The main feature of a cooperative company (société coopérative - SC) is its variable capital and the absolute non-transferability of shares to third parties. The variable nature of its capital often results in a change of the number of partners.
An SC has considerable latitude in the drafting of its articles of association, offering partners flexibility concerning their responsibilities, and the functioning and management of the company.
Who is concerned
An SC is of interest to any natural or legal person who wishes to:
- diversify potential business activities;
- associate with other professionals to boost their own business activities;
- reduce cost and sales prices by pooling resources.
There is no legal restriction on access to the legal form of an SC.
In addition, the natural and legal persons that are partners need not be qualified as merchants – only their legal capacity is a requirement.
How to proceed
Creation of the company
- notarised or private deed;
- lodging with the Trade and Companies Register (RCS) for the purpose of publication in the electronic repository of companies and associations (Recueil électronique des sociétés et associations - RESA).
Some cooperative companies are organised like public companies and certain European cooperative companies have their own provisions in terms of constitution, contribution, operation and management.
- limited or unlimited: to be determined in the articles of association, failing which, the company is set up for an unlimited duration;
- may be dissolved by a majority vote of the partners’ meeting in the form prescribed for the amendment of the articles of association.
- no minimum or maximum;
- variable capital;
- the constitutional document must stipulate how the share capital is formed and indicate the minimum immediate subscription. In cooperative companies with limited liability, the share of fixed capital in the total capital must be stipulated in the articles of association.
Form of company shares
- securities representing the subdivisions of the share capital;
- possibility to create profit shares.
Transfer of company shares
- the shares cannot be transferred to third parties;
- no derogation in the articles of association can specify transfer procedures;
- the admission of a new partner involves an increase in the capital;
- the withdrawal of a partner results in a reduction in the capital.
- conditions of admission laid down in the articles of association;
- a note must be made in the register of partners, in accordance with the applicable rules.
- minimum 2, no maximum.
- the limited or unlimited liability form of the cooperative company has to be stipulated in the articles of association;
- unless stated otherwise in the articles of association, partners have joint and several liability.
Register of partners
Every cooperative company must have a register containing:
- on the first page, the company's constitutional document;
- followed by:
- the names, professions and addresses of the shareholders (the list must be filed with the RCS every 6 months);
- the date of their admission, their resignation or their exclusion;
- the amounts paid or withdrawn by each of them;
- the date of the audits made and the names of the administrators or approved statutory auditors.
The indication of a withdrawal of contributions is signed by the shareholder who performed the withdrawal.
The register must be updated every 6 months.
A list with the names by alphabetical order, the professions and residences of the partners, dated and certified true by the signatories must also be filed with the RCS.
Meeting of partners
- all partners have voting rights (unless otherwise stipulated in the articles of association);
- calls to meetings are made by the management;
- majority conditions are defined in the articles of association or in accordance with the rules laid down for public limited companies (sociétés anonymes – SA);
- validity conditions for decisions taken by the meeting are defined in the articles of association or in accordance with the rules laid down for public limited companies (sociétés anonymes – SA).
Resignation or exclusion
- resignation is possible, under the terms and conditions as provided for by the articles of association;
- a mention of the resignation in the register of the partners, dated and signed by the partner and one administrator;
The resignation can only be tendered within the first 6 months of the financial year.
- exclusion as a result of a report, drafted and signed by an administrator, stating the facts which establish that the exclusion was pronounced in accordance with the statutes;
- transcription of the report in the register of the partners and transmission of a certified true copy to the excluded shareholder by registered letter within 2 days.
Shareholders who have resigned or have been excluded remain personally liable to the extent of their commitment and for a period of 5 years after the publication of the resignation or exclusion unless legal exceptions apply.
The cooperative company (société coopérative) is managed by one or more representatives, whether they are partners or not, who are only responsible for the tasks assigned to them. The rules concerning public limited companies (société anonyme - SA) will apply if the articles of association do not explicitly define the management procedures.
Accounting and financial information
- obligation to compile an inventory;
- obligation to produce: balance sheet, profit and loss account, notes to the financial statements and management report, which must be approved by the partners’ general meeting;
- lodging of annual financial statements, of the management report and of the internal auditor's report with the Luxembourg Business Registers (LBR) within the 7 months following the end of the financial year (6 months to hold the general meeting plus one month after the meeting);
- the accounts must be drawn up according to the 'Lux Gaap' rules.
Controlled supervision of the company
- mandatory supervision by one or more internal auditors (commissaires aux comptes), partners or otherwise.