27.1 The countries covered in this study are members of NEDAC, i.e. Bangladesh, Fiji India, Indonesia, Japan, South Korea, Malaysia, Nepal, Philippines, Sri Lanka, and Thailand. China is a member of NEDAC but does not have a cooperative law.
27.2 In Asia at present there are two types of Cooperative Laws prevailing, viz.: (I) a Common Law for all types of cooperatives and (ii) Sectoral Laws.
27.3 Cooperative will have to compete and justify their existence by showing efficiency, better services and competence. This calls for changes in the existing cooperative legislative structure.
27.4 Present cooperative laws are the products of times when cooperatives were extensively supported by the Governments and used for their planned development programs. Since the introduction of market economy and globalization of trade, state support to cooperatives has constantly declined. However, no perceptible change is taking place in cooperative laws and Government Cooperative relationship.
28. OBJECT OF COOPERATIVE LAW
28.1 The cooperative law should provide a legal status to the cooperatives and facilitate their effective working. It should also ensure that cooperatives work as genuine entities in accordance with the universally accepted cooperative principles. The legal framework of cooperatives consists of the law, supplementary laws and the bye-laws adopted by the members of a cooperative in accordance with the act and rules. The Cooperative Law thus should facilitate the working of cooperatives and should not curtail their autonomous status and change their basic character.
28.2 The objective of cooperatives, definitions and preambles are either mentioned differently in laws, or they do not find reference at all. To bring clarity to thoughts, structures and the work of cooperatives, it is desirable to include/replace cooperative principles, definitions and values in the laws and regulations, as suggested in the statement of cooperative identity at the ICA Manchester Congress, and as recommended at the Cooperative Ministers Conference.
29. TIME LIMIT FOR REGISTRATION
29.1 There should be time limit for the registering authority to register, preferably around 60 days.
29.2 In case of failure to register within the time limit, the cooperative could be granted registration, as is the case in Japan and the Philippines.
29.3 The discretion of viability of the society should not be left to the registering authority. A better solution would be to follow the Fiji provision where the registering authority if in doubt about the viability is allowed to issue provisional registration for a maximum period of two years.
29.4 Registering authorities should focus primarily on two things before registration is made, namely that:
30. MEMBER'S USE OF COOPERATIVE SERVICE
30.1 To make a cooperative genuinely member oriented, a member use-base institution, it is necessary to ensure that members use the cooperative services, and if not that membership are revoked after a year, as provided under Korean Law. If this is not feasible, the member should at least loose his right to vote and contest elections. The guiding principle should be: no use of service- no participation in the management.
30.2 There should also be a provision in the law if a cooperative fails to hold less than certain percentage of business within the member sphere it should cease to be treated a cooperative. A reasonable share range could be sixty to eighty percent.
31. GENERAL ASSEMBLY/BOARD
31.1 The minimum quorum for GAs should be not less than 50% of users and voting members. If the society fails to have AGAs for a period of three consecutive years it is a clear indication that members have lost interest in the society and as a result the cooperative should be wound up.
31.2 The GA should be the highest authority in all matters relating to the society and should not be subject to approval by the Registrar in financial matters, expect under contractual obligations (Bangladesh).
31.3 Proxy at least between family members could be established.
31.4 It should not be obligatory for the society to invite the Registrar (Malaysia) to attend AGA, invitation should be at the discretion of the society. However, provisions could be made to send agenda and minutes of the AGA to the RCS.
31.5 The powers and functional areas of the cooperative Board, Chairperson, and Chief Executive should be clearly defined in the law.
31.6 The Chair should be held by a Chairperson, presiding over the meetings. The Chairperson should be a friend, philosopher and guide to the Chief Executive. The Chair should in this case not try to direct the decisions of the CE or interfere in day-to-day business or administrative affairs. If it is found appropriate for the Chair to be involved in business and administration affairs (South Korea), this should be the task of a second Chairperson, designated accordingly.
31.7 The performance of the Board should be viewed by the General Assembly only, and therefore not by the RCS, except when the Board is guilty of contravening acts, rules, bye-laws, or laws of the land.
31.8 If the irregularities are of a serious nature and the General Assembly fails to rectify them, action could be taken by the RCS to conduct re-elections or cancel the registration of the society and initiate civil/criminal procedures against concerned officers. However, government Departments should not vest interests by dissolving the Board and running the society departmentally.
31.9 Powers to appoint the Chief Executive should be with the Board and subject to rectification by the General Assembly. Government departments (RCS) should not be involved in these matters.
31.10 In countries where the law requires singular structure (board only) the wording should be changed to allow for duelist structures, including boards and audit or control committees, to facilitate effective transfer of audit work from government departments to the cooperatives.
32. AUDITING
32.1 Auditing should be the responsibility of General Assembly and government departments should not be involved in annual auditing, especially in view of the large number of cooperatives involved and increasing turnover and complexities. However, the department may conduct supervisory audits, in the form of management auditing.
33. ACCEPTANCE OF FINANCIAL ASSISTANCE
33.1 Most laws provide concessions, facilities, tax exemptions and financial support to the cooperatives. In some cases, these facilities are without strings, in other cases provisions are made to empower government to interfere with the management of cooperatives. The right approach would not be for cooperative laws to include provisions that allow full interference in cooperative management by the responsible government department, as this would be against the cooperative principles. However, when any financial assistance is provided the right to interfere may be stated in the loan terms, and on this ground it should be left to the cooperative whether to accept the assistance or not.
34. INQUIRY AND INSPECTION REPORTS
34.1 The provision of regular inspection as provided in Japan is needed in other countries to ensure that every cooperative is inspected by the responsible government department, if not every year then at least once in three years.
34.2 The inquiry and inspection report should be placed before the general assembly. The department should take immediate action in case inquiry or inspection detects any contravention of laws, bye-laws and laws of the land. Other irregularities and rectification should be the responsibility of the Board of Directors and /or the General Assembly.
35. WINDING-UP
35.1 The winding up process is in some countries rather lengthy and may take decades, although in most countries a time limit is prescribed. In this regard the suggestions made in para 37 should be considered.
35.2 In countries where the administrative authorities have been authorized to make rules under the law, rules at times stretch beyond the spirit of the law. Practices similar to the ones followed in Japan, South Korea, Indonesia in this regard should be adopted by other countries by having no rules.
36. OTHERS
36.1 In country cooperative laws where non-members (business associates) are not allowed access to cooperatives, business associates should be allowed nominal membership, to avoid civil legislation.
36.2 In the case of the Philippines, even the public officials interfering in the internal works of a cooperative have been covered under the offence. This provision is meant to discourage political and bureaucratic interference in the works of cooperatives; which is not uncommon in many countries and is worth consideration by other countries.
