What is a social cooperative?

What is a social cooperative?

Social Co-operative

Definition of Cooperative COOP Co-operative enterprises build a better world

ICA, International Cooperative Alliance

It is an autonomous association voluntarily formed by people who want to meet economic, social, and cultural needs and aspirations through projects jointly owned and democratically operated by ICA (International Cooperative Alliance).

FRAMEWORK ACT ON COOPERATIVES, Article 2, NO.1 ‘cooperative’

The term "cooperative" means a business organization that intends to enhance its partners' rights and interests, thereby contributing to local communities by being engaged in the cooperative purchasing, production, sales, and provision of goods or services.

FRAMEWORK ACT ON COOPERATIVES, Article 2, NO.3 ‘social cooperative’

The term "social cooperative" means a cooperative that carries out business activities related to the enhancement of rights, interests, and welfare of local residents or provides social services or jobs to underprivileged people, among cooperatives under subparagraph 1, but that is not run for profit.

Feature of a cooperative

  • Business scale

    A business organized by five or more people with a common purpose, with no restriction on the type of business (excluding finance and insurance)

  • Voting right

    One vote per person regardless of the size of the investment

  • Responsibilities

    Members have limited liability for investment assets

  • Join/withdrawal

    Be free to join and withdraw fom the cooperative

  • Allocation

    Dividend based on performance of use, etc. not based on the invested amount

Seven broad principles
(100 Anniversary General Assembly of ICA in 1995 -’Statement on the Co-operative Identity‘)

  • Voluntary and Open Membership
    Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, regardless of gender, social, racial, political or religious affinity.
  • Democratic Member Control
    Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner.
  • Member Economic Participation
    Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually a common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
  • Autonomy and Independence
    Co-operatives are autonomous, self-existing organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
  • Education, Training and Information
    Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion-oriented leaders - about the nature and benefits of the co-operation.
  • Co-operation among Co-operatives
    Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
  • Concern for Community
    Co-operatives work for the sustainable development of their communities through policies approved by their members.

Expected Impacts

    1. - Expanding jobs through the activation of small businesses
    2. - Price stabilization by improving distribution structure through direct transactions between producers and consumers
    3. - Economic stabilization through cooperation between cooperatives
    1. - Supplementing the existing welfare system by providing social services and jobs to applicants.
    2. - Customized welfare services can be provided at the private level, for example, residents can gather to plan their neighborhood services and welfare services, and so on.
    1. - Enhance the satisfaction of members and the sense of ownership by ensuring the participation of members in decision-making under democratic operation (one vote per person)

Types of Cooperatives

Producer cooperative Cooperatives where individual business members jointly use sales, material purchases, and brands to generate revenue.
Consumers' cooperative A cooperative established to purchase goods or use services for improving the consumption of goods by the members, and other consumers, as well.
Worker cooperative A cooperative established to increase stable jobs by having employees own and operate cooperatives together.
Multi-stockholder cooperatives A cooperative in which two or more members of an association work together to address common needs

Differences between General and Social Cooperatives

General Cooperative classification Social Cooperative
Profit-making corporation corporate personality Non-profit corporation
Report to the City Governor establishment Obtain authorization from Ministry of Strategy and Finance (Related ministries)
No restriction on the type of business (excluding finance and insurance); Business At least 40% of public service projects should be carried out.
(Local business/Social service for vulnerable group/Employment for vulnerable group /Consignment business/Other enhancement of public interest/Mixed type)
Not compulsory. *Obligations shall be made where the number of members is at least 200 or the equity capital is at least 3 billion won; Official notice of management Not compulsory. *Obligations shall be made where the number of members is at least 200 or the equity capital is at least 3 billion won;
More than 10/100 of the surplus *Until it reaches three times its equity capital. Legal reserve More than 10/100 of the surplus *Until it reaches three times its equity capital.
Available for dividend Allocation Available for dividend
Dividend based on usage record :
Dividend not less than 50/100 of the total amount available
Dividend based on investment money :
Dividends not more than 10/100 of the invest money paid;
Treatment of residual property according to the articles of association Liquidation Reversion to Non-profit corporation or the national treasury. etc.
No related content(Application from commercial law, etc.) Supervision If necessary, the Minister of Ministry of Economy and Finance (related ministries) will inspect the work situation, ledgers, and documents, and the accreditation will be revoked if the authorization requirements are violated.