What is a Cooperative?

The Cooperative Advantage

Cooperatives are different from other businesses because their members are stakeholders with various roles. In the Malaysian context, a cooperative is a member-owned and democratically governed organisation that operates for the mutual benefit of its members. It is established under the Cooperative Societies Act 1993 and aims to promote the economic, social, and cultural interests of its members through collective action.

Cooperatives in Malaysia often focus on providing affordable goods and services, financial support, and opportunities for community development while adhering to principles of shared ownership, equitable distribution of benefits, and member participation in decision-making.

Becoming a Co-operative Member

The foundation of a cooperative is its members, who provide essential financial support, either through initial contributions or by using its services. Members often buy shares or pay fees, making it crucial for cooperatives to understand their members and their role in the co-op’s success. As owners, members typically have voting rights, can run for board positions, receive dividends, and access co-op information. They also have responsibilities, including financial support, participating in governance, holding directors accountable, and suggesting business improvements.

Co-op Members

Many co-operatives issue shares to cater to different interests or raise funds, typically offering only one type of share: membership shares (sometimes referred to as “common shares”). These shares are usually more affordable and give shareholders greater control over the co-op. Purchasing a membership share grants ownership in the co-op, along with the right to vote or run for the board.

Board Representation

Every co-operative has a board of directors responsible for overseeing its operations, elected by the membership shareholders. Establishing a governance system that allows all members (and different classes of members, if applicable) to provide input into how the business is run is vital. Ensuring broad participation in the co-op’s governance helps to meet members’ expectations and address concerns before they escalate into larger issues. If the co-op involves different groups, it’s important to ensure they have representation on the board.

Cooperative Principles

The principles of cooperatives refer to the fundamental values that outline how cooperatives operate and interact with members and the community. These principles ensure that cooperatives function fairly, transparently, and responsibly, while prioritizing the collective interests of the members. The key principles of cooperatives include open membership, democratic control, fair profit distribution, autonomy and independence, as well as cooperation between cooperatives.