Definition of a co-operative

Definition of a co-operative 

“In the last decade, even in times of crisis, co-operatives are resilient socio-economic organisations  capable of providing sustainable employment and income to individuals and communities” (Birchall &  Hammond Ketilson, 2009; OIT, 2013)  

4.2. What is a cooperative? What do we understand by a cooperative?  

The International Cooperative Alliance (ICA) defines a co-operative as an “Autonomous Association of  persons who have united voluntarily to meet their common economic, social and cultural needs and  aspirations through a jointly owned and democratically controlled enterprise. Co-operatives are based  on the values of mutual aid, responsibility, democracy, equality, equity and solidarity. In the tradition of  their founders, their members believe in the ethical values of honesty, transparency, social  responsibility and concern for others”, (ICA, 2005). 

For its part, the European Union provides the following definitions, “An autonomous association of  persons united voluntarily to meet their economic, social and cultural needs and aspirations through a  jointly owned and democratically controlled enterprise where an elected leader is accountable to the  members. The defining characteristics of a cooperative are its possibility of free, open and voluntary  association and withdrawal, its democratic structure, and its fair and equitable distribution of economic  outcomes” (European Commission, 2011), and “Groupings of persons or legal entities governed by  specific operating principles, distinct from those of other economic actors. These principles include  democratic structure and management and the equitable distribution of the net profit of the financial  year” (Council of the European Union, 2003). 

Although the different supranational organizations and legislation in different countries define  cooperative societies differently, in general terms they agree that it is an autonomous association of  people who voluntarily join together to meet their common economic, social and cultural needs and  aspirations through a jointly owned and democratically controlled company.

Cooperatives are based on mutual support and the assurance that their members work together for a  common good. Co-operatives are companies that are people-centered and people-managed, and the  profits generated are either reinvested in the enterprise or returned to the members. 

Co-operatives are the only known form of organization with an internationally agreed and consensual,  collegially or collectively agreed definition and code of ethics.  

The Values and Principles reflect the fundamentals and are the guide, the lighthouse, the way of being,  doing business and generating well-being of co-operatives, and show the tradition of a successful and  long-lasting model of society and business membership. 

It should be pointed out that, especially in recent years, the identity of co-operatives (the co-operative  brand) has become more and more desirable, attractive and fair. 

European Co-operative Society (SCE) 

The European Cooperative Society (SCE) is a legal entity with members in several European countries.  

The European Co-operative Society is first and foremost a co-operative society and is therefore a society  whose objective is the satisfaction of its members’ needs (and not the return on capital investment), as  well as the promotion of cross-border economic activities.  

As cooperative societies, they are governed by the principles and values characteristic of cooperative  societies: democratic management and the primacy of people over capital. 

With regard to the regulations applicable to cooperatives, each country has its own legislation governing  this type of company. However, at European level, the following legislation regulates cooperatives with  members in several European countries: 

• Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European  Cooperative Society (SCE). This Regulation aims to facilitate the cross-border and transnational  activities of cooperative societies.  

• The involvement of employees in the European Cooperative Society (SCE) is governed by the  provisions of Directive 2003/72/EC. 

Main characteristics of the European Cooperative Society: 

The European Cooperative Society (SCE) is a legal entity with members in several European countries.  

• An SCE can be established by: 

five or more natural persons; two or more legal persons; or a combination of at least five  natural persons and legal entities.

by the merger of two or more existing cooperatives. 

by conversion of an existing cooperative that has been established in another EU country  for at least two years. 

• To establish an SCE the minimum capital requirement is EUR 30,000. An SCE can have a limited  proportion of investor members: they do not use the services of the cooperative and their voting  rights are limited. 

• An SCE must be registered in the EU country in which it has its registered office. • For tax purposes, an SCE is treated like any other multinational enterprise and pays tax in those  countries where it has a permanent establishment. 

• An SCE must convene a general meeting at least once a year. Decisions are taken by simple  majority of the members present or represented, except for changes to the internal statutes  where a two-thirds majority is required. • The internal statutes of the European Cooperative Society must establish its management  structure according to one of two possibilities: a two-tier structure (management body and  supervisory body) or a single-tier structure (administrative body).