This document will guide you through the various steps needed to start a cooperative and inform you about the major resources available in Quebec.
Establishing a cooperative may be a complex process, and because of this, we strongly recommend that you seek the professional assistance available from the public and private sectors. Their assistance will make it easier for you to start your business and increase your chances of success.
In addition, we suggest you consult the other Info-Guides listed at the end of this document.
This Info-Guide was developed by Info entrepreneurs in collaboration with the Canada Business Network.
Note: The documents given as references in the text and in the “Other Resources” sections can be consulted on our Web site or be requested from our information agents.
It is an enterprise, or business, owned by an association of persons seeking to satisfy common needs (access to products or services, employment, etc.).
Associations include one or more kinds of users or stakeholders in the enterprise, such as:
consumers who use the enterprise to acquire products or services (such as a retail, housing, health-care or day-care cooperative);
producers (such as entrepreneurs, artisans or independent farmers) who use the enterprise to process and market the goods or services they have produced, or to buy products or services necessary to their professional activities;
workers who use the enterprise to secure their employment and control their working conditions.
Cooperatives operate democratically (one person, one vote) through two bodies: general meetings of the members or delegates, and the board of directors. At the federal incorporation level, at least two-thirds of the directors must be members and elected at a general meeting. The delegate structure may reflect the size of the organisation or the distance covered by the cooperative and may include more than one delegate for each organisation or territory represented (this may vary at the provincial incorporation level).
The cooperative's start-up capital usually comes from cooperative shares purchased by members. Federal cooperatives, however, can raise capital by issuing investment shares to members or non-members.
Each member's liability is limited to the amount of his or her share in the capital. Each member has only one vote regardless of his or her capital contribution.
Purpose of a cooperative Cooperatives are addressing citizens' needs by providing services such as: helping farmers market their products and buy farm supplies, providing communities with financial services and retail goods, as well as providing communities with utilities (gas, electricity, fire fighting services, etc.). Cooperatives are also a tool in addressing a broad range of socio-economic pressures, such as unemployment, youth employment, access to health care and value-added industries in rural communities.
Values Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.
Principles The cooperative principles are guidelines by which cooperatives put their values into practice.
Roles and responsibilities of members Members are the most important part of a co-operative and the co-operative exists to meet their needs. Just as the board has specific duties and responsibilities, members have responsibilities to themselves and to their organisation. Members have a duty to:
attend meetings and other co-operative activities;
assist in amending by-laws as required;
help to finance the co-operative by purchasing shares;
communicate complaints and suggestions to management and the board of directors;
support the development of other co-operatives;
elect directors; participate on committees and in other activities of the organisation;
The consumer cooperative Consumer cooperatives belong to consumer members, providing them with various goods and services for their personal use. (Examples of sectors of activity: food, housing, goods and services in the educational milieu, funeral services, cable television, recreation)
The producer cooperative Producer cooperatives belong to producer members, providing them with goods and services useful to them in their businesses. They may provide producers with goods and services needed for conducting their businesses, or they may process and market member products. (Examples of sectors of activity: agrifood, taxi, corporate services, farm machinery)
The worker cooperative Worker cooperatives belong to employees of the cooperative, who operate a business to provide themselves with employment. They enable workers to exercise control over their working conditions and work environment. (Examples of sectors of activity: forest management and timber processing, ambulance services, consulting and communication services, corporate services)
The worker/shareholder cooperative The worker/shareholder cooperative is a worker cooperative including all of the employees of a company, who jointly own a block of shares in that company. Its objective is to create and protect employment and represent the interests of the company’s member employees. (Examples of sectors of activity: timber processing, manufacturing, new technologies, transportation)
The multi-stakeholder cooperative This type of cooperative is characterized by the diversification of its members and its openness to partnership. In other types of cooperative, members must belong to the same category (consumers, producers, or workers). Multi-stakeholder cooperatives offer opportunities for people with a common interest and diverse needs to join together in the same company.
3. Advantages and disadvantages
Advantages
owned and controlled by members;
democratic control by one member, one vote;
limited liability;
profit distribution (surplus earnings) to members in proportion to use of service;
surplus may be allocated in shares or cash.
Disadvantages
possibility of conflict between members;
longer decision-making process;
participation of members required for success;
extensive record keeping necessary;
less incentive to invest additional capital.
