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Cooperative Society

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Currently there are several types of companies that are formed under different types of legal forms which are classified depending on the individuals or commercial companies . In this article we are going to analyze the cooperative society which is one of the most used.

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What is a cooperative society?

A cooperative society is a type of society that has a free membership regime , which is voluntary and is also organized by people who act in solidarity with the aim of being able to carry out a series of business activities to meet their needs and aspirations .

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  • Types
  • Characteristics of a cooperative society
  • Business name
  • Objective of a cooperative society
  • How it is constituted
  • Commercial register
  • Tax regime
  • Organs
  • Company administration
  • Types of partners
  • Members’ obligations
  • Members’ rights
  • Advantages of a cooperative society
  • Disadvantages
  • Regulations by country
  • Examples

Types

There are the following types of cooperative societies:

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  • Cooperative society of the first degree where the partners can be natural persons or they can also be legal entities.
  • Cooperative society of the second degree where the partners that make up a cooperative are other cooperatives.

Characteristics of a cooperative society

Among the main characteristics of a cooperative society are the following:

  • The cooperative society has its own legal personality .
  • It is not made for profit but focuses on the social improvement and the economy of its employees.
  • It is made up of no less than 10 partners.
  • The company must have a reserve fund which is used to promote the development of the company.
  • It has a variable capital that is governed by the principles of equal rights.
  • The partners also have a series of obligations to fulfill.
  • The monetary capital is made up of the contribution of money given by the partners.
  • All partners have the right to vote .
  • It is constituted by means of a public deed .

Business name

The cooperative society is framed within the group of social interest companies and arises from a series of common interests between a group of people who decide to join together to be able to carry out a specific type of activity that could not be carried out individually. Your company name will always bear the name of the company to be followed by the word corporate society or its abbreviation “S. Coop. ” .

Objective of a cooperative society

The main objective of the cooperative society is to be able to provide the associate with help so that they can meet their economic , personal , recreational , social and educational needs in order to dignify the person, improve their income and provide protection.

How it is constituted

This type of cooperative society is constituted by means of a public deed in which legal personality is also acquired when they are registered in the Registry of Cooperatives . After their registration date, they can begin to exercise their activity.

Commercial register

The commercial registry of the cooperative society must be carried out with the objective of being able to provide the institution with greater security and so that business can be carried out in a formal way . It is very important in order to achieve better economic development and so that the costs arising from the transactions carried out can also be reduced.

Tax regime

Cooperative societies are governed under common tax law and for this reason they are entitled to the tax specialties or tax regime of cooperatives. This is due to the characteristics of the cooperative, since they are generally related to associative entities or to those that have a social function.

Organs

The bodies that make up a cooperative society are the following:

  • General Assembly : its main function is to make decisions related to the cooperative through meetings between all cooperative members.
  • Governing Council : it is in charge of representing the cooperative and managing all its activities as well as establishing the guidelines so that the company can act correctly.
  • Intervention body : it is composed of several auditors who are in charge of monitoring and reviewing all the accounts that the cooperative has, it can be said that they are the ones who supervise all the work carried out in the governing council.

Company administration

This function is carried out by the administrators who are in charge of managing and representing the institution. This activity is carried out through the governing council . The appointment of those in charge of managing the company is made by the General Assembly and this appointment must be presented and registered with the cooperative registry.

All the agreements that are made must be established by majority vote, must be recorded in a minute book and may be challenged depending on the law, statutes or interests of the cooperative.

Types of partners

The members of the cooperative society can be legal or physical persons, whether private or public. All of them must make a mandatory contribution to the capital stock. In this type of cooperative there must be a minimum of 3 members if it is in the first degree or two in the case of second degree cooperatives.

Members can leave the cooperative voluntarily and the two types that exist are collaborating and working members , the former being the most common. These partners cannot develop any type of activity of their own in the company and must also contribute the established amount of money.

On the other hand, the work partners will give their contribution in terms of personal work within the cooperative and will always be natural persons. The same number of rules apply to them and they will have responsibilities depending on the capital contributed.

Members’ obligations

Among the obligations of the members of the cooperative society we can mention the fulfillment of all their obligations as such, attending the established assemblies participating in all the meetings and the different activities. They must give their financial contributions at the indicated time and carry out the positions for which they were appointed with responsibility .

They must also comply with all statutes , take care of the assets of the cooperative as well as its funds and avoid carrying out activities that may damage the image of the cooperative society.

Members’ rights

Among the rights of the members it can be mentioned that they will have the possibility to use all the services of the cooperative, participate in the different assemblies , give their own opinions and will also have the right to vote . They can be elected to represent a position within the institution and can also request information when they deem it necessary.

Advantages of a cooperative society

Among the main advantages of a cooperative society, the following can be mentioned:

  • The partners who are part of it have the same rights so they can exercise a completely democratic management .
  • The amount of the capital stock may vary and is set by the bylaws, which provides an adequate capital stock.
  • The partners can have a Social Security scheme .
  • The responsibility of the partners is limited to the amount of money they have contributed, which facilitates liability to third parties.
  • They have tax credits .
  • The accession to the cooperative society is completely voluntary on the same floor .

Disadvantages

The main disadvantages are based on a series of operational difficulties when making important decisions, there are also a series of limits regarding the hiring of employees and the control mechanisms must be fully democratic. In addition, the cooperative society must compulsorily allocate 30% of its surplus profits to be able to cover other losses.

Regulations by country

Spain

Spain regulates its cooperatives through a series of autonomous cooperative laws , specifically state law 27/1999 which applies to all cooperative societies that carry out their activity in the country.

Mexico

In this country, they are legislated through the General Law of Cooperative Societies , which is federal in nature and which was published on August 3, 1994.

Colombia

Cooperatives are regulated in their internal legal systems by Law 79 and Law 454, which are legal norms that regulate cooperative societies. They are also supervised by the Superintendency of Solidarity Economy .

Argentina

They are governed by National Law 20,337 and are controlled by the National Institute of Associativism and Social Economy. 

Bolivia

They are governed by the General Law of Cooperative Societies in its decree 5035, a law that applies to all cooperative societies.

Examples

Some examples of cooperative societies are mentioned below:

  • Consum , consumer cooperative
  • Plaknor SC , construction cooperative
  • Monebro SC, electric cooperative

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