Registration of a cooperative association in Israel
How to set up a cooperative society?
Our law office specializes in corporate and company law in Israel. We receive numerous inquiries regarding the registration of NGOs, various non for profit associations, and corporations.
An interesting and unique form of corporate registration in Israel is the Co-Operative (In Hebrew called Aguda Shitufit). Most of the Israeli Kibbutzim and agricultural villages are legally registered as a cooperative. However, in Israel also some of the factories and even the public transportation bus company Egged are actually a co-operative.
Attorney Michael Decker is the head of the corporate law department in our office. In this article he will explain the legal process of registering a cooperative association in Israel.
What is a cooperative association cooperative society?
A cooperative society is a type of corporation – a number of people who band together to achieve a common goal. The corporation is considered a separate legal entity from the individuals which found it.
A corporation differs from a company or a not for profit association insofar as improving the well-being of the founding members is its primary goal. This is in contrast to the nonprofit organization, which cannot be used to profit its founders or directors. On the other hand, unlike a for-profit company, the cooperative society’s goal is improve the members welfare, rather than generate profit for their benefit.
Some of the principles of cooperative association management are equality of rights and burdens. Members of the association band together to help each other out and improve their mutual situation. Each member has equal voting rights and equal status.
The process of forming a cooperative association:
Registration or formation of a cooperative society is based on the Cooperative Societies Act. The terms of forming a cooperative association are somewhat similar to those of forming a non-profit association, with some significant differences.
Registration of a cooperative association initially requires seven individuals or an existing cooperative society + another member to be incorporated as a cooperative society. These are basic threshold conditions without which the association cannot be registered.
Relevant details for the purpose of registration:
The goals of the association and the manner in which they must be accomplished have to be established in the bylaws. The details of the association must be recorded and submitted to the authorities – the desired name, the address of the office (or the address of the attorney office representing the association), and the association type. In addition, the names of (at least three) members of the Provisional Committee and at least seven founders must be recorded, with the full name and ID number.
The Association’s day-to-day management policies are based on the Cooperative Societies (Association Authorities) Regulations, 1975. The Articles are the founding document of the Association. They express its purpose and nature of relations between its members. The Articles constitute a contract between the Association and its members, as well as a contract governing the relationship between association members. Given the nature of the association (personal connection between its members, etc.) and the importance of the articles of association, it is recommended to use the services of an attorney specializing in corporate law in its formulation.
Exemption from Arnona (Israeli municipal propert tax)
Just like a public interest association, a cooperative association may be entitled to partial or full exemption from property taxes on its assets. For the exemption, contact an attorney, and provide documents that include:
- (A) The lease agreement;
- (B) Photographs;
- (C) The total size of the property as well as each room within the property in sqm, and an explanation of the activity carried out in each room;
- (D) An explanation of the number of members of the association.
Contact us – Israeli law firm
Our offices are located in Jerusalem and Tel-Aviv, specializing in corporate and non-profit law. Please contact us for assistance with registration and management of a cooperative association.
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