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Manitoba Agriculture, Food and Rural Initiatives

March 2007

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Cooperative Development Services

The Co-op Advantage: Comparison of Forms of Business Corporations
 

CORPORATE ENTERPRISES
  INDIVIDUAL   ENTERPRISE PARTNERSHIP ENTERPRISE COMMERCIAL TRADING CO. COOPERATIVES CROWN CORPORATIONS
Membership The owner. As per agreement of the partners. Limited by law. Number of voting shares may be limited and therefore not available to everybody. Cost of voting shares may be too expensive for many people. Membership is generally open to anyone who can use the services. Cost of shares is kept to a minimum amount so that money is not an obstacle to membership. Worker Co-ops share a common employer. Crown Corporations and Government Departments have been frequently ignored when businesses are discussed. These agencies became involved in economic development. This involvement has steadily increased. Today, we recognize that government is not only involved in crown corporations, but also supplies assistance to all other types of enterprise.
Control The owner. By partners according to the agreement. According to number of voting shares and proxy shares held. "1 Member - 1 Vote" i.e. - equal among the members regardless of investment.
Distribution of Earnings To the owner. To partners according to the agreement. According to shares held. To members on a proportional basis according to their "patronage" - i.e. - based on volume of usage.
Liability Owner totally responsible. Each partner totally responsible. Limited to value of shares purchased. Limited to value of shares purchased.
Permanence Ends with death of owner. Ends with the death of a partner. Not affected by death of a shareholder. Not affected by death of a member; value of member's share goes to their estate.

(Source: An Introduction to Co-operatives, L. E. Gossen, Copyright 1975)

 

Comparison of Business Ownership Models

A COOPERATIVE

OTHER BUSINESS
  1. Its main purpose is to provide service and savings to members.
  2. It is essentially a union of persons.

  3. Its control is democratic; each member has one share and therefore one vote regardless of their patronage level.

  4. Ownership is in the hands of its members in the community who use the service.

  5. Surplus ("profits") refunded to members in proportion to patronage.

  6. Shares are held in name of members only and are not traded for speculation.
  1. Its main purpose is to make profit for investors.
  2. It is essentially a union of capital.

  3. Control is not equal; it is based on the number of voting shares held. As the volume of shares purchased is generally unlimited, individual investors can acquire substantial or complete control.

  4. Ownership is in the hands of investors who may be located in another community, province or country.

  5. Surplus allocated in proportion to voting shares owned.
  6. Shares may be freely traded and fluctuate in value.
A cooperative is different from other business in some very important areas:
  • PURPOSE  - service and savings to members.
  • CONTROL - one member - one vote.
  • OWNERSHIP - members who use the services.
  • SURPLUS - is proportionally distributed to members according to patronage.


(Source: An Introduction to Co-operatives, L. E. Gossen, Copyright 1975)

 
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