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 South Dakota, cooperative associations are typically formed under specific state statutes that provide for their organization, operation, and governance. These statutes outline the rights and duties of the members, as well as the procedures for the creation and management of the cooperative. In South Dakota, cooperatives are often governed by the South Dakota Codified Laws (SDCL), particularly under Title 47, which pertains to corporations, partnerships, and associations. Each member of a cooperative association in South Dakota generally has an equal say in the control of the association, regardless of the number of shares they hold, which is a principle known as 'one member, one vote.' Profits, or 'patronage dividends,' are distributed to members based on their usage or purchases from the cooperative, not based on the number of shares owned. This ensures that the benefits derived from the cooperative are returned to the members in proportion to their contribution to the cooperative's success. It is important for individuals interested in forming or joining a cooperative in South Dakota to review the specific provisions of the SDCL and consult with an attorney to ensure compliance with all legal requirements and to understand their rights and obligations under the law.