How to form a cooperative:
– Forming a cooperative is unique. Potential members must agree on a common
need and strategy to meet that need. A committee conducts exploratory
meetings, surveys, and cost and feasibility analyses before members agree
with the business plan. Not all cooperatives are incorporated, though many
choose to do so. If you decide to incorporate, you must complete the following
general steps:
• File Articles of Incorporation. This legitimizes your cooperative and includes the
name of the cooperative, business location, purpose, duration of existence, names of
the incorporators, and capital structure
• Create Bylaws. While not required by law, they do need to comply with state law and
are essential to the success of your cooperative. Bylaws list membership
requirements, duties, responsibilities, and other operational procedures that allow
your cooperative to run smoothly.
• Create a Membership Application. To recruit members and legally verify cooperative
members, you must create and issue a membership application, including names,
signatures from the board of directors, and member rights and benefits.
• Conduct a Charter Member Meeting and Elect Directors. Charter members meet to
discuss, vote on, and amend proposed bylaws. If the board of directors were not
named in the articles of incorporation, you must designate them during this meeting.
• Obtain Licenses and Permits. You must obtain relevant business licenses and permits.
3. Cooperative (Slide 2 of 4)
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FDIC OMWI Education Module: Choosing a Business Structure