A cooperative differs from capital companies, such as a public limited company (AG) or a limited liability company (Sàrl), in its objectives and its democratic governance structure. It does not require any start-up capital, but it does involve, among other things, a high administrative burden.
Advantages
- Capital: no minimum required, unlike a public limited company (AG) or a limited liability company (Sàrl).
- Limited liability: members are, as a rule, liable for debts only up to the amount of their contribution and not with their personal assets, unless the articles of association provide otherwise.
- Democratic governance: each member has one vote at the general meeting, regardless of the capital invested. In a public limited company (AG) or a limited liability company (Sàrl), voting rights are proportional to the capital holding.
- Company name: the choice of name is free, but it must obligatorily begin with "Cooperative".
- Tax on profits: reduced rates if profits are reinvested in the cooperative’s objectives, or if they are used to support its members. Possibility of exemption under certain conditions if the company’s purposes are of public interest.
- Financing: preferential access to subsidies and financial support aimed at promoting collaborative and mutual projects.
Disadvantages
- Incorporation: a minimum of seven natural or legal persons is required.
- High administrative burden (drafting and amending the articles of association, holding general meetings (GM), compliance with cooperative principles).
- Lengthy decision-making processes: democratic governance can lead to slower decision-making, as well as potential conflicts.
- More difficult access to capital: cooperative enterprises do not have the same possibilities to issue shares or equity interests as a public limited company (AG) or a limited liability company (Sàrl), for example.
