How formally you wish to constitute your food co-op is up to you.
In practice most food co-ops trade as unincorporated associations. In the eyes of the law, they are a group of people who have agreed (contracted) to come together for a particular (non-profit making) purpose.
Smaller food co-ops may prefer not to take on the additional responsibility and expense of incorporation. There is very little financial risk involved in a small food co-op or buying club, as they do not employ people, own property or enter into contracts. But even in these circumstances, food co-ops will still generally have a governing document or constitution.
You might choose to have a formal legal structure and to register your food co-op. There are numerous different types of structures that a food co-op could register as. The main advantage is that if your food co-op has a formal legal structure, and is incorporated, then the membership automatically has limited liability. This means that if there are ever financial difficulties, the members have legal protection. If the food co-op is an unincorporated association, the members are personally liable for the debts of the organisation.
As your food co-op gets bigger, then financial risks may become a more important consideration, and incorporation may become appropriate or even essential. This is particularly important if you are employing staff or managing large amounts of funding. It is recommended that you seek advice on the most appropriate legal structure to adopt.
As part of the MLFW programme Co-operatives UK are offering regional training sessions and advice on governance and legal structures to find out more e-mail: email@example.com
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