THE STATUTE FOR A EUROPEAN CO-OPERATIVE SOCIETY (SCE)

Europe's 300,000
co-operatives play an important part in the economy, employing 2.3 million and
providing services to 83.5 million members. The co-operative form is recognised
in all Member States.  However, cross-border co-operation between
co-operatives has been hampered within the European Union by legal and
administrative difficulties, which should be eliminated in a market without
frontiers.

The objective of the SCE
Statute, which was adopted by the Council on 22nd July 2003, OJ of 18th August 2003
(L207), is to provide
co-operatives with adequate legal instruments to facilitate their cross-border
and trans-national activities. The new Statute parallels the Statute for a
European Company (SE), adopted in 2001, but has been tailored to the specific
characteristics of co-operative societies.

But the Statute is not
only of interest to co-operatives. It also provides an ideal legal instrument
for companies of all types wishing to group together for their common benefit,
for example in order to access markets, achieve economies of scale or undertake
research or development activities. The Statute will also enable 5 or more
European citizens (physical persons) from more than one Member State to create a
European Co-operative Society. As such it will be the first and only European
company form which can be established from scratch and with limited liability.

The Nature of the SCE

The SCE (like all
co-operatives) is a legal entity that allows its members (physical persons or
legal entities) to carry out certain activities in common, while at the same
time preserving their independence. Members of an SCE will normally be customers
or suppliers and will be directly and personally involved in the activities and
the management of the SCE. An SCE must have as its principal object the
satisfaction of its members' needs and/or the development of their economic and
social activities, and not the remuneration of a capital investment. The
activities of an SCE should therefore be undertaken for the mutual benefit of
its members in such a way that each member benefits from the activities of the
SCE in relation to his volume of trade with the co-operative, not his capital
contribution.

The SCE is an optional
legal form and does not replace existing laws governing co-operatives at
national or regional levels. It is an instrument designed to facilitate trans-national
co-operation and therefore the members must be resident in more than one Member
State.

The Main Characteristics of
the SCE

A. An SCE might be
created:

• From scratch ('ex
  novo'), by five or more natural persons, by two or more legal
  entities or by a combination of five or more natural persons and legal
  entities;

• By a merger of
  two or more existing co-operatives.

• By conversion of
  an existing co-operative which has, for at least two years, had an
  establishment or subsidiary in another Member State

In the first two cases at
least two of the natural persons or legal entities should be from different
Member States.

B. The minimum capital
requirement is Euro 30,000. An SCE has a variable share capital and may have
among its members not only customers or suppliers but, in some circumstances, a
limited proportion of "investor members" who do not use the services
of the co-operative. The voting rights of such investor members are limited.

C. An SCE must be
registered in the Member State where it has its head office. It may move its
registered office from one Member State to another without having to wind-up and
re-register.

D. For tax purposes an SCE
is treated as any other multi-national company according to the national fiscal
legislation applicable at company or branch level. It will continue to pay taxes
in those Member States where it has a permanent establishment.

E. Voting in an SCE is
generally conducted in accordance with the co-operative principle of "one
member ? one vote". However, weighted voting may be allowed in certain
circumstances to reflect the amount of business done with the SCE.

F. An SCE must call a general
meeting at least once per year. Decisions are taken by simple majority of
those members present or represented, except for changes to the internal
statutes where a 2/3 majority is required. For changes to the statutes a quorum
of ? of all members is required.

G. The internal statutes
of the SCE must set out its management structure according to one of two
possibilities: Two-tier structure (management body and supervisory body)
and One-tier structure (administrative body).

The Directive on Employee
Involvement

The Directive concerning
the involvement (information, consultation and participation) of employees in an
SCE lays down a set of rules designed taking into account the specific
characteristics of both the entities participating in the creation of a SCE and
of the SCE itself, as well as of the different ways of creating a SCE. The
solutions to protect acquired employees rights are based on negotiations between
the participating companies and their workforce prior to the creation of the
SCE. Where a negotiated mutually satisfactory arrangement cannot be found
standard rules will apply based on the "before-after" (acquired
rights) principle. These rules are mostly identical to those that would apply to
a European Company (SE) in similar circumstances.

However, specific rules
have been designed for the case of a SCE formed from scratch ("ex novo"),
as no equivalent means of establishment exists in the SE statute. In this case,
the probability is high that the participating persons or entities would have
very few or no employees at all and that the resulting entity (the SCE) would
have a very limited trans-national workforce, in terms of number of employees
employed in different Member States. The "before-after" principle was
therefore not appropriate, as there would be no acquired rights.

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