The Co-operatives Bill, 2004, is hereby publishedfor general comment.
I in brackets indicate omissions fromWords bold type in square existing enactments.
To provide for the formation, registration of co-operatives. estabishment of a Co-operativesAdvisoryBoard, windingup of co-operatives and to provide for matters connected therewith.
BE ITENACTED by the Parliament of the Republic of SouthAfrica.
Transfer of membership, membership loan or share --.
Annual general meetings '8.
Minutes of directors' meetings 4s.
CHAPTER 8 66.
Transitional provisions relating to the judicial management ofco-operati\.
In thi\ .\ct. unles\ the context indicates otherwise- **auditor means; I pmon registered as such in terms of the Public Accountants'.~nd.-ltdi~or\'Act. 19'1 I (Act No.
I 1 I cotnprises le55 than the minimum number of persons required to register 114 a co-operative.
(/)J elc'ct\ not to comply with any provision(s) of the Act applicable to co-operati\e\ for a specified reason(s) acceptable to the registrar.
"primnr!. co-operatiye" means a co-operative formed by a minimum of seven per\on\ \\ how object is to provide employment orservices to its members: 45 "secondary co-operative" means a co-operative formed by two or more primary c'o-cqwati\c\ to p1-01ide services to its members; "t'ederal co-operative" means a co-operative formed by two or more secondary L~o-opcmti\es to pro\-itle services to its members; "co-operati\e apes organization" means a co-operativeformed by primary 50 co-olc~rLlti\es tt co-operativegoups.andorsecondaryandor federal co-o!u;\l1\ c\ (<) pro\ide w\ ices to its members, and to represent the interests of .~o-<l~~c~.. Iii\ yecitic sector or region or province or nationally?
"department" means the Department of Trade and Industr!
the "generalmeeting" means ameeting of the members of; t co-operati\e or co-operative group, and may include, as the context indicates. an Annual General Meeting ("AGM"), a special general meeting or a regional or prwincial ~~elleral meeting; ~ "ordinaryresolution" means a resolutionpassed at a generalmeeting b! the majority of the members present: "Minister" means the Minister of Trade and Industry: "membership share"means a share issued tothe members of a co-opernti\ e a\; I requirement of membership of the co-operative; "memberloan" means a by a member the loan to co-operativt.. "patronage proportion" means the allocation by a co-operuti\.e to its member based on the business done by the member with or through the co-operati\ e: "prescribed" means prescribed by regulation: "registrar" means the Registrar of Co-operatives and "deput! registr~u-"\hall have a corresponding meaning: "special resolution"means a resolution passed at a general meeting by; I tm~orit! of not less than two thirds of the members present. or such greater majority ~5 ~na! be specified in the constitution of a co-operative: "surplus" means thefinancial surplus arising from the operations of; I co-operative in a financial year; and "this Act" includes regulations made thereunder.
to promote the development of autonomous. self reliant co-operati\,es.
to encourage persons and groups who subscribe to \dues of \elf-rclianct. and self-help. and who choose to work together in democratically co11trolled enterpri\e\.
to the extentfeasible, membersprovide the capital required b!
to provide for reserves, to be set aside in a reserve fund. a part of %.
for community welfare or the promotion of co-operative enterprisej: or as a distribution amongst its members as a patronage return.
(,f) it educates its members and employees on theprinciples andmethods of co-operation.
(7)A co-operative may restrict the classesof persons eligible for membership if such restrictionreasonablyrelates to the business of the co-operative as set out in its constitution and to the commercial ability of theco-operativeto provide services to prospecti1.
(3)The constitution of a secondary co-operative or federation or co-operative apex hvdy may provide that the members have more than one vote, despite subsection(I)(b).
(i); I minimum of se\'en persons that intend to found a primary co-operative.
tuo or moresecondary co-operatives that intend to form a federal co-operatiw. ti\) a minimum of five co-operatives and/or co-operative groups that intend to form an apex organization. i2 i The follov.ing persons may not make an application under subsection (1): ((/Ian indi\ idual who is an un-rehabilitated insolvent or a legal entity which was cleclured insolvent or was liquidated; or (/I) ;~n of mind.
i I Before wbmitting an application to found a co-operative there must be at least one meeting of interested persons at which a business planfor the proposed co-operative ih appl-o\,ed.;I constitution ofthe proposed co-operative is adopted, and the first directors xc electcd.
I 2 An application to register a co-operative must be submitted to the registrar in the prescribed fornn. and accompanied by the prescribed fee.
tn o copies of the constitution of the co-op, signed by the founder members:; I I1cl dl a list of the directors.
The registrar must register the co-operative, and issue a certificate of registration with; I rs$wation number. if he or she is satisfied that- ((/) the constitution complies with the Act; fill it appears from the business plan that the business will be sustainable; and ((') the propowtl name of the co-operative complies with section IO(1).
A co-operative will be incorporated as a legal person with effect t'rom the d;w 011 ahich it is registered. as reflected on its registration certificatt..
A person who enters or purports to enter into a written contrtlct in the n:mc ot or on behalf of a co-operative before it is registered. is personall!. bound b!, the conti-act and is entitled to the benefits flowing from that contract. unle\\ the contract exp~-c\\i! provides otherwise.
(2)A co-operative may, within areasonabletime after it\ registration. ratlt! thz contractreferred to in subsection (1) by a decision of the nujorit)~ of member\ in; I meeting of members.
fa the co-operative is bound by the contract and entitled to it\ benetit.
the person who originally entered into the contract cease\ lo be hound I,! the contract or be entitled to the benefits of the said contract.
The proposed name of the co-operative must not be the wnw 01' \o \imil;~r to that of an existing co-operative that it may be misleading. or a n;me that is ~~ndt.s~rablc. prohibited, or to misleading.
A co-operative must have the words "co-operative" or "co-op": I\part of it4 name. Further, it must include as the last word of its name the \vord "limited" or Ihc abbreviation "ltd.", unless theconstitution of a co-operati1.e pro\,ide\ for unlirllltctl liability.
(3)A co-operative must set out its name in legible characters in all contract\. il\ ()ice\. negotiable instruments, letters and orders and places of business?
(4)If the name of a co-operative is indicative of a restriction on the business that nu! be carried on by it, the constitution of the co-operative may not be amended to ren~nc that restriction unless its name is also amended.
The registrar may direct a co-operative to change it\ name if the co-operati\ e's name contravenes section 10.
If a co-operative does not comply with a directive from the reyimar under subsection (1) within sixty days from date of receipt thereof. the registrar may ihsue; L certificate of amendment revoking the name of the co-operatijre and assigniny; I ne\\ name.
(3)The constitution of the co-operative is deemed to be amended accordingl!, on the date shown in the certificate of amendment issued in terms of subsection (7).
(3)On issuing a certificate of amendment under subsection (7).the registrar \lust publishthe change of name immediately in a publicationgenerally; tvailable to the public in the area(s) where the majority of the members reside.
Every entity, other than a co-operative or co-operative group registered in term\ of this Act is guilty of an offence if the entity uses or authorises the use of the word or expression "co-operative","co-op","co-operativelimited"."co-operati\.e Itd". "co-op Itd" or "co-operative group"as part of its name or in any manner in connection n, ith the conduct of its business so that the entity could reasonably be considered to be holding itself out as carrying on businessas a co-operative.
I(/) 'That each member has one vote in thegeneralmeeting of theco-operative. except in the case of a secondary or federal co-operative. or a co-operative apex body. where the constitution may permit a member to have more than one \.ore.
business of the co-operative: iti Any restrictions on the business of the co-operative; ij The requirements for membership of the co-operative, including the amount of an!.
i, jJ The requirements for withdrawal of membership of a co-operative, including an!. pro\.
Pro\ision for a specified percentage of thesurplus to be transferred to an incli\ isible reserw fund: (/J Pro\ision for the distribution of the assets of the co-operative on its i)iri The date the tinancial year of the co-operative ends.
(3)Wherc; I member is required to hold shares in a co-operative upon application or acceptance its; I member.
(/I) The nomin;tl value of the shares: Whether the membership shares are to be issued fully paid upor not fully paid up.
It/) The maximurn percentage of the share capital of a co-operative a member may hold: ~CJ Thc circumstances under which shares issued to a member may be cancelled.
mceting in her or his stead: (c') Under what conditions. if any.
Thc power of the board of directors to delegate to a sub-committee or director.
