Application for admission, beginning and ending of membership (COA, Chapter 3)
According to COA, Chapter 3, Section 1, an application for admission to a cooperative shall be filed in writing with the cooperative board of directors. The board of directors will decide on admission. It can also accept an admission procedure according to which the admission decision is to be made elsewhere. The rules can stipulate that the cooperative’s general meeting (or the supervisory board) decides on the admission of new members.
In principle, any cooperative always has the right to choose its members; nobody has an unconditional right to become a member. The cooperative’s membership is always personal; no member can transfer his or her membership, not even to an heir after the member’s death.
It may be stipulated in the rules that admission is to be granted to everyone who meets the admission criteria (e.g., chartered member of a profession, age majority) and grounds for expulsion (e.g., the member has stopped using the services of the cooperative or has breached its rules).
A member has the right to resign from the cooperative (COA, Chapter 3, Section 2). It may be stipulated in the rules that a member’s right to resign be suspended until the lapse of a set period from the beginning of the membership. The period of suspension shall be no longer than three years. This so-called qualifying period during which the member cannot resign is intended to guarantee a level playing field, especially for the starting cooperative. If the right to resign members is restricted, it can be worth considering if there should be a separate agreement on the consequences imposed on the member when he or she stops using the services of the cooperatives, a commitment made when applying for membership.
An application for admission to a cooperative shall be filed in writing with the cooperative board of directors. The board of directors shall decide on admission or the admission procedure and admission criteria. The membership of the cooperative begins when admission has been granted. End of membership A member has the right to resign from the cooperative by notifying the cooperative in writing. The notifications are considered submitted to the cooperative, when it has been notified to a board member, to the managing director, or to any other person who has the right alone or together with others to sign on behalf of the trade name. (The right of a member to resign can be suspended until X years from the beginning of the membership.) A member may be expelled from the cooperative. If the member has neglected an obligation ensuing from membership, no longer uses the cooperative services, causes harm to the cooperative, or otherwise acts contrary to the cooperative’s interest. The decision to expel shall be made by the board of directors. A member shall be provided with a written notification of the grounds for expulsion at least a month before the decision is to be made by the board of directors. The notification shall be delivered to the member to the address entered into the membership register or to an address otherwise known to the cooperative. The member expelled has the right to request that the matter be referred to the general meeting for decision. The written request for referral shall be served on the cooperative within one month of the decision to expel, having been notified to the expelled member to the address entered into the membership register or to an address otherwise known to the cooperative. Also, the board of directors has the right to refer the matter on its motion to the cooperative’s general meeting for decision. An expelled member may contest the decision to expel made by the general meeting of the cooperative before a court of law Alternative: The expelled member may submit the contesting of the decision to expel to arbitration as defined hereunder concerning the disputes to be settled by arbitration.
Membership register (COA, Ch. 4, S. 14 to 16)
The board of directors must keep an up-to-date list in alphabetical order of the members of the cooperative. The board of directors is in charge of keeping the membership register but not obliged to keep the register itself. The list must include the name and address of the member, the number of his or her shares, and the admission date. It is allowed to add other data related to the member, relevant for covering the relationship with the member. If non-members can subscribe shares of the cooperative, there must be a register of these owners of holdings.
Former members of the cooperative must be kept on the lists until the cooperative has reimbursed their share. This list can be combined with the member register or kept reliably otherwise, and the usual member data must be complemented with the ending date of membership.
For details of the member register and its public nature, see the Cooperatives Act, Chapter 4, Section 14 to 16.
The board of directors shall see to it that a register is kept of the members and former members of the cooperative, as required by the Cooperatives Act. If non-members can subscribe shares of the cooperative, the owners of these holdings must be listed. The data to include in the membership register and the register’s public nature is provided for in the Cooperatives Act.
Use of services of the cooperative
The obligation of the member to use the services of the cooperative
The cooperative members contribute to the operation of the cooperation by taking advantage of the services it provides. The possibility to use the services of the cooperative is a membership right, but the law does not oblige any members to do so. The cooperative’s success and hence, that of its members implies more often than not that the members commit themselves to their cooperative. If there is a need to commit the members to the cooperative and underline the member’s obligation to use the services of the cooperative, it can be stipulated in the rules that the member is required to use the services offered by the cooperative and, moreover, which consequences will result from the member’s failure to fulfill this obligation. Usually, the member is bound to be expelled from the cooperative.
There is no need to stipulate the penalties too much in detail; a universal stipulation will suffice: the penalties are decided by the general meeting or by the board of directors, or they are agreed on separately, in the membership agreement, for instance. The penalties can be pecuniary compensations. They should be proportional to the importance of the failure of the member for the cooperative. At the same time, they must be equitable for every member.
A member is obliged to use (mainly) the services provided by the cooperative. The (financial) penalties resulting from any failure to fulfill this obligation are agreed on in a separate membership agreement / decided by the general meeting / by the board of directors.
The right of non-members to use the services of the cooperative
The repealed former cooperatives act contained a list of stipulations to be included in the rules, one of which concerned the offering of services to non-members, which had to be enshrined in the rules. Even if the corresponding provision is absent from the Cooperatives Act in force, the purpose of any cooperative, to pursue an economic activity to support the housekeeping or the business of its members, allowing its members to take advantage of the services offered by the cooperative, has not changed. The primary purpose remains that the services of the cooperative are to be used only by its members.
However, there is no need to restrict the activities of the cooperative to the circle of its members. Its rules can include the stipulation permitting it to provide services also to non-members. For a worker cooperative, this kind of stipulation may help the rules if the idea is that not all workers are members of the cooperative.
The cooperative can offer its services to non-members if not decided otherwise by the board of directors.