Click here for a printer friendly version.

Legal structure

Why have a legal structure?

If a business-any business-is to function effectively with proper protection for its owners, it is often vital that it is incorporated as a legal entity.  A legal structure puts the childcare co‑operative on a sound footing, enabling it to thrive independently and provide a quality sustainable service to its clients.

There is no single ideal legal structure for a childcare co‑operative but Co‑operatives^UK has developed various model structures that you can use - or we can draw up something tailored to fit your specific needs.  For many the best option is known as a 'Company Limited by Guarantee'.  Don't panic! Selecting and creating a legal structure for your childcare co‑operative is less complicated than it sounds and there is plenty of help to guide you through the process.

The benefits of incorporation

Incorporation means creating a legal entity for the business that is separate from its members - a 'corporate body' that is recognised in law.  The members of an incorporated organisation are protected by limited liability.  Without this their personal assets are at risk if anything should go wrong.

Incorporated organisations can enter into contracts and hold property in the name of the organisation. The members of an unincorporated organisation are personally liable for contracts and property.  Incorporation offers sound protection for all co‑operatives doing business.

Which type of co‑operative structure?

Worker co‑operatives are owned and controlled by their employees.  Some are managed on a collective basis, in which all employee members are directors.  Often in larger co‑operatives some of the employee members are elected by their colleagues as directors to manage the business.  Managers in worker co‑operatives are accountable to their fellow employee members.

User co‑operatives are owned and controlled by the parents and carers of the children being cared for.  They usually elect some of their number to be the directors, who are accountable to their fellow members. The directors employ staff to run the business day-to-day.

Co‑operative consortia are owned and run by sole traders or other businesses.  For example, a group of self-employed childminders might form a co‑operative for joint work or business activity.  Many social care co‑operatives have been formed on this basis.

Co‑operatives can also involve community representatives and other stakeholders as members.  These are known as multi-stakeholder co‑operatives.

For a specemin copy of the legal model rules for worker, user or multi-stakeholder childcare co‑operatives, please call Linda Banks on 0161 246 2959.