cooperative

Primary tabs

A cooperative, often called a co-op, is any association of farmers, businesses, or manufacturers who work together to process, prepare, market, handle products, supplies, and/or services provided that the association operates for the benefits of its members. A cooperative operates for the benefits of its members by giving earnings in proportion to each of the member’s effort. 

Under the United States Code, Title 12 Chapter 7A, an association must meet at least one out of three requirements to be a cooperative. First, each member of the association is only allowed one vote. Second, the association must not pay dividends on stock or membership capital over 8 percent per annum. Third, the association must not deal with products, supplies, or services with nonmembers if such dealings are greater in value than such dealings with its members.

[Last updated in June of 2021 by the Wex Definitions Team]