Co-operatives UK Multi-stakeholder Co-operative Model Companies Act 2006 Private Company Limited by Guarantee Articles of ……………………………………. Interpretations 1. In these Articles: “Address” means a postal address or, for the purposes of electronic communication, a fax number, email address or telephone number for receiving text messages; “Articles” means the Company’s articles of association; “The Board of Directors” or “Board” means all those persons appointed to perform the duties of directors of the Co-operative; “Companies Acts” or “the Act” means the Companies Acts (as defined in section 2 of the Companies Act 2006) in so far as they apply to the company; “The Co-operative” means the above-named company; “Co-operative Principles” are the principles defined in the International Co-operative Alliance Statement of Co-operative Identity. The principles are those of 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 the community; “Director” means a director of the Co-operative and includes any person occupying the position of Director, by whatever name called; “Document” includes, unless otherwise stated, any document sent or supplied in electronic form; “Electronic means” has the meaning given in section 1168 of the Companies Act 2006; “Employee” means anyone over the age of 16 holding a contract of employment with the Co-operative to perform at least eight hours of work per week for the Co-operative; “Entrenched” has the meaning given by section 22 of the Companies Act 2006 and as detailed under the heading ‘Resolutions’ in these Articles; “Member” has the meaning given in section 112 of the Companies Act 2006 and as detailed under ‘Membership’ in these Articles; “Person” means, unless the context requires otherwise, a natural person, unincorporated body, firm, partnership, corporate body or any representative of an unincorporated body, firm, partnership or corporate body; “Regulations” has the meaning as detailed under ‘Regulations’ in these Articles; “Secretary” means any person appointed to perform the duties of the Secretary of the Co-operative; "User" means those persons admitted into membership under these Articles that wish to use the services of the Co-operative and have agreed to pay any subscription or other sum due in respect of membership for the use of the Co-operative's services; “Writing” means the representation or reproduction of words, symbols or other information in a visible form by any method or combination of methods, whether sent or supplied in electronic form or otherwise. 1 Co-operatives UK Multi-stakeholder Co-operative Model 2. Unless the context requires otherwise, other words or expressions contained in these Articles bear the same meaning as in the Companies A ...

1. Co-operatives UK Multi-stakeholder Co-operative Model
Companies Act 2006
Private Company Limited by Guarantee
Articles of
…………………………………….
Interpretations
1. In these Articles:
“Address” means a postal address or, for the purposes of
electronic communication, a
fax number, email address or telephone number for receiving
text messages;
“Articles” means the Company’s articles of association;
“The Board of Directors” or “Board” means all those persons
appointed to perform
the duties of directors of the Co-operative;
“Companies Acts” or “the Act” means the Companies Acts (as
defined in section 2 of

2. the Companies Act 2006) in so far as they apply to the
company;
“The Co-operative” means the above-named company;
“Co-operative Principles” are the principles defined in the
International Co-operative
Alliance Statement of Co-operative Identity. The principles are
those of 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 the community;
“Director” means a director of the Co-operative and includes
any person occupying the
position of Director, by whatever name called;
“Document” includes, unless otherwise stated, any document
sent or supplied in
electronic form;
“Electronic means” has the meaning given in section 1168 of
the Companies Act
2006;
“Employee” means anyone over the age of 16 holding a
contract of employment with
the Co-operative to perform at least eight hours of work per
week for the Co-operative;
“Entrenched” has the meaning given by section 22 of the
Companies Act 2006 and as
detailed under the heading ‘Resolutions’ in these Articles;

3. “Member” has the meaning given in section 112 of the
Companies Act 2006 and as
detailed under ‘Membership’ in these Articles;
“Person” means, unless the context requires otherwise, a
natural person,
unincorporated body, firm, partnership, corporate body or any
representative of an
unincorporated body, firm, partnership or corporate body;
“Regulations” has the meaning as detailed under ‘Regulations’
in these Articles;
“Secretary” means any person appointed to perform the duties
of the Secretary of the
Co-operative;
"User" means those persons admitted into membership under
these Articles that wish
to use the services of the Co-operative and have agreed to pay
any subscription or other
sum due in respect of membership for the use of the Co-
operative's services;
“Writing” means the representation or reproduction of words,
symbols or other
information in a visible form by any method or combination of
methods, whether sent or
supplied in electronic form or otherwise.
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Co-operatives UK Multi-stakeholder Co-operative Model

4. 2. Unless the context requires otherwise, other words or
expressions contained in these
Articles bear the same meaning as in the Companies Act 2006
as in force on the date
when these Articles become binding on the Co-operative.
Schedule 1 to the Companies
(Model Articles) Regulations 2008 shall apply to the Co-
operative, save where amended
or replaced by these Articles. In the case of any variation or
inconsistency between
these Articles and the model articles, these Articles shall
prevail.
Purpose
3. The purpose of the Co-operative is to carry out its function as
a co-operative and to
abide by the internationally recognised co-operative values and
Co-operative Principles
as defined by the International Co-operative Alliance. This
article is Entrenched in
accordance with section 22 of the Act; any alteration to this
article requires the approval
of 100% of the Members.
Do not include the following if the Co-operative wishes to have
unrestricted objects and
may carry out any lawful activity.
OBJECTS
4. The objects of the Co-operative are specifically restricted to
carry on the business as a
co-operative……

5. POWERS
5. To further its objects the Co-operative may do all such lawful
things as may further the
Co-operative's objects and, in particular, may borrow or raise
funds for any purpose.
MEMBERS
6. The first Members of the Co-operative will be the subscribers
to the memorandum of
association of the Co-operative.
7. The Co-operative may admit to membership any individual,
unincorporated body, firm,
partnership or corporate body that has paid or agreed to pay any
subscription or other
sum due in respect of membership and meets one of the criteria
below.
User Members
8. Any regular user of the services of the Co-operative may be
admitted into membership.
Employee Members
9. All Employees on taking up employment with the Co-
operative may be admitted to
membership, except that the Co-operative in a General Meeting
may by a majority vote
decide to exclude from membership:
(a) Newly appointed Employees during such reasonable
probationary period as may
be specified in their terms and conditions of employment;

6. (b) Employees working less than a prescribed number of hours
per week (or per
month);
provided that any such criteria for exclusion are applied
equally to all Employees.
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Co-operatives UK Multi-stakeholder Co-operative Model
Supporter Members
10. Any natural person, unincorporated body, firm, partnership
or corporate body that
operates in an associated field of activity to the Co-operative or
that has an interest in
supporting the Co-operative’s business.
11. In accordance with the Co-operative Principle of voluntary
and open membership, whilst
the Co-operative shall undertake to encourage its Employees,
Users and Supporters to
become Members, membership must be voluntary and as a result
cannot be a condition
of employment.
Applications for Membership
12. No natural person shall be admitted into membership of the
Co-operative unless they
have attained the age of 16. All those wishing to become a

7. Member must support the
aims of the Co-operative and applications for membership shall
be in a form approved
by the Directors and the Directors shall approve each
application.
13. A corporate body which is a Member shall by resolution of
its governing body appoint a
representative who may during the continuance of her/his
appointment be entitled to
exercise all such rights and powers as the corporate body would
exercise if it were an
individual person. Each such corporate body Member shall
supply notification in Writing
to the Co-operative of its choice of representative.
Member Commitment
14. All Members agree to attend general meetings and take an
active interest in the
operation and development of the Co-operative and its business.
Members have a duty
to respect the confidential nature of the business decisions of
the Co-operative.
15. In accordance with the Co-operative Principle of education,
training and information, the
Co-operative shall provide potential Members with information
about what the role of a
Member is within the Co-operative and will provide training in
the skills required to be a
Member and to participate in the operation of the Co-operative.
16. The Co-operative shall provide ongoing education and
training in co-operative values
and Co-operative Principles and associated topics. The Co-

8. operative shall support its
Members by ensuring that meetings are accessible and
encourage participation.
Termination of Membership
17. A Member shall cease to be a Member of the Co-operative
immediately that they:
(a) Cease to meet the Co-operative’s criteria for membership; or
(b) Fail in the opinion of the Board of Directors unreasonably to
pay any fee or other
monies due to the Co-operative; or
(c) Resign in Writing as a Member of the Co-operative to the
Secretary; or
(d) Are expelled from membership in accordance with these
Articles; or
(e) Dies, or in the opinion of the Board are unable to carry out
their duties, is wound
up or goes into liquidation.
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Co-operatives UK Multi-stakeholder Co-operative Model
18. The rights and privileges of a Member shall not be
transferable or transmissible.
Removal of a Member

9. 19. A Member may be expelled from membership by a
resolution of the Co-operative stating
that it is in the best interests of the Co-operative that her/his/its
membership is
terminated. A resolution to remove a Member from membership
may only be passed if:
(a) The Member has been given at least 21 days’ notice in
Writing of the general
meeting at which the resolution to expel them will be proposed
and the reasons
why it is to be proposed; and
(b) The Member or, at the option of the Member, an individual
who is there to
represent them (who need not be a Member of the Co-operative)
has been
allowed to make representations to the general meeting.
GENERAL MEETINGS
20. The Co-operative shall in each calendar year hold a general
meeting of the Members as
its annual general meeting and shall specify the meeting as such
in the notices calling it.
The first annual general meeting shall be held within 18 months
of incorporation. Every
annual general meeting except the first shall be held not more
than 15 months after the
previous annual general meeting.
21. The business of an Annual General Meeting shall comprise,
where appropriate:
(a) Consideration of accounts and balance sheets;

