The Cooperative Company (SC): Founding, Governance and Accreditation

What Is a Cooperative Company?

The SC first serves the needs of its members. Since the Belgian Companies and Associations Code (CSA) of 2019, this form requires a genuine shared purpose. Its main aim is to meet the needs of its shareholders or of other stakeholders. Making a profit remains allowed. But profit does not form the reason for the project.

In practice, a cooperative company gathers people who use the service they own. For example, market gardeners sell their harvest together. Residents also fund solar panels or a neighbourhood shop. In both cases, the members act as owners and users at the same time.

Do you really need an SC? If the project mainly targets returns for investors, an SRL, the usual limited liability form, fits better. Our comparison SRL or SA: which legal form to choose helps you decide.

Founding the SC: Three Founders and a Notary

Three conditions frame the birth of an SC:

• At least three founders, whereas an SRL can start with one.
• A notarial deed that contains the articles of association.
• A financial plan, handed to the notary before signing.

Next, the notary files the deed with the court registry. The SC then receives its enterprise number. After that, it registers its activities with an approved business counter, as our guide to CBE registration explains. Finally, an extract of the deed appears in the annexes of the Belgian Official Gazette.

No Minimum Capital, but a Serious Plan

The law sets no minimum capital. However, the financial plan takes real work. As with an SRL, it describes the activity, the sources of funding and the forecast results and cash flow. Our article on the mandatory financial plan lists what it must contain.

Why so much care? An unrealistic plan can turn against the founders if the business goes bankrupt early. Also, shareholders in principle only risk their contribution. Their private assets therefore stay out of reach of the SC's debts.

What the Articles Should Cover

The articles organise the life of the structure. For a cooperative company, four points deserve special attention:

• The shared purpose, described in concrete terms.
• The conditions for admitting, resigning and excluding shareholders.
• Voting rights and the sharing of profits.
• The rules for paying back a member who leaves.

Governance: Who Decides in the SC?

In a cooperative company, the general meeting brings together all shareholders. It approves the accounts, appoints the directors and amends the articles. The board then runs the business day to day. It can consist of a sole director or several members. Above certain thresholds, the SC also appoints a statutory auditor.

Who votes, and with what weight? The articles leave wide room here. Many cooperatives choose the principle of "one person, one vote". Others cap the weight of large investors. Thus money alone does not dictate decisions.

Joining and Leaving Without Amending the Articles

This is the main practical strength of the SC. New members can join without any change to the articles. Likewise, a shareholder can leave by resigning, under the agreed conditions. The departing member then recovers their stake within the limits of the law and the articles. The board keeps the share register up to date.

This flexibility suits projects that grow through waves of new members. For example, a citizen project welcomes new residents every year. No trip to the notary slows down these arrivals.

CNC Accreditation for a Cooperative Company

Accreditation by the National Council for Cooperation (CNC) remains optional. The FPS Economy handles applications and publishes the current conditions. For a cooperative company, this accreditation brings several benefits:

• Greater credibility with members and partners.
• Easier access to some social economy funding.
• A possible tax advantage on a slice of dividends, to check each year with your accountant.

The Accreditation Conditions

The CNC looks at the articles and at how the SC really works. Its requirements include, among others:

• Voluntary membership, with no arbitrary refusal.
• Equal or limited voting rights: nobody holds more than one tenth of the votes attached to the shares represented.
• Directors appointed by the general meeting.
• A moderate dividend.
• A share of resources devoted to informing and training members.

These rules follow the spirit of the seven principles of the International Cooperative Alliance. Still, the accreditation can disappear if the SC drifts away from these requirements.

Social Enterprise Accreditation: One Step Further

Some SCs aim above all for social impact. They can then also apply for accreditation as a social enterprise. This second accreditation requires a clear social aim. It also imposes strict rules on the distribution of profits. This status mainly attracts projects in social inclusion, health or the environment.

Common Mistakes to Avoid

Three mistakes come up often:

• Choosing the SC to escape the financial plan, while that plan remains mandatory.
• Forgetting the exit rules, then facing a departure that drains cash.
• Copying template articles without adapting the shared purpose.

In addition, every cooperative company files its annual accounts with the National Bank of Belgium (NBB). Our guide to filing annual accounts sets out the deadlines.

Setting Up Your Cooperative Company Step by Step

First, write down the shared project on a single page. Then gather at least three founders who share that vision. Next, put figures on the launch in a realistic financial plan. Finally, meet the notary with carefully thought-out articles.

Juristelo helps you build that financial forecast. You then present a solid cooperative company to the bank as well as to the notary.