Co-operatives Bill: deliberations

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE

Co-operatives Bill [B4-2005]
New proposed amendments to Co-operatives Bill

SUMMARY
The Department presented amendments to the definitions of primary, secondary and tertiary co-operatives in the Co-operatives Bill. The Department’s policy suggested that secondary co-operatives consisted of juristic persons. Their delegation motivated this, despite concerns raised by the Committee in previous meetings. Secondary co-operatives had the discretion to decide their management regime. Support institutions would be established to assist with the implementation of the new Bill, a reserve fund was to be established and the access to information clauses in the Bill would be amended to defer to the Promotion of Access to Information Act. Some Members were concerned that the amendment to clause 8(2) was unconstitutional as it might be prejudiced against certain communities.

MINUTES

Clause 1: Definitions and Interpretation
Mr J Strydom, Senior State Law Advisor, said that most of the amendments were technical in nature and he could expedite the meeting by referring only to the more substantive amendments.

In the definition of a primary co-operative, inserting the word ‘natural’ before persons as decided in the previous meeting, would exclude any juristic person from membership of a primary co-operative, as per the Committee’s recommendation.

Similarly, the definition of secondary co-operative should be amended to indicate that two or more primary co-operatives could form a secondary co-operative to provide services to its members. It could therefore include juristic persons in its membership.

Dr E Nkem-Abota (DA) said that referring to primary co-operatives in the definition was superfluous, as the definition already included ‘juristic persons’

Mr Martin said the Committee would consider the amendments clause by clause to capture the substance of the Bill. Members should not focus on the elegance of the Bill’s wording.

Mr Strydom said the Department did not want to specify all possible juristic persons. Tertiary co-operatives would be defined as co-operatives, which advocate and lobby government on behalf of its member co-operatives.

Mr M Stephens (UDM) said this definition was identical to the apex co-operative described in the Bill. He asked about the term ‘sectoral secondary co-operative.’

Dr M Sefularo (ANC) said advocacy was an important service rendered by tertiary co-operatives but they also provided many other valuable services to the co-operative movement. He asked why lobbying government was specified as co-operatives could want to lobby other entities as well.

Mr Strydom agreed there appeared to be duplication and said the Department would review the definition of tertiary co-operatives.

Clause 2: Purpose of the Act
Mr Strydom said there had been substantial discussion on this clause in the previous meeting. The Department suggested including three paragraphs, which clarified the supportive and developmental role of the Bill, especially for the benefit of poor and marginalised communities as was requested by Professor Turok in a previous meeting.

Dr Sefularo said the responsibility for assisting co-operatives should not be limited to DTI. Mr Strydom agreed.

Clause 3 Compliance with Co-operative Principles
Mr Strydom said clause 3(1)(e) should be deleted and substituted with a new clause. He apologised and said at the previous meeting ‘we were almost part of the confusion.’ If a co-operative was left with a surplus of R100 at the end of the financial year, R5 should be set aside for reinvestment in an indivisible reserve fund.

Clause 5: Application of the Act
Mr Strydom said clause 5(2) and 5(3) should be deleted as they referred to the Co-operatives Bank Bill, which the National Treasury had withdrawn.

Clause 8: Effect of Registration
Mr Strydom said Professor Turok urged greater consistency in the developmental spirit of the Bill. The new clause 8(2) would qualify which co-operatives could receive state support to assist in poverty alleviation as stated in the Preamble.

Dr Nkem-Abota said clause 8(2) was unconstitutional as co-operatives formed by poor exclusively white people who lived in a rural area would not qualify for state support according to this clause.

Mr S Rasmeni (ANC) said the clause did not appear discriminatory as women included all women irrespective of their race or ethnicity.

Mr Stephens said he did not read the clause in the same light as Dr Nkem-Abota as it did not refer to membership but to the activities of co-operatives.

Clause 14: Provisions for all Co-operatives
Mr Strydom said clauses 14(m) and 14(hh) should be omitted.

Clause 22: Access to Information
Mr Strydom proposed substituting this clause with a new one linking this Bill to the Promotion of Access to Information Act, 2000. This would eloquently resolve all the Committee’s concerns as the Act exhaustively dealt with disclosure of information.

Clause 37: Liabilities of Directors and Employees
Mr Strydom said clause 37 should be deleted as liabilities were common law principles and were best left as such.

Clause 45: Patronage Proportion
Mr Strydom said clause 45 should state that the divisible part of the reserve fund should be distributed proportional to the value of transactions conducted by any member of the co-operative.

Clause 81: Functions of the Advisory Board
Mr Strydom said clause 81(2), 81(3) and 81(4) should be deleted.

Mr Strydom said the Bill made provision for conversions from co-operatives to companies but not the reverse. He suggested that the new Bill should include the relevant clauses contained in the current Co-operatives Act to allow companies to convert to co-operatives.

Mr Martin read the motion of desirability stating that in the opinion of the Committee it was desirable to repeal the Co-operatives Act and that the new Co-operatives Bill be adopted in its stead. The actual clause by clause adoption of the Bill was held over until 15 April due to time constraints.

Dr Nkem-Abota said clause 8(2) limited certain people’s access to state assistance.

Mr Martin said he would allow Mr October to respond but he would not allow the reopening of deliberation at this point.

Mr L October, Department of Trade and Industry, said this clause only applied to accessing state support. State support was limited to co-operatives, which promoted certain social objectives, specified by government.

The meeting was adjourned.