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Cooperative

Cooperative

A cooperative (also co-operative or co-op) is an association of persons who join together to carry on an economic activity of mutual benefit. The term may be used loosely to signify its members' ideology (as in 'jazz coop') but a mainstream cooperative comprises a legal entity owned and democratically controlled by its members, with no passive shareholders, unless they hold non-voting shares. It thus combines the equal control characteristic of many partnerships with the legal personality conferred on corporations. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join. Unlike a union, in some jurisdictions a cooperative may assign different numbers of votes to different members. However most cooperatives are governed on a strict "one member, one vote" basis, to avoid the concentration of control in an elite. Economic benefits are distributed proportionally according to each member's level of economic interest in the cooperative, for instance by a dividend on sales or purchases. Cooperatives may be generally classified as either consumer or producer cooperatives, depending largely on their membership. Classification is also often based on their function or trade sector. In the United States most cooperatives are corporations or limited liability companies (LLCs) but other legal entities may also be used. Cooperatives may be for-profit or non-profit. In for-profit cooperatives any surplus may be returned to members by way of a rebate or bonus on their activity with the cooperative, or a dividend on their shareholding in the cooperative. In the United Kingdom the traditional corporate form taken by cooperatives is the 'bona fide co-operative' under the Industrial and Provident Societies Acts. Since the 1980s, however, many have incorporated under the Companies Acts, limited either by shares or by guarantee. In a bid for sustainability, many cooperatives adopt the principle of 'common ownership', and have a zero or nominal share capital, along with a clause stipulating altruistic dissolution. This means that the cooperative cannot be wound up and its assets distributed for personal profit (see: asset stripping). The facility to legally 'lock' a cooperative's assets in this way was brought into force in 2004. In the European Union, the European Cooperative Statute will come into force in October 2006, to provide a corporate form for cooperatives with individual or corporate members in at least two of the EU member states. Worldwide, some 800 million people are members of cooperatives, and it is estimated that cooperatives employ some 100 million people. The cooperative movement often has links and associations with Green politics or Socialist politics, with socially responsible investing, and with the social enterprise movement.

Types of cooperatives

Housing cooperative

A housing cooperative is a legal mechanism for ownership of housing where residents either own shares (share capital co-op) or have membership and occupancy rights in a not-for-profit continuing co-operative (non-share capital co-op).

Building cooperative

Members of a building cooperative - in Britain known as a self-build housing co-operative - pool resources to build housing, normally using a high proportion of their own labour. When the building is finished, each member is the sole owner of a homestead, and the co-operative may be dissolved. This collective effort was at the origin of many of Britain's building societies, which however developed into "permanent" mutual savings and loan organisations, a term which persists in some of their names (such as the Leeds Permanent). Nowadays such self-building may be financed using a step-by-step mortgage which is released in stages as the building is completed. The term also refers to workers' co-operatives in the building trade.

Retailers' cooperative

mortgage A retailers' cooperative (often known as a secondary or marketing co-operative in the UK) is an organization which employs economies of scale on behalf of its members to get discounts from manufacturers and to pool marketing. It is common for locally-owned grocery stores, hardware stores and pharmacies. In this case the members of the cooperative are businesses rather than individuals. The well-known Best Western hotel chain is actually a giant cooperative, although it now prefers to call itself a "nonprofit membership association." It gave up on the "cooperative" label after the courts kept insisting on calling it a franchisor despite its nonprofit status.

Utility cooperative

A utility cooperative is a public utility that is owned by its customers. It is a type of consumer cooperative). In the US, many such cooperatives were formed to provide rural electrical and telephone service as part of the New Deal. See Rural Utilities Service.

Worker cooperative

A worker cooperative is a cooperative that is wholly owned and democratically controlled by its "worker-owners". There are no outside, or consumer owners, in a worker's cooperative - only the workers own shares of the business. Membership is not compulsory for employees, and only employees can become members. Probably the best known example of worker co-operation is the Mondragón Cooperative Corporation (MCC) in the Basque Country. Unions are often unnecessary in worker cooperatives because the workers have direct control over the management and ownership of the business - they are negotiating with themselves. Some worker cooperatives still choose to become members of local unions to demonstrate their support for the labor movement and to working conditions that have resulted from years of struggle. Worker cooperatives that join unions often benefit from the trade that comes their way from the community of union members and those who support unions for political reasons. The United States Federation of Worker Cooperatives is the organization in the US representing worker cooperative interests nationally. There are local networks and federations throughout the US in the San Fransisco Bay area, the Twin Cities, Portland Oregon, and Boston. The 'new wave' of worker cooperatives that took off in Britain in the mid-70s created the Industrial Common Ownership Movement (ICOM) as their federation. The sector peaked at around 2,000 enterprises, and in 2001 ICOM merged with the Co-operative Union (which was the federal body for consumer cooperatives) to create Co-operatives UK, thus reunifying the cooperative sector. There are examples of "hybrid" co-ops in which workers and consumers both have membership in a co-op, but the types of membership are differentiated, sometimes into districts of the cooperative, often each district having a set amount of decision making power and profit distribution. Hybrid co-ops are also referred to as multi-stakeholder cooperatives.

Social cooperative

A particularly successful form of multi-stakeholder cooperative is the Italian "social cooperative", of which some 7,000 exist. A "type A" social cooperative brings together providers and beneficiaries of a social service as members. A "type B" social cooperative brings together permanent workers and previously unemployed people who wish to integrate into the labour market. Social co-operatives are legally defined as follows:
- the objective is the general benefit of the community and the social integration of citizens
- type A co-operatives provide health, social or educational services
- those of type B integrate disadvantaged people into the labour market. The categories of disadvantage they target may include physical and mental disability, drug and alcohol addiction, developmental disorders and problems with the law. They do not include other factors of disadvantage such as race, sexual orientation or abuse
- various categories of stakeholder may become members, including paid employees, beneficiaries, volunteers (up to 50% of members), financial investors and public institutions. In type B co-operatives at least 30% of the members must be from the disadvantaged target groups
- the co-operative has legal personality and limited liability
- voting is one person one vote
- no more than 80% of profits may be distributed, interest is limited to the bond rate and dissolution is altruistic (assets may not be distributed) A good estimate of the current size of the social co-operative sector in Italy is given by updating the official ISTAT figures from the end of 2001 by an annual growth rate of 10% (assumed by the Direzione Generale per gli Ente Cooperativi). This gives totals of 7,100 social co-operatives, with 267,000 members, 223,000 paid employees, 31,000 volunteers and 24,000 disadvantaged people undergoing integration. Combined turnover is around 5 billion euro. The co-operatives break into three types: 59% type A (social and health services), 33% type B (work integration) and 8% mixed. The average size is 30 workers. multi-stakeholder cooperatives.]]

Consumers' cooperative

The term cooperative also applies to businesses owned by their customers. Employees can also generally become members. Members vote on major decisions, and elect the board of directors from amongst their own number. A well known example in the US is the REI (Recreational Equipment Incorporated) co-op. One of the world's largest consumer co-operatives is the Co-operative Group in the United Kingdom, which has a variety of retail and financial services. In reality the Co-operative Group is actually something of a hybrid, having both corporate (other cooperative businesses) and individual members. Japan has a very large and well developed consumer co-operative movement with over 14 million members; retail co-ops alone had a combined turnover of 2.519 trillion Yen (21.184 billion U.S. Dollars [market exchange rates as of 11/15/2005]) in 2003/4. (Japanese Consumers' Co-operative Union., 2003). As well as retail co-ops there are medical, housing, insurance co-ops alongside institutional (workplace based) co-ops, co-ops for school teachers and university based co-ops. Around 1 in 5 of all Japanese households belongs to a local retail co-op and 90% of all co-op members are women. (Takamura, 1995). Nearly 6 million households belong to one of the 1,788,000 Han groups (Japanese Consumers' Co-operative Union., 2003). These consist of a group five to ten members in a neighbourhood who place a combined weekly order which is then delivered by truck the following week. A particular stength of Japanese consumer co-ops in recent years has been the growth of community supported agriculture where fresh produce is sent direct to consumers from producers without going through the market.

