The revival of the Dutch cooperative: the alternative form of business
Thinking of setting up a business in The Netherlands? You may want to consider forming a cooperative society instead of a (private or public) limited company. In the Netherlands the cooperative is gaining popularity and no wonder! This type of business offers great benefits above the regularly used private limited. Dutch corporate solicitor Martijn Kesler, specialized in Dutch corporate law, explains what a cooperative is and how it may benefit you.
Cooperative, private limited or public limited?
Well-known Dutch companies as Rabobank, Univé and Campina have been using this somewhat old-fashioned form of enterprise forever. But after the UN declared 2012 the International Year of the Cooperatives, also the general business public is rediscovering the benefits of the cooperative. And benefits there are!
No shareholders, but members
Let’s first look into the structure of a cooperative. While a limited has shareholders, a cooperative has only members. According to Dutch law a cooperative is an association aiming in meeting the material needs of her members. One of the main advantages of a cooperative is its relative ease to set up. You only need a notary to draw up a deed and register the cooperative in the Trade Register. Additionally every cooperative is then required to draw up annual report and accounts. You can further opt for limitation or even exclusion of liability (which choice is reflected in the eventual form of the cooperative). This reduction of company risk, which is one of the benefits of a limited, makes a cooperative a desirable alternative for any other form of enterprise.
The cooperative: great flexibility
Contrary to a private or public limited, the cooperative is not bound by that many mandatory law provisions. Therefore it is possible to shape a cooperative in a form that suits your business. The cooperative provides a great extent of flexibility. Would you like to combine forces with a business partner under one business name, but still want to share the profits pro rata of the contribution of each partner? Not a problem! While in a Dutch limited the equality of shareholders prohibits unequal profit sharing, this rule does not apply to a cooperative. And, when you want to extend or scale down your cooperative, you can easily do this by admitting or cutting members.
Lawyer for advice on cooperatives
The cooperatives will probably be used more and more in future, especially by start-ups and self-employed. If you have plans to start a business with someone, remember the great possibilities the cooperative offers. For more information, please feel free to contact us for a non-committal discussion.