Loomio
Mon 5 Feb 2018 4:50PM

Registering social.coop as a legal entity under Maltese law. Pros and cons.

MK Michele Kipiel Public Seen by 402

Hi all,

in the light of the planned expansion of offered services, I took the liberty to reach out to the Malta Cooperative Federation ( http://maltacooperativefederation.coop/ ) to inquire about the pros and cons of registering a cooperative on the island. Below are the most relavant information I gathered during the meeting I attended with the president and the chief accountant of the federation earlier today.

Legal requirements
- According to Maltese law, cooperatives need to have a stated "business model" (ie. a demonstrable income stream).
This can be solved by presenting our membership fee as a subscription.
- Cooperatives registered in Malta are expected to contribute to the Cooperative Solidarity Fund with a mandatory donation worth 5% of the surplus monetary reserves left at the end of each year
- Each cooperative is expected to inform the Government yearly concerning the number and the identity of the new memebers acquired during the previous 12 months

Pros
- Cooperatives registered in Malta are granted the exempt tax status if they do not pay any dividend (ie. if the surplus monetary reserves are not paid out to the members a the end of each year)
- Payments made among the cooperative's own members are never taxable (ie. paying members for their efforts doesn't count as "paying dividends")
- The Cooperative Solidarity Fund helps emerging cooperatives with loans, investments etc..

Cons
- Non-EU citizens will need to be scrutinized by the government (ie. will need to provide actual documents or whatever the government sees fit), but the procedure technically does not exist since none of the cooperatives registered so far has non-EU members.
- EU citizens will need to provide just an ID card number

Additional info
- ICA principles are protected by law in Malta, as stated in the latest legislation on cooperatives approved in 2000
- The legislation does not differentiate cooperatives by type which makes it easier for social.coop to be registered

Feel free to ask questions and comment on the above, as the information I asked for is very high level and I might have missed something relevant. I'd love to see the largest number of members possible taking part in this discussion, as this is a potentially very important step forward for us all.

Looking forward to your comments!

KF

Kevin Flanagan Mon 5 Feb 2018 5:59PM

Have you considered taking a look at Freedom Coops arrangement in Luxembourg? Freedom Coop is a legal entity set up by Fair Coop to make it easy for anyone in Europe to set up a legal coop.

https://freedomcoop.eu/

https://ocp.freedomcoop.eu/freedom-coop/

https://www.thenews.coop/108249/topic/democracy/freedom-co-op-provides-legal-platform-co-operative-projects-europe/

MK

Michele Kipiel Mon 5 Feb 2018 10:05PM

The problem with social.coop is that not all memebers are EU citizens. I'd say it's rather the opposite: most aren't. Joining an SCE or making social.coop one won't solve the problem, unfortunately.

RM

Rory McCann Tue 6 Feb 2018 9:24AM

EU citizens will need to provide just an ID card number

Question: Not all EU countries have a ID system. Notably the UK & Ireland. (The UK is still an EU member, and Ireland isn't going anywhere). I'm an Irish citizen. The usual standard of proof of ID (in UK & IE) is a photocopy of 2 recent utility bills (e.g. phone, electricity) with your name and address. (I'm not making this up).

I don't know if this would be a big problem, it's just a funny case. I'm curious what the Maltese requirements are for a UK or IE citizen. Maybe they'd accept passport number.

ST

Sam Toland Tue 6 Feb 2018 2:15PM

@rorymccann - to my understanding in the case of Ireland (I'm Irish too ;) ) - it tends to be the passport number is accepted.

Also, the Public Service Card is being slowly implemented as a national id card (albeit unconstitutionally in my view).

ELP

Edward L Platt Tue 6 Feb 2018 6:44PM

Are there any pressing reasons a formal legal entity is needed?

MK

Michele Kipiel Thu 8 Feb 2018 1:45PM

Hi Eward. No pressure, but since we're planning to expand our services in the foreseeable future, I figured it would be interesting to inquire what our options are, n terms of becoming a legal entity. It doesn't mean we have to, of course :)

ELP

Edward L Platt Fri 9 Feb 2018 9:03PM

I'm not disagreeing, just trying to understand our needs.

