In some ways they're similar to registered associations (i.e. "eV" or eingetragener Verein) except for the fact that an "eG" may carry out "commercial operations" whereas a "registered association" (i.e. club) is specifically restricted under German law Section §21 of the German Civil Code or "Bürgerliches Gesetzbuch(BGB)"[1] to being a "non-economic association" i.e. it may not carry out any commercial business operations.
They are a special form of commercial association established to reduce barriers of entry for specific activities that lie in the public interest.
The private assets of "eG" members can never be called on by the "eG" or its creditors to pay for a debts that the "eG" may incur.
Mandatory membership and audit costs can be considerable financial burdens for new and small cooperatives.
The organization must promote the interests or business of its members, or their social or cultural interest through their joint operation under Section §1 of the German Cooperative Society Act or "Genossenschaft Gesetz(GenG)"[2] It is a legal person under Section §17 of the German Cooperative Society Act or "Genossenschaft Gesetz(GenG)"[3] and Under German commercial law an eG is recognized as a form of merchant.