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Statute for a European Cooperative Society SCE

Statute for a European Cooperative Society


The European Union facilitates cooperatives wishing to engage in cross-border business, by making legislative provision which takes account of their specific features. It allows the creation of new cooperative enterprises by natural or legal persons at European level. It ensures the rights of information, consultation and participation of employees in a European cooperative society (SCE).

ACTS


Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE).

Council Directive 2003/72/EC of 22 July 2003 supplementing the Statute for a European Cooperative Society with regard to the involvement of employees.

SUMMARY


This Regulation establishes a legal statute for a European Cooperative * Society (SCE). This statute guarantees equal terms of competition between cooperative societies and capital companies. It contributes to the development of the cross-border activities of cooperative societies.

Formation of the SCE

An SCE may be formed:

  • by five or more natural and/or legal persons resident in at least two Member States of the European Economic Area (EEA), formed under the law of a Member State of the European Union (EU), and governed by the law of at least two different EU Member States;
  • by a merger between cooperatives formed under the law of an EU Member State with registered offices and head offices in that Member State, provided that at least two of them are governed by the law of different Member States;
  • by conversion of a cooperative formed under the law of an EU Member State, which has its registered office and head office within the EEA if the cooperative has had for at least two years an establishment or subsidiary governed by the law of another EU Member State.

A Member State may provide that a legal body the head office of which is not in the EEA may participate in the formation of an SCE provided that the legal body:

  • is formed under the law of a Member State;
  • has its registered office in that Member State;
  • has a real and continuous link with the Member State's economy.

Capital of the SCE

The capital of an SCE shall be represented by its members' shares. It must be a minimum amount of EUR 30 000. The laws of a Member State requiring a greater subscribed capital for legal bodies carrying on certain types of activity (such as banking, insurance activities, etc.) shall apply to SCEs with registered offices in that Member State.

The general meeting is to pass a resolution each year recording the amount of the capital at the end of the financial year and the variation by reference to the preceding financial year.

If the legislation of the Member State where the registered office is located allows it, the SCE may have cooperative investor members with limited voting rights.

Statutes of the SCE

The founder members shall draw up the statutes of the SCE in accordance with the provisions for the formation of national cooperative societies. The statutes shall be in writing and signed by the founder members.

Transfer of registered office

The registered office of an SCE may be transferred to another Member State without resulting in the winding-up of the SCE or in the creation of a new legal person. The registered office, as established in the statutes, must be located within the Community and must correspond with the location of the head office.

Principle of non-discrimination

Subject to this Regulation, an SCE shall be treated in every Member State as if it were a national cooperative.

Registration and disclosure

Every SCE shall be registered in the Member State in which it has its registered office in a register designated by the law of that Member State. Notice of registration and of the deletion of such a registration shall be published for information purposes in the Official Journal of the European Union.

Structure of the SCE

The SCE structure is made up of a general meeting on the one hand, and on the other hand:

  • either a management board with a supervisory board (the two-tier system);
  • or an administrative board (the one-tier system), depending on which option is chosen in the SCE statutes.

At the general meeting, members have in principle an equal right to vote. Exceptions may be made in favour of large cooperative investors in certain financial cooperatives.

The management board or the administrative board, depending on the type of structure chosen, is responsible for managing the SCE and may represent it in legal proceedings and in dealings with third parties.

The statutes of the SCE shall list the categories of transactions which require authorisation. This may be granted by the supervisory organ or the general meeting to the management organ or the administrative organ.

Auditing and disclosure of accounts

As regards the drawing-up, auditing and disclosure of its annual accounts, and its consolidated accounts if any, the SCE is to be subject to the law of the State.

Winding up, liquidation, insolvency and suspension of payments

An SCE may be wound up either by:

  • a decision of the general meeting, in particular where the period fixed in the rules has expired or where the subscribed capital has been reduced below the minimum capital laid down in the rules;
  • or by the courts, for example where the registered office has been transferred outside the EEA.

As regards liquidation, insolvency or suspension of payments, the SCE is to be subject to the laws of the State in which it has its registered office.

Involvement of employees

The arrangements for the involvement of employees (information, consultation and participation) shall be established in every SCE.

