The aim of this page is to offer an interpretation of the conditions for approval set out in the Royal Decree of 8 January 1962 laying down the conditions for approval of groupings of cooperative societies and cooperative societies.
Membership in a Cooperative Society is Voluntary
“The affiliation of associates must be voluntary and the cooperative society may refuse the affiliation of associates or declare their exclusion only if the persons concerned do not meet or cease to meet the general conditions of admission provided for in the articles of association or if they commit acts contrary to the interests of the society” (Art. 1, § 1, 1°, of the Royal Decree of 8 January 1962).
“In the event of refusal of membership or exclusion referred to in paragraph 1, 1°, the company shall communicate the objective reasons for the refusal of membership or exclusion to the person concerned who so requests” (Art. 1, § 2 of the Royal Decree of 8 January 1962).
The cooperative society is by definition open to any person wishing to join. This cooperative principle does not mean, however, that anyone wishing to join the society has the right to be admitted.
The associates of the society decide with whom they wish to collaborate. In other words, they may designate categories of persons who may become associates of the society. As such, members of the society may have a legitimate interest in accepting only new associates who meet certain membership conditions objectively set out in the articles of association (such as residence, profession, capacity, etc.).
The principle of voluntary membership presupposes that the conditions of membership are objective and non-discriminatory. As such, an application for membership cannot be refused on the basis of the applicant's sex, race, social origin or political or religious beliefs. The applicant must therefore be able to ensure that the decision to refuse their application for membership is based on objective and non-discriminatory grounds. To this end, the Royal Decree of 8 January 1962 stipulates that the approved cooperative society must, at the request of the applicant associate, communicate the objective reasons for refusing membership.
The shares create, per class of shares, the same rights and obligations
"The shares in the company's capital, even if they are of unequal value, create equal rights and obligations within each value category, except as provided below in the provision under 3° with regard to voting rights at the general meeting" (article 1, § 1, 2°, of the Royal Decree of 8 January 1962).
In the Companies and Associations Code, the concept of “nominal value” has been deleted. The provision is therefore read as follows:
“The shares create, per class, equal rights and obligations, subject to what is determined below in the provision under 3° with regard to voting rights at the general meeting”
A recognized cooperative society may create different share classes of shares that entail different rights and obligations for the partners.
For example, the company that issues share classes of different classes of shares may associate these classes of classes with rights and obligations that are different in terms of dividends (e.g. 6% net for class A shares share class and 4% net for share class class A). of B shares), the possibility of granting a discount, the right to propose candidate directors, payment of a fixed membership fee, a quorum to vote or in terms of the redemption of the shares.
However, the terms of recognition apply to all types of share classes.share classes. Therefore, no share class of share types can be issued that pays a dividend in excess of 6% net.
This recognition condition does not allow a distinction to be made between partners for the voting right at the general meeting (it is true that the part of the sentence "subject to what is said at 3° below with regard to the voting right at the general meeting" to be interpreted).
The Vote of Associates at the General Assembly Is Democratic
“All associates shall have an equal voice in all matters at general meetings, regardless of the number of shares they hold” (Art. 1, § 1, 3°, of the Royal Decree of 8 January 1962).
“The articles of association may derogate from the provision of paragraph 1, 3°, provided that no associate may take part in the vote, either personally or as a representative, for a number of votes exceeding 10% of the votes attached to the shares present and represented. Moreover, if the society has more than a thousand associates, the vote may be taken in the second degree” (Art. 1, § 3 of the Royal Decree of 8 January 1962).
Various systems regarding voting rights are compatible with this condition for approval, provided that the chosen system does not result in a shareholder being able to cast at the general meeting, in a personal capacity or as a representative, a number of votes that is greater than one-tenth of the votes attached to the shares present and represented.
The following voting systems are therefore valid (provided that the limit of one-tenth of the votes attached to the shares present or represented is respected):
- each associate has only one vote;
- each share entitles the holder to one vote;
- only one vote per series of shares (for example, one vote per 5 or 10 shares);
- one vote per associate + one vote per series of shares;
If the articles of association do not stipulate anything, the additional rule of article 382 6:41 of the Code of companies and associations applies ("Unless the articles of association provide otherwise, each share carries one vote, a share entitles the holder to one vote"). However, this system is not in accordance with the acknowledgment condition, unless each partner holds exactly the same number of shares.
Finally, large cooperative societies with more than a thousand associates have the possibility of organising a “second degree” voting system.
This system, which aims at simplifying voting in the general meeting by organising a voting mechanism by representation, occurs as follows: first, the associates meet by category, by provinces or by regions (local committees) or in some other way and proceed to a vote (= first-degree vote) to appoint their representatives who, in a second step, will take part in the votes in the general meeting of the society (= second-degree vote).
The Statutory Auditors and Directors Are Appointed by the General Meeting of Shareholders
"The directors and auditors are appointed by the general meeting" (article 1, §1, 4°, of the Royal Decree of 8 January 1962).
"§ 4. The provision of paragraph 1, 4°, does not prevent statutory directors from being appointed to the extent that the articles of association provide for the possibility and further rules for the general meeting to revoke the appointment. Are there one or more directors or supervisory directors not appointed by the general meeting, but by the board of directors or by a different category of partners, the general meeting has the right to oppose this appointment" (art. 1, § 4, of the Royal Decree of 8 January 1962).
