A textbook definition of co-operatives could be companies with variable capital which bring together -under principles of free and open membership -, people with common social and economic interests, and who in pursuit of those interests engage in business activities. Earnings generated by the co-operative are shared out among its members, once the requirements of common funds are met, and the economic and social aspirations of co-operative members should be one and the same, so that the common good and joint interests take precedence over all other considerations.

Among the qualities which distinguish co-operatives from other types of companies (limited, incorporated, personal, mutual societies, etc.) is the principle of democratic and joint decision and policy making.

Current Spanish labour legislation governing co-operatives is now the competence of autonomous regional communities, so the regulation of this type of activity falls to each community. Nevertheless, there is a state law which provides a legal framework for those communities who still lack legislation on the matter of co-operatives.
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Who are the worker members?
These are the members of the co-operative who make no financial contribution to the co-operative but contributes instead with their own work. The statutes of the co-operative should establish the rights and duties of this type of member, who by definition must be a natural person.

What do non-working members do?
They supply the capital. Spanish cooperative legislation recognises the figure of a non-working member as a person who helps to finance this type of companies. A non-working member can be a natural person or a legal entity; may not play an active role in the co-operative�s activity; and has no right to any surplus which may be generated nor any responsibilities for any debts. The function the non-working member is limited to loaning a certain amount of money and receiving interest in return. The interest rate should be stipulated in the statutes, though it cannot be more than five points higher than the Bank of Spain�s basic rate. The these non-working members cannot contribute more than 45% of the total of the co-operative�s capital.

Who controls a co-operative?
The General Assembly of the co-operative is the company's governing body and all the members take part. The General Assembly�s mandate includes modifying the� statutes; supervising the management; approval of the annual accounts; the share out of the surplus or the assignation of losses; the appointment of Board members; the levying of obligatory contributions from the members or the adjustment of member contributions to the share capital. In other words, all the really important co-operative matters are the responsibility of the General Assembly. A feature which distinguishes a co-operative from other types of companies is that all members have the same voting power, regardless of the proportion of the capital they have put in.

The second level of governance is the Governing Board. This body is made up of a minimum of 3 and a maximum of 12 members, all elected by the Assembly. They are responsible for carrying out the will of the General Assembly and also represent the co-operative legally.

At the third level of control is Auditing, which ensures that co-operative�s statutory and economic duties are being correctly carried out. This board of auditors scrutinise the company�s accounts before they are presented before the General Assembly for their acceptance or rejection. Its members are elected from the members of the co-operative, though it is possible to bring in independent experts from outside, providing that they never make up more than one third of the total number of auditors.

What do you need to set up a co-operative?
This type of company is formally constituted by registering the public deeds of incorporation in the Register of Co-operatives. The deeds should include the statutes of the co-operative in which are clearly stated the corporate objectives, minimum capital, types of members, members� rights and duties, and minimum obligatory contributions by the co-operative�s members.

What happens to the profits?
The Co-operatives Act makes it obligatory for co-operatives to set aside part of the company's surplus to a co-operative reserve fund. The difference between revenues and expenses -once taxes have been paid and contributions to the reserve fund have been made-, make up the co-operative returns, that is each members� participation in the company�s earnings. In theory the amount is linked to the work contributed by each member to the co-operative. Contrary to what happens in other types of companies this return bears no relation to the capital the member may have contributed .

And what about the debts?
Again, contrary to what happens in other kinds of corporations , the co-operative members are not responsible for the company�s debts with their own money, unless the co-operative�s statutes expressly state the contrary. However, members who opt out of the co-operative are held personally responsible for any debts the company may have up until the time that member left. This responsibility is limited to the contributions made by the member and for the five year period prior to leaving the co-operative.

The statutes set out the criteria to be followed in the event of there being losses, but generally speaking these tend to be offset against future positive earnings in the seven following years. Losses may also be offset against voluntary and obligatory reserve funds.

The Co-operative Decalogue
The principles common to all co-operatives are the following:
-�Each member is free to join or leave the co-operative as they wish.
-�For each co-operative there is a minimum number of members and share capital.
-�All members have equal voting power, regardless of how much money they have put in.
-�No member�s contribution can amount to more than one third of the total capital.
-�All members enjoy equal rights within the co-operative.
-�The management and control of the company are to be carried out according to democratic principles.
-�There is a limit to the amount of interest a member can receive.
-�Co-operative members share out the company�s net surplus.
-�They should cooperate and collaborate with other co-operatives to further their common interests.
-�Not all members are equal, since they can be worker members or non-working members.


Types of co-operatives
(Depending on their business activity)
� -�Worker co-operatives
� -�Consumer and user co-operatives
� -�Housing co-operatives
� -�Farming co-operatives
� -�Community land co-operatives
� -�Service co-operatives
� -�Fishing co-operatives
� -�Transport co-operatives
� -�Insurance co-operatives
� -�Health co-operatives
� -�Education co-operatives
� -�Credit co-operatives

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