10. (b) Consideration of Directors’ and auditor’s reports;
(c) Elections to replace retiring Directors;
(d) Appointment and remuneration of the auditor (or their
equivalent).
22. In accordance with the Co-operative Principle of democratic
member control, the
Co-operative shall ensure that, in addition to the annual general
meeting, at least four
other general meetings are held annually. The purpose of these
meetings is to ensure
that Members are given the opportunity to participate in the
decision-making process of
the Co-operative, review the business planning and management
processes and to
ensure the Co-operative manages itself in accordance with the
co-operative values and
Co-operative Principles.
Calling a General Meeting
23. The Board of Directors may convene a general meeting or,
in accordance with the
Companies Acts, 10% of the membership may, in Writing,
require the Directors to call a
general meeting.
Notices
24. The Directors shall call the Annual General Meeting giving
14 clear days’ notice to all
Members. All other general meetings shall be convened with at
least 14 clear days’

11. notice but may be held at shorter notice if so agreed in Writing
by a majority of Members
together holding not less than 90% of the total voting rights of
the Co-operative.
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Co-operatives UK Multi-stakeholder Co-operative Model
25. All notices shall specify the date, time and place of the
meeting along with the general
nature of business to be conducted and any proposed
resolutions. The notice must also
contain a statement setting out the right of each Member to
appoint a proxy.
26. The accidental omission to give notice of a meeting to or
non-receipt of notice of a
meeting by any Person entitled to receive notice shall not
invalidate proceedings at that
meeting.
Proxies
27. A Member who is absent from a general meeting may
appoint any Person to act as their
proxy, provided that no Person shall hold a proxy for more than
five Members at any one
time in any general meeting.
28. Proxies may only validly be appointed by a notice in
Writing which:

12. (a) States the name and Address of the Member appointing the
proxy;
(b) Identifies the Person appointed to be that Member’s proxy
and the general
meeting in relation to which that Person is appointed;
(c) Is signed by or on behalf of the Member appointing the
proxy, or is authenticated
in such manner as the Directors may determine; and
(d) Is delivered to the Co-operative in accordance with the
Articles and any
instructions contained in the notice of the general meeting to
which they relate.
29. The Co-operative may require proxy notices to be delivered
in a particular form and may
specify different forms for different purposes.
30. Proxy notices may specify how the proxy appointed under
them is to vote (or that the
proxy is to abstain from voting) on one or more of the
resolutions, otherwise the proxy
notice shall be treated as allowing the Person appointed the
discretion as how to vote on
any matter.
31. A Person who is entitled to attend, speak or vote (either on
a show of hands or a poll) at
a general meeting remains so entitled in respect of that meeting
or any adjournment of
the general meeting to which it relates.
32. An appointment using a proxy notice may be revoked by
delivering to the Co-operative a

13. notice in Writing given by or on behalf of the Person by whom
or on whose behalf the
proxy notice was given. A notice revoking a proxy appointment
only takes effect if it is
delivered before the start of the meeting or the adjourned
meeting to which it relates.
33. If a proxy notice is not signed by the Person appointing the
proxy, it must be
accompanied by evidence in Writing that the person signing it
has the authority to
execute it on the appointor’s behalf.
Quorum
34. No business shall be transacted at a general meeting unless
a quorum of Members is
present, either in person or represented by proxy. Unless
amended by special resolution
of the Co-operative, a quorum shall be ten Members or one-
third of the membership,
whichever is the lesser.
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Co-operatives UK Multi-stakeholder Co-operative Model
Chairing General Meetings
35. Members shall appoint one of their number as the
chairperson to facilitate general
meetings. If s/he is absent or unwilling to act at the time any
meeting proceeds to

14. business then the Members present shall choose one of their
number to be the
chairperson for that meeting. The appointment of a chairperson
shall be the first item of
business at the general meeting.
Attendance and Speaking at General Meetings
36. A Member is able to exercise the right to speak at a general
meeting and is deemed to
be in attendance when that Person is in a position to
communicate to all those attending
the meeting. The Directors may make whatever arrangements
they consider appropriate
to enable those attending a general meeting to exercise their
rights to speak or vote at it
including by Electronic Means. In determining attendance at a
general meeting, it is
immaterial whether any two or more Members attending are in
the same place as each
other.
37. The chairperson of the meeting may permit other persons
who are not Members of the
Co-operative to attend and speak at general meetings, without
granting any voting
rights.
Adjournment
38. If a quorum is not present within half an hour of the time
the general meeting was due to
commence, or if during a meeting a quorum ceases to be
present, the chairperson must
adjourn the meeting. If within half an hour of the time the
adjourned meeting was due to

15. commence a quorum is not present, the Members present shall
constitute a quorum.
39. The chairperson of a general meeting may adjourn the
meeting whilst a quorum is
present if:
(a) The meeting consents to that adjournment; or
(b) It appears to the chairperson that an adjournment is
necessary to protect the
safety of any persons attending the meeting or to ensure that the
business of the
meeting is conducted in an orderly manner.
40. The chairperson must adjourn the meeting if directed to do
so by the meeting.
41. When adjourning a meeting the chairperson must specify the
date, time and place to
which it will stand adjourned or that the meeting is to continue
at a date, time and place
to be fixed by the Directors.
42. If the meeting is adjourned for 14 days or more, at least 7
clear days’ notice of the
adjourned meeting shall be given in the same manner as the
notice of the original
meeting.
43. No business shall be transacted at an adjourned meeting
other than business which
could not properly have been transacted at the meeting if the
adjournment had not taken
place.

16. Voting
6
Co-operatives UK Multi-stakeholder Co-operative Model
44. In accordance with the Co-operative Principle of democratic
member control, each
Member shall have one vote on any question to be decided in
general meeting. This
article is Entrenched in accordance with section 22 of the Act;
any alteration to this
article requires the approval of 100% of the Members.
45. A resolution put to the vote at a general meeting shall be
decided on a show of hands
unless a poll is duly demanded in accordance with these
Articles.
46. In the case of an equality of votes, whether on a show of
hands or a poll, the
chairperson shall not have a second or casting vote and the
resolution shall be deemed
to have been lost.
Poll Votes
47. A poll on a resolution may be demanded:
(a) In advance of the general meeting where the matter is to be
put to the vote; or
(b) At a general meeting, either before a show of hands on that

17. resolution or
immediately after the result of a show of hands on that
resolution is declared.
48. A poll may be demanded by:
(a) The chairperson of the meeting;
(b) The Directors;
(c) Two or more Persons having the right to vote on a
resolution.
49. A demand for a poll may be withdrawn if the poll has not
yet been taken and the
chairperson consents to the withdrawal.
50. Polls must be taken immediately and in such manner as the
chairperson of the meeting
directs, provided that each Member shall have only one vote.
Resolutions
51. Decisions at general meetings shall be made by passing
resolutions:
(a) Decisions involving an alteration to articles that have been
Entrenched in
accordance with section 22 of the Act require the approval of
100% of the
Members.
(b) The following decisions must be made by special resolution:
(i) Decisions involving an alteration to the Articles of the Co-
operative, except

18. where an article is Entrenched as detailed above;
(ii) Decisions to expel Members;
(iii) Decisions to dispose assets of the Co-operative equivalent
in value to one-
third of the Co-operative’s last published balance sheet, as
detailed in these
Articles;
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Co-operatives UK Multi-stakeholder Co-operative Model
(iv) The decision to wind up the Co-operative;
(v) Other decisions which are required so by statute.
(c) All other decisions shall be made by ordinary resolution.
52. A special resolution is one passed by a majority of not less
than 75% of votes cast at a
general meeting and an ordinary resolution is one passed by a
simple majority (51%) of
votes cast.
53. Resolutions may be passed at general meetings or by written
resolution.
54. A written resolution passed by Members shall be effective if
it has been passed in
accordance with the requirements of the Act which includes
sending a copy of the

19. proposed resolution to every Member. Written resolutions may
comprise several copies
to which one or more Members have signified their agreement.
55. A written resolution shall be deemed to have been passed if,
within 28 days of the
written resolution’s circulation date:
(a) Written approval has been received from at least 75% of the
Members where the
resolution is a special resolution;
(b) Written approval has been received from at least 51% of the
Members where the
resolution is an ordinary resolution.
56. In accordance with the Companies Acts, resolutions to
remove a Director or auditor (or
their equivalent) of the Co-operative before the end of his/her
period of office shall not
be passed by written resolution.
DIRECTORS
57. The Co-operative shall have a Board of Directors
comprising not less than two Directors.
58. Those persons notified to the Registrar of Companies on
incorporation and such others
as they may determine in writing shall be the initial Board of
Directors of the Co-operative
from incorporation until the first annual general meeting.
59. Only persons who are aged 16 years or more may serve on
the Board of Directors.

