European cooperative society

Definition

A European cooperative society (Societas Cooperativa Europaea – SCE) is an optional legal form of cooperative company, aimed at facilitating the cross-border and transnational activities of cooperatives. While overall in the EU there are some 131,000 cooperatives, with more than 4.3 million employees and an annual turnover of €992 billion, there are only a few SCEs, as not many cooperatives have sought SCE status so far. ^[1]

Background and status

The 2003 regulation laying down the rules on the establishment and operation of an SCE states that it can be created:

• 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 cooperatives
• by the conversion of an existing cooperative that has been established or been a subsidiary in another EU country for at least two years

The minimum capital requirement is €30,000. An SCE must be registered in the EU country where it has its head office. Voting in an SCE is generally conducted in accordance with the cooperative principle of ‘one member, one vote’. At an SCE’s annual general meeting, decisions are taken by simple majority of members present or represented. Otherwise, changes to internal statutes require a two-thirds majority.

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

Regulatory aspects

Worker participation

Arrangements for worker participation in an SCE must be negotiated as part of the establishment process between the managements of the participating entities and representatives of their employees in the different Member States. Failure to reach agreement before the SCE is registered results in the SCE being governed by a set of standard rules on worker participation, similar to those set out in the directive on the European company (Societas Europaea/SE), with, where appropriate, board-level participation, and with some adjustments to take account of the differences between an SCE and an SE.

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

Implementation

In 2012, the European Commission published its evaluation report on the SCE statute, based on the findings of a public consultation launched in 2011. The report points to its relative lack of success, with only 24 SCEs registered across the 30 EU/European Economic Area countries, and presents some of the reasons for this put forward by respondents to the consultation. These include the complexity of the process and the fact that the companies operating as a cooperative tend to be small businesses operating within national borders and anchored in their local territory. Reacting to this report, the European Parliament stressed that the statute ‘should be simplified and made intelligible to all to make it more user-friendly, easily understood and better applicable, thus ensuring the rights of information, consultation and participation of all employees without losing quality’.

• European Commission: Report on the application of Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (COM/2012/072 final)
• European Parliament: Report on the Statute for a European Cooperative Society with regard to the involvement of employees (2011/2116(INI))

Commentary

The issue of how to develop cooperative organisations, and a possible revision of the SCE statute, may be addressed in the future action plan for the social economy that will be launched by the European Commission in 2021 ‘to enhance social investment [and] support social economy actors and social enterprises to start-up, scale-up, innovate and create jobs’. ^[2]

Related dictionary terms

European company ; information and consultation ; social economy