Agricultural cooperative

Han groups Agricultural cooperatives are widespread in rural areas. In the United States, there are both marketing and supply cooperatives. Agricultural marketing cooperatives, some of which are government-sponsored, promote and may actually distribute specific commodities. There are also agricultural supply cooperatives, which provide inputs into the agricultural process. In Europe, there are strong agricultural / agribusiness cooperatives, and agricultural cooperative banks. Most emerging countries are developing agricultural cooperatives. Where it is legal, medical marijuana is generally produced by cooperatives.

Cooperative banking (Credit unions and Cooperative savings banks)

Credit Unions provide a form of cooperative banking. In North America, the caisse populaire movement started by Alphonse Desjardins in Quebec, Canada pioneered credit unions. Desjardins wanted to bring desperately needed financial protection to working people. In 1900, from his home in Lévis, Quebec, he opened North America's first credit union, marking the beginning of the Mouvement Desjardins. While they have not taken root so deeply as in Ireland, credit unions are also established in the UK. The largest are work-based, but many are now offering services in the wider community. The Association of British Credit Unions Ltd - ABCUL - represents the majority of British Credit Unions. Important European banking cooperatives include the Crédit Agricole in France, Migros and Coop Bank in Switzerland and the Raiffeisen system in Austria, Germany, Switzerland, the Netherlands, and Belgium. Spain, Italy and various European countries also have strong cooperative banks. They play an important part in mortgage credit and professional (i.e. farming) credit. Cooperative banking networks, which were nationalized in Eastern Europe, work now as real cooperative institutions. A remarkable development has taken place in Poland, where the [http://www.skok.pl SKOK] (spóldzielcze kasy oszczednosciowo-kredytowe) network has grown to serve over 1 million members via 13,000 branches, and is larger than the country’s largest conventional bank.

Car sharing

Car sharing is a process by which multiple households share vehicles, which are stored in convenient common locations. It may be thought of as a very short-term, locally-based car hire. It is most prevalent in Switzerland (where the Mobility Car-Sharing cooperative has some 50,000 clients), but is also common in Germany, Austria, and the Netherlands, and is growing in popularity in other European countries. Car sharing operations may be for-profit or non-profit organizations. Zipcar and Flexcar are examples. To reduce confusion with ride-sharing, some Britons prefer the term 'car clubs'.

History of the co-operative movement

Robert Owen (1771–1858) fathered the cooperative movement. A Welshman who made his fortune in the cotton trade, Owen believed in putting his workers in a good environment with access to education for themselves and their children. These ideas were put into effect successfully in the cotton mills of New Lanark, Scotland. It was here that the first co-operative store was opened. Spurred on by the success of this, he had the idea of forming "villages of co-operation" where workers would drag themselves out of poverty by growing their own food, making their own clothes and ultimately becoming self-governing. He tried to form such communities in Orbiston in Scotland and in New Harmony, Indiana in the United States of America, but both communities failed. Although Owen inspired the co-operative movement, others – such as Dr William King (1786–1865) – took his ideas and made them more workable and practical. King believed in starting small, and realized that the working classes would need to set up co-operatives for themselves, so he saw his role as one of instruction. He founded a monthly periodical called The Cooperator, the first edition of which appeared on May 1 1828. This gave a mixture of co-operative philosophy and practical advice about running a shop using cooperative principles. King advised people not to cut themselves off from society, but rather to form a society within a society, and to start with a shop because, "We must go to a shop every day to buy food and necessaries - why then should we not go to our own shop?" He proposed sensible rules, such as having a weekly account audit, having 3 trustees, and not having meetings in pubs (to avoid the temptation of drinking profits). A few poor weavers joined together to form the Rochdale Equitable Pioneers Society at the end of 1843. The Rochdale Pioneers, as they became known, set out the Rochdale Principles in 1844, which form the basis of the cooperative movement today. Co-operative communities are now widespread, with one of the largest and most successful examples being at Mondragón in the Basque country of Spain (see link below). Co-operatives were also successful in Yugoslavia under Tito where Workers Councils gained a significant role in management. In many European countries, cooperative institutions have a predominant market share in the retail banking and insurance businesses. insurance In the UK, co-operatives formed the Co-operative Party in the early 20th century to represent members of co-ops in Parliament. The Co-operative Party now has a permanent electoral pact with the Labour Party, and some Labour MPs are Co-operative Party members. UK co-operatives retain a significant market share in food retail, insurance, banking, funeral services, and the travel industry in many parts of the country.

References

External links

- [http://www.ica.coop/ International Co-operative Alliance]
- [http://www.ilo.org/coop The Cooperative Branch of the International Labour Organization]
- [http://www.desjardins.com Desjardins movement]
- [http://www.coopfed.com La Coop fédérée]
- [http://www.chfc.ca/eng/chf/home.htm Co-op Housing Federation of Canada]
- [http://www.cooplaw.com/ New York City Coop Apartment Law]
- [http://195.55.138.84/ing/index.asp Mondragon Co-operative in Spain]
- [http://www.cooperatives-uk.coop Co-operatives UK, the central organisation for all UK co-operative enterprises]
- [http://www.uk.coop The online database of UK Co-operatives]
- [http://www.co-op.co.uk/ The Co-operative Group, a UK consumer co-operative]
- [http://www.icos.ie/ ICOS, the Irish Co-operative Organisation Society]
- [http://www.usworkercoop.org/ United States Federation of Worker Cooperatives]
- [http://www.ncba.coop/ National Cooperative Business Association (USA)]
- [http://www.ica-group.org/ The ICA Group, technical advice for cooperative start-ups in the USA.]
- Co-operatives can register to use the .coop internet domain at the [http://www.cooperative.org/ dotCoop] web site.
- [http://www.co-op.or.jp/jccu/English_here/index.htm English website from the Japanese Consumer Co-operative Union.]
- [http://www.coopgalor.com A new approach to cooperative understanding]
- [http://www.nncc.org/Choose.Quality.Care/qual.sitter.coop.html Babysitting cooperatives]
- [http://www.nobawc.org/ Network of Bay Area Worker Cooperatives]
- [http://www.wisc.edu/uwcc/ University of Wisconsin Center for Cooperatives]
- [http://www.coopnetupdate.org/ Coopnet Update paper and event database]

Other meanings

- In biochemistry, a macromolecule that exhibits cooperative behavior has ligand binding characteristics that depend on the amount of ligand bound. See cooperative binding for more details. Category:Cooperatives Category:Business models ja:生活協同組合

Legal entity

A legal entity is a legal construct through which the law allows a group of natural persons to act as if it were an individual for certain purposes. The most common purposes are lawsuits, property ownership, and contracts. This allows for easy conduct of business by having ownership, lawsuits, and agreements under the name of the legal entity instead of the several names of the people making up the entity. A legal entity is not necessarily distinct from the natural persons of which it is composed. Most legal entities are simply amalgamations of the persons that make it up for convenience's sake. A legal entity that does have a separate existence from its members is called a corporation. This distinction gives the corporation its unique perpetual succession privilege and is also the source of the limited liability of corporate members. Some other legal entities also enjoy limited liability of members, but not on account of separate existence. Some examples of legal entities include:
- associations
- banks
- collectives
- cooperatives (co-ops)
- corporations
- estates
- flow-through entities (FTEs)
- limited liability companies
- municipalities
- partnerships
- political parties
- political action committees (PACs)
- states
- trade unions
- trusts
- persons
- natural persons

Union (commerce)

A union is a legal entity that, unlike a corporation, is governed democratically with one vote per member. Common examples include:
- labor unions
- credit unions

Economic interest

In terms of a co-operative this means how much the services of the co-op are used.