20. Elected Board of Directors
60. The Board of Directors shall be elected by and from the Co-
operative’s Members. The
composition of the Board of Directors following the first
Annual General Meeting shall be
as follows:
(a) Not more than … User Members;
(b) Not more than … Employee Members;
(c) Not more than … Supporter Members.
8
Co-operatives UK Multi-stakeholder Co-operative Model
61. The Board of Directors shall endeavour to ensure that its
composition reflects the
number of Members in each category, to maintain a
representative balance. This shall
be reviewed by the Directors from time to time.
Retirement Cycle
62. At the first annual general meeting all Directors shall stand
down. At every subsequent
annual general meeting one-third of the Board of Directors, or if
their number is not a
multiple of three then the number nearest to one-third, shall
retire from office. The
Directors to retire shall be the Directors who have been longest

21. in office since their last
election. Where Directors have held office for the same amount
of time the Director to
retire shall be decided by lot. A retiring Director shall be
eligible for re-election.
Co-option of Directors
63. In addition the Board of Directors may co-opt up to two
external independent Directors
who need not be Members and are selected for their particular
skills and/or experience.
Such external independent Directors shall serve a fixed period
determined by the Board
of Directors at the time of the co-option, subject to a review at
least every 12 months.
External independent Directors may be removed from office at
any time by a resolution
of the Board of Directors.
64. The Board of Directors may at any time fill a casual
vacancy on the Board by co-option.
Such co-opted individuals must be Members of the Co-operative
and will hold office as
Director only until the next annual general meeting.
Board Education and Training
65. In accordance with the Co-operative Principle of education,
training and information,
before accepting a position as Director an individual must agree
to undertake training
during their first year of office as deemed appropriate by the
Co-operative. This training
will include information on the roles and responsibilities of
being a Director of a company

22. which is also a co-operative.
Powers and Duties of the Board of Directors
66. The Directors are responsible for the management of the Co-
operative’s business and,
subject to these Articles and directions given by special
resolution, they may exercise all
the powers of a company for this purpose. No such special
resolution invalidates
anything which the Directors have done before the passing of
the special resolution.
67. The Board of Directors shall have the power to determine
policies and procedures
associated with membership including setting subscription
levels.
68. All decisions made by a meeting of the Board of Directors
or by any person acting as a
Director shall remain valid even if it is later discovered that
there was some defect in the
Director’s appointment or that the individual had previously
been disqualified from acting
as a Director.
69. In accordance with the Co-operative Principles of
democratic member control and
member economic participation, the Board of Directors shall not
be entitled to sell or
otherwise dispose of assets (in a single transaction or series of
transactions) equivalent
in value to one-third or more of the total value of the last
published balance sheet of the
Co-operative without the approval of the Members by special
resolution.

23. 9
Co-operatives UK Multi-stakeholder Co-operative Model
Delegation
70. Subject to these Articles, the Directors may delegate any of
the powers which are
conferred on them under these Articles to any Person or
committee consisting of
Members of the Co-operative, by such means, to such an extent,
in relation to such
matters and on such terms and conditions as they think fit.
71. The Directors may specify that any such delegation may
authorise further delegation of
the powers by any person to whom they are delegated.
72. The Directors may revoke any delegation in whole or in part
or alter any terms and
conditions.
Sub-Committees
73. A sub-committee to which the Directors delegate any of
their powers must follow
procedures which are based as far as they are applicable on
those provisions of these
Articles which govern the taking of decisions by Directors.
74. The Directors may make Regulations for all or any sub-
committees, provided that such

24. Regulations are not inconsistent with these Articles.
75. All acts and proceedings of any sub-committee must be fully
and promptly reported to
the Directors.
PROCEEDINGS OF THE BOARD OF DIRECTORS
Calling a Meeting of the Board of Directors
76. Any Director may, and the Secretary on the requisition of a
Director shall, call a meeting
of the Board of Directors by giving reasonable notice of the
meeting to all Directors.
Notice of any meeting of the Board of Directors must indicate
the date, time and place of
the meeting and, if the Directors participating in the meeting
will not be in the same
place, how they will communicate with each other.
Proceedings of a Meeting of the Board of Directors
77. The Board of Directors may meet together for the despatch
of business, adjourn and
otherwise regulate their meetings as they think fit.
78. A Director is able to exercise the right to speak at a meeting
of the Board of Directors
and is deemed to be in attendance when that person is in a
position to communicate to
all those attending the meeting. The Directors may make
whatever arrangements they
consider appropriate to enable those attending a meeting of the
Board of Directors to
exercise their rights to speak or vote at it including by
Electronic Means. In determining

25. attendance at a meeting of the Board of Directors, it is
immaterial whether any two or
more Directors attending are in the same place as each other.
79. Questions arising at any meetings shall be decided by a
majority of votes. In the case of
an equality of votes the status quo shall be maintained and the
Board of Directors may
choose to refer the matter to a general meeting of the Co-
operative.
80. A written resolution, circulated to all Directors and signed
by a simple majority (51%) of
Directors, shall be valid and effective as if it had been passed at
a Board meeting duly
10
Co-operatives UK Multi-stakeholder Co-operative Model
convened and held. A written resolution may consist of several
identical Documents
signed by one or more Directors.
81. The Board of Directors may, at its discretion, invite other
persons to attend its meetings
with or without speaking rights and without voting rights. Such
attendees will not count
toward the quorum.
82. The Directors must ensure that the Co-operative keeps a
record, in Writing, for at least
10 years from the date of the decision recorded, of every

26. unanimous or majority decision
taken by the Directors.
Quorum
83. The quorum necessary for the transaction of business at a
meeting of the Board of
Directors shall be 50% of the Directors or 3, whichever is the
greater.
84. If at any time the total number of Directors in office is less
than the quorum required, the
Directors must not take any decisions other than to appoint
further Directors or to call a
general meeting so as to enable the Members to appoint further
Directors.
Chairperson
85. Directors shall appoint one of their number as the
chairperson to facilitate meetings of
the Board of Directors. If s/he is absent or unwilling to act at
the time any meeting
proceeds to business then the Directors present shall choose one
of their number to be
the chairperson for that meeting. The appointment of a
chairperson shall be the first item
of business at the meeting.
Declaration of Interest
86. Whenever a Director has a personal, financial or material
interest, whether directly or
indirectly, in a matter to be discussed at a meeting and
whenever a Director has an
interest in another unincorporated body, firm, partnership or

27. corporate body whose
interests are reasonably likely to conflict with those of the Co-
operative in relation to a
matter to be discussed at a meeting, notwithstanding matters
relating to the terms of
business of the Co-operative, s/he must;
(a) Declare the nature and extent of the interest before the
discussion begins on the
matter;
(b) Withdraw from that part of the meeting unless expressly
invited by the chairperson
of the meeting to remain;
(c) Not be counted in the quorum for that part of the meeting;
(d) Withdraw during the vote and have no vote on the matter.
Provided that nothing in this Article shall prevent a Director
from counting towards the
quorum for Board meetings and voting in respect of her/his own
contract of employment
or in respect of bonus or other payments to Members.
87. Subject to anything to the contrary in these Articles:
11
Co-operatives UK Multi-stakeholder Co-operative Model
(a) In accordance with (but subject to) the Companies Acts, the
Board of Directors

28. may give authorisation in respect of a situation in which a
Director has, or could
have, a direct or indirect interest that conflicts, or possibly may
conflict, with the
interests of the Co-operative; and
(b) In authorising a situation the Board of Directors may decide,
whether at the time of
giving the authorisation or subsequently, that if the conflicted
Director has obtained
any information through her/his involvement in the situation
otherwise that as a
Director and in respect of which s/he owes a duty of
confidentiality to another
Person, the Director is under no obligation to:
(i) Disclose that information to the Co-operative; and/or
(ii) Use that information for the benefit of the Co-operative;
where to do so would amount to a breach of confidence.
Remuneration and Expenses
88. Any Director may act in a professional capacity for the Co-
operative and s/he or her/his
firm shall be entitled to remuneration for professional services.
Provided that nothing
shall authorise a Director or their firm to act as auditor of the
Co-operative.
89. The Co-operative may pay any reasonable expenses which
the Directors properly incur
in connection with their attendance at meetings or otherwise in
connection with the
exercise of their powers and the discharge of their

29. responsibilities in relation to the
Co-operative.
Termination of a Director’s Appointment
90. A person ceases to be a Director of the Co-operative as soon
as:
(a) That person ceases to be a Member of the Co-operative
(unless they are a
co-opted external independent Director);
(b) That person resigns from office in Writing to the Secretary
of the Co-operative, and
such resignation has taken effect in accordance with its terms;
(c) That person is removed from office by a resolution of the
Co-operative in general
meeting in accordance with these Articles and the Companies
Acts;
(d) That person is absent from 3 meetings of the Board of
Directors during a
continuous period of 12 months without special leave of
absence granted by the
Board of Directors and the Directors pass a resolution that s/he
has by reason of
such absence vacated office;
(e) Where the individual is the representative of a Member
organisation, the Member
organisation removes their endorsement of that representative;
(f) Where the person is the representative of a Member
organisation that Member
organisation ceases to exist;

30. (g) That person ceases to be a Director by virtue of any
provision of the Companies
Acts or is prohibited from being a Director by law;
12
Co-operatives UK Multi-stakeholder Co-operative Model
(h) A bankruptcy order is made against that person;
(i) A registered medical practitioner who is treating that person
gives a written opinion
to the Co-operative stating that the person has become
physically or mentally
incapable of acting as a Director and may remain so for more
than three months;
(j) By reason of that person’s mental health, a court makes an
order which wholly or
partly prevents that person from personally exercising any
powers or rights which
that person would otherwise have.
Removal of a Director
91. A Director may be expelled from office by a resolution of
the Co-operative stating that it
is in the best interests of the Co-operative that her/his office is
terminated. A resolution
to remove a Director from office may only be passed if:
(a) The Director has been given at least 21 days’ notice in

31. Writing of the general
meeting at which the resolution to remove them from office will
be proposed and
the reasons why it is to be proposed; and
(b) The Director or, at the option of the Director, the Director’s
representative (who
need not be a Member of the Co-operative) has been allowed to
make
representations to the general meeting.
SECRETARY
92. The Board of Directors shall appoint a Secretary of the Co-
operative for such term and
at such remuneration and upon such conditions as they think fit.
Any Secretary so
appointed may also be removed by them.
93. A provision of the Companies Acts or these Articles
requiring or authorising a thing to be
done by or to a Director and the Secretary shall not be satisfied
by its being done by or
to the same person acting in both capacities.
REGULATIONS
94. The Co-operative in a general meeting or the Board of
Directors may from time to time
make, adopt and amend such Regulations in the form of bye-
laws, standing orders,
secondary rules or otherwise as they think fit for the
management, conduct and
regulation of the affairs of the Co-operative and the proceedings
and powers of the
Board of Directors and sub-committees. No regulation shall be

