A new look on cooperative identity in the light of the EU Prospectus Regulation and blockchain-based public equity financing

Abstract

Сooperative identity has distinct features which formed over a century ago. Legislation of many countries recognises the value of traditional cooperatives by providing them with special regulatory regimes, like tax exemptions. These exact features make cooperatives unattractive when it comes to competing with investor-owned companies for public equity capital. The article looks into the opportunity for cooperatives to have competitive conditions in raising public equity capital through the offer of blockchain-based tokens. The analysis focuses on existing non-blockchain EU regulations, the EU Prospectus Regulation specifically. The study looks into the distinct features of the cooperative identity, analyses the specifics of prospectus regulations, and applies the criteria underlying the initial disclosure obligation when making a public offer to sell equity-based blockchain tokens by cooperatives. The article concludes that the Prospectus Regulation allows cooperatives that follow the traditional identity to access public equity financing using blockchain tokens without the need to publish a prospectus. This conclusion is only a first step in analysing the cooperative identity changes when membership is offered in transferable blockchain tokens.