A cooperative's constitution (called bylaws in the US, rules in the UK and Australia, statutes in civil law countries) is its governing document. It defines who can be a member, how decisions are made, how surpluses are distributed, and how the cooperative is dissolved. Getting it right at founding saves significant legal cost and internal conflict later. This guide walks through every essential clause.
What a Cooperative Constitution Must Cover
Name and registered address
The legal name of the cooperative (which must typically include 'cooperative', 'co-operative', 'co-op', or an equivalent term in the local language to signal cooperative status) and its registered office address. Changes to the registered name usually require a special resolution and notification to the registrar.
Purposes and objects
A clear statement of what the cooperative is formed to do and whose needs it serves. Consumer cooperatives state they exist to supply goods or services to members. Worker cooperatives state they exist to provide employment. Agricultural cooperatives state they exist to process, market, or supply goods for producer-members. The objects clause also determines tax treatment in many jurisdictions.
Membership — eligibility, admission, and withdrawal
Who may be a member, what criteria must be satisfied, how applications are made and approved, what a membership share costs, and under what circumstances membership can be terminated. Bylaws should state that membership is open and voluntary — a requirement of the first ICA cooperative principle. They should also specify the procedure for members to resign and the timeline for share redemption on withdrawal.
Member classes (if applicable)
Many cooperatives have a single class of members. Others have multiple classes: worker-members and investor-members in worker cooperatives; patron-members and capital-members in agricultural co-ops; community members and service members in multi-stakeholder co-ops. If multiple classes exist, the bylaws must specify the voting rights, share subscription requirements, and dividend entitlements of each class.
Shares and capital structure
The par value of membership shares, whether shares are transferable or non-transferable, the maximum number of shares any member can hold, the process for issuing new shares, and the priority of share redemption on dissolution. Most cooperatives issue non-transferable membership shares at a fixed par value — this prevents share speculation and is a defining feature of cooperative capital structure.
Voting rights — one member, one vote
The constitutional entrenchment of one-member-one-vote. This is the second ICA cooperative principle and is required by law in most jurisdictions for the organisation to qualify as a cooperative. Some bylaws also specify super-majority requirements for constitutional amendments (typically two-thirds) and dissolution (often three-quarters).
Board of directors — composition, election, and duties
Number of directors, eligibility requirements (typically must be members in good standing), election procedure (by secret ballot at AGM), term lengths (typically 2–3 years on a staggered basis to maintain continuity), removal procedure, quorum for board meetings, and the powers delegated to the board. Some bylaws also specify officer positions (chair, secretary, treasurer) and their duties.
Annual General Meeting and member meetings
The requirement to hold an AGM, the notice period required (typically 14–21 days), the quorum required for meetings, the procedure for special/extraordinary meetings, proxy voting rules (some cooperative statutes prohibit proxy voting to protect democratic participation), and how resolutions are passed (simple majority vs. special majority).
Surplus distribution — patronage dividends
How the cooperative's annual surplus is allocated: what proportion goes to reserves (most laws require a minimum — the Philippines requires 10% to a cooperative education and training fund), what proportion is distributed to members as patronage dividends, and whether patronage dividends are paid in cash or credited to members' capital accounts. The bylaws should also address per-unit retains for agricultural cooperatives.
Dissolution
The procedure for voluntarily winding up the cooperative, the vote threshold required (usually a special resolution of three-quarters of members), and how assets are distributed after debts are repaid. Many cooperative bylaws include an asset lock — a provision that remaining assets on dissolution must go to another cooperative or cooperative body rather than to members — particularly for community benefit cooperatives.
Model Rules and Templates by Jurisdiction
United Kingdom
The most widely used set of model rules for UK cooperatives. Available for worker co-ops, consumer co-ops, and community benefit societies. Using Co-operatives UK model rules reduces FCA registration fees from £950 to £40. Available from coopuk.coop.
Specifically designed for housing cooperatives and social centres. Used by many radical and alternative worker cooperatives in the UK. Self-build and low-cost approach.
Model rules for multi-stakeholder and community cooperatives. Allows for multiple member classes within a registered society framework.
United States
The National Cooperative Business Association provides sample bylaws and articles of incorporation for various cooperative types. Available through their technical assistance program.
The US Federation of Worker Cooperatives provides model bylaws specifically for worker cooperatives incorporating in US states. Available at usfwc.org.
Many state land-grant universities (University of Wisconsin, University of Minnesota, University of California) publish model bylaws and formation guides through their cooperative extension programs. Free and state-law compliant.
Philippines
The Cooperative Development Authority provides standard templates for each cooperative type (credit, consumer, producer, service, multi-purpose). Required format for CDA registration. Available from CDA offices or cda.gov.ph.
Australia
Standard rules compliant with the Cooperatives National Law. Available from the NSW Fair Trading website and accepted by state Fair Trading offices in CNL jurisdictions.
The BCCM provides guidance on drafting cooperative rules and can connect organisations with cooperative specialists in each state.
Frequently Asked Questions
How long should a cooperative's bylaws be?
A well-drafted set of cooperative bylaws for a small to medium cooperative typically runs 15–30 pages. Excessively short bylaws leave governance gaps; excessively long bylaws become rigid and require frequent amendment. The goal is to cover all legally required elements and the key governance decisions specific to your cooperative, without prescribing operational details that belong in policies.
Can bylaws be changed after registration?
Yes. Amendments to bylaws typically require a special resolution passed by a two-thirds or three-quarters majority of members at a general meeting. Proposed amendments must be circulated with the meeting notice (typically 14–21 days in advance). The amended bylaws or a notice of change must then be filed with the registrar. Some changes — like the cooperative's name or objects — may require the registrar's prior approval.
What is the difference between bylaws and policies?
Bylaws are the constitutional document — they set the framework that all members agree to when joining. They are legally binding and difficult to change. Policies are the operational rules made by the board under powers delegated in the bylaws — they cover things like procurement procedures, social media conduct, or redundancy processes. Policies can be amended by the board without a member vote, which makes them more agile. Put governance rules in bylaws; put operational rules in policies.
Do cooperative bylaws need to be notarised?
It depends on the jurisdiction. The Philippines CDA requires notarised signatures on the founding documents. Most US states and the UK FCA do not require notarisation — a signed declaration from the founding members is sufficient. In India, cooperative bylaws are submitted to the Registrar with a covering letter from the chief promoter but notarisation is not universally required.
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