As a general rule, a special negotiating body is set up. It brings together representatives of the legal entities' employees who participate in the formation of the SCE or its subsidaries.

This body negotiates an agreement with the competent organs of the participating legal entities in order to lay down the arrangements for the involvement of employees within the future SCE. The standard rules apply in the absence of an agreement.

However, in defining the arrangements for the involvement of employees in the SCE, the national rules of the State where the head office is located apply to SCEs established:

  • exclusively by natural persons or by a single legal entity and natural persons; and
  • which together employ fewer than 50 employees, or employ 50 or more employees in only one Member State.

Background

The establishment of an SCE statute aims at encouraging the development of the internal market by facilitating the activity of this type of company at European level. With the same aim, the Council adopted Regulation (EEC) No 2137/85 relating to European Economic Interest Grouping and Regulation (EC) No 2157/2001 relating to a Statute for a European Company, and Directive 2005/56/EC on cross-border mergers of limited liability companies.


Key terms
  • Cooperative society: autonomous associations made up of persons coming together voluntarily to meet their common economic, social and cultural aspirations and needs, through the means of a company owned collectively and where the power is democratically exercised.

REFERENCES


Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 1435/2003

21.8.2003

-

OJ L 207 of 18.8.2003

Directive 2003/72/EC

18.8.2003

18.8.2006

OJ L 207 of 18.8.2003

RELATED ACTS


Report from the Commission to the Council, the European Parliament, the European, Economic and Social Committee and the Committee of the Regions on the review of Council Directive 2003/72/EC of 22 July 2003 supplementing the Statute for a European cooperative society with regard to the involvement of employee [COM(2010) 481 final – Not published in the Official Journal]. 
The Commission presents an assessment of the implementation of the Directive on the involvement of employees in SCEs. It notes that the transposition of Directive 2003/72/EC was generally satisfactorily but was not completed until 2009 in all EU Member States. It finds certain transposition problems common to the different Directives on the involvement of workers, particularly regarding the prevention of the misuse of the formation of a European society for the purpose of depriving employees of their rights. The Commission highlights the lack of experience in applying the Directive, taking into account the very limited number of SCEs established and employees employed. It also notes that the system for establishing an SCE may be complex for small cooperatives.
Before proceeding with a revision of Directive 2003/72/EC, the Commission must evaluate Regulation (EC) No 1435/2003/EC on the Statute of an SCE, as well as the other directives governing the involvement of workers, such as Directive 2001/86/EC concerning European companies.

Communication from the Commission to the Council and the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 23 February 2004 on the promotion of co-operative societies in Europe [COM(2004) 18 final - Not published in the Official Journal]. 
The Commission considers that the potential of cooperatives has not been fully utilised and that their image should be improved at national and European levels. In this context, it sets out steps which may encourage the wider use of co-operatives across Europe. These focus on increased visibility, further improvement of national laws on co-operatives, and enhancement of co-operatives' contribution to community policy. The main issues dealt with in the Communication are:

  • promoting greater use of cooperatives across Europe by improving the visibility, characteristics and understanding of the sector;
  • further improving the legislation governing cooperatives in Europe;
  • maintaining and improving the account taken of cooperatives in Community objectives and their contribution to those objectives.
Last updated: 20.01.2011

See also

Statute for a European Cooperative Society

The European Union facilitates cooperatives wishing to engage in cross-border business, by making legislative provision which takes account of their specific features. It allows the creation of new cooperative enterprises of natural or legal persons at European level. It ensures the rights of information, consultation and participation of employees in a European cooperative society (SCE).

ACTS

Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE).

Council Directive 2003/72/EC of 22 July 2003 supplementing the Statute for a European Cooperative Society with regard to the involvement of employees.