MN

Matt Noyes Wed 7 Feb 2018 12:01AM

I second Edward's question. Not at all opposed to formal status, just wondering why now?

KF

Kevin Flanagan Thu 8 Feb 2018 8:44AM

At present afaik the social.coop is entirely volunteer run. In my experience that is great to get things started but not to sustain. If we expect priority to be given to not only maintaining the Coop but developing it as many have proposed then we need to make sure that at a minimum essential technical management is guaranteed and to do so means paying someone. If we are paying people mean we need to go legit. Responsibilities, tasks and expectations need to be clearly defined. Some of us can only be active users or volunteer members because of other life responsibilities. We can't do it full time. But people who can and would like to put their energy and enthusiasm into this full time should be supported to do so financially. That means going legal. That means legally being able to accept donations and funding.

MK

Michele Kipiel Thu 8 Feb 2018 1:46PM

Precisely! :)

MDB

Mayel de Borniol Fri 9 Feb 2018 10:02AM

Yes but the whole point of us using OpenCollective (who takes 10% of all contributions) is that they provide us with a legal framework. We are able to reimburse bills but also pay contractors' invoices. We could even have full time freelancers simply submitting an invoice each month. (I'm just saying we already have a legal what to do so, not that it's the best way to continue doing so indefinitely.)

GJ

Guy James Thu 8 Feb 2018 9:49AM

The easiest way to do it would be to sign up with freedomcoop.eu as a collective, then use the coop's fiscal number to invoice etc.

MK

Michele Kipiel Thu 8 Feb 2018 1:48PM

We can inquire with them, of course, but I've been told the fact we have non-EU members makes this a bit more complicated.

GJ

Guy James Thu 8 Feb 2018 9:09PM

May not be the case in fact. Part of the reason for the existence of freedom coop is to allow non-EU people (refugees etc) to be able to send legal invoices to EU companies. But I'm not sure if it works the other way around. We can find out though.

MK

Michele Kipiel Sat 10 Feb 2018 6:02PM

I'll try getting in touch with them to have some more information

MN

Matt Noyes Thu 8 Feb 2018 10:42PM

What about organizing as a federation or network of country or region-specific legal entities?

ST

Sam Toland Fri 9 Feb 2018 1:33PM

As someone with a legal background, I have a general bias towards formalising/incorporating this kinds of projects. But as I work with more projects like this - I have come around to what I would call the MVO (minimum viable organisation) approach. Start with the minimum structure you need, and expand/deepen this as minimum requirements change.

I think the idea of Open Collective + Freelancers is genuinely viable for the foreseeable future - and we haven't really maxed out the possibilities of this. Have we for instance elected/appointed/sortitioned a group of co-ordinators to guide the group. We could ask them to propose a number of clear work items that could be compensated via OpenCollective?

We could even compensate them as a group for the time (I would 100% support a small core group being compensated for this!).


The next step for a group like this, if we needed some corporate identity - we could ask an existing co-op to be a sponsor organisation (see Solid Fund for example) or indeed Freedom Co-op....


The incorporation question is a very big one. As soon as you incorporate, you (i.e the directors!) take on a number of significant legal and administrative obligations and the group take on a number costs, which must be justified by the clear benefits (or requirements) to incorporate.


Maybe we are at the incorporation point now (I would love social.coop to start scaling up - and perhaps we need to adopt a more focused structure, as @flgnk mentioned) but do feel that @mayel is right that we haven't exhausted the possibilities of the current model

ST

Poll Created Fri 9 Feb 2018 1:40PM

Social.coop structure Closed Sat 24 Feb 2018 1:01PM

I want to run a little advisory poll to see where people at more generally on the question of the groups structure. I'm hoping this will help crystalize the conversation.

There are three different strands of thought I've identified;

  • (1) The current model gives us certainty + a model for compensation. We haven't maxed out the current model.
  • (2) We should move to more formalisation - but through another organisation (IOO or Freedom Co-op)
  • (3) To scale up, accelerate funding and give co-ordinators/members more certainty, we should incorporate.

