Constitutions and Agreements
The constitution and members agreements set out the legal structure and relationships amongst members, and between members and the co-op business entity.
The Constitution
In a co-operative registered under co-op legislation (Industrial and Provident Societies Act) the constitution is called The Rules. In a company registered under The Companies Act, the constitution is called the Memorandum and Articles of Association.
The constitution sets out the purpose of the business and the limits of its authority to act on behalf of its owners. It provides for the governance arrangements and stipulates the criteria for membership, and the conditions and rights of shareholders.
A European Co-operative Statue came into force in 2006, making provision for co-ops with members in more than one European Union member state.
SAOS has model constitutions.
Members Agreements
Members Agreements are legally binding contracts between every member and the co-op, and are used to set out the terms of commitment of produce or loan funds to the co-op by members. The agreement describes provisions for redress if either the co-op or a member breaches their contract or any related terms and conditions.
'Commitment' is essential to success, ensuring that members do not undermine their co-op either by selling some of their produce to a competitor, or by using the co-op as an outlet of last resort. Co-ops are not just another intermediary in the market.
SAOS has model Members Agreements.