SUMMARY

The completion of the internal market and the improvement it brings about in the economic and social situation throughout the Community mean not only that barriers to trade should be removed, but also that the structures of production should be adapted to the Community dimension. For that purpose it is essential that companies of all types, the business of which is not limited to satisfying purely local needs, should be able to plan and carry out the reorganisation of their business on a Community scale. However, the legal framework within which business is carried on in the Community is still based largely on national laws. This situation forms a considerable obstacle to the creation of groups of companies from different Member States, which is why the Council adopted Regulation (EEC) No 2137/85 on the European Economic Interest Grouping and Regulation (EC) No 2157/2001 establishing the legal form of the European Company. These two instruments are not, however, suited to the specific features of cooperatives (independent associations of individuals voluntarily associated to satisfy their common economic, social and cultural aspirations and needs by means of a collectively-owned enterprise in which power is exerted democratically by the members). Anxious to ensure equal terms of competition and to contribute to its economic development, the Community therefore decided to provide cooperatives, which are a form of organisation generally recognised in all Member States, with adequate legal instruments capable of facilitating the development of their cross-border activities, through collaboration, cooperation or mergers between existing cooperatives in the different Member States, or through the creation of new cooperative enterprises at European level.

With the adoption of this Regulation, a genuine single SCE entity has been established. These new texts do in effect permit the creation of a cooperative by persons residing in different Member States or by legal entities established in different Member States. With a minimum capital requirement of 30 000 euros, these new SCEs can operate throughout the internal market with a single legal identity, set of rules and structure. They can expand and restructure their cross-border operations without the costly and time-consuming exercise of setting up of a network of subsidiaries. Cooperatives from several different countries can also now merge as SCEs. Finally, a national cooperative operating in a different Member State from the one in which it has its registered office can be converted into a European cooperative without first having to be wound up.

In order to promote the social objectives of the Community, special provisions have also been adopted by means of a Directive, particularly as regards employee involvement in the SCE, aimed at ensuring that the establishment of an SCE does not entail the disappearance or reduction of practices of employee involvement existing within the entities participating in its establishment.

THE COUNCIL REGULATION ON THE STATUTE FOR AN SCE

Form of the SCE

The SCE is defined as a body with legal personality for which the capital subscribed by its members is divided into shares. Its registered office, which is to be specified in its rules, must be within the Community and must be in the same place as its central administration. The SCE is to have legal personality from the day of its registration in the State in which it has its registered office.

An SCE shall have as its principal object the satisfaction of its members' needs and/or the development of their economic and social activities, in particular through the conclusion of agreements with them to supply goods or services or to execute work of the kind that the SCE carries out or commissions.

Formation of the SCE

Subject to this Regulation, the formation of an SCE is governed by the law applicable to cooperatives in the State in which it has its registered office. An SCE may be formed as follows:

  • by five or more natural persons resident in at least two Member States,
  • by five or more natural persons and companies and firms within the meaning of the second paragraph of Article 48 of the Treaty and other legal bodies governed by public or private law, formed under the law of a Member State, resident in, or governed by the law of, at least two different Member States,
  • by companies and firms within the meaning of the second paragraph of Article 48 of the Treaty and other legal bodies governed by public or private law formed under the law of a Member State which are resident in, or governed by the law of, at least two different Member States,
  • by a merger between cooperatives formed under the law of a Member State with registered offices and head offices within the Community, provided that at least two of them are governed by the law of different Member States,
  • by conversion of a cooperative formed under the law of a Member State, which has its registered office and head office within the Community if for at least two years it has had an establishment or subsidiary governed by the law of another Member State.

A Member State may provide that a legal body the head office of which is not in the Community may participate in the formation of an SCE provided that legal body is formed under the law of a Member State, has its registered office in that Member State and has a real and continuous link with a Member State's economy.

Capital of the SCE

The capital of an SCE shall be represented by the members' shares, expressed in the national currency. It may not be less than 30 000 euros or the equivalent in national currency. An SCE whose registered office is outside the Eurozone may also express its capital in euro. The laws of a Member State requiring a greater subscribed capital for legal bodies carrying on certain types of activity shall apply to SCEs with registered offices in that Member State.

The capital may be increased or reduced without amending the rules, and without any public announcement, provided the minimum level is observed and that the amount of the capital is disclosed annually. The general meeting is to pass a resolution each year recording the amount of the capital at the end of the financial year and the variation by reference to the preceding financial year.

Statutes of the SCE

The founder members shall draw up the statutes of the SCE in accordance with the provisions for the formation of cooperative societies laid down by the law of the Member State in which the SCE has its registered office. The statutes shall be in writing and signed by the founder members.