4. Steps to forming a cooperative
Phase I – Develop the cooperative business idea
Step 1: Assemble a group of interested people
Step 2: Conduct a feasibility study
Phase II – Coordinate the pre-cooperative's activities
Step 3: Hold an organising meeting
Step 4: Conduct a viability study
Phase III – Organise and start-up the cooperative
Step 5: Organise the association
Step 6: Organise the enterprise (operations, financing, staff; legal aspects)
Step 7: Hold the initial general meeting
Business plan of a new cooperative A business plan is a document providing a complete description of the cooperative enterprise you wish to form. It describes in detail the products or services that will be produced or sold, the organisation of work and the management approach, the results of the market study and the marketing plan, the characteristics of the paid and unpaid human capital (the members), the equipment and material needed, the financing requirements and the financing plan.
Interactive Business Planner – IBP
The Interactive Business Planner is an on-line collaborative tool with which you may create your business plan. For more information, consult our document
Interactive Business Planner (IBP) or visit Interactive Business Planner.
5. Legal status of a cooperative
A cooperative may be formed in accordance with:
a provincial cooperative statute setting out
its corporate form and mode of operation;
or the Canada Cooperatives Act when the cooperative has a place of business in at least two provinces.
The degree of supervision and guidance offered to cooperatives varies from province to province. A number of provincial governments have special programs to assist cooperative development. In most provinces, each Credit Union or Caisse Populaire is inspected yearly to ensure that it is complying with the applicable acts and by-laws.
To form a cooperative, one must bring together at least 5 people with a common interest. For workers' cooperatives, it may be three.
Before a cooperative is legally constituted, the temporary committee must prepare draft by-laws to be approved during the organization meeting. A few examples of such by-laws:
by-law 1 (internal government)
by-law authorizing the board of directors to
issue preferred shares
procedure for electing board members
loan and loan guarantee by-law
The temporary committee must then set in motion the legal procedure for incorporating the cooperative by holding a meeting during which:
a provisional secretary is appointed
two founding members are appointed to sign
the application to incorporate the cooperative
the founders are asked to sign the cooperative’s articles of incorporation. (The articles of incorporation must indicate the name of the cooperative, the Quebec judicial district in which its headquarters are located, the reason it is being constituted, and the names and domiciles of the founders.)
The Direction des coopératives is responsible for enforcing the Cooperatives Act. The cooperative is constituted in accordance with this Act, and the form Statuts et requête de constitution d’une coopérative
must be completed. There is a fee to incorporate a cooperative.
We advise you to contact your local Coopérative de développement régional. These organizations can provide you with valuable information and advice. Their contact information is available in the Entrepreneurship Assistance document for your region.
Provincial Incorporation
Registraire des entreprises (REQ)
800, Place Victoria
Place Victoria Tower
Montréal (Québec) H4Z 1H9
Tel.: 1-888-291-4443
Registraire des entreprises (REQ)
800, Place d'Youville, RC
Québec (Québec) G1R 4Y5
Tel.: 418 643-3625 or 1-888-291-4443
To apply for federal incorporation, at least three persons, or one or more federation, must send 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 cooperative will be organised and operated and will carry on business on a cooperative basis.
If the proposed cooperative is a non-profit housing cooperative or a worker cooperative, a declaration signed by all the applicants that the cooperative will be in compliance with either Part 20 or 21 of the Canada Cooperative Act. Part 20 includes specific provisions applicable to non-profit housing cooperatives and Part 21 includes specific provisions applicable to worker cooperatives.
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", "coopérative", "united" or "pool" or another grammatical form of any of those words.
The required incorporation fee must be paid.
Publications offered by Corporations Canada:
Amalgamation Kit (for cooperatives that want to
amalgamate to form a single cooperative);
Amendment Kit (for incorporated or continued cooperatives that want to amend their existing articles under the Canada Cooperatives Act);
Continuance Kit (for cooperatives currently incorporated under Canadian legislation other than the Canada Cooperatives Act that wish to continue or move
into the latter);
Incorporation Kit(to incorporate a cooperative under the Canada Cooperatives Act).
Note: The Canada Cooperatives Act came into force on December 31, 1999. The Canada Cooperatives Act replaced the Canada Cooperative Associations Act on that date. The new Act modernises the corporate governance rules relating to non-financial cooperatives and is partly modelled on the Canada Business Corporations Act. The legislation provides cooperatives with greater flexibility in responding to the demands of the competitive domestic and global marketplace. Cooperative principles and values are set out clearly in the Act. Any actions a cooperative takes must be consistent with these principles.
