Chapter 15 - § 15.7 • MEMBERSHIP QUALIFICATIONS

• Jurisdiction: Colorado

§ 15.7 • MEMBERSHIP QUALIFICATIONS

A cooperative's members hold the ultimate controlling power in the cooperative. By its very nature, a cooperative brings together people who have a common interest in what it can provide. Ultimately, these members, directly or through elected directors, determine the nature and direction of the cooperative.

The Co-op Act permits a cooperative to limit membership only to those persons who are engaged in activities that will use the goods, services, or other benefits handled or provided by the coop-erative.⁹² If a cooperative is to operate on a "cooperative basis," some limit as to who may be a member must be prescribed. While most cooperatives maintain open membership (one of the traditional cooperative principles), the membership cannot be so open as to admit members who can make no use of the cooperative. A cooperative can also limit its membership to a number that it is able to serve effectively. Thus, eligibility for membership must be carefully defined.

In defining a cooperative's membership eligibility, it is important that the definition not be so narrow as to prohibit membership to persons whose membership would benefit the cooperative. On the other hand, too broad a definition can open the cooperative up to so many disparate interests that focus is lost. In addition, some government programs require that a cooperative's membership be comprised of certain demographic segments or populations; this is especially true with agricultural cooperatives.

In several instances, statutes applicable to agricultural cooperatives require the members to be agricultural producers.⁹³ The bylaws of these cooperatives need to specify that only producers of agricultural products may be members.

Consideration should be given to whether combinations of persons who carry on activities jointly — such as spouses, joint tenants, tenants in common, and landlords and tenants — should be considered as a single economic unit and treated as one member, or whether each person needs (or can qualify) to be a separate member.

Some cooperatives are being formed with more than one class of membership, which is allowed under C.R.S. § 7-56-301(10). The statute contemplates geographic districts, but also allows for other units of demarcation, such as particular goods or services provided by or to the cooperative. A cooperative can have, for example, members that are categorized as employees, as customers, and as vendors. In the cooperative community...