On September, 30 2015, Law n. 119/2015, August 31, approving the new Cooperative Code (“Code”), entered into force. This diploma expressly revoked Law n. 51/96, Septem- ber 7, which, in turn, had approved the previous Cooperative Code. Our analysis will focus on the new main features of the cooperative sector.
Most importantly, the new diploma brings the cooperative concept closer to the commercial company concept, in an attempt to overcome some obstacles that cooperatives had pre- sented to investment in the sector.
In this context, the organisational structure of cooperatives was reformulated in the Code. Pursuant to Article 28.1 of the Code, the management and supervision of cooperatives can be structured in accordance with one of the following three possibilities: (i) Board of di- rectors and supervisory board; (ii) Board of directors with audit committee and statutory auditor; (iii) Executive board of directors, general and supervisory board and statutory auditor. In certain cases provided for by law and according to the number two of the same Article, there may be just one director and one sole supervisor, instead of a board of directors/executive board of directors and a supervisory board, respectively.
In a new rule specifically applicable to cooperatives, that has no parallel in the commercial companies legal regulation, the chairman of the board of directors may only be elected for three consecutive terms, as provided for in Article 29.4 of the Code.
Another new feature concerns the introduction of the concept of investor members, set out in Article 20 of the Code, alongside regular members, already existing in the previous legislation. However, these non-regular members can only hold capital in a cooperative in accordance with certain conditions imposed by the law.
First of all, their admission must be provided for in the bylaws. In addition, the total sum of the initial capital contributions of investor members must not be greater than 30% of the executed initial capital contributions in the cooperative, as set out in Article 20.1 of the Code.
Furthermore, their capital contributions must be approved by the cooperative’s general meeting and must be preceded by a proposal from the board of direc tors, as stipulated in number three of the same article. This proposal must also contain the el ements provided for in number four of Article 20 of the Code.
Their equity shall be acquired, pursuant to Article 20.2(a) and (b) of the Code, through the purchase of equity securities and the purchase of investment securities, respectively.
With regard to the decision-making procedures at the general meeting, Article 41 of the Code allows for multiple voting.
Multiple voting must also be provided for in the bylaws of the cooperative, being limited to general meetings of first-degree, in accordance with the first number of Article 41 of the Code. Number two of Article 41 further develops this provision, delimiting the scope of the multiple votes of members depending on their activities in the cooperative.
A cooperative that adopts multiple voting must have at least twenty members and may not operate in the worker production, crafts, fisheries, consumer or social solidarity sec- tors, in accordance with Article 41.1(a) and (b) of the Code, respectively.
The law also makes a distinction depending on the number of regular members, with regard to the maximum limit of votes, establishing a limit of three for cooperatives with up to fifty members and five if this number is exceeded, as set out in Article 41.3(a) and (b) of the Code, respectively.
The single vote is maintained, however, for certain matters, by cross-referenced stipulation of number four: amendment of the bylaws and approval and amendment of internal regu- lations; approval of mergers and spin-offs; approval of voluntary dissolutions; approval of the affiliation of the cooperative with unions, federations and confederations and decisions on the bringing of judicial actions by the cooperative against directors and members of the supervisory body, including withdrawal and agreement in these a ctions.
Also notable is a final point regarding multiple voting: the fact that they are not restricted to regular members but are also accessible to investor members. This is clearly borne out by Article 41.5, which stipulates that “If there are investor members, under the terms provided for in Article 20, multiple votes can be attributed, according to terms and criteria to be established in the bylaws”. It appears that this last expression, despite apparently permitting an absence of limits with regard to this category of members, must be read in the light of Article 41.3, which extends restrictions to investor members, and it must be set in the framework of numbers six and seven, which in turn stipulate that no investor can have voting rights of more than 10% of the total votes of regular members and, a lto- gether, these may not exceed 30% of the total votes of regular members in voting rights.
With regard to changes of a less structural nature, it must be noted that Arti cle 80.2 of the Code provides for the possibility of extending, by stipulation in the bylaws, the liability of regular members beyond the amount of the share-capital subscribed by each member. On the other hand, the minimum amount of share-capital to be subscribed to set up a cooperative has been reduced, from the previous €2,500.00, stipulated in Arti cle 18.2 of Law no. 51/96, September 7, to just €1,500.00, as now set out in Article 81.2 of the Code.
Finally, as a measure to safeguard the regulation of the bylaws of cooperatives already set up under the previous system, Article 119.1 ensures that clauses that do not comply with the new Code are automatically replaced by their new applicable provisions, naturally with- out prejudice regarding the changes being resolved by the members.