Strengthening the Cooperative Legal Form: German Government Introduces Draft Law
On January 15, 2025, the German government introduced a draft law (20/14501) entitled “Gesetzentwurf Entwurf eines Gesetzes zur Stärkung der genossenschaftlichen Rechtsform” (Draft Law to Strengthen the Cooperative Legal Form). This law aims to modernize and strengthen the legal framework for cooperatives in Germany.
Key Provisions of the Draft Law
The draft law includes several key provisions designed to improve the legal status of cooperatives and enhance their ability to operate successfully in the modern economy. These provisions include:
- Expanded use of digital tools: Cooperatives will be able to hold virtual meetings and make decisions electronically, facilitating participation and reducing administrative burdens.
- Simplified establishment process: The process of establishing a cooperative will be streamlined, making it easier for new cooperatives to be formed.
- Enhanced member rights: Members will have greater rights to participate in decision-making and access information about the cooperative’s operations.
- Improved financial flexibility: Cooperatives will be given more flexibility to raise capital, including through the issuance of hybrid securities and crowdfunding.
- Clarification of tax treatment: The tax treatment of cooperatives will be clarified and simplified, providing greater certainty for members and investors.
Rationale for the Draft Law
The German government has stated that the draft law is necessary to address challenges faced by cooperatives in the current economic environment. These challenges include:
- Declining membership numbers
- Competition from other forms of business organizations
- Technological advancements that require cooperatives to adapt their operations
The draft law is intended to provide cooperatives with the tools and support they need to overcome these challenges and continue to play a vital role in the German economy.
Impact on Cooperatives
If passed, the draft law will have a significant impact on cooperatives in Germany. The new provisions will make it easier for cooperatives to establish, operate, and raise capital. They will also provide members with greater rights and participation opportunities.
Overall, the draft law is seen as a positive step towards strengthening the cooperative legal form in Germany. By modernizing and enhancing the legal framework for cooperatives, the government aims to support these organizations and ensure their continued success in the future.
Next Steps
The draft law is currently being debated in the German parliament. After undergoing legislative scrutiny, it is expected to be voted on and potentially enacted into law later in 2025.
20/14501: Gesetzentwurf Entwurf eines Gesetzes zur Stärkung der genossenschaftlichen Rechtsform (PDF)
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