Corporation

A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a natural person. Civil law systems may refer to corporations as "moral persons;" they may also go by the name "AS" (anonymous society) or something similar, depending on language (see below). In colloquial usage, "corporation" usually refers to a commercial entity set up in accordance with a governmental framework. Churches (mainly in US, but not so much in other countries, where Churches have a different status), interest groups (both can form as not-for-profit corporations or can exist as voluntary associations), cities and townships (often chartered as public corporations), among others, may also have historically lengthy corporate identities.

Legal status

The law typically views a corporation as a fictional person, a legal person, or a moral person (as opposed to a natural person); United States law recognises this as corporate personhood. Under such a doctrine (obviously a legal fiction), a corporation enjoys many of the rights and obligations of individual citizens, such as the ability to own property, sign binding contracts, pay taxes, have certain constitutional rights, and otherwise participate in society. (Note that corporations do not possess all the rights appertaining to individuals: in most jurisdictions, for example, a corporation cannot vote.) In common law countries, the classic statement of this principle is found in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915], where Lord Haldane said: :"My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation." The most salient features of incorporation include: #Limited Liability. Unlike in a partnership, stockholders of a corporation hold no liability for the corporation's debts and obligations: see leading case in common law, Salomon v. Salomon & Co.. As a result their "limited" potential losses cannot exceed the amount which they paid for the stock. Not only does this allow corporations to engage in risky enterprises, but limited liability also forms the basis for trading in corporate stock. Without the limitation on the amount that an investor can lose, the time and effort required to determine whether the stock could wipe the investor out would render the stock market very illiquid (as one can observe in the very illiquid market for partnership interests). A lender can, however, require a personal guarantee on a loan to a corporation, thus introducing personal liability. #Perpetual Lifetime. The assets and structure of the corporation exist beyond the lifetime of any of its shareholders, officers or directors. This allows for stability of capital, which thus becomes available for investment in projects of a larger size and over a longer term than if the corporate assets remained subject to dissolution and distribution. This feature also had great importance in the medieval period, when land donated to the Church (a corporation) would not generate the feudal fees that a lord could claim upon a landholder's death. In this regard, see Statute of Mortmain. #Profit Maximization. In Anglo-American jurisdictions, business corporations are generally required to serve the best interests of the shareholders, a rule that courts have generally interpreted to mean the maximization of share value, and thus profits. Corporate directors are prohibited by corporate law from sacrificing profits to serve some other interest. Originally this included such areas as environmental protection, or the improvement of the welfare of the community. For example, when Henry Ford cut dividends and reduced car prices in order to increase the number of people who could afford to buy his cars, his brother-in-law, Mr. Dodge, a shareholder, sued him for having harmed profitability: Dodge v. Ford Motor Company, 170 N.W 688 (Mich.S.C. 1919). Mr. Dodge succeeded and went on to form his own car company with the proceeds of the suit. However, modern law by statutes and court decisions holds that a corporation does have an implied authority to make charitable contributions to society.

Ownership and control

Humans and other legal entities (such as trusts and other corporations) can hold shares. When no stockholders exist, a corporation may exist as a "non-stock corporation", a "membership corporation", or similar — this second type of corporation counts as a not-for-profit corporation. In either category, the corporation comprises a collective of individuals with a distinct legal status and with special privileges not vouchsafed to ordinary unincorporated businesses, to voluntary associations, or to groups of individuals. Typically, a board of directors governs a corporation on the stockholders' behalf. The board has a fiduciary duty to look after the interests of the corporation. The corporate officers such as the CEO, president, treasurer, and other titled officers are chosen by the board to manage the affairs of the corporation. Corporations can also be controlled (in part) by creditors such as banks. In return for lending money to the corporation, creditors can demand a control interest analogous to that of a shareholder, including one or more seats on the board of directors. Creditors are not said to "own" the corporation as shareholders do, but can outweigh the shareholders in practice, especially if the corporation is experiencing financial difficulties and cannot survive without credit. Shareholders in a corporation are said to have a "residual interest." Should the corporation end its existence, the shareholders are the last to receive its assets, following creditors and others with interests in the corporation. This can make investment in a corporation risky; however, the risk is outweighed by the corporation's limited liability, which ensures that the shareholder will only be liable for the amount they invested.

Formation

Historically, corporations were created by special charter of state governments. Today, corporations are usually registered with a state, and become regulated by the laws enacted by that state. Registration is the main prerequisite to the corporation's assumption of limited liability. As part of this registration, it must designate the principal address of the corporation (where to contact it in the event of legal process), and often an agent or other legal representative of the corporation. Generally, a corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors. Once the articles are approved, the corporation's directors meet to create bylaws that govern the internal functions of the corporation, such as meeting procedures and officer positions. The law of the state in which a corporation operates will regulate most of its internal activities, as well as its finances. If a corporation operates outside its home state, it is often required to register with other governments as a foreign corporation, and is almost always subject to laws of its host state pertaining to employment, crimes, contracts, civil actions, and the like.

Naming

Corporations generally have a distinct name. Historically, corporations were named after their membership: for instance, "The President and Fellows of Harvard College." Nowadays, corporations in most jurisdictions have a distinct name that does not need to make reference to their membership. In Canada, this possibility is taken to its logical extreme: many smaller Canadian corporations have no names at all, merely numbers (e.g., "Ontario 123-4567 Limited"). In most countries, corporate names include the term "Corporation", or an abbreviation that denotes the corporate status of the entity. See Types of corporations for a full list. These terms, known as words of limitation, obviously vary by jurisdiction and language. Their use puts all persons on constructive notice that they have to deal with an entity whose liability remains limited, in the sense that it does not reach back to the persons who constitute the entity; one can only collect from whatever assets the entity still controls at the time one obtains a judgment against it. Certain jurisdictions do not allow the use of the word "company" alone to denote corporate status, since the word "company" may refer to a partnership or to a sole proprietorship, or even, archaically, to a group of not necessarily related people (for example, those staying in a tavern).

Unresolved issues

The nature of the corporation continues to evolve, both through existing corporations pushing new ideas and structures, and governments regulating them in response to new situations. A current question is that of diffused responsibility: for example, if the corporation is found liable for a death, then how should the blame and punishment for this be allocated across the shareholders, directors, management and staff of the corporation? The present law diffuses this responsibility. One may think that the owners of the business - the shareholders - should be ultimately responsible for such circumstances, but the modern corporation may have many millions of small-scale shareholders who know nothing about its business activities. Worse still, traders - especially hedge funds - may rapidly turn over their partial ownership of a corporation many times a day. One suggestion is that the directors should be passed the burden of moral and legal responsibility as part of their job of representing the shareholders. This is currently an active area of debate.

Origins

Etymology

The word "corporation" derives from the Latin corpus (body), representing a "body of people"; that is, a group of people authorized to act as an individual (Oxford English Dictionary). The word universitas also used to refer to a group of people but now refers specifically to a group of scholars (see University). In the United Kingdom and Republic of Ireland, the term corporation was also used for the local government body in charge of a borough. This style was replaced in most cases with the term council in the United Kingdom in 1973, and in the Republic of Ireland in 2001. The sole exception is the Corporation of London which retains the title.

