In a prior post discussing the recent wave of class action lawsuits against cooperatives, we proposed a non-legal solution to the problem: education. Many of the lawsuits were caused, in part, by lack of understanding of cooperative principles and cooperative operation. Members and former members who understand the true nature of capital credits and equity management are less likely to make unreasonable demands, such as an unscheduled retirement of capital credits.
Cooperatives should educate their directors, officers, managers, employees, and most importantly their members. They should emphasize the cooperative principles of (1) democratic control, (2) subordination of capital, and (3) operation at cost / allocation and return of net margins. They should also discuss how a cooperative obtains capital, and that cooperatives return such capital only when they are able to do so without harming their financial stability.
C&A attorneys have written The Law of Cooperatives, which is a concise summary of cooperative law and operation. The book could be a starting point for your education initiative.
