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 California, cooperative associations are governed by specific state statutes, which include the California Cooperative Corporation Law found in Sections 12200-12704 of the California Corporations Code. These laws provide the framework for the formation, operation, and dissolution of cooperative associations. Members of a cooperative association have rights and duties as outlined in the association's articles of incorporation and bylaws, as well as under state law. Each member typically has an equal vote in the association's governance, regardless of the number of shares they hold, emphasizing democratic control. Profits, referred to as 'patronage dividends,' are distributed to members based on their patronage, or the amount of business they conduct with the cooperative, rather than on the number of shares owned. This structure is designed to benefit the members by allowing them to have equitable control and to share in the profits based on their individual contributions to the cooperative's success.