(jj Provision for the resolution of disputes between members ot'the co-operati\ e. or between a member(s) of the co-operative and the co-operatiit. itwlf'. h! way of private arbitration or otherwise.
hj is not invalid by reason only of the fact that it does not pro\.ide tor; I matter for which it must provide in terms of this Act.
The constitution of a co-operative may be amended by the co-operative b! special resolution.
(2)Notice of the general meeting at which a proposal to amend the constitution i\ to be considered must set out the proposed amendment.
An amendment of a constitution will come into operation on the date it ic registered with the registrar unless a later date is specified in the special resolution.
(4)The registrar must approve an amendment to the constitution that is submitted in the prescribed form if he or she is satisfied the prwisions of the Act ha\ e heen couqdied with.
(5)If the registrar is not satisfied that the provisions of the Act ha\e been complied with he or she may conditionally approve or reject the application.
(6)No amendment to the constitution affects an existing cause of action or claim OI-liability to prosecution in favour of or against the co-operati\r or its directol-s or an! civil. criminal. administrative, investigative or other action or proceeding to which; I co-operative orareits directors a party.
A co-operative may do all such things as may be reasonably nece\.;ar' to carr! out its objects. subject to any exclusions or qualifications imposed h! its constitution with reference to the powers listed in Schedule 1 hereto or otherwise. and \uhject to the provisions of this Act.
If a co-operative performs any act forwhich it does not ha\e the po\ve~-.the co-operative and each director of the co-operative Lvho authorised the pertormancr of' such act or participated in the granting of such authorisation or in the performmcc. of such act. knowing that the co-operative is not empowered to perform such act. will he an guilty of offence.
A co-operative must maintain a registered office in the plact. set out in its constitution.
(2)A co-operative must notify the registrar of the physical address of' it\ registered office. as well as any electronic address, telephone or telefax numbers. in the prcscrihed form.
(3)A co-operative must notify the registrar in the prescribed fornm \4 ithin tifteen clay if the physical or electronic address as notified in subsection (2)changes.
the co-operative's constitutionand by-laws, if any.
the minutes of meetings ofthe board of directors in aminutebook. as section envisaged in 44; fdj an attendance register, recording the attendance of directors at meetings of the board, as envisaged in section 45; el a list of its members, setting out their names and addresses.
a register of directors interests in contracts or undertakings, as envisaged in section 1X: and ill i adequate accounting records, including records reflectingthetransactions between each metnber and the co-operative for the purpose of calculating the proportion.
(2)A co-operative must retain its accounting records fora period of six years after the end of the tinancial year to which they relate.
The registrar may issue guidelines to co-operatives regarding the mannerin which the records referred to in (I) above must be kept, including guidelines allowing a ccwperativerecordsto keep in an electronic format.
(1)Members of a co-operative may examine the records referred toin paragraphs (I) to f, y) of subsection (I) during the normal business hours of the co-operative and may t;lhe extracts from the records. free of charge, orhavecopies of them made after paynxnt of; I reasonable fee.
(5)De\pite subsection (-I), where the constitution of a co-operative provides for the establishmrnt of;^ supenisory board. only members of the supervisory board shall have; ICCCS> to the tninutes of tneetings of the board of directors, kept in accordance with paragraph fc,) of subwction (I).
A co-operati\,e or director who fails to comply with any provision of subsection I \vi11 be guilty of an offence.
CHAPTER 3 18.
membership fh) the application has been approved by the board of directors; and (('/ (hepermn has complied with the membership provisions required by the constitution.includingpayment of anyentrance fees, subscribing for any minimum number of membership shares, paying anyminimumamount on account of the subscription price of the shares or paying any minimum amount 35 on; Iccount of; Imetnber loan.
(2)An inch\ idual uho is under the age of twenty-one years may make an application under p:uxpph ((I/ of subsection (1) with the consentof her or his guardian or parents.
(3)If all the conditions set out in subsection (1) have been met within six months of the date on n.hich the co-operative receives the application for membership, the board of directon may make the admission of the member effective as of the date of the applicntion or as of any date after that date but before the end of the six months.
It/ A right to participate to the fullest extent possible in the decision-making proces\es of the co-operative. including but not limited to the right to attend and ote at general meetings. to be elected to the board of directors or, where applicable.
((') A right to appoint 21 nominee to receive the member's shares when the member 55 dics. or to transfer his or her share to anotherperson, and to share in the distribution of any surplus.
To be bound by the constitution of the co-operati\,e. and b!
To attend general meetings, and to submit; I written apolog! in the e\ L>n llci it is not possible for the member to do so.
(I j A member may withdraw his or her member.;hip in a c(l-opel-nti\ e hy \Iritter1 notice to the co-operative. (2)Any such withdrawal of membership is effectilse on the date on \$,hich the co-operative receives the notice. (3)The co-operative must within a reasonable period. but not longcr than tu o !C;II-after the date a member's withdrawal becomes effectiw. repay the nlenlber the no111in;ll value of her or his shares. all member loans, all other amounts held to he memlw.\ creditand all amounts outstanding on loans made to the co-operati\,c b! thc. mcnlbcr. together with any interest accrued on those amounts up to the date of the pa!'tnent. (4) Notwithstandingsubsection (3), if a co-operativedetermine\ 011 re;lsonahlc. 20 25 grounds that the repayment envisaged in subsection (3) would ad\.cr~el! ;1ft'i:ct th~. financial well-being of the co-operative, it may direct that the repa\'ment he deterred t.or; I period not exceeding four years after the effective date of a notice of \\.ithcir:l\\ at.
(5)Unless the co-operative determines otherwise the withdrawal of: I mrmbcr trom the co-operative does not release the member from any debt or obligation to the co-operative or any contract between the member and the co-operativr.
Unlesstheconstitution or thisAct pro\-ide otherwise. the memher\hip of; I 35 member may be terminated by special resolution of the members.
If it is contemplated terminating the membership of a member h! special resolution, the board of directors must ensure that the member has receiwd the requisite notice. and allow the member concerned an opportunity to state his 01' her cast' at the senera1 meeting, before a decision in this regard is taken. The pro\.isions of this m~tiotl 40 should not be construed as preventing a general meeting from adoptiny wch re!-.olution in the member's absence.
If the membership of a member is terminated as contemplated in sub\ection I 1. the co-operative must inform the member concerned of such termination and the reawns therefor. 45 been terminated in terms of this section nlay onl! be re-admitted to membership by special resolution of the members.
If the membership of a co-operative is reduced to a number less than the number of members required for incorporation. and after six month's it remains at less than that nun~bttr.
/I that it be \\ound up in terms of the provisions of Chapter 9.
General meetings 25 26. (I) General Meetings must be held at the place(s)in the Republic provided for in thc constitution or. in the absence of such a provision, at the place where the registered offce of thc co-operative is located or any other place in the Republic that a general meeting ma) approw.
2I General rneetings shall be held as often as prescribed in the constitution, provided 30 ttxw i\; Lt least one general meeting every calendar year, known as the annual general nlecting.
i.3 Special yeneral meetings may be called at any time.
(4)The chairperson of the board of directors will chair all general meetings. or in her or hi\ absence the vice-chairperson. In the absence of both the chairperson and 35 \ ice-chairpcrwn of the board of directors. the meeting may elect an acting chairperson to chair that meeting.
(51 Subject to the constitution of a co-operative and any regulations under this Act, a member of: Ico-operative may attend a meeting of the co-operative by means of a relephonic. electronic or other communication facility if it pennits all participants to 40 co~nn~tmic:~te adecluately u.ith each other during the meeting. (61 Aperson participating in a meeting referred to in subsection (4) is deemed to be prehent at the meeting.
(7)If the constitution of a eo-operative permitsa member to appointa proxy to attend and \ore at a general meeting in her or his stead, the same person may not act as a proxy 45 (111 hehalf of more members than the number prescribed in the co-operative's con\titution. Thi\ number must not exceed twenty percent of the number of members entitled to late.
The first annual general meeting ("AGM") must be culled not 1att.r th;m eighteen months after the co-operative has been incorporated.
(3)The AGM must decide the following issues.
bJ approval of areport on the affairs of the co-operative for the pre\ ious tinancial year: approval of financial statements for the preceding tinancial !
futurebusinessplans of the co-operative: and c.f, plans to provide education and training for members and emplo>ees.
Whereregional or provincial AGMs are held in terms of 3 co-operati\e'h constitution, the constitution must provide that a conference of delegate\ ih held u ithin a period not exceeding two months of the last regional or provincial general meeting held, to ratify decisionstaken. The constitution of such aco-operative n1u<t further provide a means whereby any serious differences of opinion between dc.leptc\ f~-on~ different regions or provinces in respect of any of the issues identified in sub\ection ti may be resolved in a democratic manner.
