Briefing on Co-operatives Bill 2005 Presented by Nweti Maluleke

Introduction On 05 December 2001 Cabinet agreed that the mandate for co-operatives development be transferred from DoA to the dti the dti had to develop a new policy and legislation that will: promote development of sustainable co-operatives enterprises in all sectors; ensure simpler registration process and management of co-operatives; Ensure accessibility to the poor User friendly Developmental rather administrative promote equity and greater participation of targeted groups

Shortcomings of Co-operatives Act 91 of 1981 The focus of this Act is primarily on Agricultural co-operatives with all others categorized as trading co-operatives; It was too prescriptive Catered for highly commercial co-operatives Registrar had more powers than members Definition of a co-operative not adequate Compliance with co-operative principles was not explicitly required from co-operatives; The Act presupposes that the state plays a highly interventionist role;

Shortcomings of Co-operatives Act 91 of 1981 Complicated registration process; The language of the Act is too complex and inaccessible to the average member; Provisions that protect interest of members vis a vis board of directors weakly articulated; The Act did not provide for the formation of Advisory Board Cumbersome winding up process

Objects of Bill/Purpose of the Act To repeal Co-operatives Act 91 of 1981; To provide for formation of co-operatives and registration - to simplify the registration process; To define co-operatives in accordance to international accepted definition; To enable co-operatives to conform with co-operative principles; To re-define the role of government in promoting co-operatives;

Objects of Bill/Purpose of the Act It gives power to the Minister of Trade and Industry to oversee the implementation of the new Act; To provide legislative framework for all types and forms of co-operatives in all sectors of the economy; To provide for protection of member’s interest in a co-operative; Emergent co-ops To increase participation by targeted groups in the management of co-operatives; and Role of government as facilitator through support

Amendments addressing the shortcomings of the old Act

Definition of a co-operative Section 1 contains a number of key definitions: Definition complies with international accepted definition of the International Co-operative Alliance as adopted by ILO. also identifies different forms of co-operatives namely primary, secondary and tertiary co-operatives. defines co-operatives principles as internationally accepted principles of co-operation

Definition of a co-operative Definitions A (primary) co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

DEFINITION, VALUES AND PRINCIPLES …….Cont The universal principles of co-operation are explained: Voluntary and open membership Democratic member control Member economic participation Autonomy and independence Education, training and information Co-operation among co-operatives Concern for community

Application of the Act Applies to all co-operatives registered in terms of this Act Applies to Financial co-operatives Applies to all Schedule 1 co-operatives A minimum of 5 persons can register a co-op A minimum of two or or more in the case of secondary and tertiary

Forms and kinds of co-operatives Section 4 Clarifies the distinction between different kinds and forms of co-operatives Lists different kinds of co-operatives not intended to be exhaustive Does not prescribe kinds and forms of co-operatives that may be formed Section 5 Detail provisions related to application of Act Section 6-12 deals with simplified registration requirements Section 13-19 deals with a constitution and powers of a co-operative

Interest of members vis a vis Board of Directors Sections 20-21 Prescribes keeping of certain records to safeguard interest of members Section 22 Deals with member’s right of access to information Provides for the election of supervisory board to oversee the Board of Directors Section 23-26 deals with membership of a co-operative- reduced to constitution - Powers of registrar Section 27-31 general meetings Provides that the Board of Directors is accountable to the general meeting where there is no supervisory board Section 32 – 40 management of a co-operative structures to manage a co-op Decision making powers of such structures

Amalgamation, division, conversion and transfer Section 56-65 covers the above especially on conversion: - conversion of both not only a co-op to any other form of juristic person - amalgamation which promotes sustainability -protection of creditors - transfers

Winding up or de-registration Section 66-71 The object of this section is to simplify the wind-up process and avoid unnecessary and costly litigation Explain circumstances under which a co-operative may be wound up. A co-operative may be wound up either by special resolution of its members or by order of the court Section 68 Provides that a co-operative may be wound up or deregistered by the Minister in certain circumstances

Administration of the Act Chapter 11 The Minister will appoint the registrar and deputy registrars to administer the Act. It compels deputy registrar to keep records of co-operatives in a prescribed manner It allows a member of a co-operative to examine certain documents sent to the registrar It provides for the registrar to conduct inspection on suspicious dealings of a co-operative The registrar may make recommendations of the findings to The co-operative concerned The Minister in terms of Section 83 The relevant prosecuting authority The Powers of the registrar in terms of this Bill is massively reduced to avoid constraints- decentralized approach

Co-operatives Advisory Board Chapter 12 ,Section 80-85 Provides for the formation of advisory board The main function of this structure will be to advise -the Minister regarding the co-operatives policy -the provision of targeted support programmes -guidelines for co-operatives audit This structure is necessary because: Co-operatives supported by government policy are at an emergent phase Integrate to other related structures Once the movement is established the structure may be reviewed Members are appointed by the Minister and they must be capable of representing interest of co-operatives

Co-operatives bill vs Co-operatives Bank bill The co-operatives bill provides for all types of co-operatives including financial services cooperatives National Treasury is the custodian of co-op bank bill The co-operatives bank bill provides for a deposit taking financial services co-operatives Financial services co-operative have to register under co-operatives bill before registering as a co-operative bank The financial services co-operative must comply with chapter 1and 2 of the co-operatives bill The registrar of the co-operative bank also assist in monitoring compliance with the aforesaid chapters The co-operatives bank bill is tailored to manage the risk associated with deposit taking from the general public

Consultation All National and Provincial departments; Provincial workshops Social partners (through NEDLAC); and The draft bill was also published in the Gazette for general public comments

Concerns None

Conclusion Thank you