Purpose

• The California Consumer Cooperative Corporation Law was intended to set out specific incorporation and operation requirements for cooperative corporations. While the law gives detail on conduct of legal affairs, it remains flexible in terms of structure and procedures that must be followed by cooperative corporations. The law was crafted to address specific issues relating to cooperatives, as opposed to other types of business concerns.
  
  

Cooperative Corporations

• To incorporate under the CCCL, a corporation must be formed for a lawful purpose and also created and conducted primarily to mutually benefit its members. "Mutual benefit" implies that the corporation's earnings, savings and benefits will be used for the general welfare. Despite the title "consumer cooperative," the law may also apply to other types of cooperatives that choose to incorporate.
  
  

Articles of Incorporation

• A cooperative corporation that incorporates under the CCCL must file signed articles of incorporation with the California secretary of state. The articles must include the corporation's name, which must include the word "cooperative" and some word or abbreviation indicating the cooperative's status as a corporation. The articles must also include the statements: "This corporation is a cooperative corporation organized under the California Consumer Cooperative Corporation Law. The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under such law." The CCCL outlines additional article requirements, which should be carefully scrutinized. Legal counsel is advised.
  
  

Membership Limits

• Among other advantages to incorporating under the CCCL, a consumer cooperative corporation has no limit on the number of shares it may issue and needs no permission from the California Department of Corporations for sales of membership interests valued at up to $300. By contrast, corporations are carefully regulated in terms of issuance of shares and other interests.
  
  

Conflicting Law

• The CCCL is aimed toward cooperatives and so is differentiated from previous California Corporations Code statutes that outlined rules for nonprofit organizations, such as the California Non-Profit Corporation Law. If a cooperative corporation incorporated before passage of the CCCL, the provisions of the CCCL will generally supersede any post-1983 bylaw provisions that stand in conflict.