Response on Submissions to the Co-operatives Bill 2005

1
Response on Submissions to the Co-operatives
Bill 2005

• Presented by Nweti Maluleke

2
Background/Purpose

• The portfolio committee received submissions
  from different stakeholders.
• The dti to respond in line with the Policy stance
• Allow to the TIPC to input and give guidance
• where possible and appropriate changes will be
  effected
• A summary of submissions made and copy to be
  distributed
• No need to be opened for NEDLAC consultations

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List of Submissions

• FingerPrint Co-operative Limited
• Institute of Certified Accountants of South
  Africa
• NCT Forest Co-operatives Limited
• Agricultural Business Chamber
• COSATU
• National Co-operatives of South Africa
• A letter by Mr Msowenkosi Ntombela

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Fingerprint Co-operative Ltd

• Co-operative Bill Part 2 page 35 section
  3(1)(a)
• Workers co-operatives Requirements of a
  constitution
• 3. (1) (a) In addition to the the requirement of
  this Act, the constitution of a worker
  co-operatives must provide-
• (a)whether membership is restricted to a
  natural person who work for the co-operative
• Proposal
• Members of a workers co-op must be employed by a
  co-operative and membership should be restricted
  to a to natural persons only.

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Fingerprint cont.

• The dti
• The provision recognizes a worker co-op as
  defined in this Bill
• No need to make amendment
• The provision of 3.(1)(a) provide space for the
  members of a worker co-op to decide whether they
  want their members to be natural persons or
  juristic
• Not prescriptive but an optional broader
  guideline available
• A worker co-op is the one to design the
  constitution.

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Institute of Certified Accountants of SA

• Chapter 7. Co-operative audit
• Proposal
• That the alternative auditor providers be
  retained in the Bill - called assurance auditors
• But these alternative auditors to comply with
  qualifying criteria
• Criteria to be legislated to avoid lowering of
  audit standards
• Criteria/guidelines to be incorporated into the
  SA alternative audit standards (new)
• Accounting officers to be accredited to perform
  assurance audit

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Institute of Certified Accountants of SA

• Response by the dti
• In terms of the new Bill an auditor means any
  person registered as such in terms of the Public
  Accountants and Auditor's Act no. 80 of 1991 and
  includes a firm as defined in that Act and where
  appropriate any other person authorized by
  regulation to conduct an audit of a co-operative.
• the dti supports the input but however this
  cannot be enforced further by being legislated in
  this Act.
• introduction of the alternative audit will
  increase new entrants to the profession and lower
  the cost of reporting function thereby building
  and transferring skills

8
NCT Forest Co-operatives Limited

• Concerns
• 14(1)(e). Provides that each member of a
  co-operative shall have only one vote
• 22 (1). Where members are permitted access to
  records of Board minutes, personal information on
  each member as well as details of Director's
  interest in other undertakings. Members are also
  allowed to make copies of information in terms of
  this provision.
• will lead to confidential information being
  available to members and to outsiders which
  could cause hardship and defamation against
  Directors
• Need to keep strategic information confidential
  including marketing strategies for competitive
  reason.

9
NCT Forest Co-operatives Limited

• The dtis response
• One member one vote remains in the Bill to
  promote co-operative principle of collective
  broader ownership and decision making, democratic
  control, equality, core values of openness,
  transparency and honesty.
• The principle differentiate a co-op from other
  forms of ownerships such as a company-
  shareholding chapter removed from Bill.
• The principle empowers emerging co-operatives/
  timbers to make a decision in the running of a
  co-operative through voting on decisions.

10
NCT Forest Co-operatives Limited

• As it stands now bigger co-ops can decide to
  leave a co-op with no influence from a smaller
  co-op, since the approach is based on financial
  muscle, bigger co-ops investing in other
  undertakings than emerging ones, huge bargaining
  powers with patronage voting rights.
• Why worry in the voting when there is patronage
  proportion of the surplus which benefit bigger
  co-ops in terms of the number of business
  transactions conducted with the co-op rather than
  denying the a member the right to vote.

