Business organization is one of the first steps for any company and it is important to understand all your options. One that often goes overlooked is the corporate cooperative model. These types of businesses pose a variety of benefits including the democratizing of the workplace. This allows for member-producers or member-consumers to determine the direction and strategies of the business as a whole.
These types of businesses pose a variety of benefits including the democratizing of the workplace. This allows for member-producers or member-consumers to determine the direction and strategies of the business as a whole.
The definition of a co-op
A cooperative organization aims to provide a service to its members. This does not mean your business eschews all profit though. Many cooperatives operate as for-profit entities and divide the net profits between members according to their contributions to the business.
A few defining aspects of a co-op include having a mission to provide some sort of service, the intent to operate as a cooperative effort to serve both vendor-members and consumer-members and a flattened management hierarchy that allows for more democratic leadership.
Cooperatives in Texas
Each state approaches this type of business formation differently and Texas law includes a number of bylaws that cooperatives must adopt when organizing. These bylaws include:
- Requirements for membership
- The time, location and manner in which members conduct meetings
- The qualifications and duties of members, directors and officers
- The compensation of members and directors
- The number of members or directors that constitutes a quorum on business decisions
Other requirements include that the board of directors consist of members elected by the association’s base.
Depending on your type of business, Texas may have further requirements if you choose to operate as a cooperative organization. The attorneys at Quadros Migl & Crosby are available to help you and your associated members draft a cooperative business formation that covers all your bases. Please contact us today to schedule a consultation.
