The 50% Rule And Ontario Co-operatives

Originally published in Ontario Co-op e-newsletter, March 5, 2010

Ontario's Co-operative Corporations Act, as with other legislation that defines co-ops, attempts to balance the business and social objectives of co-ops by providing certain definitions and limitations on how co-ops are structured and operate.

One requirement in the Act is for a co-operative to do the majority of its business (at least 50%) with its members. This requirement, often called the "50% Rule," does not exist in co-op law for other Canadian provinces and territories, with the exception of a more limited restriction in the Quebec co-op legislation.

The definition of "business" depends on the type of co-operative. If the co-op is created to sell goods or services to its members, as in a housing co-op, a child care co-op or grocery store, for example, the "business" is the sale of those goods or services and so the co-op would have to provide a minimum of 50% of those goods or services to