Members must be given at least twenty-one days written notice ot; I gencral meeting. specifying the date, time and place of the meeting. and the agenda.
(2)The fact that a member has not received notice of a meeting does not in\ alirfatt. such meeting.
If a meeting of a co-operative is adjourned for less than thirt da!h. it is not necessary. unless the constitution provide otherwise. to give notice of the ad.journed meeting other than by announcement at the meeting that is adjourned.
(4)The provisions of subsections (1) to (3) shall apply to a conferenct-of dc'leg;w\ held in terms of a co-operative's constitution, with such changes as the conteXt ma! require.
thenotice of the general meeting specified the particulars of the resolution.
the resolution was passed by not less than two-thirds of the members prewnt: and in the event of a resolution to convert a co-operative into a compan! or close corporation, or to wind up the co-operative. it was passed b! at least 75 percent of all the members of the co-operative.
The constitution of a co-operative may require a larger majority of \'ores than specified in subsection (1) above for any specific purpose.
(3)Where the constitution of a co-operative provides for the holding of a conference of delegates, a special resolution must be passed both by the majority required in terms of subsections (1) and (2) at each regional or provincial general meetin concerned. and by not less than a majority of two-thirds of the delegates present at such conference of delegates?
A member may submit a resolution on any matter that the member proposesto raise at an annual general meeting.
Such resolution must be attached to the notice of the meeting. tosether with. if requested by the person proposing the resolution, a statement ofnot more than t\vo hundred words in support thereof.
it clearly appears that the purpose of theproposal is to enforce a personal claim or redress a personal grievance against the co-operative or its directors, ofiicers. members security holders.
(4)No co-operative or person acting on behalf of a co-operative incurs any liability by reason only of circulating a proposed resolution or statement in accordance with this section.
(5)If II co-operative refuses to attach a proposed resolution to a notice of a meeting. theboardmustnotify the person submitting the proposal assoonaspossible after receiving the proposal of the co-operative's intention to omit the proposed resolution from the notice. and its reasons for doing so.
The board of directors must prepare an alphabetical list of its members who are entitled to receive notice of andatvote general 15 meetings.
(2)Where a conference of delegates must be held. the board must prepare a list of delegates who are entitled to attend and vote at such meeting, and the names of their alternate\.
at the meeting for which the list was prepared.
The quorum fora general meeting must be one third of the number of members of a cc>-operati\i:present at the time which the meeting is called.
(2)Where the constitution provides for regional or provincial general meetings. the quorum mtlst be one third of the number of members in that province or region present at the timc the meeting is called.
(3)Ci'hcrc the constitution provides for a conference ofdelegates. the quorum must be one-third the number of delegates entitled to attend such conference present at the time the meeting is called.
(1)For the purposes of calculating thequorum, any apologies membershave submitted that; ire acceptable to theboard of directors must be deducted from the number of those who would otherwise be required to attend the meeting, in accordance uith a list prepared in terms of section 31.
(5)If the regiytrar is of the opinion that there is good reason, having regard to the kind of co-operatiw. to approve a provision in the constitution for a quorum of less than one-third. he or she may do so despitesubsections (1) and (2),provided that such quorun1 is not less than twenty percent of the members present.
(6)If a quorum is present. the members present may, unless the constitution provides othenvise. proceed with the business of the meeting even though a quorum is not present throu~hout the meeting.
(7)If a cporum is not present at the time the meeting is called, or within a reasonable period of timethereafter. as stipulated in the constitution, the members presentmay ad.jwrn the meeting to a determined date, time and place, but may not transact any other 45 business.
At a meeting adjourned in terms of subsection (7), the persons present at the date, time and place determined in accordance with the constitution shall constitute a quorum and may transact business on the initial notice.
33.(1) If a juristic person is entitled to vote at a meeting of a co-operative, it may be represented by any member of the juristic person concerned authorised to do so by rewlutian of its board of directors or executive committee or an equivalent structure.
(2)An incli\ idual who is authorised under subsection(1) to represent ajuristic person may cszrcise on behalf of the juristic person all the powers the juristic person could 55: ser-cise if it \vas an individual.
Voting at a general meeting or conference of delegate\ ma!- take place t! \ho\?
of hands unless the constitution provides otherwise, and subject to the provisions of subsections (2)and (3).
(2)Any person who is entitled to vote at a meeting may demand: I hallot either hetorc or after a vote by show of hands, in which event voting must be b!, ballot.
(3)Voting must be ballot in the event that there is one person acting; I\ pro.^! 011hch;~lt' of more than one member. or more than one such person.
Unlesstheconstitution provides otherwise. the board of directors ma!: i\c twenty one day's written notice of its intention to adopt a resolution in lieu of'; I gcne1.;ll meeting. which notice must be accompanied by a brief moti\ ation for the re;t\on\ I'oI-adopting a resolution in this manner, and of the resolution proposed.
(3)A copy of every resolution contemplated in subsection (1) mLlst be kept \\ it11 the minutes of the meeting.
The board of directors must cause minutes of genenl nxeting\ to be kept in one of the official languages of the Republic and to be entered in LI minurc boot, to he kept at the registered office of the co-operative.
(3)Minutes in respect of any general meeting must be circulated to thc memhcrs; I\ soon as possible after the meeting.andpresented for approval at the nest ycnc1-;11 meeting.
(3)For the purposes of subsection (I), loose leaves of paper u, ill not bc deemed to constitute a minute book. The pages or leaves of such book lnust be hound together permanently, and consecutively numbered.
(4)The minutes of any general meeting. signed by the chairperson of the board or; I person acting as chairperson, or a resolution adopted in terms of section 35. signecl b! the chairperson or person acting as chairperson, is in the absence of e\ idencc to the contrary, proof of the outcome of the vote or the resolution.
(5)The provisions of subsections (1) to (4) shall apply to a conference of deleg;ltt.\ held in terms of a co-operative's constitution, with such changes a5 the context m! require.
Membersconstituting not less than five percent of the members of; I co-operative may submit a written request calling on the directors to convene a genml meeting for the purpose stated in the request.
(2)SimilarIy members constituting not lessthan five percent of the member5 of; I region or province may submit a written request calling on the directors to con\we; I regional or provincial general meeting for the purpose stated in the request.
the board of directors have called a general meeting and gi\,en notice thereof: and the business of the meeting as stated in the request includes; I mtter v, hich it is not within the powers of the members to determine.
(5)A meeting called under this section must be called as nearly as possible in the manner in which meetings are to be called pursuant to the constitution and this Act.
(6)Unless the persons who are present and entitled to vote at a meeting called under wbhection (4) resolve otherwise, the co-operative must reimburse the persons who \ipnecl the requeht for the expenses reasonably incurred by them in requisitioning. c;~llingand holding the meeting.
(I 1 The affairs of a co-operative shall be managed by a board of directors, which \\ill.\ubject to the provisions of this Act and theconstitution of the co-operative, c\crci\c and perform the powers and of the duties co-operative. ! 2)The I, oard of directors will he elected by the members in general meeting in such nunner and tOr wch; Iperiod as may he set out in the constitution.
I iTo hold oftice as a director. a person must be a member of the co-operative. in the CLIW of; I primal-!. co-operative. or a member of a co-operative that is a member, in the CLLW of; I \econdary or federal co-operatives, or a co-operative apex organization. tlnlc\s the constitution allows a non-member to be a director.
I a person ho has at any time been convicted whether in the Republic or elsewherei of theft. fraud.forgery, perjury or any offenceinvolving dishonest! or in connection with the formation ormanagement of a co-operati\ e or other entity.
i(J upon the expiry of 30 days. or such shorter period as may be approved by the board. after he or she resiped as a director of the co-operative; and id) he or \he is removed from office under subsection (2).
(7)..\director ma!. at any time he removed from office by ordinary resolution passed, It; I gcnerd meeting of the co-operative.
I.; I Any \.acanc!t' on the board of directors of a co-operative arising from a circunlstmx referred to in subsection (1) and every vacancy caused by the death of a dircctor \vi11 be tilled in such manner as may be provided in the constitution, and every Jinxtor so appointed \vi11 hold office for the unexpired portion of the period of office of thc \ acatinz director or the director that died.
