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! :)

Load More