The Code of Companies and Associations now provides that the directors are appointed by the general meeting (art. 6:58, § 2, CAC). The possibility of appointing a director by the administrative body as provided for in Article 1, § 4, of the Royal Decree of 8 January 1962 no longer applies.
According to this recognition condition, the decision-making power to appoint directors and supervisory directors lies with the general meeting.
The board of directors or a separate category of partners (for example, the founding members) may appoint the directors or the auditors insofar as the general meeting can oppose this appointment.
Statutory directors may also be appointed insofar as the statutes provide for the possibility for the general meeting to oppose this. Only if the articles of association designate the directors “ex officio”, without the possibility for the general meeting to revoke this, the articles of association are in conflict with the conditions of recognition.
The Dividend Distributed to the Associates Is Moderate
than 6 percent of the nominal value of the shares, after deduction of withholding tax” (Article 1, § 1, 5°, of the Royal Decree of 8 January 1962).
With the entry into force of the Companies and Associations Code, the concept of “nominal value” has been abolished. The condition of recognition should be read as follows:
“The gross amount of the dividend distributed to the partners may not exceed 6 percent of the paid-up amount of the contributions”.
This condition of recognition is interpreted as follows:
- The interest rate of 6% refers to the amount distributed per share amount of each fully paid contribution (and not to the total amount of profit distribution). For example, if a share has a par value with a fully paid contribution of EUR 500, the annual dividend may only amount to EUR 30.
- Insofar as the interest rate on the shares does not exceed the net amount of 6%, there is no objection to allocating a different dividend according to the date of joining of the partner (“pro rata temporis” dividend). This offers the possibility to create multiple share classes with different rights and obligations per class.
- The amount of the dividend paid, after withholding tax has been deducted, may not exceed 6% of the nominal value of the shares held. The percentage of 6% does not include the withholding tax that the cooperative company must withhold.
An exception to this rule exists when the partners of the company are legal persons. In that case, the paid dividend will consist of a higher amount (corresponding to an amount equal to 6% of the fully paid-up amount of the nominal value of the shares held, increased by the amount of withholding tax), insofar as the actual dividend paid does not exceed 6% of the nominal value of the shares held of the fully paid-up amount of the contributions, after the withholding tax paid by the respective partners-legal entities.
The Directors Exercise their Mandate Free of Charge
“The mandate of the directors and the associates in charge of the audit is free of charge” (Art. 1, §1 7°, of the Royal Decree of 8 January 1962).
“The articles of association may derogate from the provision of paragraph 1, 7°, provided that the remuneration, if any, of the directors does not consist of a share in the profits of the society and is fixed by the general meeting” (Art. 1, §6 of the Royal Decree of 8 January 1962).
This condition for approval enshrines the principle that the directors and associates in charge of the audit should hold office free of charge. However, the articles of association may derogate from this principle (for example for the directors responsible for the day-to-day management of the society) provided that any remuneration of the directors is fixed by the general meeting and does not consist of a share in the society's profits.
The Purpose of the Society Is to Satisfy the Needs of its Associates
“The main purpose of the society is to provide the partners with an economic or social benefit in the satisfaction of their professional or private needs” (Art. 1, §1, 6°, of the Royal Decree of 8 January 1962).
“If the advantage referred to in paragraph 1, 6°, consists in the granting of a patronage dividend, it may, if applicable, be granted only in proportion to the transactions that the associates have had with the society” (Art. 1, §5 of the Royal Decree of 8 January 1962).
The main purpose of an approved cooperative society must be to provide its associates with an advantage in satisfying their professional or private needs. This can be at the economic level (larger opportunities, better prices, more continuous purchases, faster payment, etc.) or at the social level (satisfaction of certain social needs).
In concrete terms, the economic or social advantage may take various forms, including the form of a drawback (which is no longer a separate and autonomous condition for approval). If the cooperative society opts for the allocation of a drawback, this may only be allocated, where applicable, in proportion to the transactions that the associates have organised with the society. Drawbacks cannot be granted on the basis of other criteria.
This recognition condition does not apply to cooperative companies with a social enterprise recognized as a social purpose, because the text of Article 661 8:5 of the Companies and Associations Code, which applies to them, is not in accordance with this recognition condition.
A Portion of the Annual Resources Is Devoted to Informing and Training Associates
“A portion of the annual resources is devoted to informing and training associates, current and potential, or the general public” (Art. 1, §1, 8°, of the Royal Decree of 8 January 1962).
Approved cooperative societies must every year devote part of their resources to informing and training their associates, current or potential, or the general public.
Verification of the Conditions for Approval
The Royal Decree of 8 January 1962 laying down the conditions for the approval of groupings of cooperative societies and cooperative societies provides that “the officials of the FPS Economy regularly check whether the groupings and cooperative societies continue to fulfil the conditions for approval issued to them. If it deems it necessary, the FPS Economy may request from the grouping or cooperative society the special report referred to in Article 1, §7, or additional information in the context of the verification of the conditions for approval” (Art. 6 of the Royal Decree of 8 January 1962).
The directors of cooperative societies are required to make a special report annually on how the society has ensured that the conditions for approval have been met, in particular those relating to economic advantage or informing or training associates.
If necessary, this special report can be integrated into the annual report drawn up in accordance with articles 95 and 963:5 and 3:6 of the Companies and Associations Code. The directors of recognized cooperative companies that are not obliged to draw up an annual report keep the special report at the registered office of the company.