11. ! 1 Unles5 the constitution of a co-operative provides otherwise, the board of Lilrcctor\ 01'; I co-operatibe will at its first meeting after the incorporation of the co-opcwti\t' and thereafter as often as it may become necessary, elect a director as the L~ll:lll-per\onand another director as the vice-chairperson of the board.
during \uch absence or incapacity.
if he or she resigns as chairperson: or if he or she is removed from office under wbsection (2).
The chairperson or vice-chairperson of a board of directors rna!; it an! time he removed from office by 'the board.
A meeting of the boardof directors of a co-operative will be held at; I tinw and place determined by the boardor the chairperson of the board or any two di1-ectw\ of the board.
ftr a majority of all the directors will constitute a quorum for an!
in the event of an equality of votes the chairperson of the board or the perwn acting as chairperson, as the case may be. \vi11 hatme a casting \ ote in aclditioll to his or her deliberative vote.
(3)No resolution passed by a board of directors or act performed under thc authorit! of a board of directors will be invalid by reason only of a \.acarq 011 the boml 01-of' fact that a person who is not entitled to sit as a director sat as: I director at the timc \\hen the resolution was passed or the act was authorised: Pro\ided that the rewlution \\;I\ passed or the act was authorised by the requisite majority of the director\ \\ho \\ere present at the time and entitled tosit as directors.
The board of directors must cause minutes of the board meeting\ to be kcpt in one of the official languages of the Republic and to be entered in; I minute book to bc kept at the registered office of the co-operative.
Minutes in respect of any meeting of a board of directors will bc circulatetl to the directors as soon as possible after the meeting. and presented for appro\ al at thc next board meeting.
(3)A resolution of a board of directors in the fomm of a written resolution signed b! all the directors will constitute a decision of the board and milst be entered in the minute book referred to in subsection (1). The provisions of section 36(3)appl!, rrrfctrrt;\, umdis to such a minute book.
The minutesof any meeting of a board of directors purporting tobe signed by the chairperson of the board or a person who acted as chairperson, as the case may be. will in any court beprimafacieproof of the taking place of anything which according to such minutes took place at the meeting.
Every director present at any meeting of the board of directors must at the meeting sign hisor her name under the dateof the meeting in an attendance register with permanently bound leaves to be kept for such purpose by the co-operati\,e.
The attendance register will be kept at the registered office of the co-operative or such other place as may be determined by the co-operative with the approval of the registrar.
The board of directors may subject to such limitations and qualifications as may be set out in the constitution of the co-operative, delegate any of its powers to a director or a committee of directors, or authorise a director or any such committee to perform any of the board's duties or to act as the co-operative's representative or agent.
(2)A delegation under subsection (I) will not prevent the exercise of the relevant po~erby the board itself.
(-3) The provisions of section 48 will, with the necessary amendments.apply in respect ot'; I committee referred to in subsection (1).
1. A director or otficer of a co-operative will not be liable to any person in his or her person;1I capacity for any loss or damage which may occur in or in connection with the pertol-mance of his or her duties.
rli conduct u hich is or was intended to defraud any person or for any other fraudulent purpose. in Lvhich case he or she will be liable in his or her personal capxity without any limitations of liability.
48.I I ;\ tlil-ector must. in accordance with this section, disclose to the co-operative the n;tturc and extent ot' any interest that the director has in amaterialcontract or transactlon. or; I proposed material contract or transaction. with the co-operative, and; my material change to such interest.
(2)Thi\ section t1oe.s not require the disclosure of an interest in a contract or transaction that is a\.ailable to and customarily entered into between the co-operative and it\ nwmhers. if the contract or transaction is on the same terms as are generally awilablr to rnembers.
(3)Thc director must make disclosure in writing, and the fact that a director has made disclo\tlrc must he recorded in the minutes of the meetings of directors.
f ' I if there is a material change in the director's interest in the proposed contract or proposed transaction.
tli if the director becomes interested in the contract or transaction after it is made.
c 1 it' the director had an interest in the contract or transaction before becoming a director.
~IV, are of the contract or transaction.
61 Tilt. hoard of directors must keep a register of directors' interests in contracts or unclrrtahings. and enter therein full particulars of every disclosure of interest made in lcr111\ofthi\ vxtion.
A director or an employee of a co-operative mag not accept an! conln~~~~ion. remuneration or reward from any person for or in connection with an!. t1-m\acoon 10 which the co-operative is a partyunless suchcommission. remunerntion or I-cu ml i\ paid or given in the course of his or her usual business or profession and he or \he. It he or she is a director. has disclosed his or her interest in terms of the pro\.
A director or employee who contravenesa provision of submxion iI \\ ill he yilty of an offence.
any change of address of a director upon being informed of such ch:lngc b!
a person being appointed as a director. together \vith the full name and xicirc\\ of the person so appointed.
(2)A director who changes his or her address must within 30 day\ after \uch change inform the co-operative in writing of his or her new address.
A co-operative that fails to comply with a provision of subsection (I and; I director who fails to comply with a provision of subsection (2) will bc guilt! of; In offence.
The initial capital of a co-operative should be pro\,idrd b!, its nwnher~.
Membership shares may be issued only to members. each of whom mu\t hold the minimum number of membership shares prescribed by the constitution.
(2)The constitution may not include any preference. right. condition. restriction. limitation or prohibition on membership shares, except as pro\.ided for b! this Act.
(3)A member is not entitled to withdraw her or his shares for as lon_r as she i\; I member of the co-operative.
(4)Interest on membership shares is only payable on shares that are paid up. or on that portion of the shares that are paid up.
(5)A transfer of membership shares is valid only if it complies with section 21: md any restrictions set out in the constitution.
(6)A co-operative has a claim on a membership share for any debt of that member to the co-operative.
1 Each member is entitled to a certificate in respect of membership shares issued to her or him or; I certiticate in respect of member loans unless the constitution of a co-openti\e provides otherwise.
If the con4titution pro\.ides that no such certificates need be issuedthe co-opcrati\e must. on the request of a member, issuea statementof the number of mcmhcr\hip \hares held by. or the amount of any member loan of, the member.
Iom\ to the co-operati\e.
LI \tntement that the certificate is not transferable without the approval of the boxd of directors: and. I \t;w:lnent that the member is liable for the unpaidportion of any membcr\hip share iasued to her or him.
(/)J intcw\t on; II~ amount paid upon his or her shares and setaside for future XI! mcnt: an!
I an!. amount paid to him or her after the reduction of share capital: f'/ an!. ;1nmunt allocated to him or her out of the distribution of reserves set aside tor future pd!'
f.1 an!. other money due to him or her which is a deferred payment.
(3)The 1none!. tanding to the credit of a member in a members' fund- (0J ma! he applied for any purpose except for writing off a loss; (/I/ must he paid to th member in the manner and at the time provided for in the constitution?
1 ~na! bear interest: It; I rate fixed in the constitution; ma! on the due date be \et otf against the debt owing by the member to the <>-operati\e.
\L, rion\ of a L'o-opeiati\.e in terms of this section are not deemed to be activities prohibitd h!the Bank\ Act , 1965 (Act No. 23 of 1965)by reason only of the fact that tllc co-opcr-:lti\e fund.
1 I co-operati\e may allocateamong and credit or pay to its members as a patron;lge 1m)portion all or a part of the surplus remaining after the transfer to the resen e fund of; Iperccntage of the surplus specified in the constitution. in accordance \\ ith \ection 13(I)(,fj. Suchallocationmust be pro rata to the business done by the mcnllws \\ ith or through the co-operative in that financial year.
(2)For the purpose of subsection (1) the board of directors, when determining the ,~r~ount oibusiness clone by each member with or through a co-operative in a financial !far.
the quantity. quality. kind and value of things bought, sold, handled, marketed oc clcalt in b! the co-operative: //I/ the wr\.ices rendered- I i) h!the co-operative on behalf of or to the member; and (Ii b!
A co-operative may provide in its constitution that the whole of the patronage proportion of a member in respect of a financial yearor such part thereof as the board of directors may determine, must be applied to the purchase for the member of membership shares in the co-operative.
If the provisions of subsection (3) apply.
if applicable, the issuance and forwarding of certificates to members in respect of shares so issued or transferred.
A co-operative may not, directly or indirectly. give financial assistance by means of a loan, guarantee or otherwise to any member.
the co-operative is or would be, after giving the financial assistance.
hi the realisable value of the co-operative's assets. excluding the amount of any financial assistance in the form of a loan and in the form of assets pledged or encumbered to secure a guarantee, after gi\,ing the financial assistance. would be less than the aggregate of the co-operative's liabilities and the share capital.
members, or members of members. if the financial assistance is available to all terms.
