STATUTE FOR A EUROPEAN CO-OPERATIVE SOCIETY
Amended draft Council Regulation on the Statute for a European co-operative society.
|Legal base:||Article 308 EC; consultation; unanimity
|Deposited in Parliament:
||26 February 2002|
|Basis of consideration:
||EM of 18 February 2002|
|Previous Committee Report:
|To be discussed in Council:
|Committee's assessment:||Politically important
|Committee's decision:||Not cleared; further information requested
7.1 The Commission's original proposal for a European
Co-operative Statute (considered by a previous Committee in 1992)
was modelled on the proposed European Company Statute (ECS). No
progress was made on the proposal, however, during the years in
which the ECS was stalled in Council. With the adoption of that
measure last year,
work has now resumed on the European Co-operative Statute.
7.2 The objective of the Statute is to provide co-operatives
with a legal framework so that they can operate across borders
on equal terms of competition with companies. The Statute consists
of a Regulation, which sets out the framework for a European Co-operative
Society (SCE), a new type of pan-European legal body, and a Directive,
requiring a particular level of employee involvement in the SCE.
The Statute would apply only to bodies that chose to form a SCE
in order to operate in two or more Member States.
7.3 The Regulation and Directive are on slightly different
timetables and are being discussed in different Councils of Ministers.
We have already considered the Directive once, and have requested
further information on it.
7.4 The background note on Co-operatives and the European
Statute for a European Co-operative Society, provided by the Treasury,
which is annexed to our paragraph on the Directive is also relevant
to the draft Regulation.
The draft Regulation
7.5 The current text of this draft Regulation is a compromise
proposal produced by the Belgian Presidency at the end of last
year. The document makes it clear that the principal object of
a SCE is the satisfaction of its members' needs and/or the development
of their social and economic interests, and not the remuneration
of a capital investment. The draft measure sets out rules for
certain key aspects of SCEs' statutes, including formation, capital
requirements, rules of incorporation, membership and mergers.
Other rules would be left to the existing law of the SCE's home
7.6 In regard to formation, it provides for an SCE to
- by five or more natural persons, by five or more natural persons
and legal entities, or by two or more legal entities;
- by a merger of two or more existing co-operatives; or
- by conversion of an existing co-operative which has, for at
least two years, had a subsidiary or establishment in another
In the first two cases, at least two of the natural persons or
legal entities should be from different Member States.
7.7 Membership of an SCE is in line with the principles
of voluntary and open membership and primacy of the individual.
The latter is reflected in the rule of "one member, one vote"
although weighted voting may be allowed in some circumstances.
An SCE may also have a proportion of "investor members"
who do not use the society's services. This proportion will be
restricted to ensure the primacy of the "one member, one
vote" principle; the actual proportions have yet to be agreed.
7.8 An SCE must be registered in the Member State in
which its head office is located. It will, however, be able to
move its registered office to another Member State without having
to wind-up and re-register.
The Government's view
7.9 The Economic Secretary to the Treasury (Ruth Kelly)
tells us that the Government is in favour of a Statute for a European
Co-operative Society. However, she draws our attention to two
linked outstanding issues in the current proposal investor
members and voting rights. She says:
"To maintain co-operative principles in the Statute for
a European Co-operative Society the Government wishes to limit
the scope of investor members and to uphold the primacy of the
... 'one member, one vote'. In the current proposals weighted
voting may be allowed to reflect 'contribution' to the SCE. The
meaning of contribution in this context is not yet agreed (whether
it means throughput/business with the SCE or whether it means
capital contribution). The Government will seek to ensure that
the control of the SCE lies with the members and not the
7.10 The Minister tells us that a consultation to establish
the levels of interest in the original proposal for an SCE (and
parallel proposals for a European Mutual Society and a European
Association) was carried out in 1992. The findings suggested that
takeup in the UK would be small. In 2001, HM Treasury and the
Department of Trade and Industry circulated a joint consultation
paper to about 70 relevant bodies in order to obtain more up to
date information. Five responses only were received. These broadly
supported the latest proposals and expressed the hope that a Statute
would be adopted without delay.
7.11 The Minister provides us with a Regulatory Impact
Assessment (RIA). This notes that any SCE registered in the UK
would need to be registered and supervised. It suggests that this
would most sensibly be done by a body set within the Financial
Services Authority. SCEs themselves would face formation costs,
and, possibly, minimum capital requirements.
7.12 Although it is not possible to gauge the eventual
compliance cost, since it is unclear how many co-operatives might
seek to become SCEs, it is unlikely to be substantial. The RIA
underlines the point that the Regulation will be optional, applying
only to those bodies operating under UK law which choose to become
an SCE in order to operate more easily across Member State borders.
7.13 Finally, the Minister informs us that the Spanish
Presidency will seek political agreement on the Regulation at
the Council of Ministers in June.
7.14 We thank the Minister for her helpful Explanatory
Memorandum. It is good news that progress is once more being made
on the Statute for a European Co-operative Society, of which this
draft Regulation forms part.
7.15 We support the Minister in her wish
to uphold the primacy of the 'one member, one vote' principle
and to ensure that control of the European Co-operative Societies
lies with the members. Indeed, we wish to be assured that the
Government has been successful in amending the draft Regulation
to that end. We will, therefore, keep the document under scrutiny
until we know more about the progress of negotiation on this issue.
5086/92; see HC 79-i (1992-93), paragraph 24 (17 June 1992). Back
No. L 294, 10.11.01 p.1-21 and p.22-32. Back
HC 152-xix (2001-02), paragraph 11 ( 13 February 2002). Back