Pre-modern corporations

Corporations have been present in some forms as far back as Ancient Rome. Although devoid of some of the core characteristics by which corporations are known today, they nonetheless were enterprises, sanctioned by the state, with a form of shareholders who invested money for a specific purpose. With the collapse of the Roman Empire, the rise of Christianity and the influx of Germanic tribes, the Roman conception of the corporation merged with other views. Germanic tribes, for example, maintained that a group entity in and of itself could have a separate identity from that of its members. These influences came together in the body of canon law built around the conception of the church as corporate structure in the Middle Ages. Different theories of the church as corporate body were favored by different individuals but all agreed on one key component: that the church was more than just its members and could maintain an existence perpetually, regardless of the death of any individual member. This, together with discussion as to the relationship between the head of a corporation (such as the Pope) and its members, contributed not only to the development of modern corporations and corporate theory but also set the stage for many ideas that would come to fruition during the enlightenment. Kenneth Pomeranz, an economic historian, argues that the need to perform pseudo-governmental operations (such as the waging of war) accounts for the development of this economic structure in Europe but not in China or in the Middle East. Older corporate entities gained incorporation as "the person/people of xx". This reflected the people who made up the "body" and also emphasised their legal identity. The law classifies a corporation either as a corporation sole (one person) or as a corporation aggregate (any other number). Examples include (the link gives the legal name; the nickname appears in brackets with the nature of the corporation)
- The Governor and Company of the Bank of England (Bank of England — corporation aggregate)
- The Chancellor Masters and Scholars of the University of Cambridge (Cambridge University — corporation aggregate)
- The President and Fellows of Harvard College (Harvard College — corporation aggregate)
- Her Majesty the Queen in Right of New Zealand (New Zealand Government — corporation sole)
- The Archbishop of Canterbury (corporation sole)
- The Dean, Chapter and Students of the Cathedral Church of Christ in Oxford of the Foundation of King Henry VIII (Christ Church, Oxford — corporation aggregate) Using strict definitions, universities and colleges count as corporations since they merely comprise groups of people.

Development of modern commercial corporations

college, dating from 7 November 1623, for the amount of 2,400 florins]] Early corporations of the commercial sort were formed under frameworks set up by governments of states to undertake tasks which appeared too risky or too expensive for individuals or governments to embark upon. The alleged oldest commercial corporation in the world, the Stora Kopparberg mining community in Falun, Sweden, reportedly obtained a charter from King Magnus Eriksson in 1347. Many European nations chartered corporations to lead colonial ventures, such as the Dutch East India Company, and these corporations came to play a large part in the history of corporate colonialism. In the United States, government chartering began to fall out of vogue in the mid-1800s. Corporate law at the time was very restrictive and very closely regulated by the states. Forming a corporation usually required an act of legislature. Investors generally had to be given an equal say in corporate governance, and the corporation's activities were tightly restricted to its express purposes. Many private firms in the 19th century avoided the corporate model for these reasons (Andrew Carnegie formed his steel operation as a limited partnership, and John D. Rockefeller set up Standard Oil as a trust). Eventually, state governments began to realize the economic value of providing more permissive corporate laws. New Jersey was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state. Delaware followed, and soon became known as the most corporation-friendly state in the country; even today, most major public corporations are set up under Delaware law. The 20th century saw a proliferation of enabling law across the world, which helped to drive economic booms in many countries before and after World War I. After World War II, and especially starting in the 1980s, many countries with large state-owned corporations moved toward privatization, the selling of publicly-owned services and enterprises to private, normally corporate, ownership. Deregulation - reducing the public-interest regulation of corporate activity - often accompanied privatization as part of an ideologically laissez-faire policy. Another major postwar shift was toward conglomerates, in which large corporations purchased smaller corporations to expand their industrial base. Japanese firms developed a horizontal conglomeration model, the keiretsu, which was later duplicated in other countries as well. While corporate efficiency (and profitability) skyrocketed, small shareholder control was diminished and directors of corporations assumed greater control over business, contributing in part to the hostile takeover movement of the 1980s and the accounting scandals that brought down Enron and WorldCom following the turn of the century. More recent corporate developments include downsizing, contracting-out or out-sourcing, off-shoring and scoping down activities to core business, as information technology, global trade regimes, and cheap fossil fuels enable corporations to reduce labour costs, transportation costs and transaction costs, and thereby maximize profits. For a history of corporations that is “pro-corporate”, see John Micklethwait and Adrian Wooldridge, The Company: a Short History of a Revolutionary Idea (New York: Modern Library, 2003). For a history of corporations that is “critical”, see Joel Bakan, The Corporation. The pathological pursuit of profit and power (Toronto: Viking Canada, 2004).

Types of corporations

For-profit and non-profit

Main article: non-profit organization In modern economic systems, the corporate conventions of governance commonly appear in a wide variety of business and non-profit activities. Though the laws governing these creatures of statute often differ, the courts often interpret provisions of the law that apply to profit-making enterprises in the same manner (or in a similar manner) when applying principles to non-profit organizations — as the underlying structures of these two types of entity often resemble each other.

Closely-held and public

The institution most often referenced when the word "corporation" is used, as in the title of the movie The Corporation, is a public or publicly traded corporation, the shares of which are traded on a public market (e.g., the New York Stock Exchange or Nasdaq) designed specifically for the buying and selling of shares of stock of corporations by and to the general public. Most of the largest businesses in the world are publicly traded corporations. However, the majority of corporations are said to be closely held, privately held or close corporations, meaning that no ready market exists for the trading of ownership interests. Many such corporations are owned and managed by a small group of businesspeople or companies, although the size of such a corporation can be as vast as the largest public corporations. The affairs of publicly traded and closely held corporations are similar in many respects. The main difference in most countries is that publicly traded corporations have an additional burden of complying with securities laws, which (especially in the U.S.) grant further rights to stockholders to protect them from fraud or unfairness in connection with the sale and purchase of stock. The publicly traded corporation must usually follow much more stringent disclosure requirements, and sometimes additional procedural obligations in connection with major transactions (e.g. mergers) or events (e.g. elections of directors).

Multinational corporations

Following on the success of the corporate model at a national level, many corporations have become transnational or multinational corporations: growing beyond national boundaries to attain sometimes remarkable positions of power and influence in the process of globalising. The typical "transnational" or "multinational" may fit into a web of overlapping ownerships and directorships, with multiple branches and lines in different regions, many such sub-groupings comprising corporations in their own right. Growth by expansion may favour national or regional branches; growth by acquisition or merger can result in a plethora of groupings scattered around and/or spanning the globe, with structures and names which do not always make clear the structures of ownership and interaction. In the spread of corporations across multiple continents, the importance of corporate culture has grown as a unifying factor and a counterweight to local national sensibilities and cultural awareness.

National features

There are various types of corporations throughout the world.

United States

In the United States, several corporate forms exist; the name of "corporation" generally applies to a business, run for profit, to which one of the states of the United States has granted a corporate charter. American corporations often charter as a Delaware Corporation in Delaware, which charges no tax on activities outside the state and has courts experienced in commercial law. Corporations set up for privacy or asset protection often charter in Nevada, which allows setting them up with no record of who owns them. The federal government of the United States usually does not grant corporate charters, except for some special instances such as Amtrak and Freddie Mac and banks and credit unions which opt not to receive charters from their home states. Historically, most U.S. states issued charters for fixed lengths of time (for example, a manufacturing corporation might receive a charter good for 40 years), and only by an act of the legislature. In theory, a limited charter forced corporations to remain accountable to government (that is, to the community) for the special privileges granted to them. Investors protested that it actually led to unhealthy amounts of political payoffs and graft. Most states now charter unlimited-term corporations for a small fee, and possibly for a yearly tax. Legally, corporations are accorded some corporate personhood, i.e. Constitutional rights similar to those held by persons. The U.S. Supreme Court ruled on this question in the 1886 case Santa Clara County v. Southern Pacific Railroad. Many countries around the world now have corporate laws based upon state laws from the United States. For example, corporations in Japan are organized under a variant of the corporate law of Illinois, and corporations in Saudi Arabia follow corporate laws copied from New York. The oldest corporation in the United States, and the oldest in North America, is the President and Fellows of Harvard College (also known as the Harvard Corporation), chartered in 1650.