An audit of the affairs of a co-operative must be conducted once a year.
reportgenerally as towhether the assets and facilities of a co-operative are 45 being properly managed, and the operations of a co-operative properly conducted, in compliance with the Act; and report on any other matter the auditors are required to report on in terms of a co-operative's constitution.
(2)The Minister may publish regulations further regulating the audit of co-operatives in terms of subsection (1).
(3)The Minister may, in terms of the regulations envisaged in subsection (2),grant the registrar the power topermit a co-operative, notwithstandingtheprovisions of subsection (I), to conduct such audit every second year, or permit a suitably qualified person other than an auditor to conduct the required audit, subject to such conditions as 55 th'e registrar considers appropriate.
The ,4GM must approve the auditors' report and financial statements, subject to the provisions of subsection (5).
(3)A co-operative may not issue.
(((1 appro\ed and signed in accordance with subsection (1); and inspection at the registered office of the co-operative for at least twenty-one days after the date of their approval.
\vithin titteen &I! s of approval. If for any reason an AGM h.as failed to approve the reawls for \uch failure. and the action the co-operative proposes to address from disqualified.
i 1 The members must by ordinary resolution at the tirst annual general meeting and, It each suhcequent annual general meeting. appoint an auditor to hold office until the claw of the ne\t mnual general meeting.
i21 Despite \ub\ection i1 1. if an auditor is not appointed at a meeting of members the incumbctlt auditor- continues in oflice until a successor is appointed. ii I the co-operati\.
14The fee pa! able to the auditor appointed in the manner contemplatedin subsection 35 j 3 mu\t ht.
The members rnay by ordinary resolution remove the'auditor from office.
I 7.A \ acanc!. created by the removal of an auditor may be filled at the meeting at 45 \vhich the xditor i\ removed or. if not so filled. may be filled in terms of section 631.
62.i I The hoard of directors must till a vacancy in the office of auditor as soon as po\\ible at'tc~it occurs. unles4 the constitution provides that such a vacancy be filled by the nlt.mbc.1-s; It; I generul meeting.
(7)If there is not a quorum of directors, the directors then in oftice must call; Igencl-al meeting within twenty-one days after a vacancy in the oftice of auditor occurs to fill thc' \.acancy. If the directors then in ofice fail to call a meeting or if th, ere are no clirectors in '3ffce. such meeting may be called by any member.
(3)An auditor appointed tofill a vacant post holds ofice for the unexpired term of his or her predecessor.
The auditor of a co-operative must be given notice of any general meetin; at 3a.hich a report of the auditor is to be discussed and i; entitled to a'ttend such meeting.; It the expense of the co-operative, and to beheard on mattersrelating to the auditor'\ duties.
(2)A director or member of a co-operative may require the auditor or former auditol- to attend a general meeting at the expense of the co-operative and answer question\ relating to the auditor's duties, providedtheauditor or a former auditor of the cu-operative is given ten days written notice of such meeting.
(3)A directoror member that sends anotice referred to in subsection (2)must \end; I mpy of the notice to the co-operative at the same time.
i1 At the request of the auditor. the members. directors. ofticc'rs. emplo~ecsor ;_cents or mandatories of the co-operative must provide any information and explanations. and access to any documents of the co-operative or any of its subhidiarics tut are. in the opinion of the auditor, necessary for the purposes of the; udit.
(2)At the request of the auditor, the directors must obtain from; my present or former directors, officers. employees and agents or mandatories of the co-operati\c the information and explanations that such persons are reasonably ablle to pro\.idc and that are. in the auditor's opinion. necessary for the purposes of the auJit.
In the e\'ent that director or officer becomes aware of any error or misstatcmcnt in a financial statement that the auditor or a former auditor has reported on. 41c or hc nlust notify the auditor without delay.
(7)If the auditor or former auditor of a co-operative is notified or become\ ;\\\are of ail error or misstatement in; I financial statement on n.hich the auditor 01-former auditor h.ls reported. and the error or misstatement is material. the auditor or former auditor must inform the board of directors accordingly.
When the auditor or former auditor informs the board of director5 of an error 01-misstatement in a financial statement in terms of subsection (2).
prepareand issue revised financial statements: or inform the members of the error or misstatement, and inform the regi\trar in the same manner as it informs the members.
Two or more co-operatives may agree in writing to amalgamate providedthe annlgarnated co-operative would complywith the requirements for a co-operative to be registered in terms of the Act.
(2)An agreement to amalgamate envisaged in subsection (1) mua, t set out the terms of thl-amalgamation, and the means by which it will be effected.
thename andaddress of each proposed director 0.
the manner in which the shares of each amalgamating co-operative are to be converted into membership shares of the amalgamated co-operative and, if amlicable.
if any share of an amalgamating co-operativeis not to be converted into shares of the amalgamated co-operative, the amount of mloney that the holders of those sharesareto receive in addition to or instead of shares of the amalgamated co-operative: the continuation of the members' respective interests in a members' fund of the xmalgamated co-operative: the application of any surplus which may have resultjed from the operations of the amalgamating co-operatives: and; I pro\ ision that at least three month's notice of the intended amalgamation is gi\,en to the creditors of the co-operatives concernetl.
Approval of amalgamation constitution of the amalgamated co-operative must be submitted to the registrar for approv:~l. together with a notice of registered office and a notice of the diI-cL, tor\ 11' thc amalgamated co-operative.
(3 For the p~trpo\eof subparagraph (2)(c)(iv) adequate notice is given if a notice in \\ nting is wit to each hnoun creditor who has a claim against any of the amalgamating co-operati\ e\ that exceeds one thousand Rands.
It/ '111 applicable requirements of this Act have been cornplied with.
(5)For the ptqxxs of subsection (4).the registrar may rely on the constitution and the declaration> contemplated in subsection (2).
an existing cause of action.
If 21 conviction against or ruling, order or judgment in favour of or ayainst; In amalgamating co-operative may be enforced by or against the anlalyamnletl co-operative.
(N)Subject to paragraph (h).a co-operative that has passed; I special wwlution wthorising the conversion of the co-operative into any other kind or form of corporate body may apply to the registrar, in the form determined by the registrar. to cancel its registration as a co-operative.
if at least threemonth'snotice of the intended conversion has been gi\en to the creditors of the co-operative concerned.
that proper notice has been given to the creditors of that co-opt.rati\c: hl theprescribed fee.
(3)The registrar may require a co-operative referred to in subparagraph (1)iu) lo sJbmit to the registrar such proof as may be determined by him or her in respect of'; m! matter contained in a declaration referred to in paragraph (rr) of subsection (2).
other of that co-operative off the register of co-operatives.
subject to subsection (6).all assets. rights. liabilities and obligations of \uch co-operative vest in the corporate body intowhichthe co-operative i4 converted or, if it is by virtue of its constitution capable of owning propert!
in the event of a co-operative converting into a company, all members of the co-operativeshareholders of the company.
(6)Any property which vests in the corporate body by virtue of sulbscction (5)Ih/ mujt bt. transferred to that corporate body without paymentof transfer duty. \tamp duty or any other fee or charge, in accordance with section 71.
The registrar of deeds upon submission to him or her of a certificate of amalgamation or conversion or order of court or its certified copy must endorse and mAe entries in any relevant register, title deed or other documentin his or her oflice or laid before him or her to register the property in the name of the amalgamated or converted co-operative.
(3)No transfer duty. stamp duty or other fees is payable in respect of the registration contemplated in subsection (1).
(1 A sale. lease or exchange of all or substantially all of the property of a co-operative requires the approval of the members in accordance with subsections (2)to (6).
(2)In a event of a sale, lease or exchange of theproperty of a co-operative as 5 contemplated by subsection 1). notice of a general meeting must be sent to all members and must include a copyorsummary of the proposed agreement of sale.lease or exchange.
Each member carries the right to vote with respect to an extraordinary disposition. whether or not it otherwise the to vote.
(1)A tiispohition is nuthorised when approved by special resolution of members. Pro\ ided that the special resolution may authorise the directors to determine any terms and conditions of a sale. lease or exchange.
51The directors. if authorised by the members approving a proposeddisposition. ma! abandon the disposition further approval.
(/I); I court order made under any other Act of Parliament or this Act that affects the rights among the co-operative. its members, creditors.
