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 Iowa, cooperative associations are typically formed under the Iowa Cooperative Associations Act, which provides the legal framework for their creation, governance, and operation. These associations are designed to serve the mutual benefit of their members and are often used in agricultural contexts, among others. The rights and duties of members are dictated by state statutes as well as the cooperative's own charter or articles of incorporation. In Iowa, each member of a cooperative association generally has an equal vote, ensuring democratic control, which is a key principle of cooperatives. This is true regardless of the number of shares a member holds. Profits, referred to as 'patronage dividends' in a cooperative context, are distributed to members based on their usage or patronage of the cooperative's services or products, rather than on the number of shares owned. This aligns the financial benefits with the members' contributions to the cooperative's success during the profit-earning period.