Book 6 of the Code of Companies and Associations (the “CCA”) contains the provisions that apply to a cooperative company. The CCA makes a number of important changes to the existing rules. We will be happy to explain these for you.
The current Companies Code defines a cooperative company as a company composed of a variable number of partners (with smooth arrangements for entry or departure), who contribute a variable amount of capital. This specific characteristic, along with the flexibility on offer, makes this type of partnership particularly popular for companies in the cooperative sector, as well as for professional partnerships through which individual professionals carry out their activities collectively (such as partners in a law firm and a medical practice). However, the cooperative notion has fallen out of favour more than once.
Return to the cooperative school of thought
With the CCA, the legislator is bringing the popular cooperative company back to its original raison d’être, namely striving towards the cooperative school of thought. It makes cooperative companies the sole preserve of the “true” cooperatives.
The CCA specifies that a cooperative company “must as its primary goal meet the needs of its shareholders or third-party interests and/or develop their economic and social activities, including by coming to agreements with them on the supply of goods and services or carrying out work in the context of the activity that the cooperative company practises or causes to be practised […].”
As a result, it will no longer be possible for cooperative companies who do not conform to this cooperative notion to continue to adopt the form of a cooperative company. This will, therefore, have an impact on the numerous professional partnerships through which individual professionals carry out their activities collectively. Under the CCA, a private limited company (“BV/SARL”) will now be considered the appropriate legal form for such professional partnerships.
Extraordinary sanction: dissolution where definition not met
In order to avoid the form of a cooperative company being adopted by companies that do not conform to the definition as determined by the CCA, the CCA provides for an extraordinary sanction: the Business Court may, at the request of a shareholder, a third-party interest or the Public Prosecutor, declare the dissolution of a cooperative company that does not conform to the requirements imposed by the CCA.
SCRI/CVOA to disappear – SCRL/CVBA will become SC/CV
Whereas under the current Companies Code, a distinction is drawn between a cooperative company with limited liability (“SCRL/CVBA”) and a cooperative company with unlimited liability (“SCRI/CVOA”), the SCRI/CVOA will no longer exist as a type of company under the CCA. The cooperative partnership (“SC/CV”) will remain as the only type of cooperative company.
It will remain possible under the CCA to recognise a cooperative company (“recognised SC/CV”), either as a social enterprise or otherwise. The rules for this recognition are laid out in Book 8 of the CCA, and are further explained in our newsletter on Book 8 that will be sent out within two weeks (“Recognition of Companies”).
A later contribution will examine Book 7 – The public limited company.