3 responses

  1. Jamie
    July 22, 2015

    You appear to be confusing a cooperative with a partnership. Where state cooperative statutes exist at all, they often take on structural characteristics of corporations, including limited liability, and whereas it is true that shares generally cannot be transferred, this is a restriction imposed in bylaws or operating agreements and not a function of the structure.

    At the Federal level, cooperative taxation (under Subchapter T) allows for pass-through treatment of “patronage dividends” that are viewed as refunds of excess rather than profit, so that an entity that is otherwise a C-Corp can obtain treatment more closely associated with an S-Corp — but use of Subchapter T is optional, not a requirement. What makes an organization a cooperative is its operating model, particularly democratic management on a one person/one vote model (i.e. no greater degree of control as a result of greater investment) and the allocation of earnings on the basis of participation. This can be done by writing cooperative principles and mechanisms into the bylaws or agreements governing any multi-participant structure, whether it is a corporation, LLC, or partnership.

    Reply

    • Hallya
      May 30, 2019

      This has been a very helpful article. The concept I have is complicated and wish to get in touch for a further discussion in confidence

      Reply

    • Joseph
      October 11, 2020

      Yeah that’s true u get it right jamie

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top
mobile desktop