11
NCT Forest Co-operatives Limited

• The dti response to access to information by a
  co-operative
• A co-op operate in terms of core values of
  openness, transparency, economic participation by
  members, honesty, and equal participation.
• How can other members of the same co-op design
  marketing plans and have other interest without
  the knowledge of the other members. A plan need
  to be drawn and communicated with full knowledge
  and buy-in by all members.
• Section 22(2) provides for withholding of
  information to current commercial transactions
  for a certain period if it is justified that may
  be of commercial disadvantage to the co-operative.

12
Agricultural Business Chamber

• Proposing a proportional member control due to
  capitalization problem in a co-operative. Bigger
  members must have a bigger say to encourage them
  to stay in a co-op and to continue capitalizing
  for the benefit of the smaller co-ops.
• Smaller co-ops will be protected through capping
  the proportional vote to a maximum of 5 vote per
  member.
• Allow co-operatives to determine voting system in
  their own constitution.

13
Agricultural Business Chamber

• Response by dti
• Widely agreed at NEDLAC and agreed to one man one
  vote to differentiate from a company
• Even at secondary level, weighted voting need to
  be monitored to avoid abuse and blocking of
  access to opportunities by bigger ones
• If inserted, will allow the existence of pseudo
  co-operatives operating as companies

14
COSATU

• Very general and submissions not linked to
  provisions as in the Bill but only a few are
  referenced.
• For an example, Board of Directors, Audits,
  complex language, Financial Co-operatives Banks'
  Bill not talking to Co-operatives Bill, inclusion
  of support measures in the Bill, winding-up to
  encourage co-operatives to survive than close
  down, separation of rules for types of
  co-operatives in the appendix denying them of
  operating within general broad rules- schedules,
  unlawful use of a co-operative word.
• The dti conference is of no relevance to the
  submissions made by stakeholders.

15
COSATU

• All what COSATU has raised generally has been
  addressed in the Bill.
• Section 32(1)Board of Directors is repeated and
  is therefore prescriptive.
• Section 12(1). Unlawful use of the word co-op.
• Section 17. Invalidity of a co-operative. Cosatu
  says why repeat the whole list instead of
  allowing a co-op to include in the constitution.
  

16
COSATU

• Response nothing to be changed in the Bill.
• Support, cannot be in the Bill.
• Audit promotes good governance and the Registrar
  will exempt smaller co-ops not affording the
  audit and further a Technical Assistance
  instrument developed will assist co-ops in
  reducing cost through subsidization and capacity
  building including the introduction of
  alternative assurance audit providers as
  introduced in this new Bill.

17
NCASA

• Sections 41-56- Capital Structure of a
  Co-operative.
• - NCASA submission centers around the inclusion
  of a Co-op Fund and Reserves to help grow the
  movement and this to be legislated at a certain
  to be deducted from the surplus as indivisible
  amount.
• Sections 5-17, Wants the Bill to include and
  legislate the purpose and functions of the
  secondary and tertiary co-operatives.
• Chapter 8. 66-73. Amalgamation, conversion and
  transfer. Facilitate conversion of other entities
  to a co-op. keep the existing provisions as per
  section 157 of the current Act.

18
NCASA

• No amendments to be made and not to be legislated
  on reserves and Co-op Fund
• Members are empowered by the constitution to
  determine the reserves if need be
• A co-op fund was never introduced at NEDLAC
• In the policy is provided as a broad guideline if
  grass roots movement takes to voluntarily
  contribute to such initiatives
• Cannot legislate the purpose, functions of a
  secondary and tertiary.
• Agree to the inclusion of the conversion of a
  company or other entities to a co-op. section to
  be retained as per the current Act of 1981.

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Private submissions

• Co-operatives and BEE
• Main Programme of the BEE Policy
• YES- in the Implementation
• All sectors of the economy
• To be instruments for poverty alleviation and
  empowerment across the mainstream of the economy
• EPWPs, Preferential procurement, led, PPPs.

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Comment on the co-operatives Banks Bill in line
with the Co-ops Bill

• Need to comply with chapters 1 and 2 of this Act
• Deposit taking financial co-operatives
• Bill allows the growth of the emerging sector
  such as stokvels and burial societies
• Bills talks to each other