Knowledge Base
Explain the characteristics and risks associated with cooperative bank shares
What is the maximum legal rate for the remuneration of cooperative bank shares?
The remuneration of cooperative shares is capped at the Average Rate on Private Sector Bonds (TMO). This cap limits the potential return and is a key factor in assessing the attractiveness of these investments compared to other options.
What is the main risk associated with cooperative bank shares in the event of bank failure?
In the event of failure, members are repaid in the last rank after full settlement of liabilities, which can result in a total loss of share value. This information is crucial because it highlights that cooperative shares do not benefit from the same protection as bank deposits guaranteed by the FGDR.
What fundamental legal characteristic of cooperative bank shares distinguishes them from shares of limited companies?
Cooperative bank shares are governed by the 'one person, one vote' principle, meaning each member has an equal voting right regardless of the number of shares held. Unlike shares, they are not classified as financial instruments under European law, which excludes them from certain regulatory protections. This specificity is set out in the law of September 10, 1947, and Articles L.512-1 et seq. of the Code monétaire et financier.
Nominal value of a cooperative share at Crédit Coopératif
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The nominal value of a cooperative share at Crédit Coopératif is €15.25. This information is specific to each cooperative bank and illustrates the apparent stability of the nominal value, which contrasts with the structural illiquidity of these instruments.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Capital loss risk
Illiquidity risk
Tax risk
Risks can be classified into three main categories: capital loss risk due to members' last-rank position in the event of bankruptcy, illiquidity risk due to the absence of a secondary market and strict reimbursement rules, and tax risk related to dividend taxation. This categorization helps understand the different aspects of risks.
For how long can a former member be held liable in the event of liquidation of their local branch?
A former member may be called upon to contribute to losses for five years after disposing of their shares. This extended liability is an important feature that must be considered when investing.
Cooperative Investment Certificates (CCI) confer voting rights on investors.
CCIs do not confer any voting rights, unlike cooperative shares. However, they offer potentially higher remuneration and are listed on the stock exchange, which clearly distinguishes them from traditional cooperative shares. This information is crucial for understanding the differences between these two types of instruments.
Cooperative bank shares are eligible for the PEA-PME.
Cooperative shares are not eligible for the PEA-PME, only for the standard PEA. This distinction is important because it limits the tax advantages available to investors. The text specifies that cooperative shares are eligible for the standard PEA but not the PEA-PME, which is a crucial tax detail.