Canada

In Canada both the federal government and the provinces have corporate statutes, and thus a corporation may have a provincial or a federal charter. Many older corporations in Canada stem from Acts of Parliament passed before the introduction of general corporation law. The oldest corporation in Canada, and second oldest in North America, is the Hudson's Bay Company, chartered in 1670. Federally recognized corporations are regulated by the Canada Business Corporations Act

German-speaking countries

Germany, Austria and Switzerland recognize two forms of corporation: the Aktiengesellschaft (AG), analogous to public corporations in the English-speaking world, and the Gesellschaft mit beschränkter Haftung (GmbH), similar to (and an inspiration for) the modern limited liability company.

Corporate taxation

In many countries, including the United States and United Kingdom, corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate. Such a system is sometimes referred to as "double taxation," because any profits distributed to shareholders will eventually be taxed twice. One solution to this (as in the case of UK tax system) is for the recipient of the dividend to be entitled to a tax credit which addresses the fact that the profits represented by the dividend have already been taxed. The company profit being passed on is therefore effectively only taxed at the rate of tax paid by the eventual recipient of the dividend. Where a double taxation system exists, the additional tax burden is often an incentive for smaller businesses to organize in the form of a partnership, limited liability company, or other type of entity that is not separately taxed. Such entities are often called "pass-through entities." In the United States, business corporations owe taxes according to two basic categories. A "C corporation" must pay corporate taxes, while "S corporations" pay no corporate taxes but instead pass profits and losses directly to their owners (the stockholders) who declare such profits and losses as part of their personal taxable income. An S corporation must generally have no more than 100 stockholders, who must be natural persons (not other corporations or entities), must reside in the United States, and must consent to the classification; moreover, the S corporation can only issue a single class of stock. As a result of these restrictions, all publicly traded corporations and many larger close corporations have C corporation status. Certain kinds of investment companies are also exempt from corporate income taxes, provided they distribute almost all of their income to shareholders in the form of dividends or capital gains distributions.

Other commercial entities

Several other forms of business entity exist under the laws of various countries. These include:
- Partnership
- Limited partnership (LP)
- Limited liability partnership (LLP)
- Limited liability company (LLC)
- Sole proprietorship

Quotes

- Corporations have neither bodies to be punished, nor souls to be condemned, they therefore do as they like. —Lord Thurlow
- An ingenious device for obtaining individual profit without individual responsibility. —"Corporation" as defined by Ambrose Bierce in The Devil's Dictionary
- The opinion of the Court, after mature deliberation, is that this [a corporate charter] is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States. —Chief Justice John Marshall, Dartmouth College v. Woodward (1819).

External links

- [http://www.econlib.org/library/Enc/Corporations.html Corporations] — article by Robert Hessen
- [http://www.company-formation-glossary.co.uk Company Formation Glossary]
- [http://www.ukcorporator.co.uk/guidance/G59.php Standard UK Company Formation Configurations]
- [http://www.gangsofamerica.com/ Gangs of America by Ted Nace] — A free book on historical and legal bases of Corporations Category:Business law Category:Corporations law Category:Legal entities Category:Types of companies ko:주식회사 ja:株式会社

Industrial and provident society

An Industrial and Provident Society (IPS) is a legal form for trading businesses in the United Kingdom. IPSs are regulated by the Financial Services Authority, which took the job over from the Treasury. IPSs fall into two categories:
- bona fide co-operatives - these trade for the mutual benefit of their members, and the Registrar will judge the legality of their action by reference to co-operative principles (case law is very thin on the ground compared with that for companies);
- societies for the benefit of the community - these trade to benefit the broader community, and the Registrar will refer to charity law. Societies for the benefit of the community are granted charitable status by the taxation authority, the Inland Revenue, rather than the Charity Commission (in England and Wales). IPSs may in general conduct any legal business except that of investment for profit. Consumer, agricultural and housing co-operatives, working mens' clubs, Women's Institute markets, allotment societies, mutual investment companies, friendly societies and housing associations usually incorporate as IPSs, as do some social enterprises. This process is facilitated by the existence of "model rules" developed by various federal bodies, which reduce the legal costs. Credit unions and building societies, which sprang from the same roots, are now governed by specific legislation. Both types of IPS have a share capital, but it is usually not made up of equity shares like those in a company limited by shares, which appreciate or fall in value with the success of the enterprise that issues them. Rather they are par value shares, which can only be redeemed (if at all) at face value. The profits and losses of an IPS are thus the common property of the members. The share typically acts as a "membership ticket", and voting is on a "one member one vote" basis. The maximum individual shareholding is currently set at £20,000. Category:Cooperatives

Capital (economics)

Capital has a number of related meanings in economics, finance and accounting. In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business. Initially, it is assumed here that other styles of capital, e.g. physical capital, can be acquired with money or financial capital, so there is little need here for any further analysis of the latter. So below, the word "capital" is short-hand for "real capital" or "capital goods" or means of production. Also to be ignored will be the problems of aggregating capital and the capital controversy.

Capital in classical economic theory

In classical economics, capital is one of three factors of production, the others being land and labour. Goods with the following features are capital:
- It can be used in the production of other goods (this is what makes it a factor of production).
- It is human-made, in contrast to "land," which refers to naturally occurring resources such as geographical locations and minerals.
- It is not used up immediately in the process of production, unlike raw materials or intermediate goods. The third part of the definition was not always used by classical economists. The classical economist extraordinaire David Ricardo would use the above definition for the term fixed capital while including raw materials and intermediate products are part of his circulating capital. For him, both were kinds of capital. Karl Marx adds a distinction that is often confused with Ricardo's. In Marxian theory, variable capital refers to a capitalist's investment in labor-power, seen as the only source of surplus-value. It is called "variable" since the amount of value it can produce varies from the amount it consumes, ie, it creates new value. On the other hand, constant capital refers to investment in non-human factors of production, such as plant and machinery, which Marx takes to contribute only its own replacement value to the commodities it is used to produce. It is constant, in that the amount of value committed in the original investment, and the amount retrieved in the form of commodities produced, remains constant. Investment or capital accumulation in classical economic theory is the act of producing increased capital. In order to invest, goods must be produced which are not to be immediately consumed, but instead used to produce other goods as a means of production. Investment is closely related to saving, though it is not the same. As Keynes pointed out, saving involves not spending all of income on current goods or services, while investment refers to spending on a specific type of goods, i.e., capital goods. The Austrian economist Eugen von Böhm-Bawerk maintained that capital intensity was measured by the roundaboutness of production processes.