(31If; I court ordercontemplated in subsection (1) is made with regard to; I 25 co-operati\ e.the constitution of the co-operative may be amended by the order to effect an! changes that might lawfully be rnade by an amendm'ent to aco-operative's constitution under this Act.
in the form that the registrar determinestogether notice of registered oftice and notice of change of directors mus, t be sent to the registrar. 3 On receipt of constitution of reorganisation the registrar must issue a certificate of ~lnlclldlllell~.
fIJ by an order of court.
I I A competent court may, on application by any interes, ted person, order that a co-operuti\ e he \vound up. if it appears to the court that it is just and equitable that the co-operatix should be Mound up.
12)The court considering an application in terms of subsection (1) may adjourn the hearingthereofconditionally or unconditionally or beforegranting or refusing such L~ppli~~:ltio~l. pro\,isional or other order it may deem fit.
the co-operative was formed for H particularperiod or until the occumncc 01 a particular event.
dl the co-operative is not operating in accordance with its constitution or in accordance with co-operative principles.
The winding-up of a co-operative shall be effected in accordance with a la\\ of :!end application to be enacted regulating the law of insolvency and the \vindiny-up 01' legal persons, includingco-operatives. Pending the enactment of such; I la\\. 1Ilt provisions of Chapter 10 of the Co-operatives Act. 1981 (Act No. Y I of' 198I) sh;~ll apply. notwithstanding its repeal in terms of this Act.
Having regard to co-operative principles and notu.ithstanding the enactment an!
The recovery of a contribution, in terms of a contribution a;, count.
Any person who has a claim against a co-operative being wound up. e\c, ludillg a claim against a members' fund.
lodge a sworn statementsettting out the amount of' the claitn ;~ndtllc particulars relating thereto, together with supporting document\ if an! within 90 days of the publication of the notice.
The liquidator may admit or refuse to admit theco-operative'a liahilit! t'or thc; unount of a claim referred to in subsection (1) or ma!' admit the co-operati\ e's liabilit! for any portion of such an amount.
fh the registrar may after consideration of the: rounds of the appeal and the liquidator's reasons for his or her decision confirm the decision or !,et the decision a5ide and order the liquidator to admit the claim or to admit it to the extent determinedby the registrar.
(3)((I) Anypersonreferred to in subsection (I) who hac failed to lodge his or hL.1-claim with the liquidator within the period mentioned in that subsection. may thet-t.aftrbr with the consent of the registrar lodge his or her claim with the liquidator within a period of 30 days after the termination of the said period.
The provisionsof subsections (2)and (3) shall with the necessary adaptions ~~pplk in respect of a claim referred to in paragraph (a).
(5)A member who does not want his claim against a members' fund to proceed must inform the in writing thereof.
((I) The provisions of this subsection do not prevent a creditor from proving claim in any court.
(0)A person instituting an action against a co-operative being wound up must lodge hi:; or her claim with the liquidator within the period contemplated in subsection (1 1 or. with the written consent of theregistrar, within the further period contemplated in subsection (4).
(3I The rehidue referred to in subsection (1) must in the first place be applied in paying 5 bxh the paicl-up share capital of the co-operative to members of the co-operative.
(3)If such residue is less than the paid-up share capital the amount to be paid to a mernher\ out of such residue u.ill be an amount which bears the same ratio to the amount of wch !residue as the paid-up value of his or her shares bears to the paid-up share capital.
71. be allocated to the members of the co-operative-in the case of; I co-operative the main object of which involves that its members conduct transactions with or through it.
f /I J in the c;lw of; I co-operati\,e the main object of which does not involve that its membrrs conduct transactions with or through it, in accordance with a basis wt out in the constitution.
il be determined with reference to either the period specified in the constitution of the co-operative which preceded the cornmencement of the \\inciing-up of the co-operative or theperiodforwhich the co-operati\.e has existed. whichever period is the shorter.
i the former member. or. if he or she is deceased., his or her executor. has \ubmittetl his Lvrittrn consent to that effect to the co-operative within 90 Jay uftcr such formermember ceased to be amember of the co-operati\.
hi; I co-operati\.e incorporated in consequence of a conversion in terms of the Act \\ill he dcemed to haveexistedasfromthedate of incorporation of the pre~io115 co-operati\,e so converted, and thevalue of the transactions concluctecl h!;I member of thefirst-mentioned co-operativeduring the qqxopriate period with or through the previous co-operative as a member ma! he: dclrd to the \.due of the transactions conducted by him or her with or tl~rot~gh the tirst-mentioned co-operative; J co-operati\.e incorporated in consequence of an amalgamation of two or 111ort'co-operati\ es in terms of this Act will be deemed to have existed as from the d;~teof incorporation of the most recent of those co-operatives, and the 45 \slue of the transactions conducted by a member of the amalgamated co-operatiw during the appropriate period with or through any of the pre\.ious co-operati\w of which he or she was then a member may be added to the \ aluc of the transactions conducted by him or her with or through the co-operative.
(7)If the con\titution of a co-operative provides that an amount shall be paid to any particulx pmon or for LIJI~particular purpose in the event of the co-operative being \\ot~ndup. the halance referred to in subsection (4) shall in the first place be applied for the pa!nlcnt of wch an amount.
(2).+\contribution account must. in respect of each contributory. indicate the ground on \\ hich lie or \he i\ liable for the payment of contribution, the amount for which he or \IIC i\ liahle and the contribution to be paid by him or her in terms of that contribution accountand, in the case of a second or latercontributionaccount. thc contribution recovered from him or her in terms of a previous contribution account.
is unable to pay its debts or is probably unable to meet its obligations: and has not become or is prevented from becoming asuccessful concern. and there is a reasonable probability that, if it is placed Llnder judicial managenlent. it will be enabled to pay its debts or to meet its obligations and becomc; I successful concern, a competent court may. if it appears just and equitable. grant a judicial management orderin respect of that co-operative.
by the Minister on the recommendation of the registrar.
The judicial managementof a co-operative shall be regulated in: uxmd;lnce with a law of general application to be enacted regulating the law of insolvent) and the winding-up of legal persons, including co-operatives. Pending the enactment of wch; I law. the provisions of Chapter 1I of the Co-operatives Act. I98 I (,kt 9 I of I98 I) shall apply. notwithstanding its repeal in terms of this Act.
must appoint an officer in the public service as the registrar of co-operatiw5.
may appoint as manypersons as he or she may deem necessary a\ deputy registrars of co-operatives, to assist the registrar perform the functions of the registrar and to exercise such powers as have been delegated to the deputy.
A delegation under subsection (3) shall not prevent the exercise of the relevant power by registrar the himself or herself.
The Minister must determine a sealof office for the registrar, which must be placed on the registration certificate of co-operatives and in so far as it may be required in terms of any pro\.ision of this Act or otherwise as prescribed, on any other document issued by the reFistrar in terms of this Act.
(1)The impression of the seal of the office of the registrar will be judicially noticed in e\-idence.
The registrar must keep a register to be known as the register of co-operatives in the prescribed manner. in which particulars of all registered co-operatives are entered.
(7)The register of co-operatives or any extract or a copy of that register signed by the registrar i\ p/irr~tr, firc, ic~proof of the particulars contained therein.
Thc Co-operatives Advisory Board ("Advisory Board") is hereby established.
The functions of the Advisory Board are: to ad\.ise the Minister generally, and to make recommendations to her or him.
(/I) to advise the Minister regardinganydispute between, on the one hand, a eo-operative or proposed co-operative or a member(s) of a co-operative and. 40 on the other hand.
1 to ad\.ise the Minister regardinganyAppeal by a co-operativeor proposed co-operati\,e or member of a co.
t~i to conhider and ad\.ise on any matter referred to the AdvisoryBoard by a co-operati\.e or proposed co-operativeormember of a co-operative. in a mmner that promotes the development of co-operatives.
(3)The Minister may request the Advisory Board to advise him or her reyal-dInF: ill! decision he or she is required to take in terms of this Act.
Subject to the laws governing the public service. the Minister- mu\t p~-o\idL*the Advisory Board with the staff that the Minister considers necessary for the ~~~rt'~t-~ll.~~~~~~~ of its functions.
The expenses of the Advisory Board are to be met by Inone' appropl.i;ltcd b! Parliament for that purpose and which is subject to auditing by the Auilitor-C;t.~lr~.al.
The Minister must, after consultation with any co-opernti\,e ape\ organiwllon\ andwith NEDLAC, appoint as members of the Advisory Board. nine per\on\.
The Minister may designate one of the members of the Board as churpt.r\on.
