Registration of Cooperative in Ukraine

We provide qualified legal services:
registration of a cooperative;
preparation of the constituent documents of the cooperative;
reorganization of the cooperative;
liquidation of the cooperative;
disputes resolution between members of a cooperative (including the forced exclusion of a member of a cooperative, challenging decisions of governing bodies, etc.).
We register the following types of cooperatives, including:
• energy or utility cooperatives;
• housing cooperative;
• garage or garage constucting cooperative;
• country (country-building);
• gardening;
• agricultural service and production cooperatives;
• trading;
• purchasing cooperative;
• production or so called worker cooperative;
• service coperative;
• harvesting cooperative.

What is a cooperative in Ukraine?

A cooperative is a legal entity created by individuals and/or legal entities (companies) voluntarily united on the basis of membership to conduct joint economic and other activities in order to achieve their economic, consumer, social and other needs on the principles of self-management. A cooperative is an association of citizens or companies with a common goal of production and/or consumption and/or service.
Depending on the objectives and nature of activities, the cooperatives are divided in following types: production, service and consuming. The status of cooperatives is regulated by the Civil Code of Ukraine, the Laws of Ukraine “On Cooperation” and “On Agricultural Cooperation” (only production and service cooperatives in the field of agriculture or farming).
The cooperative is liable for its obligations with all the property. And that is the main difference between cooperative and llc in Ukraine. The procedure for compensation for losses caused by cooperation is determined by the charter or so called articles of association. The members of the cooperative are responsible for the obligations of the cooperative within the limits of the contributed funds or property, unless other is dermined by the charter of the cooperative or the law. Consider that the cooperative is not responsible for the obligations of its members. The cooperative is created by the founders, who automatically become members of the cooperative. The founders of the cooperation are registered in the register of legal entities of Ukraine. All the others are considered to be members of the cooperative and the fact that confirm participation in such association is confirmed by internal documents.

The main goals of cooperation are:

  • raising the standard of living of members of a cooperative, protecting their property interests and social rights;
  • creation of a system of economic and social self-help of the people and businesses;
  • attraction of goods, works, services, additional labor resources into production, increase of labor and social activity of the people;
  • creation and development of the infrastructure necessary for the implementation of the economic and other activities of cooperatives in order to increase the material well-being of their members and meet the needs for goods and services;
  • promotion of sustainable development and establishing the foundations for the democratic development of society.

A cooperative is considered to be a legal entity from the date of state registration. Cooperative may have a bank account, stamp, symbols, acquire ownership rights to securities, immovable and movable property, etc.
A cooperative in Ukraine cannot be used as a housing cooperative. That is because there is a different law in Ukraine that do regulate cooperation between the owners of a multy-residential building and it is called OSBB.
Founders and members of a cooperative can be citizens of Ukraine, foreigners and stateless persons (who have reached the age of 16), as well as legal entities under the laws of Ukraine and foreign countries who can participate in the activities of cooperatives through their representatives. Members are required to pay an entrance fee and share in the amount determined by the charter of the cooperative. A cooperative must keep records of its members and issue a membership certificate to each of them. Admission of new members to the cooperative is carried out on the basis of an application, and a subsequent decision of the general meeting of members (at least 50% of the vote is required for adoption) and payment of the entrance fee and share.
The statutory documents of a cooperative may establish the possibility, rights and obligations of associate membership. An associate member is a person who has made a share contribution in full and enjoys the right of an advisory vote in a cooperative. When a cooperative is liquidated, an associate member has a preferential right to pay a share, compared to ordinary members.

Energy Cooperative in Ukraine

An energy cooperative is an association of citizens and / or companies for the purpose of joint consumption and / or production and / or preservation of energy carriers. It sounds strange, but this model has long been working in many developed countries of the world. Examples of the use of energy cooperation can be a mass, ranging from the joint procurement of firewood and ending with the joint production of biogas. The energy cooperative in Ukraine is not clearly defined by law. Therefore, such an association can be defined as production, consumer or service. In the last time in Ukraine, cooperatives often began to be used to conclude contracts for the supply of electric energy with oblenergo. This is often used in holiday villages, and allows you to bypass the bureaucratic procedures associated with connecting each house to transmission grid.

Cooperative management bodies

The supreme governing body of the cooperative is the general meeting of members. A scheduled general meeting of members is held at least once a year. Each member of the cooperative has one vote that cannot be transferred to other members. The supreme management body has the right to make decisions on all issues of the cooperative.
The decision of the general meeting of the cooperative to approve a new edition or amend the charter, join a cooperative association or withdraw from it and reorganize or liquidate the cooperative if adopted by at least 75 percent of the members of the cooperative attending the general meeting of the cooperative. On other issues, decisions are made by a simple majority of votes of members (authorized) of the cooperative present at the general meeting.

Collective executive body of the cooperative – the Board. The Board includes: Chairman of the Board and members of the Board. In cooperatives with less than ten members, only the chairman of the cooperative is elected.

