How to incorporate a co-operative in Ontario
Incorporation is a process that grants your organization legal rights and recognition under the law – similar rights as is granted to a person. Incorporating an organization as a co-operative provides some formality and protection to the organization. Being incorporated gives the co-operative the ability to purchase assets, take on debt and it can make it easier to raise capital. It is not necessary for a group to incorporate if they wish to operate as a co-op on an informal basis, but in order to have the legal protection that incorporation provides or to be able to use the word ‘co-op’ or ‘co-operative’ in the name of a group, it must be incorporated formally.
There is special legislation in Ontario, called the Co-operative Corporations Act (commonly referred to as the Act), which dictates how co-ops can operate and what is required in order for an organization to be considered a co-op under the law. If an organization wishes to be legally considered a co-op in Ontario, they must follow a certain process and the requirements of the Act. This process is regulated by the Financial Services Commission of Ontario (FSCO), an agency of the Ontario Ministry of Finance.
The actual process of incorporation is fairly simple, but there are some things that a potential co-op should do before beginning the incorporation process. A group may wish to engage the services of a lawyer to assist in drafting the articles of incorporation. It may also be advantageous to consult with an accountant as part of the financial planning process associated with incorporation.
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