The cooperative
In § 1 I GenG, the cooperative is legally defined as follows:
"Companies with a non-closed number of members whose purpose is to promote the acquisition or the economy of their members or their social or cultural interests through joint business operations (cooperatives)."
§ 1 I GenG
The legal definition makes clear the constitutive element of a cooperative, which is the purpose of promoting members through joint business operations. In contrast to the goal of maximizing profits in other forms of business, the primary goal of a cooperative is to promote its members. The goal of promoting members means that the primary premise within the cooperative is not pure profit orientation, but rather that the aim is merely to cover expenses. Nevertheless, a cooperative may also realize profits so that it can support its members in the best possible way. This results in a pronounced closeness of the members to each other with an intensified personalistic character of the form of the company. Consequently, the basic idea of a cooperative is not the usual maximization of profits, but the best possible support and promotion of the members within their social and cultural interests (§ 1 GenG).
Above all, therefore, is the mandate to promote its members. This promotional mandate may differ depending on the type of cooperative, although all types of cooperatives are based on common values and principles that are regulated by cooperative law. A key characteristic of the cooperative form of company is that the members have equal rights to each other - without differentiating between the respective capital shares in terms of the amount of their contributions. This means that members acquire full shareholder status as soon as they join the cooperative, regardless of the amount of their cooperative shares. Member protection is realized through the special regulations of association law cf. § 65 III GenG and thus not through the protective provisions of the law on general terms and conditions cf. § 310 IV p. 1 BGB.
A cooperative is an association of people with similar problems, interests or objectives who work together to find economic solutions to their concerns. The working methods of cooperatives are therefore based on the principles of self-help, self-administration and self-responsibility. A cooperative is a democratically organized company with a promotional economic objective. For this reason, they are also referred to as a development economy association, as they have the character of both an association and a company. More transparently, a cooperative is a company that pursues the goal of promoting the acquisition of its members by means of a joint business operation.
Nothing is more alien and detrimental to the nature of German cooperatives than their misuse for state and party-political objectives - they are economic associations without party-political objectives! The cooperative is a legal entity (§ 17 I GenG) just like corporations. The cooperative is entered in the register of cooperatives and must bear the addition of a registered cooperative (eG) (§ 3 GenG).
According to § 9 I S. 2 GenG, a small cooperative is a cooperative with 20 or fewer members. In 2006, simplifications were made to the organizational constitution of small cooperatives as part of the law reform. A small cooperative can be founded with three natural persons or two natural persons and one legal entity. As a legal entity under private law, it cannot act on its own; this is the responsibility of its executive bodies.
The position and influence of the members of a cooperative become clear when you look at the individual cooperative bodies. The registered cooperative must be composed of at least two bodies: the executive board and the general meeting. These cooperatives can dispense with a supervisory board in accordance with § 9 I sentence 2 GenG. In this constellation, this role is replaced by the general meeting in accordance with § 9 I sentence 3 GenG or by an authorized representative of the general meeting who represents the management board in accordance with § 39 GenG.
The General Meeting is the highest decision-making body of the cooperative. It is responsible for electing and approving the actions of the Executive Board. This emphasizes the personal character of the cooperative. According to the Cooperatives Act, the management of the company is represented by the cooperative's board of directors, which can be represented by just one person in the case of a small cooperative. In addition to the board of directors, the general meeting is a kind of "parliament of the cooperative". The General Assembly has rights and powers that are exclusively reserved for it and are irrevocable. Specifically, it is responsible for the conversion/merger of the cooperative into other legal forms, if necessary, as well as the dissolution of the cooperative, amendments to the articles of association, the division and increase of members' shares and the determination of compulsory shareholdings.
Conclusion:
Cooperatives are characterized by their primary purpose of supporting members rather than maximizing profits. They offer a democratic and solidary form of organization based on self-help, self-administration and self-responsibility. Every member has equal rights, regardless of their capital share. Cooperatives are both economic and social associations and are subject to special legal regulations. They offer a strong community that supports and promotes the economic and social interests of its members. Small cooperatives in particular benefit from simplified organizational structures, which means that they can be founded with just a few members.
We would be happy to support you in setting up your cooperative or to check to what extent the cooperative is suitable for you as a legal entity.