The statutes of the SCE shall include at least:

  • the name of the SCE, preceded or followed by the abbreviation "SCE" and, where appropriate, the word "limited",
  • a statement of the objects,
  • the names of the natural persons and the names of the entities which are founder members of the SCE, indicating their objects and registered offices in the latter case,
  • the address of the SCE's registered office,
  • the conditions and procedures for the admission, expulsion and resignation of members,
  • the rights and obligations of members, and the different categories of member, if any, and the rights and obligations of members in each category,
  • the nominal value of the subscribed shares, the amount of the subscribed capital, and an indication that the capital is variable,
  • specific rules concerning the amount to be allocated from the surplus, where appropriate, to the legal reserve,
  • the powers and responsibilities of the members of each of the governing organs,
  • provisions governing the appointment and removal of the members of the governing organs,
  • the majority and quorum requirements,
  • the duration of the existence of the society, where this is of limited duration.

Transfer of registered office

The registered office of an SCE may be transferred to another Member State without resulting in the winding-up of the SCE or in the creation of a new legal person.

Principle of non-discrimination

Subject to this Regulation, an SCE shall be treated in every Member State as if it were a cooperative formed in accordance with the law of the Member State in which it has its registered office.

Registration and disclosure

Every SCE shall be registered in the Member State in which it has its registered office in a register designated by the law of that Member State in accordance with the law applicable to public limited-liability companies. Notice of an SCE's registration and of the deletion of such a registration shall be published for information purposes in the Official Journal of the European Union.

Publication of documents and particulars concerning an SCE which must be made public under this Regulation shall be effected in the manner laid down in the laws of the Member State applicable to public limited-liability companies in which the SCE has its registered office.

Structure of the SCE

The Regulation provides for the SCE structure to be made up of a general meeting on the one hand, and for either a management board with a supervisory board monitoring its activities (the two-tier system), or for an administrative board (the one-tier system), depending on which option is chosen in the SCE statutes.

The general meeting must be held at least once a year, not later than six months after the end of the financial year.

In the two-tier system, a management board is to manage the SCE. The member or members of the management board have power to represent the SCE in dealings with third parties and in legal proceedings. They are to be appointed and removed by the supervisory board. The same person may not serve on both boards of the same SCE at the same time. The supervisory board may, however, nominate one of its members to occupy a vacancy through holiday absence on the management board. During this period, the member concerned then ceases to exercise his/her functions on the supervisory board.

In the one-tier system, a single administrative board is to manage the SCE. The member or members of the administrative board have power to represent the SCE in dealings with third parties and in legal proceedings. The administrative board may delegate powers of management, but not other powers, to one or more of its members.

The statutes of the SCE shall list the categories of transactions requiring:

  • under the two-tier system, authorisation from the supervisory organ or the general meeting to the management organ,
  • under the one-tier system, an express decision adopted by the administrative organ or authorisation from the general meeting.

Auditing and disclosure of accounts

As regards the drawing-up, auditing and disclosure of its annual accounts, and its consolidated accounts if any, the SCE is to be subject to the law of the State in which it has its registered office, giving effect to the Community legislation in force.

Winding up, liquidation, insolvency and suspension of payments

An SCE may be wound up either by a decision of the general meeting, in particular where the period fixed in the rules has expired or where the subscribed capital has been reduced below the minimum capital laid down in the rules, or by the courts, for example where the registered office has been transferred outside the Community.

As regards liquidation, insolvency or suspension of payments, the SCE is to be subject to the laws of the State in which it has its registered office.

COUNCIL DIRECTIVE SUPPLEMENTING THE STATUTE FOR AN SCE WITH REGARD TO THE INVOLVEMENT OF EMPLOYEES

The Directive governs the involvement of employees in the affairs of SCEs. It aligns the laws, regulations and administrative provisions in force in the Member States so as to cater for the involvement of employees in the running of the SCE. The arrangements for the involvement of employees shall be established in every SCE in accordance with the negotiating procedure or in accordance with the standard rules on the involvement of employees set by this Directive.