32. made which is
inconsistent with these Articles or the Companies Acts. All
members of the Co-operative
and the Board of Directors shall be bound by such Regulations
whether or not they have
received a copy of them.
LIABILITY OF MEMBERS
95. The liability of Members is limited to £1. Every Member of
the Co-operative undertakes
to contribute to the assets of the Co-operative in the event of it
being wound up while
s/he/it is a Member or within one year of her/him/it ceasing to
be a Member. The
contribution shall be for payment of the debts and liabilities of
the Co-operative
contracted while s/he/it was a Member and of the costs, charges
or expenses of winding
up and for the adjustments of the rights of the contributories
amongst themselves. Each
Member’s contribution shall not exceed £1.
13
Co-operatives UK Multi-stakeholder Co-operative Model
APPLICATION OF PROFITS
96. The profits of the Co-operative shall be applied in the
following ways, in such proportions
and in such manner as the general meeting shall decide from
time to time:

33. (a) To create a general reserve for the continuation and
development of the
Co-operative;
(b) In accordance with the Co-operative Principle of member
economic participation,
to a bonus for all members, either equally or in accordance with
some other
equitable formula which recognises the relative contribution
made by each
Member to the business of the Co-operative;
(c) In accordance with the Co-operative Principle of concern for
community, to make
payment for social, co-operative and community purposes.
DISSOLUTION
Common Ownership
97. The Co-operative is a common ownership enterprise. In the
event of the winding up or
dissolution of the Co-operative the liquidator shall first,
according to law, use the assets
of the Co-operative to satisfy its debts and liabilities. Any
balance of assets remaining
may not be distributed among the Members but shall be
transferred to some other
common ownership co-operative(s) or to Co-operatives UK (or
any body that succeeds
to its function). If such residual assets cannot be distributed in
this manner they shall be
transferred to some other organisation(s) whose purpose is to
promote and support the
Co-operative Movement and common ownership enterprises.

34. This article is Entrenched
in accordance with section 22 of the Act; any alteration to this
article requires the
approval of 100% of the Members.
ADMINISTRATIVE ARRANGEMENTS
Means of Communication
98. A Member may provide their consent to receive
communications from the Co-operative
by electronic means.
99. Subject to these Articles, anything sent or supplied by or to
the Co-operative under the
Articles may be sent or supplied in any way in which the
Companies Acts provides. Any
notice or Document to be sent or supplied to a Director in
connection with the taking of
decisions by Directors may also be sent or supplied by the
means by which that Director
has asked to be sent or supplied with such notices or Documents
for the time being. A
Director may agree with the Co-operative that notices or
Documents sent to her/him in a
particular way are to be deemed to have been received within a
specified time or their
being sent, and for the specified time to be less than 48 hours.
Seal
100. If the Co-operative has a seal, it shall only be used by the
authority of the Board of
Directors acting on behalf of the Co-operative. Every
instrument to which the seal shall
be attached shall be signed by a Director and countersigned by a

35. second Director, the
Secretary, or a Member of the Co-operative appointed by the
Board of Directors for the
purpose.
14
Co-operatives UK Multi-stakeholder Co-operative Model
Registers
101. The Board of Directors shall ensure accurate registers are
maintained which shall
include a register of Members, a register of Directors and such
other registers as
required by the Acts.
Register of Members
102. The Co-operative shall maintain a register of Members
which records their/its name,
address (in the case of a corporate body the registered office
address), and the dates on
which s/he/it became a Member and ceased to be a Member. A
Member shall notify the
Secretary of the Co-operative within seven days of any change
to her/his/its name or
address.
103. An entry on the register relating to a former Member of the
Co-operative may be
removed from the register after the expiration of 10 years from
the date on which s/he/it

36. ceased to be a Member.
Register of Directors
104. The Co-operative shall maintain a register of Directors
which shall include the following
particulars:
(a) Name of the Director and any former names used by her/him
for business
purposes;
(b) Service address;
(c) Country of residence;
(d) Nationality;
(e) Business occupation, if any;
(f) Date of birth.
105. The register of Directors shall be open for inspection to
any Member of the Co-operative
without charge and to any other Person on payment of such fee
as may be prescribed.
106. The Co-operative shall also maintain a register of
Director’s residential addresses which
is not available for inspection.
Minutes
107. The Co-operative shall ensure that minutes are kept of all:
(a) Proceedings at meetings of the Co-operative; and

37. (b) Proceedings at meetings of the Board of Directors and its
sub-committees which
include names of the Directors present, decisions made and the
reasons for those
decisions.
Accounts
15
Co-operatives UK Multi-stakeholder Co-operative Model
108. The Board of Directors shall cause proper accounts to be
kept and circulated in
accordance with the Companies Acts with respect to:
(a) All sums of money received and expended by the Co-
operative and the matters in
which the receipt and expenditure takes place;
(b) All sales and purchases of goods by the Co-operative;
(c) The assets and liabilities of the Co-operative.
109. Proper accounts shall be deemed to have been kept if they
give a true and fair record of
the state of the Co-operative's affairs and explain its
transactions.
110. The accounts shall be kept at the registered office of the
Co-operative or, subject to the
Acts, at such other place or places as the Board of Directors

38. thinks fit, and shall always
be open to the inspection of all Members and other Persons
authorised by the
Co-operative in a general meeting.
111. The Board of Directors shall prepare and present to the
Members such regular financial
reports, results and cash flow predictions showing the current
financial position of the
Co-operative as the Members in a general meeting shall require
to be laid before them.
Audit
112. The Co-operative may decide if it meets the qualifying
criteria to apply the small company
audit exemptions. If not, at least once in every year the accounts
of the Co-operative shall
be examined and the correctness of the income and expenditure
account and balance
sheet ascertained by one or more properly qualified auditors (or
their equivalents).
113. Auditors (or their equivalents) shall be appointed and their
duties regulated in
accordance with the Companies Acts.
Borrowing from Members
114. In accordance with the Co-operative Principle of member
economic participation the
interest paid by the Co-operative on money borrowed from
Members shall not exceed
such rate as is necessary to attract and retain the capital
required to further the
Co-operative’s purpose.

39. Social Accounting and Reporting
115. In addition to any financial accounts required by the
Companies Acts, the Members may
resolve to undertake an account of the activities of the Co-
operative which will
endeavour to measure its co-operative, social and environmental
performance using
whatever methodology the Members deem appropriate.
Following the completion of
such an account the Co-operative shall report any findings to its
Members and other
stakeholders.
Indemnity and Insurance
116. Subject to the following article, any Director or former
Director of the Co-operative may
be indemnified out of the Co-operative’s assets against:
16
Co-operatives UK Multi-stakeholder Co-operative Model
17
(a) Any liability incurred by that Director in connection with
any negligence, default,
breach of duty or breach of trust in relation to the Co-operative;
(b) Any liability incurred by that Director in connection with
the activities of the

40. Co-operative in its capacity as a trustee of an occupational
pension scheme (as
per the Act);
(c) Any other liability incurred by that Director as an officer of
the Co-operative.
117. The above article does not authorise any indemnity which
would be prohibited or
rendered void by any provision of the Companies Acts or any
other provision of law.
118. The Directors may decide to purchase and maintain
insurance, at the expense of the
Co-operative, for the benefit of any Director or former Director
of the Co-operative in
respect of any loss or liability which has been or may be
incurred by such a Director in
connection with their duties or powers in relation to the Co-
operative or any pension fund
or employees’ share scheme of the Co-operative.
1

41. ISSN 2281-8235 Working Paper n. 95 | 17
Johnston Birchall
Silvia Sacchetti
The Comparative Advantages
of Single and
Multi-stakeholder
Cooperatives

42. ―
Please cite this paper as:
Birchall, J. & Sacchetti, S. (2017), The Comparative
Advantages of Single
and Multi-stakeholder Cooperatives, Euricse Working Papers,
95 | 17.
2
The Comparative Advantages of Single and Multi-stakeholder
Cooperatives1
Johnston Birchall2, Silvia Sacchetti3
Abstract
When cooperatives were first invented, it was assumed their
membership would be
limited to one type of user. The Rochdale Pioneers favoured
consumers, and employee
representation was deliberately limited to a set percentage of

43. board members. Similarly,
Schulze Delitsch and Raiffeisen privileged farmers, Buchez
workers, insurance mutuals
those who are insured, and so on. Recently, Italian social
cooperatives have developed
a different model in which all the relevant stakeholders become
members: those who are
cared for, the carers, the workers, and volunteers. Also,
occasionally dual stakeholder
cooperatives have been designed. Eroski, the big Spanish
retailer, has both consumers
and workers in membership, and iCoop in Korea has both
consumers and farmers. This
paper has two aims, to set out some of the theoretical arguments
for and against multi-
stakeholder governance, to look at examples of multi-
stakeholder models in practice,
and to generate from this a set of research questions.
Keywords
Cooperative governance, Organizational design
JEL Codes

44. D23; P13; L20; L31.
1 Paper presented at the International Co-operative Alliance
2017 CCR Global Research Conference
“Developing Inclusive and Responsible Businesses: Co-
operatives in Theory, Policy and Practice”,
University of Stirling, Scotland, UK, 20-24 June 2017.
2 University of Stirling, Scotland, UK. Email: [email protected]
3 Open University, UK; University of Trento, Italy; and
Euricse. Email: Italy [email protected]
3
1. Introduction
When cooperatives were first invented, it was assumed their
membership would be
limited to one type of user. The Rochdale Pioneers favoured
consumers, and employee
representation was deliberately limited to a set percentage of
board members. Similarly,
Schulze Delitsch and Raiffeisen privileged farmers, Buchez