Canadian cooperatives are generally subject to the same taxes as other business firms. Cooperatives usually fit into one of the following categories: producer, consumer or worker. A Corporation Return form is to be filed within six months after each fiscal year-end.
Nouveau Régime d'investissement coopératif – MDEIE
This plan is intended to
foster the funding of co-operative enterprises by providing tax advantages for
the members and employees of eligible co-operatives. Members or employees of
co-operatives can receive a deduction of their investment, subject to certain
conditions. http://www.mdeie.gouv.qc.ca/index.php?id=247&no_cache=1&tx_igaffich agepages_pi1[pid]=1962&mode=arbo
(In French only)
Ristourne à impôt différé – mesure fiscale pour coopératives – MDEIE
This tax measure is designed to support co-operatives
wishing to increase capitalisation. It allows the deferral of tax on eligible
rebates received by a member of an eligible co-operative. The ministère du
Développement économique, de l'Innovation et de l'Exportation (MDEIE) is
responsible for issuing certificates of eligibility each year at the request of
eligible co-operatives. http://www.mdeie.gouv.qc.ca/index.phpid=247&no_ca che=1&tx_igaffichagepages_pi1[pid]=1983&mode=arbo
(In French only)
For more information on these programs and on
co-operatives in general, contact the MDEIE at 418 691-5978.
7. Financing
Start-up costs When the decision is made to establish a cooperative, initial development costs will be incurred even before the cooperative is incorporated. These costs will be incurred as a group examines and assesses its ability to develop, finance and operate the proposed cooperative. Such costs can include fees for legal and financial advice, and consultants' services. Additional costs may occur if a decision is made to promote a proposed cooperative through methods such as advertising and public meetings.
How cooperatives are financed Cooperatives need money to start operations, to expand and diversify, and to modernise facilities. When the amount of money needed for the project has been determined, the cooperative should identify the best sources of capital and the desired amount from each source. These sources include common and preferred shares, other types of securities, member loans and loans from financial institutions.
Fédération des coopératives de développement régional du Québec
The Fédération brings together all coopératives de développement régional (CDR) which cover the entire province of Québec. CDRs represent the union between the cooperative movement and all the other socio-economic sectors at the regional level. CDRs offer powerful development support since their first mandate is to start cooperatives. Contact your local CDR for all start-up projects related to cooperatives (see the Entrepreneurship Assistance document for your region), call 418 656-1335, or visit http://www.fcdrq.coop (In French only).
Co-operatives Secretariat – Agriculture and Agri-Food Canada (AAFC) The secretariat advises the government on policies affecting co-operatives, coordinates the implementation of such policies andincreases the understanding of co-operatives within the federal government. The secretariat also provides a link between the co-op sector and the many federal departments and agencies with which they interact. For more information, consult our document
Co-operatives Secretariat, call 1-888-781-2222, or visit http://www.agr.gc.ca/index_e.php?s1=info&s2=t&page=coop
Se lancer en affaires : le modèle « Coopérative de travail » The Regroupement québécois pour la coopération du travail holds monthly information sessions on the cooperative work approach. The goal of these sessions is to answer the questions and needs of the participants and allow them to make an informed choice concerning the proper legal structure for their business start-up project. For more information, call 514 526-6267, or visit http://www.rqct.coop (In French only)
International Co-operative Alliance (ICA ) The ICA's Web site is essential for finding out about co-operative sites world-wide. The site also contains official texts and discussions of co-operatives and co-operation. http://www.ica.coop/index.html
Conseil de la coopération du Québec The Conseil de la coopération du Québec participates in the social and economic development of Quebec by promoting the expansion of Quebec's cooperative movement. It promotes dialogue between cooperative sectors and their partners, represents and defends the interests of Quebec's entire cooperative movement, and promotes cooperative development to maximize the beneficial effects of cooperation for its members and the entire province. For more information, call 418 835-3710 or visit http://www.coopquebec.coop/ (In French only)
Conseil Canadien de la Coopération (CCC)
Devoted to promoting the interests of Francophone co-operators in Canada, the CCC encourages co-operation with a view to the socio-economic development of the Francophone community in Canada. http://www.ccc.coop (In French only)
We hope the information provided in this Info-Guide has been helpful to you. Many other interesting documents, tools and links may be found on our Web site.
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