Negotiating procedure applicable to SCEs established by at least two legal entities or by transformation

The special negotiating body:

Where the management or administrative organs of participating legal entities draw up a plan for the establishment of an SCE, they shall as soon as possible take the necessary steps to start negotiations with the representatives of the legal entities' employees on arrangements for the involvement of employees in the SCE. For this purpose, a special negotiating body representative of the employees of the participating legal entities and concerned subsidiaries or establishments shall be created in accordance with the following provisions:

  • members are elected or appointed in proportion to the number of employees employed in each Member State by the participating legal entities and concerned subsidiaries or establishments, by allocating in respect of a Member State one seat per each portion of employees employed in that Member State which equals 10%, or a fraction thereof, of the number of employees employed in all the Member States taken together;
  • in the case of an SCE formed by way of merger, there are such further additional members from each Member State as may be necessary in order to ensure that the special negotiating body includes at least one member representing each participating cooperative which is registered and has employees in that Member State and which it is proposed will cease to exist as a separate legal entity following the registration of the SCE;
  • Member States shall determine the method to be used for the election and appointment of the members of the special negotiating body.

The special negotiating body and the competent organs of the participating legal entities shall determine, by written agreement, arrangements for the involvement of employees within the SCE. To this end, the competent organs of the participating legal entities shall inform the special negotiating body of the plan and the actual process of establishing the SCE, up to its registration.

The special negotiating body shall take decisions by an absolute majority of its members, provided that such a majority also represents an absolute majority of the employees. Each member shall have one vote. However, should the result of the negotiations lead to a reduction of participation rights, the majority required for a decision to approve such an agreement shall be the votes of two thirds of the members of the special negotiating body representing at least two thirds of the employees, including the votes of members representing employees employed in at least two Member States:

  • in the case of an SCE to be established by way of merger, if participation covers at least 25% of the overall number of employees of the participating cooperatives, or
  • in the case of an SCE to be established by any other way, if participation covers at least 50% of the overall number of employees of the participating legal entities.

With the exception of an SCE established by way of transformation, the special negotiating body may decide by a majority of the votes of two thirds of the members representing at least two thirds of the employees not to open negotiations or to terminate them. In this case, these votes should represent employees employed in at least two Member States.

The special negotiating body shall be reconvened at the written request of at least 10 % of the employees of the SCE, its subsidiaries and establishments, or their representatives, at the earliest two years after the above-mentioned decision, unless the parties agree to negotiations being reopened sooner.

The agreement on arrangements for the involvement of employees:

This agreement shall be negotiated in a spirit of cooperation between the competent organs of the participating legal entities and the special negotiating body, in accordance with the legislation of the Member State in which the registered office of the SCE is to be situated. Negotiations shall commence as soon as the special negotiating body is established and may continue for six months thereafter. The parties may decide, by joint agreement, to extend these negotiations up to a total of one year from the establishment of the special negotiating body.

This agreement specifies:

  • the scope of the agreement itself;
  • the composition, number of members and allocation of seats on the representative body which will be the discussion partner of the competent organ of the SCE in connection with arrangements for the information and consultation of the employees of the SCE and its subsidiaries and establishments;
  • the functions and the procedure for the information and consultation of the representative body;
  • the frequency of meetings of the representative body;
  • the financial and material resources to be allocated to the representative body;
  • the arrangements for implementing information and consultation procedures if, during negotiations, the parties decide to establish one or more of those procedures instead of establishing a representative body;
  • the procedures to be followed so that employees can elect, appoint, recommend or oppose their members and their rights if, during negotiations, the parties decide to establish arrangements for participation, the substance of those arrangements including the number of members in the SCE's administrative or supervisory body which the employees will be entitled to elect, appoint, recommend or oppose;
  • the date of entry into force of the agreement and its duration, cases where the agreement should be renegotiated and the procedure for its renegotiation, including, where appropriate, in the event of structural changes in the SCE and its subsidiaries and establishments which occur after the creation of the SCE.

Standard rules:

The Member States shall lay down standard rules on employee involvement which must satisfy the provisions set out in the Annex to the Directive. As laid down by the legislation of the Member State in which the SCE has its registered office, these standard rules shall apply from the date of the registration of the SCE where either:

  • the parties so agree, or
  • no agreement has been concluded between the special negotiating body and the competent organs of the legal entities within the deadline given but where the latter decide to accept the application of the standard rules in relation to the SCE and so to continue with its registration of the SCE. This also implies that the special negotiating body has not taken the decision not to open negotiations or to terminate negotiations already opened with the competent organs of the participating legal entities.