Broadening the definition of capital

Traditional economic theory generally viewed capital as physical items, such as tools, buildings and vehicles that are used in the production process. Other economists have focussed on broader forms of capital. For example, investment in skills and education can be viewed as building up human capital. Some theories use the terms intellectual capital or knowledge capital which lead to certain questions and controversies discussed in those articles. In general, intellectual capital is that which produces new " intellectual property rights", and that in turn is "whatever one can get paid royalties for". Further, one can create intellectual property rights simply by taking someone else's ideas and then patenting them. So intellectual capital need not be used. Classifications of capital that have been used in various economic theories include:
- Financial capital which represents obligations, and is liquidated as money for trade, and owned by legal entities.
- Natural capital which is inherent in ecologies and protected by communities to support life, e.g. a river which provides farms with water.
- Infrastructural capital is non-natural support systems (e.g. clothing, shelter, roads, PCs) that minimize need for new social trust, instruction, and natural resources. (Almost all of this is manufactured, leading to the older term manufactured capital, but some arises from interactions with natural capital, and so it makes more sense to describe it in terms of its appreciation/depreciation process, rather than its origin: much of natural capital grows back, infrastructural capital must be built and installed.)
- Human capital, arising from investment in skills and education. Human development theory recognizes it as being composed of clear and distinctive social, imitative and creative elements:
- Social capital is the value of trusting relationships between individuals in an economy.
- Individual capital which is inherent in persons, protected by societies, and trades labor for trust or money . Close parallel concepts are 'talent', 'ingenuity', 'leadership', 'trained bodies', or 'innate skills' that cannot reliably be reproduced by using any combination of any of the others above. In traditional economic analysis individual capital is more usually called labor. Although it is still possible to calculate the macro economic idea of "human capital" as payments (like salary), it is rarely or not used when discussing the process of planning investment: for this it is broken down into the more specific styles, which are distinct when one considers the means of identifying them, investing in, and exploiting them. The term "human capital" may thus do more harm than good. In part as a result, separate literatures have developed to describe both natural capital and social capital. Such terms reflect a wide consensus that nature and society both function in such a similar manner as traditional industrial infrastructural capital, that it is entirely appropriate to refer to them as different types of capital in themselves. In particular, they can be used in the production of other goods, are not used up immediately in the process of production, and can be enhanced (if not created) by human effort. There is also a literature of intellectual capital and intellectual property law. However, this increasingly distinguishes means of capital investment, and collection of potential rewards for patent, copyright (creative or individual capital), and trademark (social trust or social capital) instruments.

Asset stripping

Asset Stripping is the practice of buying a company in order to sell its assets individually at a profit. Asset stripping is also sometimes used to describe the practice of investors dealing directly with armed militant groups in developing nations to take direct control of assets that legally belong to the state or commons or any group in society that the investor and armed militant can effectively coerce. It has led to deforestation in Africa and Colombia and to other harmful effects. Jim Friedman on a United Nations panel on exploitation of natural resources in the Democratic Republic of Congo, listed this as one of several key concerns in "Investment and human rights". Category:Business terms

European Union

: This article is about the European Union. For other meanings of 'EU', see the EU (disambiguation) page. The European Union or the EU is an intergovernmental and supranational union of 25 European countries, known as member states. It will include another 2 countries in 2007 - Romania and Bulgaria. The European Union was established under that name in 1992 by the Treaty on European Union (the Maastricht Treaty). However, many aspects of the Union existed before that date through a series of predecessor relationships, dating back to 1951. The European Union's activities cover all areas of public policy, from health and economic policy to foreign affairs and defence. However, the extent of its powers differs greatly between areas. Depending on the area in question, the EU may therefore resemble:
- a federation (for example, on monetary affairs, agricultural, trade and environmental policy)
- a confederation (for example, on social and economic policy, consumer protection, home affairs)
- an international organisation (for example, in foreign affairs) A key activity of the EU is the establishment and administration of a common single market, consisting of a customs union, a single currency (adopted by 12 of the 25 member states), a Common Agricultural Policy, a common trade policy, and a Common Fisheries Policy. The most important EU institutions are the Council of the European Union, the European Commission, the European Parliament and the European Court of Justice.

Status

The members of the European Union have transferred to it considerable sovereignty, more than that of any other non-sovereign regional organisation. As has been mentioned, in certain areas the EU begins to take on the character of a federation or confederation. However, in legal terms, member states remain the masters of the Treaties, which means that the Union does not have the power to transfer additional powers from states onto itself without their agreement through further international treaties. Further, in many areas member states have given up relatively little national sovereignty, particularly in key areas of national interest such as foreign relations and defence. This unique structure means the European Union is perhaps best seen as a sui generis entity. On 29 October, 2004, European heads of government and state signed the Treaty establishing a Constitution for Europe. This has been ratified by some member states and is currently awaiting ratification by the other states. However, this process faltered on May 29, 2005 when the majority of French voters rejected the constitution in a referendum by 54.7%. The French rejection was followed three days later by a Dutch one on June 1 when in the Netherlands 61.6% of voters refused the constitution as well. The current and future status of the European Union therefore continues to be subject of political controversy, with widely differing views both within and between member states. For example, in the United Kingdom, currently holding the EU presidency, one poll suggested that around 75% of the population are indifferent or opposed to the European Union. However, other countries are more in favour of European integration — soon after the Netherlands and the French voted "no" on the constitution, Luxembourg voted "yes."

Current issues

Major issues currently facing the European Union cover its membership, structure, procedures and policies; they include the adoption, abandonment or adjustment of the new constitutional treaty, the Union's enlargement to the south and east (see below), resolving the Union's problematic fiscal and democratic accountability, revision of the rules of the Stability and Growth Pact, and the future budget and the Common Agricultural Policy. At the next Intergovernmental Conference (IGC), which is a semi-annual meeting of EU member states' heads of state and government, EU member states must decide on how it will allocate the EU budget. Also, here is the issue of the "Financial Perspective", which is renegotiated every seven years. The next Financial Perspective will be for 2007-2013. Issues that will be controversial during upcoming budget debates will be the British rebate, France's benefits from the Common Agricultural Policy, Germany and the Netherlands' large contributions to the EU budget, and reform of the European Regional Development Funds. Many commentators have envisaged these debates to yield a major split between governments such as France and Germany, who call for a broader budget and a more federal union, and governments such as that of the UK, who demand a slimmer budget with more funding transferred to science and research (and whose watchword is modernisation). Turkey on 4 October 2005 furthered its will to enter the European Union, making them the first predominantly Muslim country to open membership talks with the organisation. Many states within the union are wary of this decision, chiefly Austria. Austrian apprehension for Turkey dates back for centuries, leading from the 1683 Battle of Vienna, where the Austrians defeated the Ottoman Turks. Fears of an influx of migration from Turkey into Austria if the country and its 70 million inhabitants are allowed into the union is a heated topic. Others argue that most of the country is on the wrong side of the Bosporus Strait, which many believe to be the dividing line between Europe and Asia. Turkey also refuses to acknowledge any relations with the state of Cyprus since Turkish troops invaded the northern section of the island in 1974 following a coup attempt by Greek ultra-nationalists. Austria has proposed for an esteemed partnership for Turkey which would come short of an actual membership. Turkey rejected that proposal. Other European states claim that denying Turkey to a membership would brew future hostilities with other Muslim nations.