((1) The term of ofice of the chairperson. vice-chairperson antl mt.mber\ of the Advisory Board. which may no1 be than three more years: (bj With the concurrence of the Minister of Finance, the ren1uncr:ltion irncl allowances to be paid to members of the Advisory Board: and (cj Any other conditions of appointment not provided for in this scctioll.
(2)A penon whose period of office as chairperson or vice-chairperson VI-memhcr 01' the Advisory Board has expired is eligible for reappointment.
(3)The chairperson. vice-chairperson or member of the Adviwry Board ma! rt.\iy in writing.
(4)The Minister may remove the chairperson.
misconduct: (I) Serious (hi Permanent incapacity: or fc) Engaging in any activity that may undermine the integrity ol' thc Ad\ i\or!
TheAdvisory Board may make rules in relation to the holding of. antl procedureat. meetings of theAdvisory Board. which rules shall be subject to the; approval of the Minister.
Meetings of the Advisory Board must be held at such timt: and place; I\ may be determined by the chairperson of the Advisory Board in accordance with its rules.
The regi\trar may order an investigation into the business of the co-operative.
Registrar to investigate the affairs of the co-operative and the Registrar is of 10 the opinion that the need for such investigation is well-founded.
(2)The registrar may make any recommendation she or he considers appropriate on the hasis ot an inwstigation in terms of subsection (l),including a recommendations to rhr co-operati\,e concerned. to the Minister in terms of section 77, or to the relevant prowcuting authorit! in term of section 98. 15 98.
duty imposed under this Act is guilty of an offence.
I 2. An!, person \vho knowingly makes or assists in making a report, return. notice or other document to be wt to the registrar or any other person as required by this Act that 20 cxmt;lin\; inuntrue statement of a material fact or a material omission shall be guilty of ,111 ofcncc.
A co-operative. a prospective co-operative and members of a co-operative, may appc;11 to the Xlinister on any decision of the registrar.
The prcxi\ion\ of the Insurance Act do not apply to co-operatives in respect of 30 it\ xtl\itic\ in w far as the! relate to a schemeor arrangement in terms of the con\titutlon ofthe co-operatileunder which the amount of the benefits afforded by such \chrmc or; Irrangement is not guaranteed and the liability to the amount standingto the credit of;I fund hpecially maintained in respect of such claim.
r /I, prescribing the fees or the manner of determining the fees that may be charged in respect of the tiling. 1,erification or copying of a document in terms of this 40 Act.
rc\pecting the payment of any prescribed fees. including thetimewhenand the manner in which the fees are to be paid, the additional fees that may be charged or payable for late payment of fees and the circumstances in which any fees previously paid may be refunded in whole or in 45 part; /I prescribing criteria with respect to exemptions permitted by this Act: 1'I prex-rihing the \tandards of accounting by a co-operative to be followed for the purposes of Chapter 7; r/j categorisiny .;pecific kinds or types of co-operatives.
The Minister may, from timeto time delegate any power conierred upon him or her by or under this Act, to the registrar, or any officer in tht: Public Senice.
A delegation under subsection (1) will not prevent the exercise of the relc\ant power by the Minister himself or herself.
Any co-operative registered in terms of the Co-operatives Act. I981 (Act No. 91 of 1981) will be deemed to be registered in terms of this Acr. and the statute of' an!' co-operative registered in terms of Co-operatives Act. 1981 will be deemed to colnpl! with the provisions of this subject the provisions of this section.
A co-operative registered in terms of the Co-operatives Act. 1981 is requircd to ensure that its constitution conforms with the provisions of thih Act. and to this e~~cl adopt any amendments to its constitution that may be necessary within a period of three years from the date of commencement of this Act.
At any time prior to the expiry of the periodspecified in subsection 21such co-operative is requiredto submita statementto the registrar indicating that ill it\ opinion it complies with the provisions of this Act.
(4)Upon receipt of a statement envisaged in subsection (3),the registrar shdl either issue such co-operative with a certificate stating that its constitution complies \vith the provisions of this Act, or issue a directive specifyins in what respect the co-operative's constitution is considered not to comply with the provisions of thih Act. and; I further period of time within which it is required to comply.
(5)The registrar may require a co-operative that fails to compl!. \\.
(I) convertinto a co-operative group or other legal entity.
be wound up in terms of the provisions of Chapter 9.
(11 Subject to subsection (2)the laws specified in Schedule 4 are repealcrl h!thi\ Act.
Anything done under the provisions of the la\va repealed by zuhscctiotl I 1, ml Lvhich may be done under the provisions of this Act.are deemed to ha\,ebeen done under this Act.
This Act is called the Co-operatives Act. 2003and comes into operation on; I date determined by the President by proclamation in the Gflrerre.
Subject to the provisions of this Act and its constitution, a co-operativeshallhave po\\e1-s to: employ staff on a full-time.part-time or temporary basis and to determine appropriate conditions of employment; enter into a contract with any person for the performance of work on behalf of the co-operatiLe: establish training. recreation, sports or other facilities or administer a housing schemeinterestin the of its employees; acquire or hire movable or immovable property, including rights thereon: hypothecate. let. bell or otherwise dispose of movable or immovable property. includin rights thereon: acquire.hypothecate or dispose of bonds, debentures.stocks and other securities: acquire or alienate patents. licences. concessions. trade marks or the like, and exercise and protect the rights. privileges and powers attached thereto: in the Republic or elsewhere establish or takeover. or acquireinterests or shares in. trusts. companies or otherjuristicpersonsor partnershipsand tinance them: Pro\ ided that the objectives of the institution so established or taken ()\'et-. or in lvhich interests or shares have been acquired must relate to thc objectives of the co-operative concerned: indemnif!, any perm1 against damage or loss or guarantee the obligations of any person or become surety or give security for the due fultilment thereof: undertake studies and do research in connection with any matter which may be beneficial to the cmying out of its objects or finance or otherwise assist any person in undertaking such studies or in doing such research: award bursaries: open; Iccount\ with banking or other financial institutions: make. dra\\. accept. or negotiate instruments?
endorse negotiable subject to the pro\,isions of section I of the Banks Act. 1965 (Act No. 23 of I965) and subject to the authority of a special resolution. in the Republic or elsewhere bomw or raise money or overdraw a banking account: Invest money: make or accept donations; procure the registration of a co-operative in any other country or territory: collaborate with any person in the performance of any act which the co-operatiLs ib by law permitted to perform: become; I member of a co-operative of which it is competent to become a Inember. or of any association or organization whichseeks to promote any nuttcr in ivhich the co-operative has an interest; act; ISan agent of its members or in the interestof its members as intermediary in connection with any pension fund, pension scheme.
insurance business within the meaning of the Insurance Act.
participate in companies. other juristic persons or partnerships established by it in tc'rnls of paragraph (12) or in which it acquired interests or shares in terms of that p;uqraph. or in other co-operatives, including the performance of wvices on behalf of such companies, juristic persons.
This schedule applies to a co-operative group that is rrgi\tered or clcclnd to hc registered in terms of the Act.
the name of the co-operative group includes the phrase "co-opcroti\,e group".
(dj the reasons specified in the application. as envisaged in section 2(2)of' Ill\ Schedule, are not inconsistent with the \tatus of co-oper;lti\c sroup.; I\ 30 detined, and the purposes of the Act.
provision to elect office-bearers comprising a chairperson.
hi provision for the distribution of assets of the co-operative groupon its dissolution.
I/ a provision establishing an executive committee, comprising the chairperson.
pro\ isions relating to the appointment of a manager: and ltl provisions relating to the appointment of an accounting officer.
The ctmtitution of a co-operative group may be amended by the decision of a nlxjority of two thirds of the members present at a general meeting.
i1I An amendment of the constitution will be of no force and effect unless registered nith the re-'.
7.iI. A metnber must apply for membership of a co-operative group in writing.
2i Application for membership must be approved by a general meetins or. if there is one. b!an esecuti1.e committee comprising the chairperson, vice-chairperson.
\ecret;~r!/treasurer and other members. i31 On bcing accepted as; I member of a co-operative group, a member has one vote on a11 nutter\ to be decided b! the members. 14.A mcn1bt.r may Lvithdraw membership by written notice to the co-operative. i5. A co-operati\ e yroup ma!' terminate the membership of a member if two thirds of the nwnllxrs pre\ent at a general meeting SO decide. provided the member concerned is giwn an opportunity to be heard before such decision is taken. i6No transfer of membership in a co-operative group is valid unless approved by the members in general meeting.
X. The liabilit! of a member of a co-operative group by virtue of hidher membership i\ limited to the amount of hidher unpaid subscriptions.
