Co-operative Registration

FREE Planning Tool

Click the blue start button, log-in and experiment with our FREE planning tool. It is designed to help you with the 10 compulsory decisions you need to make in order to register your Co-op.

We have prepopulated the data cells with our example, so simply enter your own  own information over our data and click on the calculate button to view the membership table. You will also see an example of a members share certificate.  

We recommend that you play around with these values to get all members to agree. This completes the planning phase. To proceed click on the Register Now button and all your data will be drawn through to the registration page. 

Good to know

We have a number of YouTube videos covering relevant concepts such as  Authorized Share Capital and Par Value Shares.  We recommend you start with the the Co-op video below.



Price :  From R1290
How long does it take?   1-7 days


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Frequently Asked Questions

A Co-op is a registered legal entity which is owned and run by its members. Each member has one vote regardless of how many shares they own which makes it more democratic in terms of managing the company. It is important to be aware that members can have differing amounts of shareholding which could result in differing amounts of shares in the profits. 

There are 4 types of Co-ops namely: Primary, Secondary, Tertiary and Apex.  The base type or starting point is a Primary Co-op as Primary Co-ops can group together to form Secondary Co-ops.  Secondary Co-ops can group together to form Tertiary Co-ops which can in turn group together to form an Apex Co-op.  This is to get greater representation when dealing with government.


You need a minimum of 5 members to register a Co-op, two of whom must be appointed as directors. Co-ops can have employees who are not members. 

Yes, but then there must be a minimum of two companies. The companies will have the same voting rights as the other members. 

This depends on 2 factors, namely, what the members have agree to and what is stated in the constitution. If some members own more shares than others, then they will be entitled to more profits. The constitution may also state that the profits are based on a user patronage principle and again this will mean that some members will be entitled to greater profits. Alternatively, if the members choose to make equal share contributions or scrap the share contribution altogether and only rely on raising money through the entrance fee then everyone should have made equal contributions to raising the money and therefore own equal shares in the Co-op. In such a scenario the profits are distributed evenly. The method of profit distribution should be cleared up during the planning phase.   

Yes, all primary Co-op members have one vote regardless of how many shares each member has.

This is when the profits are paid out according to the amount of business each member does with the Co-op and not according to the amount of shareholding. 

If some members use the Co-op equipment more than others, then they must pay proportionally for the use of the equipment. For example, if a combine harvester is owned by an Agricultural Co-op and only a few members use the asset then they will pay proportionally for the running costs of operating it. 

Planning is an essential element of any Co-op’s success.  It is so important that we have developed an online Co-op planning tool to help you understand the process and run potential scenarios.  For example: How many shares must be authorised? What value should the Par Value shares be fixed at? Should the members raise the money by contributing to shares or using the entrance fee or both? Once you have resolved these questions you should draw up a business plan and familiarise yourself with the standard constitution for your specific industry, before you register your Co-op.

It is not necessary as CIPC has drafted 6 different standard sector constitution which cover all industry types, you need only select the most appropriate one. 


Only if the annual turnover exceeds R25 million.  However, CIPC requires annual returns to be paid which will depend on the turnover of your Co-op which will be categorised into one of the following 4 groups. The category will determine what information you need to supply to CIPC.  

Category

Turnover

Responsible Person

Documents

A1

Less than R1m

Director

Financials, Co-op forms 7,8 and 15.1

A2

Between R1m – R10m

Director

Financials, Co-op forms 7,8 and 15.2

B

Between R10m – R25m

Independent Reviewer

Financials, Co-op forms 4, 7 and 8

C

More than R25m

Auditor

Financials, Co-op forms 4, 7 and 8

 For example, your Co-op’s turnover is less than R1m a year, it will be classified as category A1.  The Directors will need to complete the Co-op forms 7, 8 and 15.1 which must be supported by an income statement and balance sheet and submitted to CIPC on an annual basis. Form Co-op 8 includes annual fees which must also be paid to CIPC as failure comply with any of these requirements will result in the Co-op being non-compliant which will attract penalties and may be deregistered by CIPC. 

Yes, absolutely. They are required to be accepted by the directors and pay the entrance fee and or the share contribution as stipulated by the constitution.  It is a good idea to withhold a portion of the authorised share capital so that it can be issued to the new members. 

Yes, all the members become the shareholders (owners) of the Co-op and therefore are responsible for raising the finances to start the business. The number of shares each member is issued is determined by the amount of money each member invests. This could result in some members owning more shares than others. It is important to note that all Co-op shares are of a single class, meaning there are no preferential shares and no preferential voting rights. 