Feel free to edit the above. You can see the thread for my own views.

What are you thinking at the moment? Don't forget to share on Mastodon!

Results

Results Option % of points Voters
The current model is good, but it needs more work 40.0% 10 GJ NS MC MN ST LS MK EM LO ED
The current model is working 24.0% 6 ELP D MDB JT NS DVN
Would be good to consider using FairCoin 16.0% 4 GJ MC MN MDB
It is time to start exploring a relationship with another organisation 12.0% 3 ST LS MDB
It's time to consider incorporating 8.0% 2 MK LO
mmm 0.0% 0  
Undecided 0% 38 KF ST JD CG SH C AM TB JG IMS DB D SJK MS K TMG MB AW JB TD NP WM A L BMH JH A JI CS JW M R M GSF MAS F C

16 of 54 people have voted (29%)

ELP

Edward L Platt Fri 9 Feb 2018 3:08PM

The current model is working

Not opposed to incorporating, but would like to start from considering what our needs are.

MK

Michele Kipiel Sat 10 Feb 2018 5:53PM

It's time to consider incorporating
The current model is good, but it needs more work

I'd say "the current model is working but it could make sense for us to explore what benefits (if any) would incorporation bring.

D

Darren Sat 10 Feb 2018 8:06PM

The current model is working

I don't see anything wrong with the current model. We can work within this. In previous co-ops I've made a stand against unnecessary incorporation. Think there needs to be clear benefits to balance the extra work and expense involved.

NS

Nathan Schneider Sat 10 Feb 2018 10:09PM

The current model is good, but it needs more work

Our scale seems to be working for the most part, but we need to professionalize some aspects of the process and pay people appropriately to do so.

NS

Nick S Fri 16 Feb 2018 10:03AM

The current model is working

Essentially I voted "working for me" because the issues, if any, are opaque to me. What might be constructive would be to compile a list of perceived issues the proposed change aims to resolve, labelled "essential", "nice to have", "optional"?

EM

Erik Moeller Fri 9 Feb 2018 7:19PM

Sam, I agree with your assessment. I think our top priority right now should be reliability of the existing service, not tweaking the organizational model. We are two releases behind, have production DB issues we still haven't fully resolved, and have had significant service outages. In addition, new member applications have sometimes been backlogged for weeks.

Training up more technical volunteers is probably the best way to deal with this (I have been on one call so far, but I don't have access to the server so I can't help). If the self-hosting is not something we can keep doing reliably, we should switch to a paid host like https://maastodon.net/ . Service reliability is the number 1 issue that could cause this project to fail at this stage.

MC

Matthew Cropp Mon 12 Feb 2018 3:51AM

Interesting - I noticed their "community" maxes out at 1k members, so we might need something a little custom (for onboarding too), but that looks like it might meet our needs (and budget in a sustainable way). Would probably be worth setting up a call. Do you know about these guys, @mayel and @victormatekole?

EM

Erik Moeller Wed 14 Feb 2018 11:16PM

I'll just note that they run mastodon.social, which is the largest non-Japanese instance (Japan has the largest instances in part because Pixiv, a DeviantArt like site, promotes its own Mastodon instance).

Of course giving up self-hosting would bottleneck any custom improvements on the service provider and may make it harder to configure additional services.

N

Neil - @neil@social.coop Sun 11 Feb 2018 10:25PM

I'll abstain from voting as I don't know enough of the practicalities to say one way or the other, but I appreciate the discussion!

KF

Kevin Flanagan Fri 23 Feb 2018 3:39PM

Hey @samtoland can you share links for documentation on the 'current model'

ST

Sam Toland Sat 24 Feb 2018 1:22PM

@mattcropp / @ntnsndr what's the best way to share these docs... Are they on the wiki?

KF

Kevin Flanagan Sat 24 Feb 2018 8:27PM

There's a wiki?

NS

Nathan Schneider Sat 24 Feb 2018 11:16PM

It was at wiki.social.coop.

The bylaws are here: https://social.coop/bylaws