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 Illinois, cooperative associations are typically formed under the Illinois Cooperative Act (765 ILCS 160/1-1 et seq.) or other relevant general state business laws. These entities are designed to serve the mutual benefit of their members and are governed by state statutes, as well as their own charter or articles of incorporation. Membership rights and duties are outlined in these governing documents. In a cooperative association, each member typically has equal ownership and equal voting rights, regardless of the number of shares they hold. This means that each member has one vote in the decision-making process. Profits generated by the cooperative are distributed among the members based on their patronage, or the amount of business they conduct with the cooperative, rather than on the number of shares they own. This distribution is often referred to as a 'patronage dividend.' The specific rules and regulations for the operation of cooperatives in Illinois are detailed in the statutes and must be adhered to by the cooperative's members and board of directors.