This Model Law establishes the legal, organizational, economic, and social foundations for the creation and operation of cooperatives. It defines a cooperative as a voluntary membership-based association aimed at meeting members’ material and other needs through democratically organized joint activity and pooled contributions. The Law distinguishes between production cooperatives, which require personal labor participation, and consumer cooperatives, where such participation is not mandatory. It also sets out core cooperative principles, including voluntary membership, democratic governance (“one member – one vote”), mutual assistance, autonomy, and cooperation among cooperatives. The Law regulates the formation, registration, governance, and property of cooperatives. It requires at least three members, allows participation of both individuals and legal entities, and establishes that cooperatives operate based on a charter. It defines members’ rights (e.g., participation in management, receipt of their share upon exit) and obligations (e.g., contributions and compliance with statutes). The governance structure includes a general meeting as the highest authority, executive bodies (board or chairperson), and supervisory and audit bodies. The Law also addresses cooperative property, including share, reserve, and indivisible funds, and provides rules for income generation and distribution, typically based on members’ participation and contributions. In addition, the Law covers unions of cooperatives, employment relations, state interaction, and sector-specific rules (e.g., agricultural, consumer, housing, and credit cooperatives). It ensures cooperatives’ independence from undue state interference while allowing for legal oversight and support measures. Detailed provisions govern reorganization and liquidation, as well as specific operational features of various cooperative types, including agricultural production and service cooperatives, consumer societies, and housing cooperatives. Overall, the Law provides a comprehensive framework for cooperative activity, combining general legal principles with sector-specific regulations.
1997-12-06