their name. The six types provided (with the exception of “other”) match the special purpose co-ops identified in Parts 21-25 of the Act with additional regulations. Co-ops that do not identify with these special purpose co-operatives should select the “other” option.   

  1. Consumer Co-operatives: Part 21 provides additional regulations for consumer-owned co-ops. The Act restricts the number of employees that can serve on a consumer co-op’s board and sets out requirements for maintaining reserves. 
  2. Community Service Co-operatives: Part 22 regulates community service co-operatives. These provisions remove the requirement that the co-op’s name includes the word “limited” and prohibit private benefit to members through interest or dividends.  
  3. Housing Co-operatives: Part 23 sets out key regulations for housing co-ops. Importantly, housing co-ops must operate on a non-profit basis, offering non-market housing. The Act also prescribes some default provisions or key processes that need to be included in the co-op’s bylaws related to evictions, disputes, and reserves.  
  4. Employment Co-operatives: Part 24 provides additional regulations for employment co-ops requiring them to include some variation of employment in their name and exempting them from the restrictions on employees serving on the board. The Act also requires at least 75% of all members to be employees, 75% of all employees to be members, and no more than 50% of the co-op’s work can be subcontracted out.  
  5. Community Clinics: Part 25 regulates community clinics clarifying their purpose and creating alignment with other healthcare-related legislation. The Act restricts how these co-ops can use surplus and who can serve on the co-op’s board. 

In Saskatchewan, New Generation Co-operatives incorporate under separate legislation.   

Manitoba  

Manitoba’s Cooperatives Act is similar to Alberta’s in that it places additional regulations on select types of co-operatives while recognizing other types in the incorporation process. This government website provides information about Manitoba’s different classifications of co-ops, including “producer, consumer, worker, housing, financial, new generation, multi-stakeholder, and non-profit community service.” The province also lists select industries that should be included in the co-op’s articles: “producer/marketing, retail supply, utilities, cable television, agricultural services, fish marketing, child care, farmers’ markets, and community service.”   

The Act places additional regulations on select types of co-ops:   

  1. Housing Co-operatives: Part 12 of the Act regulates housing co-ops. This includes setting out what qualifies as non-profit housing and limiting the purpose of a non-profit housing co-op. The Act sets out the co-op’s additional bylaw requirements and provides for important processes like evictions, occupancy rights, and abandoned property. The Act permits patronage dividends in the form of rent reduction and establishes a tribunal process for dealing with disputes.  
  2. Worker Co-operatives: Part 13 of the Act sets out additional provisions for worker-owned co-ops including provisions that need to be included in the co-op’s articles and bylaws. The Act also provides clarity on how to handle lay-offs, dissolution, and terminations, and permits employees to serve on the board and audit committee. 
  3. Multi-Stakeholder Co-operatives: Part 13.1 of the Act regulates multi-stakeholder co-operatives. The Act sets out key items that need to be included in a co-op’s articles and bylaws respecting the division of the membership into stakeholder groups. The Act also clarifies how to use the multi-stakeholder model when the purpose is to provide housing or employment.  
  4. Community Service Co-operatives: Section 62 of the Act restricts community service co-ops from distributing profit with members. And section 338(2) aligns a community service co-op’s dissolution with that of a non-profit. 

The Province of Manitoba makes template bylaws available for different types of co-ops including:  

  • Standard co-ops with or without share capital 
  • Community service co-ops 
  • Worker co-ops with or without share capital 
  • For-profit or not-for-profit housing co-ops

Canada 

 The Canada Cooperatives Act regulates co-ops that operate in multiple provinces upon incorporation. The Act aligns with the incorporation process and the instructions provided to help complete the articles of incorporation. The only specific types of co-ops mentioned in the Act and the articles are non-profit housing co-operatives and worker co-operatives. Parts 20 and 21 of the Act place additional regulations on these co-ops:  

  1. Non-profit housing co-operatives: Part 20 sets out additional requirements for non-profit housing co-ops including key provisions that need to be included in their articles and bylaws. It also provides default provisions for concepts like occupancy, evictions, and dispute resolution.  
  2. Worker co-operatives: Part 21 places additional regulations on worker co-ops including provisions that need to be included in their articles and bylaws. The Act also requires some variation of the word “worker” to be included in the name and 75% of the employees to be members. The Act also clarifies processes concerning terminations, lay-offs, and dissolution.  
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