Social economy entities have a long tradition and come from the cooperative movement, which was developing intensively in the nineteenth century. Originally, these entities were grassroots and self-sufficient nature, their task was to secure economic and social needs of people working in them. Often filled niches unattractive for commercial enterprises. Today, such organizations are classified as entities of the old social economy. Traditional legal forms of social economy organizations are cooperatives and mutuals.
The cooperative is a voluntary association of an unlimited number of people, with variable composition and variable share fund, which, in the interests of its members has a common activity. Decisions in cooperatives are taken in a democratic manner, and the highest authority of the cooperative is the general meeting of members, where each member has one vote, regardless of the amount of contribution to the share fund. Members of the cooperative are not liable for its obligations and have the right to participate in the distribution of profits. Other bodies are the cooperative management (authorized to represent the cooperative outside) and the supervisory board (the body's internal control). Co-operatives have no restrictions as to the industry in which it operates unless it will be the occasion of activities to spend profits on important social purpose.
A mutual, mutual organization, or mutual society is an organization (which is often, but not always, a company or business) based on the principle of mutuality. Unlike a true cooperative, members usually do not contribute to the capital of the company by direct investment, but derive their right to profits and votes through their customer relationship. A mutual organization or society is often simply referred to as a mutual. A mutual exists with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services to all members of the organization or society. A mutual is therefore owned by, and run for the benefit of, its members - it has no external shareholders to pay in the form of dividends, and as such does not usually seek to maximize and make large profits or capital gains. Mutuals exist for the members to benefit from the services they provide and often do not pay income tax.
Profits made will usually be re-invested in the mutual for the benefit of the members, although some profit may also be necessary in the case of mutuals for internal financing to sustain or grow the organization, and to make sure it remains safe and secure.