Authorised share capital is the total number of shares that are “created out of thin air” when a Co-op is formed. All the authorised shares belong to the Co-op and remain “dormant” until they are issued to the members. Each issued share now becomes “active” and represents a part ownership of the Co-op. Only the issued shares (not the authorised shares) make up 100% ownership of the Co-op. 

The number of authorised shares and issued shares does not determine the value of the Co-op. The value of a share is based on what a willing buyer and willing seller agree on. Therefore by creating and issuing a large numbers of shares you simply reduce the price of the individual share.

When deciding on the number of authorised shares you must take into account the number of members and the amount of money you want to raise as well as future expansion plans.

In our default example 2000 authorised share capital of which 1000 is held back as unallocated shares for issuing to new members at a future date. The 1000 issued shares were then divided amongst the 7 members based on their individual contribution which resulted in the members having different amounts of shareholding.  

No, Unallocated shares belong to the Co-op and remain dormant with no rights linked to them. Only when the shares are issued do they become active and can participate in profit sharing. Only the total of all the issued shares make up 100% of the Co-op ownership. 

Par Value shares is an outdated concept from centuries ago when markets were unregulated. It pegs the value of a share at a fixed minimum value. The implication of this is that the shareholders exposure to the Co-op is limited to the value of the Par Value shares. In reality the actual value of the shares goes up and down, so in order to balance the books, the difference between the actual value and the par value is called the share premium which is recorded in the financials. 

The Co-op Act is contradictory on this topic. On one hand setting the Par Value shares as low as possible as this limits your liability to the Co-op, however, on the other hand setting it as high as possible as pay-outs for termination and death are valued on Par Value and not actual value. In my example above I set the Par Value at R10 per share.

Each issued share is assigned a permanent number starting from one and ending with the last issued share. This means no share can be duplicated nor divided into fractions. For example, if you are the first shareholder in the Co-op and you own ten shares then your distinctive number of your shares will be share numbers 1 to 10. The share ownership including the distinctive numbers is maintained in the company share register and authenticated when the directors and the members both sign the original share certificate. 

This is the record of all the shareholders indicating who owns which shares. It is a legal requirement and the directors are responsible for keeping it current and up to date.  It needs to include the history of all share transfers.  To assist with this task, we have created an online members management tool which records all shareholding, share transfer history, the loan accounts, issuing of the certificates as well as meeting notifications. 

The members can select the minimum number of shares each member should own, we advise that it is set to one to keep matter simple. 

This is an important consideration. If the members are required to contribute different amounts of funding to the Co-op then the share contribution is advisable. If each member is required to contribute equal amounts of money, then share contribution is not necessary and the entrance fee essentially substitutes it.  It is also possible to have both as we have used in our default example.  

The purpose of the annual fee is to fund the cashflow of the business while the purpose of the user pay principle is that the members who use the Co-ops assets the most should pay proportionally more as they may have had a greater benefit. Both can be selected where relevant. 

Shares can be issued even if they are not yet paid for them. However, in these cases the shareholder will only share in the profits to the percentage of the shares that are paid up. For example, if 80% of the shares are paid, the shareholder will receive 80% of the assigned profits.

For a share certificate to be validate it is required to be signed by both the directors and the member as this ensures all signatories agree on the accuracy. There can only be one original share certificate and it can’t be duplicated and should be kept in a safe place as proof of ownership of the Co-op. 

Yes, all the money invested in the Co-op is deemed by SARS as a loan to the Co-op and all loan accounts attract interest. This means that the Co-op owes the interest on the investment which must be indicated on the loan certificate. When the interest is paid back it is an expense for the Co-op and deemed as income in the member’s personal name which must be added as income to the member’s tax return. 

Yes, it is a legal requirement and we have created a membership management tool which will assists the directors issue the share and loan certificates as well as sending out compulsory notifications for the respective meeting.

The director’s register requires additional information such as a list of entities they belong to and a disclosure of interest of business dealings which may have a material impact on the Co-op. 

Yes, as well as monthly loan statements

Within 18 months of the date of incorporation and after that, all subsequent AGMs must be held within 6 months of the financial year end

The members register must record who the nominee of the members shares will be so that in the event of death the value of the shares (based on Par Value) will be paid to the nominee. 

Yes, all members have the right to view the register and our online membership management tool facilitates this. 

Yes, it is a legal requirement for the directors to issues monthly updated loan statements. 

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