A Co-operative (Leaving Cert Business): Revision Notes

A Co-operative

Setting up as a Co-operative

Credit Unions are often set up as co-operatives.

• Formation: Requires at least seven members and registration with the Registry of Friendly Societies. Approval is granted upon adherence to rules and payment of fees.
• Liability: Members have limited liability, meaning their financial risk is limited to their investment in the co-op.
• Finance: Funding can be challenging; profits are distributed based on turnover or savings. Co-operatives may struggle to raise large amounts of capital.
• Control: Operates democratically with each member having one vote ('one member, one vote'). An elected management committee makes key decisions.

*Credit Unions are co-operatives where members get to elect the management *

Advantages of being a co-operative

Many Businesses, such as credit unions, choose to set up as co-operatives for reasons such as:

• Limited Liability: Members' personal assets are protected, limiting their financial risk.
• Democratic Control: Each member has an equal say in decision-making, promoting fairness.
• Not Profit Driven: Focuses on member benefits and service quality rather than maximising profits.

Disadvantages of being a co-operative

However, running a co-operative has some drawbacks such as:

• Funding Difficulties: Raising significant capital can be difficult due to limited external funding options.
• Decision-Making Process: The democratic process can be slow and may hinder quick decision-making.
• Limited Growth Potential: Restricted to member contributions and profits, potentially limiting expansion opportunities.