45. workers, and so on. It is true
that before these familiar types of cooperation crystallised there
was a period of idealism,
when utopian socialists such as Robert Owen and Charles
Fourier were advocating a
cooperative community in which membership would be much
more holistic. Their vision
did not survive much contact with reality, whereas cooperative
stores for consumers
prospered. There was also sometimes a period of confusion,
when promoters were
unsure about which stakeholder to put at the centre of the
cooperative. William King set
up cooperative stores that were both consumer and producer
owned (with artisans
bringing goods to sell through them), until it was realised that
their interests could clash
(Birchall, 1994). Raiffeisen set up rural banks in which
investors had control, until he
realised that they had to be owned by the farmers (Birchall,
2013). The emergence of
single stakeholder cooperatives could be seen as a process of
organisational evolution;
every other type failed to survive and reproduce itself over

46. time.
The assumption that cooperatives should give membership to a
single-stakeholder
continues in the rules that they develop to prevent multi-
stakeholding emerging. For
instance, quite soon in their evolution, consumer cooperatives
began to limit the number
of employees who could be elected to a board. Furthermore,
membership was seen as
being for consumers, and employee board members had to see
themselves primarily as
representing consumers. Another example is insurance mutuals
that, though they began
to appoint experts to their boards, established a tradition that a
majority of board
members should represent policy-holders (Birchall, 2011).
Housing cooperatives have
also developed rules that ensure a majority of residents on their
boards. Some farmer
cooperatives have recently appointed one or two experts to their
boards, but others are
resisting the idea (Birchall, 2014).
Why, then, should we want to discuss the idea of multi-
stakeholder ownership and

47. governance of cooperatives? It is because practices are
changing. Occasionally dual
stakeholder cooperatives have been designed. The Spanish
health cooperative Espriu has
both doctors and patients on some of its boards, Eroski, the big
Spanish retailer, has both
consumers and workers in membership, and iCoop in Korea has
both consumers and
farmers. Recently, Italian social cooperatives have developed a
governance model in
which membership is open to more than one of the relevant
stakeholders. Practice varies,
but membership is open to some combination of workers,
volunteers, other non-profit
organisations and service users. The social cooperative sector is
growing and being
copied elsewhere. However, it operates typically in social care
services where non-
4
profits have traditionally provided services under contract to
local authorities, and so it

48. may or may not have more general applicability.
This paper has three aims: to set out some of the theoretical
arguments for and against
multi-stakeholder governance, to describe some examples of
multi-stakeholder models
in practice, and to generate from this a set of research
questions.
2. Economic theory and the assumption of single-stakeholder
ownership
Mainstream economic theory lends weight to the argument that
multi-stakeholder
ownership will not work. In a small business where the owners
carry out the tasks of
management and oversight themselves, there is no need for a
separate governance
function. As soon as they appoint a separate group of managers
to run the business, the
problem emerges of how the principals (the owners) can control
the agents (the
managers) so that their interests are aligned and managers do
not engage in “rent-
seeking” behaviour. Governance is seen as a cost to the business
rather than an activity

49. that adds value. Transaction cost economics adds to this
analysis with two propositions.
First, if giving ownership rights to a particular stakeholder
group leads to high cost of
governance compared with those of their competitors, the
business will suffer. If a
change of ownership type reduces such costs, then eventually
(other things being equal)
it will be chosen. Conversions—such as from consumer to
investor ownership, or from
investor ownership to employee ownership—can be explained in
this way.
Second, there are also costs from not bringing a particular
stakeholder group into
ownership. If their cooperation is needed by the business, it is
secured through contracts
the cost of which is determined through the market. For
instance, the conventional
capitalist solution is to have investor-owners and to contract
with employees through
paying them wages. However, there are circumstances where
other type of ownership
will be promoted. For instance, if an industry is prone to
monopoly over crucial parts of

50. the value chain, producer ownership will prove more attractive
than investor ownership.
This explains the popularity of farmer cooperatives (Hansmann,
1996).
What economic theory does not predict—in fact, does not even
consider—is the
possibility that more than one stakeholder group could take
ownership. It is assumed that
stakeholder groups have essentially different interests that can
only be brought into
alignment through market contracting. If they are brought into
ownership, then their
interests have to be aligned through the system of governance.
Since the costs of such
governance will be too high (relative to competitors who do not
need to incur such costs),
the business will suffer.
5
3. A strong argument for multi-stakeholder cooperatives
Shann Turnbull (2001) has developed a strong argument for
joint ownership by

51. employees, consumers and suppliers. Such a cooperative would
have three separate
boards to represent these interest groups, and they would
together make up a compound
board. He calls this “distributed control”. His argument against
single-stakeholder
ownership has three parts. First, centralised control is
corrupting. Directors have too
much power to maintain their positions while obtaining private
benefits for themselves.
Second, there is a lack of information by which board members
can challenge the status
quo. There is a lack of independent feedback information on
performance. Directors
become “largely captive to the information provided by
management” (Turnbull, 2001:
178). Third, there is information overload, which means that
directors cannot effectively
process the information they need.
All these criticisms of unitary boards are familiar and we do not
need much convincing
of their merit. However, the mainstream literature on
governance also sets out to tackle

52. these problems, seeing them not as inherent to unitary
governance but as faults that can
be rectified. What Turnbull advocates is a complete redesign of
businesses and we need
to be convinced that his solution does not just produce another
set of problems. At the
heart of his solution is the introduction of greater complexity
into the governance system,
with boards being accountable to a higher authority that
contains all the stakeholder
interests. This is variously known as a supervisory board,
stakeholder council, or
watchdog board. Of course, this kind of design is also common
in single stakeholder
cooperatives. Multi-stakeholding adds the challenge of
reconciling diverse interests
before they reach the main board as well as enabling them to
come together again at a
higher level to supervise the board.
There remains the question of how the interests of such a
diverse group of owners can
be reconciled. Much of the time they will have a common
interest in the effective running
of the business, but there must be moments when they have to

53. decide who gets what
from the value added. They cannot all benefit equally or all the
time, nor can they always
be expected to agree on what is fair. Another issue concerns the
examples that are given
of distributed ownership in practice. Turnbull lists the Japanese
Keiretsu, employee-
owned firms and the Mondragón cooperatives. The Keiretsu are
a good example; here
the firm distributes shares to employees and suppliers in order
to bind them into the
business. It could be described as “distributive capitalism” in
that it widens the
ownership of firms. Also, because firms invest in each other, it
creates an informal
business network. What is unclear is whether employees benefit
from increased
authority in the governance structure; this would depend on the
extent of their
shareholding in any one firm and on whether they are
incentivised to make the most of
this.

54. 6
Employee-owned firms are not a good example of multi-
stakeholding as they are either
single-stakeholder cooperatives (if 100 per cent owned by
employees) or hybrids (if
majority owned by employees along with other investors). A
firm that is owned by a
combination of workers and investors is a kind of multi-
stakeholding or at least “dual
stakeholding”, but some commentators see this as an unstable
mix that should be
encouraged to lead to full employee-ownership (Ellerman,
1990).
There are other examples of producer cooperative hybrids.
Some food processing
companies are now owned by a mix of farmers and outside
investors. Kerry Group is a
good example, though the farmer stakeholding has fallen
recently to just over 13 per
cent. Other food processing companies are majority owned by
farmers (Emmi in
Switzerland is a good example), but in some cases the farmers
have bought back their

55. side of the business because they do not like sharing control
with other investors. In
Ireland, Lakeland Co-operative and Glanbia Co-operative have
succeeded in buying
back their dairying business. The only strong argument for a
mix of producer and
investor ownership is the need for more capital that outside
shareholders can provide
(Briscoe, McCarthy and Ward, 2012).
The Mondragón system is quite a good example of multi-
stakeholding. At the level of
the individual cooperative, most are still conventionally owned
either by workers,
consumers or farmers, but they have a tradition of inviting
representatives from
neighbouring cooperatives on to their boards. Also, at the
higher level of the corporation
there are elaborate governance mechanisms for ensuring the
different types of
cooperative are represented. In addition, at Mondragón there is
one genuine worker and
consumer owned retailer in the Eroski Group, (the Spanish
cooperative retailer, Consum,
has a similar ownership structure).

56. There are a few other interesting examples of multi-stakeholder
ownership that might
support Turnbull’s argument. iCoop is a very successful
consumer-farmer owned
cooperative federation in Korea which we will examine in more
detail below. There are
two health cooperative federations that have both producers
(medical doctors) and
consumers (people insured through health plans) on some of
their boards; Unimed in
Brazil, and Espriu in Spain (Birchall, 2014). However, in both
these cases the producer
interest predominates. A cynical view might be that the
development of health plans is
a way that medical doctors can gain business for themselves,
and that having some
consumers on the board is a necessary part of their legitimation.
In practice, though,
there is no reason for such cynicism; the common interest of
both producer and consumer
in having an effective health care system does seem to hold
them together. On the other
hand, the dominance of the medical interest is evidenced by the
fact that government

57. legislation has also been necessary to ensure the consumer
interest is properly
safeguarded in the governance of their health insurance mutuals.
7
We will now look further at two clear examples of multi-
stakeholding—Eroski and
iCoop—before examining in some detail the most well known
example of the Italian
social cooperatives.
4. The examples of Eroski and iCoop
Eroski is a supermarket chain that began in 1969 in the Basque
region, with the merger
of 10 consumer cooperatives, but has now spread out into other
parts of Spain and
France. It is a highly successful business, with 1896 stores
(including supermarkets,
super stores, cash&carry, opticians, travel agents, perfume
stores and sports shops) and
an annual turnover of more than EUR 6 billion (Eroski, 2015).

