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Incorporating a Cooperative Association in British Columbia
Cooperative associations differ from traditional businesses in that they are owned and democratically controlled by the people who use their services. Cooperative associations are operated for the benefit of members and members have a say in decisions affecting the association. Cooperative associations offer a unique model for community development and job creation. Some offer products to their members, others provide housing, health care or other services.
Since cooperative associations are developed through consensus and run on the democratic principle of "one member, one vote", cooperative associations can be more complex to set up and operate than traditional businesses. There are benefits in working with a lawyer, accountant and cooperative development resource group in setting up your cooperative association.
If your organization is studying the potential value of a cooperative association model and you need advice on early steps, you may find resource information on the British Columbia Co-operative Association website.
The Cooperative Association Act (the Act) and Cooperative Association Regulation (the Regulation) govern the formation, structure and operation of cooperative associations in British Columbia. Before you can carry on a business, trade or enterprise, or deliver a community service as a cooperative association, you must be incorporated or registered under the Act.
Incorporation provides your cooperative association with an independent legal status separate from its members. An incorporated cooperative association is a legal entity and can enter into contracts or incur debt in its own name. As a separate legal entity, a cooperative association possesses many of the legal rights and obligations of an individual.
To incorporate a cooperative association you must:
- Request Name Approval and Reservation
- Prepare a Memorandum of Association
- Prepare the Rules of the Association
- Complete the List of First Directors
- Complete the Notice of Registered Office
- File your Incorporation Documents
By filing the necessary paperwork and paying the filing fees, three or more subscribers (persons or eligible organizations that makes and subscribes the memorandum that is filed with the registrar) can form a cooperative association.
For information regarding completion of your documentation, contact the Corporate Registry at 1 877 526-1526. Corporate Registry staff cannot provide legal or business advice.
Step 1: Request Name Approval and Reservation
The Act requires that you include one of the following words in your cooperative association name: "cooperative"; "co-operative"; "coop"; "co-op"; "coopérative"; or another grammatical form of any of these words.
Your cooperative association name may include one of the following words: "association"; "society"; "union"; or "exchange"; or a similar word approved by the Registrar of Companies.
You cannot use the word "company" or "limited" in the name. Also, except in specific circumstances that apply only to housing cooperatives, you cannot use the terms "not for profit" or "non-profit" or any similar words.
For information on how to request a name approval for your cooperative association, see requesting a name approval reservation.
Step 2: Prepare a Memorandum of Association
The Memorandum of Association sets out:
- the name of the association;
- its purpose;
- any restrictions on the business it may carry on;
- any restrictions on the powers of the association;
- a detailed listing of the number and classes of shares the cooperative is authorized to issue (called the authorized share capital);
- a statement that the liability of the members or investment shareholders is limited in accordance with the Act;
- an optional statement regarding provisions on winding up of the cooperative association; and
- the number, class and par value, if applicable, of shares subscribed for by the founding members.
At least three subscribers are needed to form a cooperative association. They may be individuals or eligible organizations as set out in the Act. Eligible organizations are defined in the Act as the government, a first nation or a corporation. Corporations include companies, societies and other cooperative associations.
Keep in mind that it can be time consuming, expensive and difficult to amend your Memorandum once it is in place so make sure it accurately reflects the intentions and values of the subscribers and is not overly restrictive.
There is no pre-printed form to complete for the Memorandum of Association. The Memorandum is to be typed or printed clearly on 8½" by 11" white paper. Refer to Appendix A for information on preparing your Memorandum and the model format/content of the Memorandum.
The Memorandum must be submitted in duplicate. Each copy of the Memorandum must have original signatures.
Step 3: Prepare the Rules of the Association
Every cooperative association is unique; so each needs its own set of rules to cover topics such as requirements for and obligations of membership, how meetings are conducted and the election of directors, as well as other matters and processes required for the cooperative association's governance. The Act and Regulation specify matters that must be in every cooperative association's Rules. You may also include additional rules specific to your needs and objectives, as long as they do not conflict with the Act or Regulation.
Every cooperative association must have Rules of Association that address key corporate matters. While the Rules do not address day-to-day activities such as hours of operation, they do cover topics such as membership requirements, special rights and restrictions attached to investment shares, the conduct of meetings of members and of directors, and the financial management of the cooperative association.
When preparing your Rules, keep the following principles in mind:
- Rules should balance the rights of individual members with the interests of the cooperative association as a whole.
- Rules must be flexible enough to allow the cooperative association to respond to changing conditions.
- Rules should be clearly worded, with the same terminology throughout, to avoid misunderstandings and disputes over vague or inconsistent language.
- Rules must be consistent, not only with one another, but also with the Act and the Regulation.