9, i 1 Not less than one week's notice must be given to each member of a co-operative group ot'; I general meeting.
(2)In the ca\e of a special general meeting forty-eight hours notice ma!' be given. nom ithstanding pro\%ions of subsection (I).
i31 The quorum for a general meeting is half the members present.
41If LIquoruln is not present within half an hour of the time and date of a scheduled meeting. the meeting must be adjourned until the same time and place at a date not less than \e\e11da! \ and not more than ten days from the date of the adjourned meeting.
Finances j 1 A co-operative group must open an account in the name of the co-operative ith; I registered bank or building society or the South African Post Office.
All monieb received in the name of the co-operative group must be receipted in a receipt hook maintained for this purpose.
1.7 i E.\pznditure in the name of the co-operative group may only be incurred upon the \ignature of not less than twomembers, one of whom must be the chairperson. \ Ic~-chairpcr~on.
At the end of the financial year, a co-operative group must prepare; Istatement reflecting the income and expenditure of the co-operative group for that year. \\ hich must be submitted at the annual general meeting for approval.
Aco-operativegroup may apply to theregistrar to be registered a$; I 5 co-operative in terms of the Act, with the approval of a resolution of a general meeting.
creditors of the co-operative group have been given not less than three month\ 10 written notice of the proposed conversion.
(3)If the registrar approves the conversion of a co-operativegroup to a co-operatiw. the assets and liabilitiesof the co-operative group become the ahsets and liabilitie\ of the co-operative with effect from the date of registration thereof.
Duty to report 15 12. Every registered co-operative group must provide the registrar.
names and residential addresses of its oflice-bearers; 20 a physical address for service of documents: and such other information as may be prescribed.
The Registrar must maintain a register in the of registered co-operative groups prescribed form.
The Minister may make such regulations as are considered necessary or expedient in order to regulate the activities of co-operative groups.
This Part applies to housing co-operatives in addition to the requirements of the Act.
(3)A primary housing co-operative must comprise a of five persons. despite minimum the provisions of section 5(1) of the Act. 40 2. The name of a housing co-operative must include the following words. "housing co-operative", or "housing co-op", or "housing co-operative".
A provision for the establishment of adequate reserves and the maintenance of adequate insurance to protect the co-operative from loss.
Not\vithstanding any other provisions of this Act, the membership of a member a primary housing co-operative may be terminated withoutaspecialresolution of the members.
It' the member is in arrears with payments due in terms of the use agreement and is served with a written notice to pay such arrears by; I date specified in such notice.
A person whose membership is terminated in terms of (1) above shall not have a right to appeal. S/he shall only be re-admitted to membership if she pays the arrears that were due at the date hisor her membership was terminated. as well as any other payments due by virtue of his or her continued occupancy after that date. if applicable.
The directors may terminate the membership of a member in circumstances other than subparagraph (1) if there is good and sufficient reason to do so. provided the directors give the member concerned reasonable prior notice that termination is contemplatedfor reasons stated in such notice, and the member is atforded the right to be heard before a decision is taken.
(4)A member whose membership is terminated in terms of subsection (3) must haw a right to appeal to a generalmeeting, which right must be exercised within the time limit prescribed in the constitution.
A decision of the directors to terminate the membership of a member is contirmed if the members. at a duly called general meeting, donot reverse the directors' decision.
th If a generalmeeting is duly called to consider the appeal of aterminated member and a quorum of members is not present, the decision of the directors is deemed to have been confirmed.
A member has the right to occupy the unit allocated to him or her until the termination has been confirmed by the members, provided she exercises her or his right of appeal within the time-limit prescribed and is not in arrears with an. payments.
Once a person no longer has a right to occupy a housing unit, the co-operative ma.
Court or him.
Nothing in this sectionprecludestheboard of directors of a primary co-operativefromentering into an agreement with asecondaryhousing co-operative in terms of which the collection of payments from members. the ser\.ice of any notice suchas envisaged in subsection (1) above.and the institution of any proceedings toevict aperson will be managed by the secondary co-operative on its behalf.
The provisions of the Share Block Control Act. 1980 (Act No. 59 of I OXO) \hall INII apply to a housing co-operative registered in terms of this Act.
This part applies to worker co-operativesin addition to the requirement5 ot the Act.
(2)A worker co-operative is defined as a co-operative whose main objecti\t.\ include providing employment to its members.
(3)Aworkerco-operative mustcomprive a minimum of five persons. despite the provisions of section 5(1) of the Act.
The name of a worker co-operative must include the words "worker co-opcrati\e limited", or "worker co-op limited or ltd".
Requirements of constitution operative must provide that: ((I) Membership is restricted to natural persons who work for the co-operati\ c.
The maximum mount a member is required to contribute during thc 1iv.r 1CLII. of membership, whether by way of entrancefees, paynlent\ in re\pcc~11' shares or in respect of a member loan. should not exceed hdl the pcl-\on'\ expected annual remuneration.
IC Whether the co-operative is entitled to pro\.ide employment to pc~wn\\\ ho are not members. and if so a limitation on the number of' per\on\ thar m non-members that may be employed. expressedas a percentage of the numher of members. which percentage should not exceed twenty-fi\ e percent.
The period of probation applicable to an applicant for nlembeI4lip.\\hich should not exceed a period of two years.
Theprocedureforallocating, crediting or distributing an!surplu\ txxccl.
For laying off or suspending of members &hen there is lack of \\,orL.
Notwithstanding any other provisions of this Act. the constitutionof; Iworker\' co-operative may give the directors the power to terminate the membership ot; I membel-if there is good reason to do so.
Before deciding to terminatethe membership of a member, the directors must gi\'e the member concernedreasonable priornoticethattermination is contemplated. and afford the member the right to be heard before a decision is taken.
(3)A member whose membership is terminated by the directors must have a right to appeal to a general meeting, which rightmustbe exercised within the time limit prescribed in the constitution. (4)A decisionof the directors to terminate the membership of a member is confirmed if the members, at a duly called general meeting, do not reverse the directors' decision. (5)If a general meeting is duly called to consider the appeal of a terminated member and a quorum of members is not present, the decision of the directors is deemed to have been confirmed. (6)The termination of membership in terms of this section does not constitute a dismissal in terms of the Labour RelationsAct,1995 (Act No. 66 of 1995).
A temporary lay-off of a member does not result in termination of hidher membership. After a member has been laid off and two years have elapsed after the date of the lay-off without the member having resumed employment with the co-operative, thedirectors of the members may. in accordancewiththeconstitution.terminate the membership of the member.
I. (1) This part applies to financial sewicesco-operatives in addition to the requirements of the Act.
(2)A financial services co-operatiye is a co-operative whose main objective is to 25 pro\,ide tinancial services to its members. andincludesacredit union. co-operative banh. \a\.ings and credit co-operative or other financial services.
In: ddition to the other requirements of this Act. the constitution of a financial \er\,ices co-operativenmt specify the financial services the co-operatiye provides to its 30 members.
(c,) to inwst money on behalf of its members, subject to such limitations regardingthe nature of such investments as may be provided for in the 35 constitution or from time to time prescribed; (tli to stand surety on behalf of its members toany personincluding a body corporate to the extent of the member's deposit in the co-operative: (e/ to render any other banking or financial service.
(2)The co-operatiye must not receive deposits from the general public or any person 40 \vho is not a member.
A co-operative to whom this part applies is required to register in terms of the Banks Act. 1990 (ActNO. 94of 1990) notwithstanding its registration in terms of this Act.
A co-operative to whom this part applies is not required to comply with the pro\,isions of the Usury Act. 1968 (Act No. 73 of 1968) or any regulation applicable to micro-finance. notwithstanding the provision of any other law.
The Registrar may, in conjunction with the Registrar of Banh\. clirccl that ;111 co-operatives to whom this part applies belong to a secondary co-opcraIi\c rlut is accepted by the Registrar of Banks as representing a self-regulatory bod!. in con1pli:mcc withthe requirementsforexemptionfrom theprovision of theBanksAct. (2)The Registrar has the power to de-register any co-operative to v, hom thih part applies that refuses or fails, within a reasonable period of time. to become; I membcr 01'; I secondary co-operative that meets the requirement of the Registrar of Bank\ IO he; I self-regulatory body.
Regulations 10 7. The Minister may, in consultation with theDepartment of Finance. nlaht. regulations regarding any matter relatingto the operation or administration of' tinancixl services co-operatives.
Co-operatives Act, 1981 (Act No.