Origins and history

1974 Attempts to unite the disparate nations of Europe precede the modern nation states; they have occurred repeatedly throughout the history of Europe. Three thousand years ago, Europe was dominated by the Celts, and then conquered and ruled by the Mediterranean centred Roman Empire. These early unions were created by force. The Frankish empire of Charlemagne and the Holy Roman Empire united large areas under a loose administration for hundreds of years. More recently the 1800s customs union under Napoleon and the 1940s conquests of Nazi Germany had only transitory existence. Given Europe's collections of languages and cultures, these attempts usually involved military subjugation of unwilling nations, leading to instability, others have lasted thousands of years and large spells of peace and economical and technological progress as in the Roman Empire's Pax Romana. One of the first proposals for peaceful unification through cooperation and equality of membership was made by the pacifist Victor Hugo in 1851. Following the catastrophes of the First World War and the Second World War, the impetus for the founding of (what was later to become) the European Union greatly increased, driven by the determination to rebuild Europe and to eliminate the possibility of another war. This sentiment eventually led to the formation of the European Coal and Steel Community by (West) Germany, France, Italy and the Benelux countries. This was accomplished by the Treaty of Paris, signed in April, 1951, and taking effect in July, 1952. The first full customs union was originally known as the European Economic Community (informally called the Common Market in the UK), established by the Treaty of Rome in 1957 and implemented on 1 January 1958. This later changed to the European Community which is now the "first pillar" of the European Union. The EU has evolved from a trade body into an economic and political partnership. For more details, please see History of the European Union. As president of the Convention on the Future of Europe, the former French president Valéry Giscard d'Estaing proposed to change the name of the European Union to United Europe but it was not adopted.

Member states and enlargement

The European Union has 25 member states, an area of 3,892,685 km² and approximately 460 million EU citizens as of December 2004. If it were a country, it would be the seventh largest in the world by area and the third largest by population after China and India. The European Union has land borders with 20 nations and sea borders with 31. India Since its inception with six countries, nineteen further states have joined in successive waves of enlargement: Note:
- Greenland, which was granted home rule by Denmark in 1979, left the European Community in 1985, following a referendum.
- Romania and Bulgaria will join EU on 1 January 2007

Overseas territories

Several overseas territories and dependencies have close associations with particular EU member states, for example Greenland, the Isle of Man, the Azores and Madeira.

Future enlargement and close relationships

- Romania and Bulgaria are scheduled to become members on 1 January 2007, provided that they meet the conditions for membership and that the Treaty of Accession for the Republic of Bulgaria and Romania is ratified by parliaments of member states. The treaty was signed by representatives of the EU Member States at the Abbaye de Neumünster in Luxembourg on 25 April 2005. As of 2005, member state parliaments are taking forward its ratification.
- Turkey is an official candidate to join the European Union. Turkish European ambitions date back to 1963 Ankara Agreements. Turkey started preliminary negotiations on 3 October 2005. However, analysts believe 2015 is the earliest date the country can join the union due to the plethora of economic and social reforms it has to complete. Since it has been granted official candidate status, Turkey has implemented permanent policies on human rights, abolished the death penalty, granted cultural rights to its large Kurdish minority, and taken positive steps to solve the Cyprus question. However, due to its religious and cultural differences, Turkey faces strong opposition from conservative and religious governments of the member states, mainly France, Germany, Austria, Greece, Cyprus and Slovenia.
- Croatia is another official candidate country to join. It is expected to join by 2010, although the accession process could still be hampered by issues with the UN War Crimes Tribunal in The Hague among other things. See also: Croatian accession to the European Union.
- On 9 November 2005, the European Commission recommended granting candidate status to Macedonia [http://news.bbc.co.uk/1/hi/world/europe/4420158.stm].
- The EFTA states of Iceland, Liechtenstein and Norway are members of the European Economic Area which allows them to participate in most aspects of the EU single market without joining the EU. Switzerland, the fourth EFTA state, rejected EEA membership in a referendum; however, it has established close ties to the EU by means of bilateral treaties.

Context – rationale for enlargement and future prospects

Supporters of the European Union argue that the growth of the EU is a force for peace and democracy. They argue that the wars which were a periodic feature of the history of Western Europe have ceased since the formation of the European Economic Community (which later became the EU) in the 1950s. They also claim that in the early 1970s, Greece, Portugal and Spain were all dictatorships, but the desire of the business communities in these three countries to be in the EU created a strong impetus for democracy there. Others argue that peace in Europe since World War II is more due to other causes, such as the need for a unified response to the threat from the Soviet Union, a need for reconstruction after World War II, and a collective temporary tiring of waging war, and that the dictatorships cited came to an end for totally different reasons. In more recent times, the European Union has been extending its influence to the east. It has accepted several new members that were previously behind the Iron Curtain, and has plans to accept several more in the medium-term. It is hoped that in a similar fashion to the entry of Spain, Portugal and Greece in the 1980s, membership for these states will help cement economic and political stability. Further eastward expansion also has long-term economic benefits, but the remaining European countries are not viewed as currently suitable for membership, especially the troubled economies of countries further east. It is hoped by some that eventual membership of states that are currently politically unstable might help deal with tensions resulting from earlier conflicts such as the Yugoslav wars and the Cyprus dispute, and help avoid such conflict in the future. As the EU continues to enlarge eastward, the candidate countries' accessions tend to grow more controversial. As discussed, the EU has finished accession talks with Bulgaria and Romania, and set an entry date for the two countries in 2007. However, the rejection of the EU Constitution by France and the Netherlands, and the EU's slow economic growth, have cast some doubt on whether the EU will be ready to accept new members in 2007, despite the fact that both Bulgaria and Romania have signed Accession Treaties to join in 2007. A further point of contention for EU members is the accession of Turkey. Accession preliminary talks between Turkey and the EU are due to begin in early October 2005. Turkey's Government, led by Prime Minister Recep Tayyip Erdogan, has enacted many legal reforms to meet the EU's entry requirements. However, some member states, especially Austria [http://euobserver.com/9/19989] repudiate Turkey joining the EU, and the possible economic, immigration and cultural implications that may bring.

Institutions and legal framework

EU institutions

The functioning of the European Union is supported by several institutions:
- The European Parliament (732 members 750 max.)
- The Council of the European Union (or 'Council of Ministers') (25 members)
- The European Commission (25 members)
- The European Court of Justice (incorporating the Court of First Instance) (25 judges (& 25 judges of CFI))
- The European Court of Auditors (25 members)
- The European Council (25 members) - whose unique role is perhaps better described as that of a "quasi-institution" There are several financial bodies:
- European Central Bank (which alongside the national Central Banks, composes the European System of Central Banks)
- European Investment Bank (including the European Investment Fund) There are also several advisory committees to the institutions:
- Committee of the Regions, advising on regional issues
- Economic and Social Committee, advising on economic and social policy (principally relations between workers and employers)
- Political and Security Committee, established in the context of the Common Foreign and Security Policy, monitoring and advising on international issues of global security. There are also a great number of bodies, usually set up by secondary legislation, which exist to implement particular policies. These are the agencies of the European Union. Examples are the European Environment Agency, the European Aviation Safety Agency and the Office for Harmonisation in the Internal Market. Lastly, the European Ombudsman investigates complaints of maladministration by EU institutions.