58. It has 33,509 employees
and over seven million customer members, and is a member of
the Mondragón
Corporation.
Eroski’s governance system is a hybrid of the Mondragón
worker ownership system and
of a conventional consumer cooperative; it describes itself as a
consumer cooperative in
which the workers are owners and the consumers are members.
However, in order to
become an owner an employee has to invest a significant
amount in the cooperative;
only 11,858 are “worker partners” out of a total of 33,509
workers. The “client partners”
are a much higher proportion of the customers, accounting for
76 per cent of sales. The
incentives are very different: worker-owners share 40 per cent
of the profits, while
consumer members receive discounts on purchases. The annual
general meeting consists
of 250 worker and 250 consumer representatives, who then elect
a governing board of
six worker and six consumer partners. This governance system
is supplemented by

59. worker self-management in the stores and by 21 consumerist
committees that provide
guidelines for the cooperative. It is interesting that the president
of the cooperative has
to be a consumer rather than a worker member; anecdotally, the
view of commentators
who know the business is that the worker interest tends to
dominate. This is only to be
expected, since the workers have a much larger stake in the
business, both as employees
and as shareholders.
iCoop is also a successful retailer, with 180 stores and 17
factories for farm produce. At
first sight, it is a similar mix of consumer and producer
ownership (the producers being
local farmers). Its 2015 annual report says it has 237,000
consumers and 2367 producers
in membership. However, it is not a primary but a secondary
cooperative; the individual
consumers and workers are grouped in 85 consumer and 33
producer cooperatives. It
puts the emphasis on the consumption side of the equation,
describing itself as a

60. “consumer cooperative federation” of “consumer members who
practice ethical
consumption and production with producers” (iCoop, 2015). It
owns the Mutual Aid
Society for Enhancing Korean Agriculture that has business
with consumers, producers
and employees, but this is an insurance mutual so that its
customers are all simply
8
insured persons. The farmers are grouped into an association of
producer groups. The
problem of how to reach a price for products is therefore solved
within the market. The
federation supplements this with a member account fund in
which consumers make
advance payments so that farmers can grow their produce
without having to go into debt.
It also has a price stabilisation fund that intervenes to smooth
out farm prices over the
year. The federation enables a genuine solidarity to be
expressed between consumers
and producers, but it keeps them separate so that their interests

61. do not have to be
completely reconciled.
5. The Italian model of social cooperatives
Organisations that provide social care for vulnerable people
have a particular problem.
Those who they are caring for include people with learning
difficulties, people who are
physically or mentally disabled, older people suffering from
dementia and so on. They
cannot always be relied on to look after their own interests
either as purchasers of care
or within the governance system of the cooperative. In
economic theory, we might say
the costs of both contracting and of governance are too high.
This problem was analysed
by Hansmann (1996), who recognised a dilemma. On the one
hand, agency costs would
be exceptional if users had to own the firm. On the other hand,
there would be a clear
disadvantage from being excluded. Hansmann’s solution is that
the organisation should
be constituted as a non-profit in which nobody owns the

62. enterprise and a board of
trustees provides its governance. The trustees are trusted to act
on behalf of the service
users.
A different governance solution is exemplified by the social
cooperative model, which
has developed in Italy since its inception in 1991 (Law
381/1991). This model was
explicitly engineered to be multi-stakeholder. Here the service
users have the right to be
part of the assembly of members and represented in the
governance structure along with
all the other main stakeholders: workers, volunteers, carers,
other legal entities such as
cooperatives and financial members. Multi-stakeholding
requires specific governance
solutions and has implications for governance costs (Sacchetti
and Tortia, 2014). At the
same time, however, it enables the inclusion of a plurality of
interests which can lower
the costs of coordinating transactions on the market (borne by
the internal patrons), but
also the external costs associated with the exclusion of
stakeholders from the governance

63. process (borne by excluded stakeholders) (Borzaga and
Sacchetti, 2015).
For the law: “Social cooperatives are intended to pursue the
general interest of the
community to human promotion and social integration of
citizens through:
(a) the management of social, health and educational services
[A-type];
(b) carrying out various activities—agricultural, industrial,
commercial or
9
services—aimed at providing employment for disadvantaged
persons [B-type]”
(Parlamento Italiano, L. 381/1991; art. 1)4.
Together, the differentiation between A-type and B-type
introduced by the 1991 law has
facilitated the organisation of systemic solutions to welfare
problems. Consortia or
groups including A-type and B-type cooperatives address a
variety of complementary
societal goals, from elderly care, to housing, to rehabilitation of

64. psychiatric patients (A-
type social cooperatives), as well as work integration in
manufacturing, agriculture, and
service activities (B-type social cooperatives).
The objective of social cooperatives was to produce welfare
services, support
employment and, more generally, to produce meritorious goods
(Weisbrod, 1988;
Bacchiega and Borzaga, 2001). Specialized welfare services
and work integration can
be considered an example of meritorious goods that can lead to
the reduction of social
marginalisation. Moreover, because of their “public” aims,
social cooperatives have
grown to represent specific forms of social enterprise which, in
the European tradition
places emphasis on social aims, participatory governance, and
limited profit distribution
(cf. European Parliament, 2012). Democratic membership
embodies the participatory
requirement, while commercial goals are instrumental to the
pursuit of social aims. This
emphasis on participatory governance has deep roots in the
country’s cooperative

65. tradition that had already developed in social service provision
prior to the law, as well
as in other sectors, such as farming, banking, manufacturing,
and retailing.
Moreover, the idea of stakeholder participation was supported
by the broader framework
set by the Civil Code (art. 2540 and 2542), which regulates
representation either through
the board of directors or by the institution of multiple
assemblies for each of the
stakeholders.
Does this mean that in practice all stakeholders have equal
authority within the
governance structure? Unfortunately, it is recognised that in A-
type co-ops the worker
interest tends to be dominant. One interesting question is how a
model with a prevalence
of worker membership sets out to pursue the interest of users,
typically disadvantaged
categories of individuals. Social cooperative membership, in
fact, has mainly included
workers, volunteers and, less frequently, other non-profit
organisations5, whilst users

66. have been scarcely represented, especially in A-type
cooperatives. So, differently from
ordinary co-ops, A-type, and to some extent B-type, social
cooperatives cannot be
4 Translated by the author; specifications in brackets [A-type]
[B-type] are added by the author; see
Thomas (2004) for more details on A- and B-types.
5 The assembly works with the one-head-one vote rule, with the
exception of members with the status of
legal entities (which can express up to five votes), and financial
organisations. For the latter, votes cannot
go over one third of those attributed to ordinary members, and
nomination rights in the board of directors
are limited to less than one third (for detailed analysis of the
Italian legislation, cf. Cafaggi and Iamiceli,
2009).
10
considered mutual organisations, since their activities are
directed towards the benefit of
users rather than the co-op’s main patron (cf. Cafaggi and
Iamiceli, 2009).

67. A-type cooperative statutes tend to emphasise community
welfare objectives to be
pursued in partnership with public and private organizations.
Stakeholders retain control
through the assembly, have the right to elect directors and—
indirectly—the board
president.
Having analysed a number of A-type social cooperatives6, a
possible answer to the
question of why workers would pursue users’ interests is that
although, as a norm,
beneficiaries are not members, their welfare is nonetheless the
sine qua non condition
for the existence of the cooperative. Because of the social
nature and aims of the
cooperative project, worker members understand that their
authority is legitimised only
if it is instrumental to the benefit of vulnerable categories. In
other words, there is a
“social contract” that ties controlling publics (mostly workers,
often paired by
volunteers) with non-controlling publics (beneficiaries)7.
The answer is different for B-type cooperatives, which focus on
work-integration and

68. strive to develop work opportunities at the best possible
conditions for all worker
members, including users. In B-type cooperatives beneficiaries
of work-integration
services should preferably be members (albeit not necessarily).
In fact, when hired by a
B-type cooperative, users can become worker members with the
same statutory rights of
other ordinary worker members. Where this happens
systematically, it represents a way
to make users part of the governance structure. Thus, the
welfare of ordinary workers is
inexorably related to the presence and welfare of workers with
difficulties, since these
cooperatives find their reason to exist only if they succeed in
integrating user-workers
(by law with a proportion of 30:70). With this member
composition, directors and
managers must be clear about their duty, which is
simultaneously to maximise the
welfare of both type of workers.
In 2006, another piece of legislation instituted the social
enterprise model8. With the new

69. regulation, the social cooperative form defined in 1991 became
just one organisational
model among others (including also associations, foundations
and other than cooperative
businesses). The social enterprise regulation interpreted the
participatory governance
criterion by requiring openness in the selection of stakeholder
members. There are no
specific prescriptions on who the members should be, albeit
specific attention in the law
is dedicated to beneficiaries and workers. In general, it is the
social enterprise, through
the assembly, that has the right to identify classes of
stakeholders 9 . The multi-
6 See Sacchetti and Tortia (2014) and Sacchetti (2016) for
illustrative cases.
7 On social contract, see Donaldson (1982), Flanningan (1989),
Brummer (1991) and Sacconi (2013).
8 Law 155/2006.
9 Similar requirements were introduced in other countries.
However, while Italy introduced a “non-
discrimination principle” in the selection of members, France
has been the only European country where
multi-stakeholding became a specific requirement. The SCIC
(Société Coopérative d’Intérêt Collectif)

70. 11
stakeholder social enterprise can include stakeholders as
organisational members or as
board members. Through these bodies, stakeholders can
contribute to strategic decision-
making, including what to produce, and how to distribute
economic surplus under the
limited distribution constraint. As Borzaga and Mittone (1997)
notice, this participative
form of governance (paired with a social aim and a non-profit
distribution constrain)
leads to a unique feature, which is that the activities of the
organisation have multiple
categories of beneficiaries, including members but also non-
members.
This principle was already recognised in 1991 and it had been
partly implemented. Even
before the 2006 law that instituted a “non-discrimination
principle” in relation to
stakeholder admission practices, in many instances social
cooperatives had put in place
solutions for the representation of multiple interests and needs

