Can I Operate as a Cooperative?

According to section 7 of the Canada Cooperatives Act (the "Cooperatives Act"), the federal legislation governing cooperatives, your business must be organized and operated on a cooperative basis to incorporate as a cooperative. The definition of "cooperative basis" is based on principles laid out in the Statement of Cooperative Identity adopted by the International Cooperative Alliance in 1995.

A proposed federal cooperative under the Cooperatives Act would be organized on a cooperative basis if it had the following features (for more detailed information, please refer to section 7 of the Cooperatives Act):

• open membership;
• one member, one vote;
• no proxy voting for members (holders of investment shares may vote by proxy);
• limited interest on member loans;
• limited dividends on membership shares;
• to the extent feasible, members provide capital;
• distribution of surplus funds to develop the business, improve common services and provide reserves:
  • to pay interest on member loans,
  • to pay dividends on membership shares and investment shares,
  • for community welfare, or
  • for distribution among members as a patronage return; and
• cooperative education.

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