Board Responsibilities:

management of the cooperative in the period between the general meetings of members of the cooperative, ensuring the implementation of their decisions;
representation in relations with state and local authorities, other legal entities and individuals;
making transactions, transactions on behalf of the cooperative;
activities on behalf of the cooperative to the extent provided by the statute and the law.
The Board may be vested with other rights and / or duties by a decision of the supreme body or by the charter of the cooperative. The Board is elected by the General Assembly for a period determined by the charter, but not more than five years. The Board may hire (on the basis of an agreement) an executive director for operational management of the activity. The executive director may not be a member of the cooperative.

The controlling body of the cooperative is the Supervisory Board. The law does not establish the obligation to form a supervisory board in a cooperative. The supervisory board is elected from among the members of the cooperative in the amount of 3-5 people. Members of the supervisory board work on a voluntary basis and do not receive wages or other remuneration.

Property and funds of cooperatives.

What can a co-op own?
The property of a cooperative may consist of:

entrance, membership and special purpose payments of its members, shares and additional shares;
property voluntarily transferred to the cooperative by its members;
funds from business activities;
funds received (including in the form of dividends) from enterprises, institutions, organizations created by the cooperative;
donations, charitable contributions, grants, gratuitous technical and financial (including turning) assistance from legal entities and individuals, including foreign ones;
other income not prohibited by law.
To ensure the activities of the cooperative, the following funds are formed:

mutual fund – formed by members at the expense of shares (including additional);
indivisible – formed at the expense of entrance fees and deductions from the income of the cooperative and can not be distributed among members, except in cases established by law; the procedure for crediting part of the income to the indivisible fund is determined by the charter of the cooperative;
reserve – formed from the deductions from income, the redistribution of the indivisible fund, donations, irrevocable financial assistance and other sources not prohibited by law; created to cover possible costs, damages;
special fund – is formed at the expense of earmarked contributions of members and other statutory receipts; created to ensure the statutory activities, and is used by the decision of the governing bodies of the cooperative.
The share of each member is formed by a one-time fee or within a certain period. The size of the share depends on the amount actually paid. In the event of withdrawal from the membership of the cooperative, such a person has the right to receive its total share in kind, financial means or securities. A share may be inherited (individuals) or transferred to successors (legal entities).

Profit of cooperation

Cooperative payments – dividends, part of the income distributed by the results of the fiscal year among members of the cooperative in proportion to their participation in the economic activity of the cooperative in the manner, based on the decision of the cooperative’s highest governing body.

Payments on shares – payment of a part of the cooperative’s income to a share of a member of the cooperative.
Cooperative payments and payments on shares do not relate to wages, and therefore are taxed as passive income. The cooperative acts as a tax agent when making payments to its members, withholds and transfers taxes to the budget.

Taxation of the cooperative

Everything is very simple. If your cooperative is created for the purpose of consumer or service cooperation, then such an association may be registered as a non-profit organization. Accordingly, cooperatives may be exempt from paying corporate income tax. For this, the constituent documents of such a cooperative must comply with the requirements of the relevant articles of the Tax Code of Ukraine. In principle, garage, garden, garden-dacha, other consumer and service cooperatives may be included in the register of non-profit organizations. At the same time, please note that in this case, share, membership and target contributions from members of the cooperative will not be considered as profit either. And this is correct, because members, transferring funds to the account of the association that serves such persons (or their property) actually pay themselves. This is the rare case when the legislation of Ukraine is really doable and acts in the interests of its citizens.

Production cooperatives are business companies that are established for the purpose of making a profit and cannot be included in the register of non-profit organizations.
Housing cooperatives by the time of the completion of construction and commissioning of a residential building are not eligible for non-profit status. That is, at the design, construction and construction stages of an apartment building, the activities of a housing and construction cooperative are subject to taxation.
A cooperative that carries out activities for profit (production, services or trade) has the right to register as a single tax payer (simplified tax system) and / or value added tax payer (VAT).

Rights of cooperative members to property

A member of a housing construction, cottage construction, garage construction, housing, cottage, garage or other relevant cooperative has the right to possession, use, and with the consent of the cooperative – and dispose of the apartment, cottage, garage, other building, structure or room of the cooperative, if he did not buy this property.

Termination, liquidation and reorganization of cooperatives

The reorganization (merger, accession, division, separation, transformation) of a cooperative is carried out by decision of the general meeting of members of the cooperative in the manner specified by the legislation and the charter of the cooperative. In the event of a reorganization, the rights and obligations of the cooperative are transferred to its successors.

A cooperative of any type (production, consumer, service) can be reorganized into any form of business entity (limited liability company, joint-stock company, private enterprise, etc.)

Co-op is eliminated:

by decision of the supreme governing body of the cooperative;
By the tribunal’s decision.
The liquidation of a cooperative has a number of features:

The property of the cooperative remaining after satisfying the claims of the cooperative’s creditors, making payments to the members of the cooperative of units and payments on the shares, cooperative payments, remuneration, settlements with the cooperative association of which it is a member, is distributed among the members of the cooperative in the manner specified by the charter.
The property of the indivisible fund is not subject to division between its members and is transferred by decision of the liquidation commission of another (other) cooperative organization (cooperative organizations) or credited to the budget revenue.
If a cooperative was included in the register of non-profit institutions and organizations, then in liquidating such a cooperative, absolutely all immovable, movable property and funds remaining after satisfying creditors’ claims must be transferred to another cooperative. The division of the property of a non-profit organization among owners, members or participants in the liquidation of such an organization is prohibited.

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