3.1.3.4 Cooperatives with a social purpose in the social housing sector – Volkshuisvesting

Social housing is a regional competence in Belgium for the various different regional governments, i.e. the Flemish region, the Walloon region, and the Brussels-capital region. Each regional government has the competence to generate and implement its own housing and social housing policy. In the Flemish region, the Flemish Housing Code of 1997 has been introduced to regulate the Flemish social housing policy.1 The Flemish Housing Code of 1997 constitutes the primary legislative source for the housing policy in the Flemish region. Furthermore, the Flemish government has the competence to recognise organisations with a social purpose as social housing corporations which can implement the objectives that the Flemish government aims to fulfil with respect to the social housing policy. In the Flemish region, social housing corporations are not public organisations but independent legal entities. They are obliged to execute the tasks prescribed by the Flemish Housing Code of 1997 and its supporting regulations. Social housing organisations are operated in the Flemish region under the supervision and monitoring of the thereto established supervision and monitoring organisations.2 Social housing corporations are also allowed to benefit from favourable loans and subsidies.

However, due to their public task, social housing corporations are highly regulated. According to the Flemish Housing Code of 1997, social housing corporations are obliged to take the legal form of either a cooperative or a public limited company and to adopt the VSO legal label. Therefore, social housing corporations are in principle subject to the provisions of the Belgian Companies Code of 1999. However, the provisions of the Belgian Companies Code of 1999 only apply in so far as the Flemish Housing Code of 1997 or the AoA designed by the Flemish government for social housing corporations, do not deviate from the Belgian Companies Code of 1999.3

One deviation, which emanates from the Flemish Housing Code of 1997 is the following: social housing VSO organisations cannot provide membership rights/shares to employees.4 Thus, the 10% voting cap on the exercise of the voting rights does also not apply to the public members/shareholders in social housing corporations.5

Volkshuisvesting is a social housing cooperative in the Flemish region of Belgium. It provides renting and social housing facilitation services to people requiring social housing according to income or (eligibility to dispose of) property. The enterprise was incorporated in the early 1920s as a private limited liability company, whereas in 2009 it converted into a cooperative with a VSO label.

Volkshuisvesting has adopted a tripartite social objective to fulfil the regional housing policy (AoA, Article 4). Primarily, it aims to improve the living conditions of families and individuals in need of social housing, such as low-income families and individuals, the elderly, and people with disabilities. Secondly, Volkshuisvesting aims to realise social housing neighbourhoods by purchasing property. Finally, Volkshuisvesting aims to contribute to society by renovating or otherwise improving the quality of existing old houses.

In Volkshuisvesting’s AoA, it is explicitly mentioned that the members/shareholders are allowed to seek pecuniary (capital) gain only to a limited extent (AoA, Article 5). In principle, profits are not distributed to the members of Volkshuisvesting. Members can only receive dividends subject to the regulated cap, i.e. currently 6% (AoA, Article 21).

Volkshuisvesting has different types of members/shareholders: 23 from the public domain and 49 from the private domain (Interview with MP, 18 February 2015). However, the classification of members/shareholders is not explicitly mentioned in Volkshuisvesting’s AoA. According to Volkshuisvesting’s AoA (Article 11), public institutions that are allowed to acquire the shares of Volkshuisvesting are the Flemish government, any province, any community, and any public institutions for social welfare. Private institutions that own Volkshuisvesting shares are banks and insurance companies (Interview with MP, 18 February 2015).

The social cooperative is managed by a management committee of seven members. According to Volkshuisvesting’s AoA, the board of directors can entrust the day-to-day management to a management committee assigned for that purpose (AoA, Article 14). The management committee makes the decisions regarding the daily management and operations. However, these decisions can be subject to the approval of the board of directors.

Volkshuisvesting is governed by the board of directors, which is the competent organ to decide on any matter that concerns the cooperative including all matters that are not reserved to the competence of the general assembly (AoA, Article 14). It decides with a unanimous majority but if unanimity cannot be reached, simple majority applies. The board of directors is also the competent organ to decide on the issuance of new shares (AoA, Article 8). In such case, only the members/shareholders of the cooperative are in principle allowed to purchase newly-issued shares. A person or entity can however be nominated by two existing members/shareholders, after which the board of directors decides in a confidential meeting on the allowance of such new member/ shareholder. The regular transfer of shares between members/shareholders is also subject to the approval of the board of directors (AoA, Article 9).

The board of directors is required to comprise of at least 11 members in order to represent both the private and the public members/shareholders, i.e. five directors from the public domain and five directors representing the private members/shareholders (AoA, Article 11). Volkshuisvesting has a board of directors, which consists of 13 members. At Volkshuisvesting, the board of directors prepares and publishes an annual social report in which it is showcased how the cooperative’s activities pursue the social purpose. The social report particularly indicates in which way the expenditures on investment, operating costs and salaries have contributed to achieving the social purpose of the cooperative. The report is integrated in the annual report of Volkshuisvesting (AoA, Article 13, Interview with MP, 18 February 2015).

At the top of the governance hierarchy, Volkshuisvesting is also governed by the general assembly of the members/shareholders. The general assembly is assigned to convene annually to decide on any proposals regarding amendment of the AoA and/or on proposals formulated by the board of directors (AoA, Article 26). However, Volkshuisvesting, and any other recognised social housing corporation in the Flemish region, is not allowed to amend the AoA without the permission of the Flemish minister responsible for housing.6 This provision does not apply to several designated minor changes.7

The general assembly is entitled to appoint and dismiss the members of the board of directors (AoA, Article 12). According to Volkshuisvesting’s AoA, members/shareholders from the public domain, i.e. Flemish government, any province, any community, and any public institution for social welfare, can exercise their voting rights with as many votes as are attached to the membership rights/shares which they own. The remaining members/shareholders from the private domain are subject to the VSO legal requirement, according to which no one is allowed to participate in the voting procedure with more than 10% of the total number of votes (AoA, Article 24).

However, in practice, according to the managing director of Volkshuisvesting, ‘the cooperative strives for a unanimous majority in the general assembly, which has worked out fine so far’ (Interview with MP, 18 February 2015).

Furthermore, employees are not allowed to become a member/shareholder of Volkshuisvesting. Article 40(2) Flemish Housing Code of 1997 explicitly excludes the application of Article 661(7) and (8) of the Belgian Companies Code of 1999, which regulates the legal right of employees to acquire membership/shareholdership rights. Volkshuisvesting’s AoA mention in this context that the employees cannot become members/shareholders (AoA, Article 9). The same rule applies vice versa to Volkshuisvesting’s members/shareholders. They can only become an employee of Volkshuisvesting provided that they dispose of their shares. Due to the exclusion of membership rights/shares, the employees of Volkshuisvesting do not have a direct access to the decision-making processes of the cooperative. In the Sub-section that follows, we will elaborate on the cross-sectoral comparison and synthesis of our findings.