A co-operative is a unique form of private enterprise that is based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity.

Self help, expressed through mutual action as a group, provides the motivation for self reliance and assuming responsibility for taking control of one's own affairs. Democracy and equity sustain the solidarity of the group by ensuring that no individual member can secure power or gain advantage to the detriment of other members.

In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Seven internationally recognised co-operative principles act as guidelines by which co-operatives put these values into practice, and form the basis of co-operatives legislation in Australia and other countries.

Every member has one vote only, irrespective of the amount of capital contributed by them or their use of the co-operative's services.

An incorporated body is also described as a corporation, a corporate body, a body corporate or legal entity. Companies, co-operatives, incorporated associations and aboriginal corporations are all incorporated bodies.

Members are, however, liable for the amount, if any, unpaid on their shares, any charges payable by them in accordance with the rules of the co-operative and any debts they owe to the co-op. In certain circumstances such as insolvent trading, directors may be held personally liable for the debts of the co-operative if they are found to have breached their duties under law.

Credit unions and customer owned banks are mutuals - only depositors can be members, all depositors must be members and income is derived from investing member deposits. Similarly, housing co-operatives are mutuals - only tenants may be members, all tenants must be members and income is derived from tenants.

Many Australian co-operatives are not mutuals because they provide services to both members and non-members. For example, a co-operative which runs a retail outlet is not a mutual if some of its customers are not members. Similarly, a health care co-operative would not be mutual if it provides health services to both member and non-member patients.

The principle is that taxable income must be derived by outside parties (a person cannot make a profit out of himself or herself). Any surplus arising from the use of that fund for the common purpose is not assessable as income, even if distributed to the contributors.

Typically, the mutuality principle has relevance with the activities between the organisation and its members (mutual activities), but not to activities with non members for payment (trading activities). The principle does not apply to dealings between an organisation and a member that goes beyond a mutual arrangement and are in the nature of trade.

Not-for-profit organisations include non distributing co-operatives, companies limited by guarantee and incorporated associations.

The rules constitute a contract between members, officers, directors and the co-operative, all of whom are all required under Co-operatives National Law to observe the rules. Sanctions apply for contravention of the rules including expulsion.

In Australia, social enterprises can either be member benefit organisations, such as co-operative social enterprises, or organisations that provide social services to stakeholders who are not the owners of the enterprise, such as charities.