The Determination and Control of the Social Object of the Cooperative

The objective pursued by this communication is to highlight the main differences between cooperatives and commercial companies considering the aim pursued by the members and the social object should develop each of them. Often... [ view full abstract ]

The objective pursued by this communication is to highlight the main differences between cooperatives and commercial companies considering the aim pursued by the members and the social object should develop each of them.
Often it says that the aim pursued by those promoting a cooperative is not getting distributable profits (as partners in a commercial company) but the satisfaction of the needs and aspirations of its members, as noted by the ICA. This aim is known as “mutual purpose”, which is not the only objective pursued, but is the main.
That mutual purpose determines the different social object and justifies the existence of so-called cooperative principles, principles that have mostly characterized the mutual entities constituted even before the first cooperatives.
The social object in a commercial company is the economic and business activity carried on for distributable profits. In the cooperative its social objective is also the development of an economic and business activity but geared to meet the needs and aspirations of its members, and with the direct participation of these in such activity, as consumers, suppliers or employees. This activity is known in the Spanish legislation as a cooperative activity, as opposed to other activities that can develop cooperative (extra-cooperative activity and extraordinary activity).
The social object of the cooperative must guide their directors and managers in the business management should mark the limits of its performance, and their compliance or failure to comply should be cause for dissolution of the cooperative.
Although the social object of the cooperative is determined in the bylaws, there are many issues that the development of social object of the cooperative poses. Some of these issues will be addressed in this communication between them: Who, How, When and Where the conditions under which the cooperative members involved in this activity are determined?, and How and When the cooperative members control if the cooperative meets its purpose?

*Tenured Lecturer in Commercial Law, University of Valencia (Spain)