Moreover, it should be stressed that the standard rules set by the national legislation of the Member State of registration shall only apply in the specific cases listed by the Directive which differ depending on the way in which the SCE was formed (conversion, merger, etc.).

Rules applicable to SCEs established exclusively by natural persons or by a single legal entity and natural persons

In the case of an SCE established exclusively by natural persons or by a single legal entity and natural persons, which together employ at least 50 employees in at least two Member States, the preceding provisions shall apply.

In the case of an SCE established exclusively by natural persons or by a single legal entity and natural persons, which together employ fewer than 50 employees, or employ 50 or more employees in only one Member State, employee involvement shall be governed by the following provisions:

  • in the SCE itself, the provisions of the Member State of the SCE's registered office, which are applicable to other entities of the same type, shall apply,
  • in its subsidiaries and establishments, the provisions of the Member State where they are situated, and which are applicable to other entities of the same type, shall apply.

Miscellaneous provisions

This Directive also specifies reservation and confidentiality obligations, the operation of the representative body, the procedure for the information and consultation of employees, the protection of employees' representatives, and other minor details which are useful for its smooth operation.

REFERENCES

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 1435/2003
[adoption: consultation COD/1999/0388]
21.08.2003 - OJ L 207 of 18.08.2003
Directive 2003/72/EC [adoption: consultation COD/1991/0389] 18.08.2003 18.08.2006 OJ L 207 of 18.08.200

RELATED ACTS

Communication from the Commission to the Council and the European Parliament, the European Economic and Social Committee and the Committee of the Regions of 23 February 2004 on the promotion of co-operative societies in Europe [COM(2004) 18 final - Not published in the Official Journal].
The Commission believes that the potential of cooperatives has not been fully utilised and that their image should be improved at national and European levels. In this context, it sets out steps which may encourage the wider use of co-operatives across Europe. These focus on increased visibility, further improvement of national laws on co-operatives, and enhancement of co-operatives' contribution to community policy. The main issues of the Communication are:

  • the promotion of the greater use of cooperatives across Europe by improving the visibility, characteristics and understanding of the sector;
  • the further improvement of legislation governing cooperatives in Europe;
  • the maintenance and improvement of cooperatives' place and contribution to Community objectives.

How to set up a European Cooperative Society

A European Cooperative Society or 'Societas Cooperativa Europaea' (SCE) is a type of body intended to make profit for members who contribute to their capital, and own and control them - not investors.

Formation of an SCE

Forming an SCE follows similar rules as when forming a national cooperative. An SCE can be created:

  • as a completely new business - also called 'ex novo' - with five or more people, by two or more legal entities or by a combination of the two, from at least two member states
  • by merging two or more existing co-operatives from at least two member states
  • by converting a co-operative that has had a subsidiary in another member state for at least two years

SCEs must be owned by at least five European Union (EU) citizens from two or more member states.

Your minimum share capital must be €30,000 spread between different amounts of members' shares. Members can be customers, suppliers and 'investor members', who have limited voting rights.

Founding members must draw up the SCE's statutes in writing and sign the document. They must be in accordance with cooperative societies laws for the country the registered office is locate in.

The statutes of the SCE should include:

  • the name of the SCE
  • a statement of the objects
  • the names of the founder members - persons and entities - indicating their objects or registered offices
  • the registered office address
  • conditions and procedures for the admission, expulsion and resignation of members
  • rights, obligations and different categories of members
  • the nominal value of the subscribed shares, and information on capital
  • amount to be allocated from the surplus to the legal reserve
  • governing members powers and responsibilities
  • provisions governing the appointment and removal of the members of the governing organs
  • number of people that will make up the 'majority' and the 'quorum'

Before registration you must negotiate an agreement between you - as the employer - and a special negotiating body of employees from each member state the employees work in.

Registering an SCE

An SCE must be registered in the member state in which its head office is located.

All documents and information about an SCE registered in the UK must be published as if it was any other company. Notice of registration must also be published in the Official Journal of the EU.