Co-op Planning. What you need to know before registering a Co-operative in South Africa with CIPC

Please use the link below to PLAN your Co-op:
www.swiftreg.co.za/swiftreg/P...
The Scrip to follow:
In this video, I will explain everything you need to consider when planning a new Co-op. I will use a practical example to demonstrate some of the critical decisions required to set up your Co-op optimally for success and end off with a few top tips. There are some interesting concepts, so let’s jump right in.
A Co-op can be defined as a legal entity formed by a group of five or more people to provide goods and service to its members. In the simplest terms a Co-op is a membership club which operates as a business.
Of all the legal entities available in South Africa, a Co-op is by far the most democratic and egalitarian. This is because all members have an equal say in how the business is managed and have one vote, regardless of how many shares they own.
It is often misunderstood that the profits of a Co-op are not always equally distributed as the profit each member receives is determined either by the number of shares they own or by the amount of business the individual members do with the Co-op. The general rule is the more money you invest in the Co-op the more shares you will receive and therefore the more profit you will entitled to. I will illustrate this later using our online planning tool. However, Co-ops remain more inclusive and equitable than private companies as the business operates on shared values owing to the equal voting rights.
In South Africa there are four types of Co-ops namely Primary, Secondary, Tertiary and Apex. When starting a new Co-op it will always be a Primary Co-op. The remaining types of Co-ops are simply groups of existing primary Co-ops which have joined together to form larger and larger Co-ops, as can be seen in this table.
The logic behind grouping Co-ops together is to achieve greater representation and more bargaining power when conducting business. But for the purpose of this video, we will focus the primary co-op which is the most common.
CIPC has categorised Primary Co-ops into 6 industry sectors namely; Agricultural, Financial, Housing, Non-Specific, Social and Worker Co-ops each with their own standard constitution already drafted by CIPC. Regardless of which category your Co-op falls into, they all operate along the same principles.
So let’s take a look at a practical example, go to www.swiftreg.co.za and click on the Co-op button where you will find our Co-op planning tool. This FREE service has been designed to help you with the 10 most important decisions you need to make to finalise the ownership of your Co-op. By entering your data into the planning tool it can calculate the number of shares each member should receive as well as the percentage profit each member will be entitled to; which is essential information for those intending to register a Co-op.
For ease of use, we have defaulted the values of our fictional example (which I will explain shortly) into this planning tool. This is to give a rough idea of some values which are required to generate the shareholding table.
To use the tool, simply type your information over these existing values and click on the calculate button to display the ownership table for your proposed Co-op.
The example you see here is a small fishing business based in Kalk Bay. The first step is for our fisherman to get together to decide on how much money they plan to raise as it is their intention is to buy a small fishing boat. To do this accurately, it is recommended that they draw up a business plan. This initial meeting of members is referred to as the pre-incorporation meeting and it is where all ten of these decisions should be agreed upon. Our fisherman agreed raise R50000 to purchase their fishing boat for their Agricultural Co-op called Kalk Bay Fishing Co-op Ltd.
To make our example easier, we selected the minimum number of members which is 5 but you can enter any number. It is important to remember that all the members automatically become the owners and will therefore be responsible to club together to finance the Co-op.
At this point you also need to decide on the amount of authorised share capital that needs to be created. This is the number of available shares created “out of thin air” to be distribute amongst the members. In our example the members created 2000 authorised shares.
The authorised shares have no value until they are issued to the members as only issued shares make up the ownership of the Co-op. It is advisable not to issue all of the authorised share capital to the members as this will allow the Co-op to retain shares to issue to new members in the future without having to create additional authorised share capital. In our example the members issue 1000 shares in total to themselves which means the Co-op has another 1000 unallocated shares available for future use should new members join the Co-op.

[@petroszwaras6205]

Iam subscribing immediately!!!

[@swiftreg]

Thank you, Petros

[@sonezojama788]

Thanks Sir for the information, i have a question. If initially when we registered the coop all five directors have 50% shareholding and this was done not having foreseen how much each member would make. Now that in the startup and operation of the business only one director contributes more to the business , is it possible to change the shareholding percentages?

[@sonezojama788]

Dont mind Sir your other video captured my question

[@swiftreg]

Hi Sonezojama, Thank you for this excellent question. Yes, it is possible to change the shareholding of a Co-op. In fact, we (SwiftReg) have designed an entire online service to manage all aspect of existing Co-ops including shareholder changes. Please use the link below to adjust the share holding of you Co-op. www.swiftreg.co.za/swiftreg/Products/CoopManagement.aspx You will need to recapture all the Co-op information in order to print the new share certificates and yes we are busy editing a new video to promote this service. Please let me know if you get stuck as the service is designed to be user-friendly.

[@fikiswamiselo5015]

Hi, how do I change a PTY to a Co-Operative on the CIPC system?

[@swiftreg]

Hi there, unfortunately this is not possible as CIPC does not all for it.

[@zingisamaziko9200]

Hi, is it possible to change a Primary Cooperative to a Secondary Cooperative?

[@swiftreg]

No, a Secondary Cooperative is registered from scratch and is made up of existing Primary Co-ops

[@laurentajawi5581]

Hi, if the company already exists outside of South Africa do you still need the R5 000 000

[@swiftreg]

Hi Laurenta, Your question refers to foreigners getting an investment visa which is not part of Co-op planning. However, to answer your question; if you already have an existing company and you are interested in opening a branch in South Africa. You have two options: 1. Register and external company or 2. Register a Pty with a local director and overseas shareholders. I do touched on this topic in the following video kzbin.info/www/bejne/j2HRkqpuZtujprs

[@laurentajawi5581]

@@swiftreg Thank you so much for your response , I realised I had typed in the wrong video, late

[@savedbygrace_alone]

Once the company is registered PTY LTD, how do I add employees to the company? I am literally ready to pull my hair out at this point. Please assist. Thank you!

[@swiftreg]

Hi Madikizela I am not sure if you are refereeing to a Co-op or a (Pty) Ltd as your question refers to a (Pty) Ltd but you posted it under the Co-op video. So let me try and explain both scenarios. No employees are added to any (Pty) Ltd nor any Co-op. However, all companies have to register their employees with SARS for Pay as You Earn (PAYE) within 21 days of becoming and employer. Pty Ltd's directors are registered with CIPC while the shareholders are privately managed and the employees not registered other than with SARS. Co-ops have their directors and founding members registered with CIPC. Additional membership is managed privately. You may be confusing Co-op members with employees.

[@savedbygrace_alone]

@@swiftreg Thank you very much. This was so helpful.

[@zukoforeelmygai]

@swiftreg could you assist in registering a co-op as I've been struggling for weeks via cipc. Even trips to the cipc branch have been of no help.

[@swiftreg]

Hi Zuko, I am sorry you have been struggling. My suggestion would be to start with our co-op calculator www.swiftreg.co.za/swiftreg/products/coop-registration.aspx all the data you capture here will pull through to your registration; if you get stuck with it please contact our call center on 021-5954433 and they can always email you a manual application form.