- Rules must address all the matters that the Act and the Regulation require to be addressed.
The Regulation contains a set of model rules in Schedule B, which are geared toward a simply structured cooperative association. Schedule B is designed to accommodate an association that is not a housing cooperative association, has membership shares with par value and issues investment shares to members only. It may be a useful reference on general matters for all cooperative associations. You may adopt the model rules in Schedule B, modify them or prepare your own - it all depends on the type of enterprise you are starting and your business objectives.
Schedule B may not deal with all the matters that your cooperative association must address under the Act and the Regulation. If you choose to adopt or modify the Schedule B model rules, you must still review the Act and the Regulation carefully to make sure your Rules deal with all the matters that are required.
Refer to Appendix B for information on "Matters that must be provided for in the Rules." Appendix B shows matters that must be provided for by all cooperative associations and matters that may pertain to your cooperative association depending on how it is structured. This Appendix must be read in conjunction with the legislation to ensure you understand any restrictions it might impose. The most relevant provisions of the Act, the Regulation and Schedule B have been noted for each item.
In addition to those rules that are required for every cooperative association and the rules that are required if applicable to your cooperative association, you may address any number and kind of matters in your cooperative association's Rules, provided these additional rules do not contravene any of the provisions of the Act or Regulation.
However, keep in mind that it can be time consuming, expensive and difficult to amend your Rules once they are in place so make sure they accurately reflect the intentions and values of the subscribers and are not overly restrictive.
There is no pre-printed form for the Rules of the Association. The Rules are to be typed or printed clearly on 8½" by 11" white paper and completed in duplicate. Each subscribers' full name must be printed under their signature. The date the Rules of the Association were signed must be placed under each subscribers' name. If an eligible organization is a subscriber, it must select an individual to sign the Rules on its behalf.
The signatures must each be signed in the presence of a witness. You may have a witness for each signature or one person may witness all subscribers' signatures. You may witness each others' signatures. Should one person witness all subscribers' signatures, after the witness address type or print "Witness to all Subscriber Signatures"
If an Association has three subscribers and one person witnesses all three subscribers' signatures, then only one witness signature is required, along with the typed or printed statement "Witness to all Subscriber Signatures" after the date the person witnessed all three signatures.
However, if one person witnessed two of the three signatures and another person witnessed the third signature, then each person must sign the Rules across from the signature s/he witnessed. In other words, the one witness will sign twice and the other witness will sign once.
Each witness(es) full name and address must be typed or printed under their signature. Each signature must be dated. Signatures, including those of witness(es) must be originals on both copies of the Rules.
Note: Whether your Rules are written by the subscribers or by a professional advisor, it is important to make sure that members understand what they mean and what they allow.
Step 4: Complete the List of First Directors
Full names and residential addresses of each of the first directors must be listed on Form 1(A) the List of First Directors. The residential address of a director must be a complete physical address. You may include general delivery, post office box, rural route, site or comp. number as part of the address, but the Corporate Registry cannot accept this information as a complete address. You must also include a postal code. If an area does not have street names or numbers, provide a description that would readily allow a person to locate the director.
A minimum of three directors is required. The first directors of the cooperative association must be appointed in writing by a majority of the subscribers.
Step 5: Complete the Notice of Registered Office
Section 27 of the Act requires every cooperative association have a registered office in British Columbia to which all communications and notices may be delivered. The Notice of Registered Office form must set out the complete physical address of the cooperative association to enable a person to locate the office readily. You may include general delivery, post office box, rural route, site or comp. number as part of the address but the Corporate Registry cannot accept this information as a complete address. The postal code must be included. If an area does not have street names or numbers, a description must be provided that would enable a person to readily locate the office.
Step 6: Fees and Filing Your Incorporation Documents
All filings are processed on a first-come, first-served basis unless you pay an additional priority fee. If you wish the filings to be process on a priority basis, an additional $100 will be required. If the filings are being submitted on a priority basis, clearly indicate on both the envelope and the filings that the submission is a priority.
A priority service is considered completed when the document is filed or the service request is completed. Turnaround is usually within 24 hours.
Note: If a document to be filed has errors and requires correction, then those corrections must be made and returned to this office within the 24 hour period to maintain priority status.
Send your documents (two signed and witnessed original copies of the Memorandum; two signed and witnessed original copies of the Rules; the List of First Directors and the Notice of Registered Office), with cheque or money order payable to the Minister of Finance, to:
Once your documents meet the requirements of the Act and the Regulation, the registrar will register the Memorandum and Rules, issue a certificate of incorporation and return a certified copy of the Memorandum and Rules to you.
Once incorporated, your cooperative association will be a legal entity separate from its members.