Please use the link below to PLAN your Co-op:
www.swiftreg.co.za/swiftreg/P...
The Scrip to follow:
In this video, I will explain everything you need to consider when planning a new Co-op. I will use a practical example to demonstrate some of the critical decisions required to set up your Co-op optimally for success and end off with a few top tips. There are some interesting concepts, so let’s jump right in.
A Co-op can be defined as a legal entity formed by a group of five or more people to provide goods and service to its members. In the simplest terms a Co-op is a membership club which operates as a business.
Of all the legal entities available in South Africa, a Co-op is by far the most democratic and egalitarian. This is because all members have an equal say in how the business is managed and have one vote, regardless of how many shares they own.
It is often misunderstood that the profits of a Co-op are not always equally distributed as the profit each member receives is determined either by the number of shares they own or by the amount of business the individual members do with the Co-op. The general rule is the more money you invest in the Co-op the more shares you will receive and therefore the more profit you will entitled to. I will illustrate this later using our online planning tool. However, Co-ops remain more inclusive and equitable than private companies as the business operates on shared values owing to the equal voting rights.
In South Africa there are four types of Co-ops namely Primary, Secondary, Tertiary and Apex. When starting a new Co-op it will always be a Primary Co-op. The remaining types of Co-ops are simply groups of existing primary Co-ops which have joined together to form larger and larger Co-ops, as can be seen in this table.
The logic behind grouping Co-ops together is to achieve greater representation and more bargaining power when conducting business. But for the purpose of this video, we will focus the primary co-op which is the most common.
CIPC has categorised Primary Co-ops into 6 industry sectors namely; Agricultural, Financial, Housing, Non-Specific, Social and Worker Co-ops each with their own standard constitution already drafted by CIPC. Regardless of which category your Co-op falls into, they all operate along the same principles.
So let’s take a look at a practical example, go to www.swiftreg.co.za and click on the Co-op button where you will find our Co-op planning tool. This FREE service has been designed to help you with the 10 most important decisions you need to make to finalise the ownership of your Co-op. By entering your data into the planning tool it can calculate the number of shares each member should receive as well as the percentage profit each member will be entitled to; which is essential information for those intending to register a Co-op.
For ease of use, we have defaulted the values of our fictional example (which I will explain shortly) into this planning tool. This is to give a rough idea of some values which are required to generate the shareholding table.
To use the tool, simply type your information over these existing values and click on the calculate button to display the ownership table for your proposed Co-op.
The example you see here is a small fishing business based in Kalk Bay. The first step is for our fisherman to get together to decide on how much money they plan to raise as it is their intention is to buy a small fishing boat. To do this accurately, it is recommended that they draw up a business plan. This initial meeting of members is referred to as the pre-incorporation meeting and it is where all ten of these decisions should be agreed upon. Our fisherman agreed raise R50000 to purchase their fishing boat for their Agricultural Co-op called Kalk Bay Fishing Co-op Ltd.
To make our example easier, we selected the minimum number of members which is 5 but you can enter any number. It is important to remember that all the members automatically become the owners and will therefore be responsible to club together to finance the Co-op.
At this point you also need to decide on the amount of authorised share capital that needs to be created. This is the number of available shares created “out of thin air” to be distribute amongst the members. In our example the members created 2000 authorised shares.
The authorised shares have no value until they are issued to the members as only issued shares make up the ownership of the Co-op. It is advisable not to issue all of the authorised share capital to the members as this will allow the Co-op to retain shares to issue to new members in the future without having to create additional authorised share capital. In our example the members issue 1000 shares in total to themselves which means the Co-op has another 1000 unallocated shares available for future use should new members join the Co-op.
12 июн 2022
