A cooperative association is a business entity formed by individuals for their mutual benefit, and is usually organized under general state business laws or specific state statutes governing cooperative associations. The rights and duties of the members of a cooperative association are governed by state statutes and by the association’s charter or articles of incorporation.

Each shareholder in a cooperative association has equal ownership and an equal share in the control of the association, regardless of the number of shares of stock held by the shareholder. Profit earned by the association is divided among the shareholders based on the amount of their purchases during the period the profit was earned.

In Alabama, cooperative associations are typically formed under specific state statutes that cater to the unique structure and purpose of cooperatives. These statutes outline the formation, governance, and operation of cooperative associations. The rights and duties of members are determined by both state law and the cooperative's own governing documents, such as its charter or articles of incorporation. In Alabama, each member of a cooperative association generally has an equal say in the control of the association, which is a principle known as 'one member, one vote,' regardless of the number of shares they hold. Profits, often referred to as 'patronage dividends,' are distributed to members based on the proportion of business they conduct with the cooperative, rather than on the number of shares owned. This reflects the cooperative principle of member economic participation, where benefits are allocated among members in proportion to their use of the cooperative's services.