1. Briefing on Co-operatives Bill 2005
Presented by Nweti Maluleke

2. 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

3. 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;

4. 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

5. 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;

6. 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

7. Amendments addressing the shortcomings of the old Act

8. 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

9. 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.

10. 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

11. 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

12. 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 deals with a constitution and powers of a co-operative

13. 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 deals with membership of a co-operative- reduced to constitution
- Powers of registrar
Section 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

14. Amalgamation, division, conversion and transfer
Section 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. Concerns
None

21. Conclusion
Thank you