Plain‑English primer
What is a cooperative? A plain‑English guide (UK)
A cooperative (or "co‑op") is a business that is owned and democratically controlled by its members — the people who use it, work in it, or benefit from it — rather than by outside investors. Members usually share in any surplus and in the decisions, on the principle that the business exists to meet their needs, not to maximise profit for shareholders who play no other part in it.
This guide explains the idea in plain language: how a co‑op is defined, the seven principles that underpin them worldwide, the main types you will meet in the UK, and how co‑ops differ from ordinary companies and from charities or CICs.
The core idea: member‑owned, democratically controlled
Three features sit at the heart of almost every cooperative:
- Member ownership. The people the business serves also own it. There is no separate class of detached external owners pulling the strings.
- Democratic control. Members govern the co‑op together. The hallmark is one member, one vote — your say does not depend on how much money you have put in, which is the opposite of a typical shareholder company.
- Benefit to members and community. Any surplus is reinvested, returned to members in proportion to their use (sometimes called a "dividend" or patronage payment), or used for wider community benefit — rather than paid out purely on the basis of capital invested.
"Cooperative" describes how a business is owned and run, not one specific legal form. In the UK a co‑op can be set up in several ways — most commonly as a registered society under the Co‑operative and Community Benefit Societies Act 2014 (registered with the FCA mutuals register), or as a company limited by guarantee. We unpack these options on the compare structures page.
The seven Co‑operative Principles
Co‑ops around the world share a common set of values and guidelines. The principles below are maintained by the International Co‑operative Alliance (ICA) and trace back to the rules of the Rochdale Pioneers, who opened their famous shop in 1844 and are widely regarded as the founders of the modern movement.
- Voluntary and open membership — open to all who can use the co‑op's services and accept the responsibilities of membership, without discrimination.
- Democratic member control — members actively set policy and make decisions; in primary co‑ops members have equal voting rights (one member, one vote).
- Member economic participation — members contribute to, and democratically control, the co‑op's capital, and share surpluses fairly.
- Autonomy and independence — co‑ops are self‑help organisations controlled by their members, staying independent even when working with others.
- Education, training and information — co‑ops support their members, staff and the public so people can contribute effectively.
- Co‑operation among co‑operatives — co‑ops strengthen the movement by working together locally, nationally and internationally.
- Concern for community — co‑ops work for the sustainable development of their communities.
The main types of cooperative
Co‑ops are often grouped by who their members are. The most common types in the UK include:
Worker co‑ops
Owned and run by the people who work in the business — the staff are the members. See our worker cooperative guide.
Consumer / retail co‑ops
Owned by the customers who shop there. Retail societies are the best‑known example of this long‑established model in Britain.
Community co‑ops
Owned by a local community to run an asset or service everyone benefits from. See our community cooperative guide.
Housing co‑ops
Members collectively own or manage their homes and make decisions together. See our housing cooperative guide.
Agricultural co‑ops
Farmers and growers pool buying, processing or marketing to gain scale and share costs while staying independent businesses.
Platform co‑ops
A newer model where the workers or users of an online platform or app own and govern it cooperatively.
How co‑ops differ from ordinary companies
| Feature | Ordinary company | Cooperative |
|---|---|---|
| Who owns it | Shareholders / investors | Members (users, workers or the community) |
| How votes work | Usually one vote per share | Typically one vote per member |
| Main purpose | Maximise returns to shareholders | Meet members' needs and benefit the community |
| Who shares the surplus | Investors, by shareholding | Members, often by how much they use the co‑op |
How co‑ops differ from charities and CICs
A charity exists for the public benefit and is run by trustees rather than owned by members; it cannot distribute profits to individuals and is regulated by a charity regulator. A Community Interest Company (CIC) — registered at Companies House — is a normal company that locks its assets to a community purpose, but it is not necessarily member‑owned or democratically controlled. A cooperative, by contrast, is defined by member ownership and democratic control. The structures can overlap (for example, a community co‑op may also pursue community benefit), so it is worth comparing them side by side on our compare structures page before you decide.
A note on the word "co‑operative". At Companies House, "co‑operative" is treated as a sensitive word, so using it in a company name normally needs prior approval. The way your business is owned and governed — not just its name — is what makes it a genuine co‑op.
Well‑known kinds of UK co‑op
Rather than risk getting specific names or figures wrong, it helps to think in categories you have probably already encountered:
- Retail societies — large consumer co‑ops running food shops, funeral services and more, owned by their shopping members.
- Supporters' trusts — fans collectively owning a stake in, or even running, their football club on a democratic basis.
- Community pubs and shops — locals buying and saving the last pub or village store, owned via community shares.
- Community energy — groups jointly owning solar, wind or hydro projects and sharing the benefits locally.
Some links on this site are affiliate links, and our directory listings are paid placements. This never changes the general information above. Always take your own professional advice before choosing a legal structure.
Ready to take the next step?
If the cooperative model fits what you are trying to build, our step‑by‑step guide walks you through registering and getting started in the UK.
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Frequently asked questions
What is a cooperative in simple terms?
A cooperative is a business owned and democratically controlled by its members — the people who use it, work in it or benefit from it. Members usually each have one vote regardless of how much they have invested, and surplus is used to benefit members or the community rather than outside shareholders.
What are the seven Co‑operative Principles?
Voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information; co‑operation among co‑operatives; and concern for community.
How is a cooperative different from an ordinary company?
An ordinary company is usually controlled in proportion to shareholding, so the largest shareholder has the most votes. A co‑op is controlled democratically by its members, typically one member one vote, and is run to meet members' needs rather than to maximise investor profit.
Is "cooperative" a legal structure in the UK?
No — it describes how a business is owned and run. UK co‑ops are commonly registered societies under the Co‑operative and Community Benefit Societies Act 2014 (FCA mutuals register), or companies such as a company limited by guarantee, and sometimes CICs or LLPs.
This article is general information about cooperatives in the UK and is not legal or financial advice. Rules and regulators' requirements change, so check the current position and take professional advice for your situation.