Guides and Resources

Creating a Co-operative - An Information Guide
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Canada Cooperatives Act

Incorporation under the Federal Legislation

A co-operative association wishing to incorporate under the federal legislation must:

be carrying on its business in two or more provinces;
have a fixed place of business in more than one province.

This legislation governs non-financial co-operatives only. Under the Canada Cooperatives Act, a co-operative cannot carry on business as a bank, insurance company, trust and loan company, co-operative credit society or association, credit union or caisse populaire.

A minimum of three persons, or one or more cooperative entities, who intend to be members can apply for incorporation. If three persons applied for incorporation, the number of members cannot fall below three.

Capital Structure of Co-operatives

The Canada Cooperatives Act recognizes co-operatives with different capital share structures:

With member share capital; that is in which people must have co-op shares to qualify as members.
Without membership share capital; that is in which people are not required to have a certain number of co-operative shares in order to qualify as members.
With or without the power to issue investment shares; that is the co-operative can access capital from investors who expect a return on their investments and not membership status. Of course, members can also be investors .

Non-Profit Housing Co-operatives and Worker Co-operatives

The Canada Cooperatives Act includes provisions for non-profit housing co-operatives and worker co-operatives:

Non-profit housing co-operatives are co-operatives whose business is restricted to that of primarily providing housing to its members. The business must be carried on without the purpose of gain for its members.
Worker co-operatives are co-operatives whose prime objective is to provide employment to its members and to operate an enterprise in which control rests with the members.

How to Incorporate

To apply for incorporation, at least three persons, or one or more federation, must send to the Director, appointed under the Canada Cooperatives Act, the following:

Articles of Incorporation, Form 3001.
Notice of Registered Office, Form 3003.
Notice of Directors, Form 3006.
A declaration signed by all the applicants that after incorporation the co-operative will be organized and operated and will carry on business on a co-operative basis and that the information contained in forms 3003 and 3006 filed with the articles of incorporation must meet the requirements of the Act.
If the proposed co-operative is a non-profit housing co-operative or a worker co-operative, a declaration signed by all the applicants that the co-operative will be in compliance with either Part 20 or 21 of the Canada Cooperatives Act. Part 20 includes specific provisions applicable to non-profit housing co-operatives and Part 21 includes specific provisions applicable to worker co-operatives.
A name search report, specifically a Canada-biased NUANS report. The name must not be confusing with other names, including corporate names, and it must include the word "co-operative," "cooperative," "co-op," "coop," "cooperative," "united," or "pool" or another grammatical form of any of those words.
The required incorporation fee.

Under the Canada Cooperatives Act, by-laws are not required to be sent to the Director.

Articles of Incorporation, Form 3001

Articles must be set out in accordance with Form 3001, 3003 and 3006.
Specifically, the articles must contain the following:

The name of the co-operative (see below for requirements for non-profit housing co-operatives and worker co-operatives).
The place in Canada where the registered office will be located.
The name and residence address of each of the incorporators.
The number of directors or the minimum and maximum number of directors.
(Optional) Any restriction on the businesses that the co-operative may carry on (see below for restrictions for non-profit housing co-operatives).
Any restriction on membership in the co-operative.
A statement that the co-operative will be organized and operated and will carry on business on a co-operative basis.
A statement that the co-operative will carry on its undertaking in two or more provinces and will have a fixed place of business in more than one province.
Whether the co-operative is to be incorporated with or without membership share capital
If there is membership share capital:
- Whether the number of membership shares to be issued is unlimited or limited. If limited, the maximum number of shares that may be issued must be stated.
- If membership shares are to have a par value, their par value must be stated. If membership shares are not to have par value, an indication as to whether the membership shares are to be issued, purchased, redeemed or otherwise acquired at a fixed price or at a price determined in accordance with a formula. The formula must be set out. Non-profit housing co-operatives can only issue shares on a par value basis. (See below for restrictions for worker co-operatives.)
If there is no share capital:
- A statement that each member has the same rights and responsibilities as each other member.

(Optional) Any provision for the maximum rate of return that may be paid on member loans or membership shares.
(Optional) Whether there is to be investment share capital and, if so, the particulars of it. Non-profit housing co-operatives cannot issue investment shares.
(Optional) Any provisions for the distribution of the property of the co-operative on its dissolution. For non-profit housing co-operatives, any remaining property on dissolution must be transferred or distributed among one or more non-profit housing co-operatives, co-operatives that have similar objectives and limitations, or charitable organizations.
(Optional) Any provision by which members, other than by unanimous agreement, may restrict the powers of the directors to manage the business of the co-operative.
(Optional) Any provision that the members consider necessary or desirable, including any provision that could be set out in the by-laws.

Additional Articles for Non-profit Housing Co-operatives

The name of the co-operative must include the words "non-profit", "not-for-profit", "not for profit" and "housing cooperative", "housing co-operative" or "housing co-op" or the French equivalent.
The business of the co-operative is restricted to that of primarily providing housing to its members.

Additional Articles for Worker Co-operatives

The articles of a worker cooperative must provide that the name of the worker cooperative include the words "worker cooperative", "worker co-operative", "worker co-op", "coopérative de travailleurs", "coop de travailleurs", "co-op de travailleurs", "coopérative de travail", "coop de travail" or "co-op de travail."
No person may be admitted as a member unless the person is an individual and an employee of the co-operative.
The maximum membership investment payable by a member may not be more than 50% of their expected annual salary during the first year of their membership, unless a higher amount is paid by all members.

Main Features of By-laws

As noted above, by-laws are not to be filed with the Director. However, by-laws are generally required for a co-operative to operate. The by-laws address:

The qualifications and procedures for acceptance of members.
The rights and obligations of members and auxiliary members and conditions for their acceptance.
Transfer or assignment of member's interest.
The selection, qualifications, term of office and removal of directors and members of committees of directors.
The distribution of any surplus earnings.
The definition of the agent relationship if the co-operative can act as an agent for its members.
The conditions on which membership is terminated, whether voluntary or involuntary.
The way in which votes must be held if the co-operative wishes to hold electronic meetings.
(Optional) The representation of members by delegates, including classes of members, if any, who may be represented; the procedure for altering classes of members; and powers, duties, selection, voting rights and procedures for the removal of delegates.
(Optional) The division of members into classes, including the qualification, conditions precedent, manner of withdrawing and the conditions on which membership in a class ends.
(Optional) The referral of disputes between a member and the co-operative to a process of dispute resolution.
Any other matter that the members consider necessary or desirable.

For Further Information

Enforcement of the federal co-operative legislation is the responsibility of Industry Canada . You may obtain additional information to assist you in applying for incorporation and drawing up by-laws by contacting the Co-operatives Secretariat. Applications for incorporation are to be forwarded to Industry Canada, Corporations Directorate, 9th floor, Jean Edmonds Towers South, 365 Laurier West, Ottawa, Ontario, K1A 0C8, Tel. (613) 941-9042, Fax (613) 941-5781.

Industry Canada website for incorporation and technical information