71. in the form of committees
representing beneficiaries or their families (Cafaggi and
Iamiceli, 2009).
Despite encouraging pluralism, the 2006 legislation activated
other business forms only
to a limited extent. Today, the majority of Italian social
enterprises is still defined by the
social cooperation model, to an extent that the two categories
nearly overlap. Workers
still remain the main stakeholder to be represented in Italian
social cooperatives, but
their representation is not exclusive. Borzaga, Depedri and
Tortia (2011) have
undertaken some research to map the governance status of these
organisations. They
evidence that nearly 80 per cent of enterprises providing
personal, social and work
integration services feature some form of multiple stakeholder
involvement.
Specifically, one out of three social cooperatives (34 per cent)
are multi-stakeholder,
although users are included in the membership in one out of ten
social cooperatives.
Twenty-nine per cent are hybrid organisations with multiple

72. membership but with a
single stakeholder (workers) represented in the board of
directors. Sixteen per cent have
a dual stakeholding (including workers and volunteers), whilst
the remaining 21 per cent
are mono-stakeholder (workers) social cooperatives. Borzaga
and Depedri (2014) have
further noticed that users are members in the majority of B-type
social cooperatives
(across sectors, e.g. environmental maintenance,
manufacturing), whilst A-type
cooperatives (typically providing health assistance and
educational services) tend not to
involve users.
specifies the three types of members that must be represented in
the board: workers and beneficiaries, plus
a third category to be nominated. Moreover, in France (unlike
Italy where the legislator pursued the idea
of independence of social enterprises from the public sector)
public administrations can also be members
of a social enterprise.

73. 12
6. Some research questions
Several questions emerge out of this preliminary discussion that
might usefully be the
focus of further research:
1. Is single-stakeholder governance more likely in highly
commercial sectors where
competitive pressures are high and market pricing is important?
Is multi-
stakeholding more likely when the market pressures are lower
and prices are set
by negotiation with funding agencies such as local authorities?
2. Is multi-stakeholder governance found in social care because
it has these specific
characteristics: contracts are long-term, service users find it
difficult to assess the
quality of the product, and the product itself is dependent on the
relationship
between service provider and user?
3. Is it possible to operate a multi-stakeholder governance

74. without bringing more
than one stakeholder into ownership? In other words, is
ownership less important
than we might think?
4. Is it possible in cooperatives that focus mainly on the needs
of one owner—
producer or consumer—to broaden their governance to include
other
stakeholders? If so, will this provide a business advantage, or
will it lead to a loss
of focus and higher governance costs compared to those of
competitors?
5. In some countries (England and Wales for instance) the
health and social care
sectors are becoming increasingly commercial, with new
agencies being formed
to bid for contracts. Some are multi-stakeholding (mainly
workers, service
users), some single (usually the workers). In this scenario,
which type can we
expect to have more success?
6. What are the factors that can lower the internal costs of
multi-stakeholding and

75. increase a culture of stakeholder inclusion among directors?
7. Within the multi-stakeholder organisation, what factors
contribute to ensure the
engagement of stakeholders in collective action?
13
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Solidarity co-operatives : an embedded historical
communitarian pluralist approach to social enterprise
development?(Keynote to RMIT Research Colloquium)
RIDLEY-DUFF, Rory <http://orcid.org/0000-0002-5560-6312>
and BULL, Mike
Available from Sheffield Hallam University Research Archive
(SHURA) at:
http://shura.shu.ac.uk/9890/
This document is the author deposited version. You are advised
to consult the
publisher's version if you wish to cite from it.
Published version
RIDLEY-DUFF, Rory and BULL, Mike (2014). Solidarity co-
operatives : an embedded
historical communitarian pluralist approach to social enterprise
development?
(Keynote to RMIT Research Colloquium). In: 2014 Social
Innovation and
Entrepreneurship Research Colloquium, Melbourne, RMIT
Building 80, 26th - 28th

82. November 2014. (Unpublished)
Copyright and re-use policy
See http://shura.shu.ac.uk/information.html
Sheffield Hallam University Research Archive
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http://shura.shu.ac.uk/information.html
Solidarity co-operatives: An embedded historical
communitarian
pluralist approach to social enterprise development?
Rory Ridley-Duff and Mike Bull
Rory Ridley-Duff, Reader in Co-operative and Social
Enterprise, Sheffield Business School.
Sheffield Hallam University, Arundel Gate, Sheffield, S1 1WB.
Mike Bull, Senior Lecturer, Manchester Metropolitan University
Business School, Oxford
Road, Manchester M1 3GH.
Rory Ridley-Duff. Sheffield Hallam University, Sheffield, S1
1WB.
[email protected]
Rory Ridley-Duff is Reader in Co-operative and Social

83. Enterprise at Sheffield Business School, Sheffield
Hallam University. Dr Ridley-Duff’s primary research interest
is the process by which democratic relations
develop in both informal and formal organisations and affect
governing processes. He has authored two
books, 32 scholarly papers and two novels. The first book,
Emotion, Seduction and Intimacy examines
relationship development at work, and the second,
Understanding Social Enterprise: Theory and Practice has
helped to establish the field of social enterprise studies in four
continents. His research has been published in:
Human Relations; Corporate Governance: An International
Review; International Journal of Entrepreneurial
Behaviour and Research; Social Enterprise Journal; and Journal
of Cooperative Studies. He has won best
paper awards from Emerald Publishing in 2011 for a paper on
ethical capital, and from the 31st Institute of
Small Business and Entrepreneurship Conference (ISBE) for
critical research on the Social Enterprise Mark.
He became a director of Social Enterprise Europe Ltd in 2012,
co-founded the FairShares Association in 2013,
and now acts as chair of the PRME Working Group at Sheffield
Business School.
Mike Bull is Research Fellow at Manchester Metropolitan

84. University and Senior Lecturer in social
entrepreneurship, sustainability and sport governance. He is an
editorial board member of Social
Enterprise Journal and has previously been a Director of Social
Enterprise North West (SENW) and
Together Works Community Interest Company, The Social
Enterprise Network for Greater Manchester.
- 2 -
Solidarity co-operatives: An embedded historical
communitarian pluralist approach to
social enterprise development?
In this paper, we explore antecedents of the FairShares Model
of social enterprise to answer the
question “how has the concept of a ‘solidarity co-operative’
developed in the UK?” Our
research on the antecedents of the FairShares Model uncovers a
history of attempts to integrate
entrepreneurs, producers, service users and investors using
multi-stakeholder approaches to
social enterprise. We argue that this (hidden) history is rooted
in a growing acceptance of

85. communitarian pluralist principles in the social and solidarity
economy, but remains
marginalised in the UK due to a powerful US discourse on
social entrepreneurship. The
FairShares Model represents a fresh attempt to advance
communitarian pluralism in social
economy through advocacy of ‘multi-stakeholder co-operation
in member-owned social
enterprises’.
Keywords: communitarianism; social economy; solidarity co-
operatives; social enterprise;
multi-stakeholder governance.
Introduction
This paper examines the antecedents of the FairShares Model –
an approach to creating solidarity
co-operatives1 that integrate the interests of founders,
producers, consumers and small investors. In
doing so, we seek an answer to the question “how has the
concept of a ‘solidarity co-operative’
developed in the UK’s social enterprise movement?” We are
motivated by an interest in the way
‘new co-operativism’, and its focus on solidarity co-operatives,
disrupts the logic of the common

86. bond in ‘old co-operativism’.2
By tracking the antecedent works of contributors to the
FairShares Model between 1978 and
20133 we uncover a (hidden) history of communitarian pluralist
alternatives to neo-liberalism in the
social enterprise movement. This ‘new co-operativism’4 is part
of an emerging social and solidarity
economy that departs from ‘old co-operativism’ by regarding
the common bond as something that is
actively forged through acts of solidarity. Our paper, therefore,
contributes to knowledge by
clarifying the historical shifts that have led to the emergence of
a social and solidarity economy, and
how those shifts were expressed in the UK during its formative
years.
- 3 -
The FairShares Model, as presented by the FairShares
Association5, comprises a set of brand
principles, social auditing questions, management diagnostic
tools and choice of model rules for
‘self-governing co-operatives, mutuals and social enterprises’
consistent with an international

87. definition of social enterprise6. We retrieved documentation
created by the association up to
May 20137 to examine how its founder members’ commitment
to “multi-stakeholder co-operation in
member-owned social enterprises” developed over time.8
The paper is divided into five parts. We begin by building a
theoretical framework to
distinguish unitary and pluralist applications of communitarian
philosophy in business. This
provides us with proxy indicators to identify unitarist and
pluralist forms of ownership, governance
and management. Secondly, we review a range of secondary
sources that reveal divergences in the
co-operative movement between 1820 and 1970. We argue that
different strands of co-operativism
developed to emphasise the collective interests of consumers,
workers and the wider community. We
show how developments at Mondragon established the viability
of multi-stakeholder (solidarity)
co-operatives through its approach to banking, retailing and
education. In the third section, we switch
to primary sources to track how these historical influences
shaped the work of founder members of

88. the FairShares Association prior to publishing the FairShares
Model. Lastly, we link the
assumptions in antecedent model rules to the FairShares Model,
then conclude by setting out the
implications for social enterprise theory.9
Communitarian Pluralism
Communitarian pluralism is a distinct strand of thought within
communitarian philosophy.10 Kant
was amongst the first philosophers to lay the foundations for
communitarian philosophy by arguing
that people are profoundly influenced by social, cultural and
historical processes, and that these
shape their thoughts, desires, narratives of action and capacity
for agency.11 Communitarian
philosophers critique the ontological assumptions of
liberalism12 by pointing out that individuality is
a product of the social relationships within which it is
expressed. Personality ‘traits’ are not innate as
they are intimately linked to the cultures that shape individuals’
development.13
- 4 -
Driver and Martell14 identify three justifications for

