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The SCOP:characteristics, advantages and disadvantages

A SCOP is a Cooperative and Participatory Company. There are several thousand in France and all areas of activity, or almost, are represented. A SCOP works differently from a traditional company. However, it may have another legal form. Here is everything you need to know about the cooperative society.

Definition:what is a cooperative society?

The cooperative society can also be called workers' production cooperative society. This company, considered to be more democratic, differs from traditional companies by a peculiarity:the capital is mainly held by the employees of the company. This can have several legal forms, namely:

  • Société Anonyme (SA),
  • the simplified joint-stock company (SAS),
  • The Limited Liability Company (SARL).

Within a SCOP, employees have:

  • at least 51% of the shares of the company,
  • 65% of the voting rights.

The remaining shares are held by external shareholders. These can be legal or natural persons. Employees, who may be partners, have the power to elect their managers, whether individuals or legal entities.

A SCOP is therefore made up of non-associated employees and associated employees. The former receive a minimum of 25% of the profits and the latter a maximum of 33%. The sums are paid in the form of participation or salary supplement.

The activity of a cooperative society can be commercial, industrial, artisanal and even service. Some regulated liberal professions may opt for the SCOP. This is the case, for example, of architects. Like many companies, the SCOP is subject to corporation tax (IS). Production cooperatives are also exempt from the territorial economic contribution (CET).

How to create a SCOP?

To create a SCOP, you must register on the official list of cooperative societies. It is maintained and updated by the Ministry of Labour. To do this, it is necessary to embark on an annual cooperative review procedure which makes it possible to ensure that the companies meet all the legal criteria.

What are the advantages of a cooperative?

Cooperative societies are subject to VAT and, as we have just seen, to IS. It should be noted that the profits are divided. Half is for employees and the other is set aside. This is exempt from property tax and corporation tax. Participations intended for employees are not subject to income tax and social charges provided they are blocked for 5 years.

All employees are intended to become associates. Entry into a cooperative society is therefore simplified. Employees can also easily leave a SCOP.

There are Agricultural Cooperative Societies (SCA), which are a variant of SCOP intended for the agricultural sector. Thanks to it, the associates can pool their equipment and their buildings.

In a SCOP, the employees are more motivated because the result of their company directly impacts them and especially their salary. They invest at all levels and participate in the success of their business.

The disadvantages of a SCOP

Although the SCOP has many advantages, this format also has some limitations. Among them, there is in particular the impossibility of selling this type of business. It is also impossible to earn capital gains within a cooperative society.

Conflicts may arise within a SCOP. Most often, these disputes concern the organization or even the strategic orientation of the activity. When creating a SCOP, it is imperative to ensure that the employees are motivated and that they want to invest in a common project.