Information On Formation Of A Cooperative Society
INFORMATION ON FORMATION OF A COOPERATIVE SOCIETY
1. DEFINITIONS OF A COOPERATIVE SOCIETY
A. According to International Labour Organization (ILO)
A Cooperative society is an association of persons, usually of limited means, who voluntarily, democratically come together to achieve a common economic and social objectives of its members by making an equitable contribution to the risk and benefits undertaking.
B. According to International Cooperative Alliance (ICA) on 25th September, 1995.
A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
POINTS TO UNDERSTAND FROM THE DEFINITIONS
i. Autonomous Association
ii. Voluntary Association
iii. Democratic Control
iv. Equitable Contributions
v. Meeting individual’s economic, social and cultural needs.
2. VALUES OF COOPERATIVE
v. Equity and solidarity.
3. MOTTO FOR LAGOS STATE COOPERATIVE MOVEMENT
“Each for All and All for Each”.
4. THE 3 TIERS OF COOPERATIVE SOCIETIES
i. Primary Society: This refers to a unit cooperative society at the grass root level. This society could either be a community based or an industrial based cooperative society.
ii. Secondary Society: This is the combination of different primary societies to form a Cooperative Union. A secondary cooperative is formed by at least 5 primary cooperative societies.
iii. Apex Society: This refers to cooperative at the tertiary level for which Lagos State Cooperative Federation stands for. It is the combination of all the cooperative unions in the state.
5. COOPERATIVE PRINCIPLES
i. Voluntary and Open Membership
ii. Democratic Member Control
iii. Member Economic Participation
iv. Autonomy and Independence
v. Education, Training and Information
vi. Cooperation Among Cooperatives
vii. Concern for Community for Sustainable Growth and Development.
6. TYPES OF COOPERATIVE SOCIETY
i. Cooperative Thrift and Credit Society (CTCS).
This society under Cooperative Bye-Law is only allowed to collect savings and to issue loan to members as at when due.
ii. Cooperative Multipurpose Society (CMS).
This society is engaged in more activities than collection of savings and issue loan. It can venture into businesses, buy and sell goods or properties to members or the general public.
iii. Cooperative Agricultural Multipurpose Society (CAMS)
7. COOPERATIVE BYE-LAW
This can be referred to as the policy established to guide the activities of a cooperative society. It is expected of every cooperative society to have a bye-law which is binding on the society.
A. SOCIETY’S NAME
The captioning of the society’s name should include the following:
i. The name of the cooperative society.
ii. The name of the geographical area should be included in a closed bracket in the society’s name.
iii. The society’s name must indicate either the society is a Cooperative Thrift & Credit Society (CTCS) or Cooperative Multipurpose Society (CMS).
iv. The name of the cooperative society must end with the word “Limited”. This implies that the cooperative society can be sued and can sue.
i. According to the Lagos State Cooperative Law, the minimum number required for the registration of a cooperative society is 20members.
ii. Anyone who is interested in joining the society must write an application to that effect.
iii. ENTRANCE FEE: Every member of a cooperative society is expected to pay a unified amount of money as an entrance fee. This is statutory and the amount must be based on the agreement of the general meeting. The fee is non-refundable and it is an income to the society.
iv. NOMINEE FORM: It is expected of individual member of a cooperative society to fill a nominee form. The form allows an individual member to give the society the name and a brief information about the person that he/she would like to receive on his/her behalf, his/her due benefits in the society in case of death, insanity or other unforeseen contingency.
v. MONTHLY SAVINGS: Every member of a cooperative society must be an economic member of the society through a monthly financial commitment. Each member is liable to make a monthly saving with the society as convenient for him/her.
vi. SHARE CAPITAL: It is very important that every member of a cooperative society pays a share capital most especially members of cooperative multipurpose societies. This stands as members’ ordinary shares in the society’s investment(s).
vii. COOPERATIVE SOCIETY MEETING: Cooperative societies hold a number of meetings and every member is expected to attend meetings regularly. These are:
a. Ordinary General meeting.
b. Special General Meeting.
c. Annual General Meeting.
This means that the presence of at least one third of the members of a cooperative society shall form a quorum at meetings.
D. ELECTION OF OFFICERS
The officers of a cooperative society must be elected officers. The election must be conducted at any of the above stated meetings as the need arises. The election is conducted on the ground of the cooperative principle of Democratic Members Control “One man one vote”.
The cooperative officers are:
ii. Vice President
iii. General Secretary
iv. Financial Secretary
The society can decide to have more elected officers but the decision has to be based on the agreement of the general meeting and must reflect in the society’s bye-law. Furthermore, the number of executives has to be an odd number.
Note: The President, General Secretary and one other member of the management which is usually the Treasurer are the trustees of a Cooperative Society and they stand to be the signatories to the society’s bank account.
E. TENURE OF OFFICE
The tenure of any cooperative officer in a Cooperative Thrift and Credit Society shall be one (1) year. Any elected officer can be re-elected to serve for a second term. No officer shall serve more than two (2) consecutive tenures. Under a Cooperative Multipurpose Society, one tenure shall be for a period of 2 years.
F. LOAN TO MEMBERS
i. LOAN FORM: Loan applicants are expected to obtain a loan form at a cost which serves as an income to the society. Loan applicant fills the loan form stating the amount and purpose of the loan. The President or the credit committee minutes on the form stating if the applicant is qualified for the loan or not.
ii. LOAN ACCESSIBILITY: The bye-law states that a member of a cooperative society can only access times two (x2) of his/her total savings. This goes along with 2 standing guarantors who must be members of the cooperative society.
iii. LOAN INTEREST RATE: The cooperative bye-law states that the interest rate on loan should be between 5% – 15%. The decision on the specific interest rate that the cooperative should charge on loan shall be taken by the general meeting. This model is recommended for new cooperative societies.
G. TERMINATION OF MEMBERSHIP
The termination of a member by:
2. Permanent Insanity
3. Change of organization or area of residence in case of societies that use that as the basis for membership.
Note: A member of a cooperative society can at will withdraw from being a member of the society by writing the society on same.
H. REGISTRATION OF A COOPERATIVE SOCIETY
The Directorate of Cooperative Services under Ministry of Commerce, Industry and Cooperative, is in charge of the registration of cooperative societies in Lagos State.
The following are to be provided for the registration:
1. Application for registration with a proposed date for inauguration or Obtain registration form from the Area office.
2. Cooperative Society’s Bye-Law.
3. The cooperative books. (Register, Minutes book, Financial books etc).
4. Registration Fee.