The question
How do you organise a joint enterprise that serves its members rather than investors, at home and across borders?
In brief
The registered cooperative (eingetragene Genossenschaft, eG) combines an enterprise with equality among its members. It promotes their income, their businesses or their social and cultural interests, and as a rule each member has one vote. An auditing association accompanies it from formation onwards. The general assembly can also be held online (Section 43b Cooperatives Act, GenG). For members from several EU states there is the European Cooperative Society (SCE), which has so far rarely been used.
The law
Purpose of promoting members. Cooperatives are societies with an open number of members whose purpose is to promote the income or businesses of their members, or their social or cultural interests, through a jointly operated business (Section 1(1) GenG). Members are both owners and users: they buy there, supply to it, live there or work there. Profit is permitted but is not the purpose; it serves the members.
Formation. At least three members are needed (Section 4 GenG), together with articles. The cooperative must belong to an auditing association (Section 54 GenG), which gives an expert opinion before registration on whether the cooperative is economically viable and whether the interests of members and creditors are safeguarded (Section 11(2) no. 3 GenG). The eG comes into being on entry in the register of cooperatives. There is no statutory minimum capital.
Organs. The executive board manages the cooperative on its own responsibility (Section 27(1) GenG). It has at least two members; with no more than 20 members the articles may allow a single director (Section 24(2) GenG) and dispense with a supervisory board (Section 9(1) GenG). The general assembly decides fundamental matters. With more than 1,500 members the articles may provide for an assembly of delegates (Section 43a GenG).
Equal votes. Each member has one vote regardless of the number of shares held (Section 43(3) GenG); multiple votes are allowed only within narrow limits. The general assembly decides by simple majority of votes cast unless the law or the articles provide otherwise (Section 43(2) GenG).
Liability. Only the cooperative’s assets are liable to creditors (Section 2 GenG). Whether members must make additional contributions in insolvency is for the articles to decide (Section 6 no. 3 GenG).
Audit. The auditing association examines the cooperative’s arrangements, financial position and management at least every two years, annually for larger cooperatives (Section 53 GenG). This costs money and is often felt as a burden. But it gives the cooperative a third party looking in from outside and protects members against a management drifting away from the members’ purpose.
Reform. On 14 August 2026 the Federal Government submitted a bill to strengthen the cooperative as a legal form to the Bundesrat (BR-Drs. 459/26). Among other things it would strengthen text form and digital meetings, make investing members more attractive, speed up registration and clarify that merely investing assets together is not a permissible purpose. The procedure is ongoing.
The European Cooperative Society (SCE). It is based on Council Regulation (EC) No 1435/2003 of 22 July 2003, supplemented by Directive 2003/72/EC on employee involvement, and has applied since 18 August 2006. Its principal object is to satisfy its members’ needs or develop their economic or social activities (Art. 1(3)). It can be formed by at least five natural persons resident in at least two Member States; by at least five natural persons and companies from at least two Member States; by companies from at least two Member States; or by merger or conversion of existing cooperatives (Art. 2(1)). Subscribed capital must be at least EUR 30,000 (Art. 3(2)). Here too each member has, as a rule, one vote (Art. 59(1)), and the SCE may choose a two-tier or a one-tier board structure (Art. 36). Where the Regulation is silent, the cooperative law of the state of the seat applies, in Germany supplemented by the SCE Implementation Act (SCEAG).
The SCE promises a European form for European members, but its requirements, particularly the minimum capital and the rules on employee involvement, are demanding for small communities. For many cross-border projects a national eG with members from other states is also worth considering; German cooperative law does not require members to live in Germany.
Online
The general assembly. Section 43b GenG recognises four forms: an in-person meeting, a virtual meeting without joint physical presence, a hybrid meeting, and a meeting in stages, in which a period of discussion is followed later by the vote. The executive and supervisory boards decide the form together at their due discretion; the articles may fix a form or limit that discretion (Section 43b(6) GenG). Members taking part electronically count as present. These forms have been part of the statute permanently since 2022.
The staged procedure suits communities whose members live in different time zones. Discussion takes place asynchronously, everyone can contribute when they are able, and the vote follows once all arguments are on the table. It combines the strengths of written deliberation with a clear decision.
Platform cooperatives. Digital platforms usually belong to investors, yet their value comes from what their users contribute. A platform cooperative reverses this: the people who work on or use the platform, such as photographers in a picture agency, drivers in a ride service or producers on an online marketplace, are its members and decide with equal votes on rules, fees and the handling of data. The purpose defined in Section 1 GenG describes exactly this: the platform is the joint business that promotes the members’ income.
Cooperation within
The cooperative divides management, supervision and fundamental decisions between three organs. The executive board manages within the articles on its own responsibility and is not bound by instructions from the general assembly, but it has to win the assembly over on fundamental questions in which every vote counts the same. See Shareholders among themselves, Management as cooperation and Shareholders and management.
In which phases
- Designing the cooperation: does the project serve a joint business of its members?
- Agreeing the cooperation: articles and joining an auditing association.
- Supporting the cooperation: the mandatory audit is built-in support from outside.
- Developing the cooperation: new members, investing members, cross-border growth.
Limits of this account
This page outlines the eG and the SCE. Tax, employee involvement and the details of the audit are not covered.
As at 30 September 2026