Location of EU institutions

The EU has no official capital and its institutions are divided between several cities:
- Brussels, Belgium - Considered the de facto capital of the EU
- Seat of the European Commission and the Council of the European Union
- Venue for the European Parliament's committee meetings and mini-sessions
- Host city for all European Council summits (since 2004)
- Strasbourg, France
- Seat of the European Parliament and venue of its twelve week-long plenary sessions each year
- Also the location of two key European organisations — the Council of Europe and the European Court of Human Rights — which are different from the EU and have a wider membership than the EU
- Luxembourg City, Luxembourg
- Seat of the European Court of Justice and the Secretariat of the European Parliament
- Seat of the European Investment Bank
- Frankfurt, Germany
- Seat of the European Central Bank
- The Hague, The Netherlands
- Seat of EUROPOL (the European Police Office)

Legal framework

EUROPOL] European Union law comprises a large number of overlapping legal and institutional structures. This is a result of its being defined by successive international treaties, with each new treaty amending and supplementing earlier ones.. In recent years, considerable efforts have been made to consolidate and simplify the treaties, culminating with the final draft of the Treaty establishing a Constitution for Europe. If this proposed treaty is adopted, it will replace the set of overlapping treaties that form the current constitution of the EU with a single text. The earliest EU treaty was the Treaty of Paris of 1951 (took effect in 1952) which established the European Coal and Steel Community between an original group of six European countries. This treaty has since expired, its functions taken up by subsequent treaties. On the other hand, the Treaty of Rome of 1957 is still in effect, though much amended since then, most notably by the Maastricht treaty of 1992, which first established the European Union under that name. The most recent amendments to the Treaty of Rome were agreed as part of the Treaty of Accession of the 10 new member states, which entered into force on 1 May 2004. The EU member states have recently agreed to the text of a new constitutional treaty that, if ratified by the member states, would become the first official constitution of the EU, replacing all previous treaties with a single document. Although accepted by many countries, this document was rejected in a French referendum with a 55% majority on May 29th and in the Dutch referendum with a 62% majority on June 1st. If the Constitutional Treaty fails to be ratified by all member states, then it might be necessary to reopen negotiations on it. Most politicians and officials agree that the current pre-Constitution structures are inefficient in the medium term for a union of 25 (and growing) member states. Senior politicians in some member states (notably France) have suggested that if only a few countries fail to ratify the Treaty, then the rest of the Union should proceed without them, possibly creating an "Avant Garde" or Inner Union of more committed member states to proceed with "an ever-deeper, ever-wider union".

The role of the European Community within the Union

European Communities: European Community plus Euratom The term European Communities refers collectively to two entities -- the European Economic Community (now called the European Community) and the European Atomic Energy Community (also known as Euratom) -- each founded pursuant to a separate treaty in the 1950s. A third entity, the European Coal and Steel Community, was also part of the European Communities, but ceased to exist in 2003 upon the expiration of its founding treaty. Since 1967, the European Communities have shared common institutions, specifically the Council, the European Parliament, the Commission and the Court of Justice. In 1992, the European Economic Community, which of the three original communities had the broadest scope, was renamed the "European Community" by the Treaty of Maastricht. European Union: European Communities plus CFSP and PJCC The European Communities are one of the three pillars of the European Union, being both the most important pillar and the only one to operate primarily through supranational institutions. The other two "pillars" – Common Foreign and Security Policy, and Police and Judicial Co-operation in Criminal Matters – are looser intergovernmental groupings. Confusingly, these latter two concepts are increasingly administered by the Community (as they are built up from mere concepts to actual practice). Effect of Constitutional Treaty If it is ratified, the proposed new Treaty establishing a Constitution for Europe would abolish the three-pillar structure and, with it, the distinction between the European Union and the European Community, bringing all the Community's activities under the auspices of the European Union and transferring the Community's legal personality to the Union. There is, however, one qualification: it appears that Euratom would remain a distinct entity governed by a separate treaty.

Intergovernmentalism and supranationalism

A basic tension exists within the European Union between intergovernmentalism and supranationalism. Intergovernmentalism is a method of decision-making in international organisations where power is possessed by the member states and decisions are made by unanimity. Independent appointees of the governments or elected representatives have solely advisory or implementational functions. Intergovernmentalism is used by most international organisations today. An alternative method of decision-making in international organisations is supranationalism. In supranationalism power is held by independent appointed officials or by representatives elected by the legislatures or people of the member states. Member state governments still have power, but they must share this power with other actors. Furthermore, decisions are made by majority votes, hence it is possible for a member-state to be forced by the other member-states to implement a decision against its will. Some forces in European Union politics favour the intergovernmental approach, while others favour the supranational path. Supporters of supranationalism argue that it allows integration to proceed at a faster pace than would otherwise be possible. Where decisions must be made by governments acting unanimously, decisions can take years to make, if they are ever made. Supporters of intergovernmentalism argue that supra-nationalism is a threat to national sovereignty, and to democracy, claiming that only national governments can possess the necessary democratic legitimacy. Intergovernmentalism is being favoured by more Eurosceptic nations such as the United Kingdom, Denmark and Sweden; while more integrationist nations such as the Benelux countries, France, Germany, and Italy have tended to prefer the supranational approach. The European Union attempts to strike a balance between the two approaches. This balance however is complex, resulting in the often labyrinthine complexity of its decision-making procedures. Starting in March 2002, a Convention on the Future of Europe again looked at this balance, among other things, and proposed changes. These changes were discussed at an Intergovernmental Conference (IGC) in May 2004 and led to the Constitutional Treaty discussed above. Supranationalism is closely related to the inter-governmentalist vs. neofunctionalist debate. This is a debate concerning why the process of integration has taken place at all. Intergovernmentalists argue that the process of EU integration is a result of tough bargaining between states. Neofunctionalism, on the other hand, argues that the supranational institutions themselves have been a driving force behind integration. For further information on this see the page on Neofunctionalism.

Main policies

As the changing name of the European Union (from European Economic Community to European Community to European Union) suggests, it has evolved over time from a primarily economic union to an increasingly political one. This trend is highlighted by the increasing number of policy areas that fall within EU competence: political power has tended to shift upwards from the member states to the EU. This picture of increasing centralisation is counter-balanced by two points. First, some member states have a domestic tradition of strong regional government. This has led to an increased focus on regional policy and the European regions. A Committee of the Regions was established as part of the Treaty of Maastricht. Second, EU policy areas cover a number of different forms of co-operation.
- Autonomous decision making: member states have granted the European Commission power to issue decisions in certain areas such as competition law, State Aid control and liberalisation.
- Harmonisation: member state laws are harmonised through the EU legislative process, which involves the European Commission, European Parliament and Council of the European Union. As a result of this European Union Law is increasingly present in the systems of the member states.
- Co-operation: member states, meeting as the Council of the European Union agree to co-operate and co-ordinate their domestic policies. The tension between EU and national (or sub-national) competence is an enduring one in the development of the European Union. (See also Inter-governmentalism vs. Supra-nationalism (above), Euroscepticism.) All prospective members must enact legislation in order to bring them into line with the common European legal framework, known as the Acquis Communautaire. (See also European Free Trade Association (EFTA), European Economic Area (EEA) and Single European Sky.) See table of states participating in some of the initiatives.

Single market

Many of the policies of the EU relate in one way or another to the development and maintenance of an effective single market. Significant efforts have been made to create harmonised standards – which are designed to bring econo

Cooperative

Types of cooperatives

Housing cooperative

Building cooperative

Retailers' cooperative

Utility cooperative

Worker cooperative

Social cooperative

Consumers' cooperative

Agricultural cooperative

Cooperative banking (Credit unions and Cooperative savings banks)

Car sharing

History of the co-operative movement

See also

References

External links

Further reading

Other meanings

Legal entity

See also

Union (commerce)

Economic interest

Corporation

Legal status

Ownership and control

Formation

Naming

Unresolved issues

Origins

Etymology

Pre-modern corporations

Development of modern commercial corporations

Types of corporations

For-profit and non-profit

Closely-held and public

Multinational corporations

National features

United States

Canada

German-speaking countries

See also

Corporate taxation

Other commercial entities

Quotes

Further reading

See also

Lists

Documentary

External links

Industrial and provident society

Capital (economics)

Capital in classical economic theory

Broadening the definition of capital

See also

Lists

Asset stripping

European Union

Status

Current issues

Origins and history

Member states and enlargement

Overseas territories

Future enlargement and close relationships

Context – rationale for enlargement and future prospects

Institutions and legal framework

EU institutions

Location of EU institutions

Legal framework

The role of the European Community within the Union

Intergovernmentalism and supranationalism

Main policies

Single market