Skip to main content
Practical Manual of Companies 2022.

Loss of tax-sheltered cooperative status

Regulation: Article 13 Law 20/1990

Any of the following circumstances will cause the loss of the status of a fiscally protected cooperative:

  1. Do not make allocations to the mandatory reserve fund and to the education and promotion fund.

  2. Distribute among the partners the undistributable reserve funds during the life of the company and the surplus assets upon its liquidation.

  3. Improperly apply the education and promotion fund.

  4. Failure to comply with the destination of the result of the regularization of the cooperative's balance sheet or the updating of the members' contributions to the capital.

  5. Reward the contributions of the partners or associates to the capital with interests higher than those authorized.

  6. Credit returns in a different proportion to the partners' deliveries, activities or services.

  7. Failure to properly allocate the losses for the year.

  8. Make contributions to capital exceeding legal limits.

  9. Participate, without authorization, in the capital of non-cooperative entities in amounts greater than 10 percent, or 40 percent, in the case of entities that carry out complementary activities to those of the cooperative. These participations may not exceed 50 percent of the cooperative's own resources.

  10. Carry out cooperative operations that are not permitted with non-member third parties, do not account for them separately and do not allocate the results obtained in them to the mandatory reserve fund.

  11. Employ salaried workers in numbers greater than authorized in the event that such limitation exists.

  12. Existence of a lower number of members than expected without being reestablished in 6 months.

  13. Reduce the capital to an amount less than the minimum established by statute without it being restored within 6 months.

  14. The paralysis of the cooperative activity or the inactivity of the social bodies for 2 years without justified cause.

  15. The conclusion of the company that constitutes its object or the impossibility of developing the cooperative activity.

  16. The lack of external audit in the cases indicated in the legal regulations.