What is a cooperative?
A cooperative is an association of people that is not profit-oriented, but pursues a common goal. The basic principle is that any net profit is not distributed to members, but is used to reduce prices or improve products/services.
In contrast to joint-stock companies, cooperative members are more individual-oriented than capital-oriented, as members' non-financial obligations or personality may be more important than their capital contribution.
When can a cooperative be used?
A cooperative is an association of people that is not profit-oriented, but pursues a common goal. The basic principle is that any net profit is not distributed to members, but is used to reduce prices or improve products/services.
In contrast to joint-stock companies, cooperative members are more individual-oriented than capital-oriented, as members' non-financial obligations or personality may be more important than their capital contribution.
How to set up a cooperative
Members needed
At least seven members are required to form a cooperative society. Once the articles of association have been drawn up and approved by the founders' meeting, the cooperative company is registered in the Commercial Register.
Entry in the Commercial Register
The cooperative only acquires the status of a legal entity when it is entered in the Commercial Register. The competent commercial register is that of the place where the cooperative is domiciled.
Founders' Meeting
Cooperative organization
Annual General Meeting
The General Meeting is the supreme body of the cooperative and elects the other bodies. It is responsible for the Articles of Association, approval and acceptance of the income statement and balance sheet and, where applicable, for deciding on the appropriation of net profit, for the discharge of members of the Board of Directors and for all matters decided by the General Meeting by virtue of the law or the Articles of Association.
Administration
Auditors
For the auditors, the cooperative's controlling body, the provisions of stock corporation law apply.
What are members' rights?
A cooperative is an entity with an unlimited number of members. In fact, a cooperative can admit new members at any time. All members have the same rights and duties.
Property rights
The most important property right is the right to use the cooperative's facilities.
Cooperative members' rights can be divided into property rights and non-property rights, which are in turn divided into participatory rights (such as the right to take part in the members' general meeting or the right to vote) and protective rights (such as the right of control or the right to information or the right to contest decisions taken by the members' general meeting).
Other property rights include the right to receive a dividend on participation certificates, the right to compensation in the event of withdrawal from the cooperative, and the right to a liquidation dividend.
Profit distribution
Another asset-related right is the potential right to receive part of the net profit. Please note, however, that a distribution of net profit is only permitted if provided for in the articles of association; otherwise, the net profit is transferred to the cooperative's equity.
What is a cooperative's responsibility?
Responsibility of the cooperative
Unless otherwise stipulated in the articles of association, only the cooperative's assets are available to meet its obligations.
Members' liability
Personal liability of members only exists if provided for in the Articles of Association. This personal liability may be unlimited.
In this case, cooperative members are jointly and severally liable, or limited to an amount specified in the articles of association. If there are cooperative shares, the liability of individual members is determined in proportion to the amount of their shares.
The personal liability of the company's governing bodies is similar to that of a public limited company, but is less strict.
