The establishment of a cooperative is subject to certain conditions. For example, it needs at least three members to establish it. These can be both natural and legal persons. Then the cooperative also needs a proper statute. It must be in writing and must contain certain information. These include the company and the registered office of the cooperative, the subject matter of the cooperative enterprise, provisions on the additional funding obligation in the event of insolvency, provisions on the convening and resolution of general meetings and their announcements. Furthermore, the statutes must contain provisions relating to the members' share of the business and the reserves to be created. Furthermore, if necessary, other provisions must also be included in the statutes. This applies in particular to the reception of investing members and minimum capital. In addition, the establishment of a cooperative in practice also requires the approval of a cooperative auditing association. Finally, the board must also make an entry in the register of cooperatives in order to meet all the requirements.

What is a cooperative? Establishment, taxes, benefits, evaluation

Formation of a cooperative: Introduction

The cooperative is a remarkable form of enterprise. On the one hand, it carries essential elements of an association within itself. On the other hand, it also combines these with aspects that suggest a corporation. Cooperatives have a long tradition, especially in Germany. In this way, they represent the possibility of cooperation and mutual economic promotion, to give just one example. In addition, the cooperative operates on the basis of democratic decisions of its members.

So today we want to deal with the question of how to start a cooperative. We therefore examine the entire founding process, which takes into account the prerequisites as well as the contents of the statutes and an economic concept as well as their examination and the final registration of the cooperative in the required public register.

2nd establishment of a cooperative: start-up requirements

First of all, you can distinguish between five different conditions. On the one hand, this applies in terms of the minimum number of founding members needed to set up a cooperative. On the other hand, it concerns the legal requirements relating to the content of the statutes. There must also be a founding meeting of its founding members. Furthermore, the establishment of a cooperative requires an examination of its economic planning for the future. Finally, it must also be entered in a public register provided for this purpose.

2.1 Minimum members to set up a cooperative

The number of members required to form a cooperative is determined according to § 4 GenG to a minimum of three persons. These can be both natural and legal persons. A differentiation in this regard is in any case missing in the applicable cooperative law.

2.2 Provisions on Statutes

2.2.1. Form of statutes

In general, the law stipulates that the statutes must be written. In addition, there are no other formal requirements for the statutes.

2.2.2. Content of the Statutes

2.2.2.1. General information

The list of requirements for the content of the statutes is extensive. Particularly relevant are the information on the company and registered office of the cooperative as well as the object of the company. In addition to these fixed requirements, the statutes must also contain various regulations, which must be decided on before the foundation. This includes information on the measures taken by the cooperative members in the event of insolvency. For example, an additional funding obligation or a limitation of liability may be the subject of the articles of association. Furthermore, the statutes should determine the form in which the general meeting of the members of the cooperative is to be convened and who should preside over it. The form in which decisions taken at the meeting are made shall also be included in the Statute. Similarly, the authentication of decisions is the subject of the Statute.

Then provisions on the minimum capital of the cooperative as well as on the share of the members in the statutes are still required. It is therefore necessary to determine the amount of this deposit and the minimum amount to be paid by each member, which must be at least 10% of it. In addition, the statutes are intended to inform whether members with more than one share in the cooperative may be involved. Associated with this, a maximum as well as other regulations in this regard can be part of the statutes. If contributions in kind are also acceptable, the articles of association must also state this.

Another financial aspect which is to be echoed in the Articles of Association concerns the statutory reserve. This reserve is intended to compensate for a possible loss of balance sheet. The statutes must then determine the manner and the amount with which the cooperative intends to form the reserve.

Other aspects of the cooperative can also be part of the statutes. For example, one can determine the marketing year or the duration for which the cooperative is to exist. Equally important are rules on decision-making processes. For example, with which majority should certain decisions be considered adopted?

2.2.2.2. Provisions on the rights of members

Particularly important, especially for housing cooperatives, is the question of the admission of investing members. According to the cooperative law, investing members should only be allowed to develop limited rights within the cooperative vis-à-vis ordinary members. It is therefore necessary that the statutes provide for rules that prevent the ordinary members of the cooperative from being overruled by the investing members. Such a measure could, for example, provide for the exclusion of all voting rights for investing members.

2.3 Development of an economic concept

In addition to the statutes, it is also necessary to develop an economic concept that should form the basis of the cooperative’s economic activity. The concept must cover economic development for at least the first three years after the establishment of the cooperative. This includes both a business plan and a liquidity plan. The economic concept is also important because it requires an audit by the cooperative auditing association. Its approval depends, of course, on the soundness of the economic concept that has been developed and thus on the prospect of economic success.

If the statutes and the economic concept developed meet the first two requirements, the next formal step takes place. This leads to a founding meeting of the founding members of the cooperative. If legal persons, such as a GmbH, are to be a member of the newly founded cooperative, then their authorised representatives in the external relationship or the representatives authorised by them must participate in it. To this end, a proof of their power of representation must also be submitted. Also permitted is the representation of a founding member by a representative authorized by authority.

During the inaugural meeting, members of the board are elected. If the cooperative comprises more than 20 persons or is to include once later, then a supervisory board is also obligatory. For this purpose, at least two other persons from the series of members must be elected.

The most important task at the founding meeting is the confirmation of the statutes. For this purpose, the founding members sign the statutes. Where corporations also participate in the cooperative, their representatives must sign on behalf of the respective corporation. Otherwise, this can lead to unforeseen complications in the later comparison with the list of members as part of the register check.

In this context, two more points should be mentioned. On the one hand, you should create a list of participants. Secondly, a protocol of the founding assembly must also be drawn up.

Finally, we note that this procedure also manages without notarial participation

The developed economic concept is now submitted to a cooperative auditing association for examination. This determines whether the concept is sound. In particular, the question of whether third parties or cooperative members could incur economic damage on this basis is in the foreground. In addition, the cooperative examination association also subjects the statutes to an in-depth general examination. Only if the statutes meet the legal requirements can the cooperative take place. For this reason, it is also advisable to seek expert advice when drawing up the Statutes.

5th establishment of a cooperative: registration in the register of cooperatives

Finally, the last step towards the establishment of the cooperative: registration in the register of cooperatives. The district court in whose district the seat of the founded cooperative is located is competent for this. It is a public register that corresponds to the commercial register for merchants and commercial companies.

In order to enter the cooperative in the register of cooperatives, however, an application by a notary is still required. However, it is the responsibility of the Executive Board to arrange for the registration of the cooperative in the cooperative register. For this purpose, he submits both the statutes and the opinion of the cooperative examination association. In addition, the Management Board also attaches a copy of the appointment documents for the members of the Management Board and, if necessary or provided, the Supervisory Board.

Only with the registration of the cooperative in the register of cooperatives is the establishment of the cooperative completed.