89. communitarianism: a sociological
justification that people are primarily social beings, not isolated
individuals; an ethical justification
that ‘community’ is ‘good’ because collective provision secures
individual well-being, and;
a meta-ethical justification that because goodness and virtue are
not fixed, they have to be
discursively agreed and refined through dialogue within a
community. This last point is particularly
important because it suggests a system of dynamic development
over time guided by democratic
institutions. Table 1 shows Driver and Martell’s meta-
theoretical framework for comparing
‘unitarist’ and ‘pluralist’ variants of communitarianism.
Table 1. Dimensions of Communitarian Philosophy Identified
by Driver and Martell15
Conformist (Unitarist) Pluralist
More Conditional
(rights conditional on responsibilities)
Less Conditional
(rights not conditional on responsibilities)
Conservative
(socially conservative)

90. Progressive
(socially liberal)
Prescriptive
(enforcement of social norms)
Voluntary
(loose networks with varying social norms)
Moral
(driven by religion / ideology)
Socio-Economic
(driven by ‘relations of production’)
Corporatist
(rights / responsibilities apply to organisations)
Individualist
(rights / responsibilities apply to individuals)
A unitary form of communitarianism encourages conformity: it
is socially conservative,
encouraging self-discipline from community members in
accordance with ideological or religious
norms. Normative values apply to ‘legal persons’ as well as

91. ‘natural persons’ creating an
expectation that corporations will accept legal and social
responsibility for community well-being.
A pluralist form of communitarianism retains aspects of
liberalism by favouring voluntary
associations that permits a diverse range of social and political
norms, loosely connected through
networks and trading relations.
In the field of business, Bamfield views flour and bread
societies as one of the earliest
examples of a communitarian alternative to the individualism of
free-markets16. Co-operatives are
characterised as enterprises with members who have a ‘common
bond’ and who act collectively to
- 5 -
intervene into markets to protect and develop their economic,
social or cultural interests.17 Bamfield
represents them as a part of Thompson’s ‘moral economy’
committed to local ownership, socially-
oriented markets, focussed on local (community) needs rather
than export markets. The logic of the
common bond is succinctly described by Parnell:

92. Members of the common bond group are those the enterprise
was established to serve…for
example: in a consumer co-operative, the common bond will be
that they are all consumers; in an
agricultural co-operative, all are farmers; in a credit union or
building society, all savers and
borrowers; and in a tenants’ housing co-operative, all are
tenants.18
This single-stakeholder conceptualisation of the common bond
has oriented Anglo-American
cultures towards a unitary form of co-operativism based on
common ownership. This is evidenced
by the slowness with which Co-operatives UK has recognised
multi-stakeholder cooperatives in its
guidance on co-operative identity.19 And yet, in Franco /
Latinate cultures, the principles of solidarity
co-operatives have spread. There are have been examples of
practice for 50 years resulting in
statutory legal frameworks about 20 years ago.20 Savio and
Righetti described ‘cooperatives as a
social enterprise’ after social co-operatives became a legal form
in Italy (1991), and Quebec followed
with a law for solidarity co-operatives a few years (1995).
These events prompted Lund to describe

93. ‘solidarity’ between two or more stakeholders as a new business
model.
This pluralist turn slowly began to influence English language
works on communitarianism.
For example, Tam argued that communitarian enterprises can:
…treat workers, suppliers and customers, as well as their senior
management and shareholders,
as members of a shared community…Cooperation in this context
does not mean bargaining to
secure the best advantage for one's own group with minimal
concession to others, but to
developing shared values and long-term goals.21
It is worth noting Tam’s key argument: it is possible to design
enterprises so that
multi-stakeholder principles become the norm, in which
“workers, suppliers and customers…senior
managers and shareholders” seek solidarity with each other by
‘developing shared values and long-
term goals’. Both Lund and Tam argue that the impact of
conflict between stakeholders is not always
destructive – it depends largely on whether stakeholder can
resolve their differences through

94. - 6 -
co-operative inquiry in democratic institutions. Where they can,
their decision-making is superior to
single-stakeholder enterprise because they secure the well-being
of a wider range of stakeholders and
create efficiencies that are impossible in single-stakeholder
enterprises.
[Author 1] (between 2003 – 2012)22 and Coule (from 2007 –
2013)23 have produced studies
that pinpoint the ownership, governance and management
practices that (re)produce unitary and
pluralist cultures in social enterprises.24 Drawing on these
works, Table 2 sets out proxy indicators
that help with interpretation of business practice:
Table 2. Dimensions of Communitarian Philosophy in Social
Enterprise Theory and Practice
Proxies for a Unitary Culture Proxies for a Pluralist Culture
Ownership
Single class of shareholders / members
Common ownership
Multiple classes of shareholders / members25

95. Joint ownership / co-ownership26
Owners / trustees from one stakeholder Owners / trustees from
multiple stakeholders27
Governance
Centrally controlled governing bodies
Representative democracy
Loose network of governing bodies28
Direct democracy / sociocracy29
Single beneficiary group Multiple beneficiary groups30
Management
Dominant stakeholder prioritised
Line management / reporting
Reconciliation / negotiation of political interests31
Matrix management / dual reporting32
Employment / Individual entrepreneurship Member relations /
culture of cooperateurs33
In the next section we use secondary sources cited in
background documents retrieved from
the FairShares Association, informed by our own additional
literature review. This enables us to

96. present an interpretation of the foundational influences on the
FairShares Model based on historical
developments between 1820 and 1978 (Figure 1).
Collective Interests in the Co-operative Movement
Robert Owen is identified as the person who shaped early
developments in co-operative principles
and his followers developed both producer and consumer co-
operatives. He lived from 1771 - 1858
and rose to prominence through the creation of co-operative
communities at New Lanark and New
Harmony34. Owen was regarded by Marx and Engels as
‘utopian’ for believing that poverty and
- 7 -
inequality could be replaced by co-operative societies within a
‘prosperous and harmonious
community’35. After some limited successes in the UK and US,
Owen's writings on the formation of
character through educational and working practices were
overshadowed by the writings of Marx and
Engels. However, Owen’s works formed an important strand of
communitarian thought that
resurfaced in later projects to build co-operative

97. communities36.
Owen inspired the Rochdale Pioneers (to whom the Co-
operative Group and the International
Co-operative Alliance trace their history). Charles Howarth,
the author the first Laws and Objects of
the Rochdale Society of Equitable Pioneers, and James Daly -
the society's first secretary - were
leaders of the ‘Owenites’ in Rochdale.37 Rochdale Principles,
however, go beyond Owen’s vision of
productive cooperation within an educated working class to
more fundamental reforms based on
one-person, one vote principles. They also advanced a new
arrangement for sharing surpluses based
on individual payments that reflected production and
consumption activity. The 1944 film about The
Rochdale Pioneers, based on George Holyoake’s histories,
portrays Charles Howarth discovering the
innovation of dividend payments in proportion to trading.38
Cathcart notes that Owen influenced John Spedan Lewis39 who
sought to create his own
‘co-operative society of producers’ in the 1930s. In this
endeavour, he made ‘partnership’ a more
important principle than ‘employment’ to encourage a culture
that shared gains, information and

98. power40. He spoke out vehemently against both nationalisation
(which he regarded as a pathway to
soviet-style communism) and a private economy of "absentee-
capitalists who [get] excessive reward
for their function of saving and lending”.41 Following bitter
arguments with his father42, JSL argued
that owners should not receive more compensation than the
professionals they hire to run
companies.43
The John Lewis Partnership (JLP) is now frequently cited as a
model for both private and
public sector reform.44 Following the transfer of ownership to
the workforce, staff joined and became
‘partners’ and beneficiaries of an Employee Benefit Trust
(EBT). It was the Chair of the EBT, rather
than individual workers, who owned the shares in John Lewis
Department Stores and Waitrose until
- 8 -
the formation of a trust company. Initially some partners held
shares, but over time a trust acquired
them and partners received profit-shares through the trust rather
than individual dividend payments

99. based on capital holdings.45 The constitution permitted the
workforce to elect 80% of the Partnership
Council responsible for social development, and 40% of the
board responsible for commercial
decisions. As a Trust owned enterprise, JLP technically became
a commonly owned rather than
jointly owned enterprise, but its governance and management
systems are underpinned by
communitarian pluralist assumptions (loose network of
governing bodies; negotiation of political
interests; sociocratic (circular) self-organising; matrix
management / dual reporting; member-
relations within a co-operative culture).46
The Co-operative Retail Society (now part of the Co-operative
Group)47, in contrast,
developed a system of individual membership based on
Rochdale Principles (formalised in 1957).
Unlike John Lewis, UK consumer co-operatives adhered to the
tradition of members providing share
capital. However, many societies have not updated the value of
early shareholdings. The £1 share
contribution paid today is worth less than 1/500th the
contribution of co-operative shareholders in

100. 1844.48 As co-operative societies (both consumer and worker
owned) were initiated by member
contributions, they were jointly owned enterprises that created
both individual and cooperative
capital49 for members and which was divided between
individually owned member accounts and
commonly owned capital reserves.
Rochdale Principles and Owen’s interest in producer co-
operation were important to
Fr. Arizmendi at Fagor50. Arizmendi is credited with co-
creating the Mondragon co-operatives with
his students in the Basque region of Spain51. He drew on
Owen’s writings about education and the
Rochdale Principles of one-person, one-vote and surplus
sharing.52 In adapting them, Mondragon’s
founders developed single-stakeholder industrial (worker) co-
operatives and solidarity co-operatives
in banking, retailing and education.53 Fagor, as outlined by
Molina54, was instigated by Arizmendi to
reinforce Christian ideals for a new entrepreneurial order that
valued work over capital, and
solidarity between workers and the wider communty. The
amounts invested by - and distributed to -