Cooperative corporation (under Italian Law)

Definition

According to Article 2511 of the Italian Civil Code, "cooperatives are companies with variable capital with a mutual purpose registered in the register of cooperative companies referred to in Article 2512, second paragraph, and Article 223 sexiesdecies of the provisions for the implementation of this code."

Cooperative societies differ, therefore, from other corporations precisely because they are not devoted to achieving a profit to be distributed among the members, but are aimed at providing goods or services or employment opportunities directly to the members, on more profitable terms than those offered by the market.

They may be predominantly or not predominantly mutual, depending on whether or not there are clauses in the company's bylaws limiting the distribution of profits or reserves to members, and the activity is carried out primarily for the benefit of the latter.

The organizational model chosen, as well as its regulations, may follow those of the joint-stock company or the limited liability company, depending on the will of the members, except for cooperatives with fewer than 9 members, for which the limited liability company model is mandatory.

Among the special features of cooperative corporations are:

-       the variability of capital: this means that there is no need to amend the bylaws when the membership varies (the so-called “open door” principle);

-       the need for a resolution by the directors to make a member's admission or exclusion effective;

-       the criterion of a capital vote, whereby each shareholder, regardless of the amount of his or her shareholding, is entitled to cast one vote at the shareholders' meeting ("one head - one vote" principle);

-       the provision of supervision by the government authority, in order to ensure the smooth administrative and accounting operation of the cooperative society.

In addition to the business registry, cooperative societies are required to register in special registers maintained by the Ministry of Economic Development.

References

G. F. Campobasso, Diritto commerciale, 2, Diritto delle società, 10° ed., Utet Giuridica, Milano, 2020, p. 603 ss.;

Società cooperative, in Dizionario Treccani Online, disponibile al sito: https://www.treccani.it/enciclopedia/societa-cooperative/