Co-operatives Bill: adoption

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE

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

SUMMARY
The Committee was briefed on proposed amendments to the tabled Co-operatives Bill. The Committee adopted the Bill with amendments. The constitution of a secondary or tertiary co-operative provided that the co-operative members had more than one vote, provided that in the case of a secondary co-operative, no member would have more than 15% of the vote.

MINUTES
The delegation from the Department of Trade and Industry (DTI) was composed of Mr J Strydom (Head of Legal Services), Mr M Modiba (Acting Registrar of Companies), Ms N Maluleke (National Programme Manager: CO-operatives) and Mr R Rapoo (Registrar of Co-operatives). Mr Strydom went through the proposed amendments to the Co-operatives Bill. (See document attached). He also introduced the Bill clause by clause and indicated any important amendments that the Committee needed take note of.

Mr Strydom referred to the amendments to the definition of "secondary co-operative". There might be a slight change to the definition but the principle contained therein would remain the same. This amendment had been necessitated by the view that, in the process of providing for juristic persons to become members of secondary co-operatives, they should not allow co-operatives to be diluted. It was unfair to allow any single member of a co-operative to exercise undue influence on the operations of the co-operative. The Committee had already agreed in the past that the words "despite subsection (1)(b)" should be deleted from clause 3(3). Mr Strydom proposed the addition of a proviso to clause 3(3). The clause would then read: "The constitution of a secondary or tertiary co-operative may provide that the members have more than one vote provided that in the case of a secondary co-operative no member shall have more than 15% of the vote of all the members of the co-operative". He felt that the amendment would address the issue raised by Mr S Rasmeni in a previous meeting. There would be a cap to the weight of the votes of any member of a secondary co-operative. There would be some consequential amendments that would have to be effected should the Committee agree with this proposed amendment.

Mr S Rasmeni (ANC) asked about the international standards on this issue. During the public hearings, some people had argued that the cap should be set at 5% of the votes.

Ms N Khunou (ANC) asked what had informed the decision to set the cap at 15%.

Ms D Ramodibe (ANC) asked what would determine the votes.

Ms Maluleke replied that there had been extensive debates on this issue at NEDLAC. It terms of current law, the cap was set at 20% of the votes. The Department was aware of the various submissions that had been made on this issue. The financial sector’s co-operative, the South African Credit Co-operative League, was working very well. They determined voting in terms of membership and monitory value. For instance, a co-operative could get one vote with the growth of 500 members. Members determined all these issues in the constitution. The Department was trying to avoid a situation where one member could take decisions unilaterally.

Mr M Ngema (IFP) said that a co-operative was a particular kind of organisation governed by specific rules and principles. By tampering with it, they would be creating a ‘special breed’ of co-operatives. South Africa was not the first country to provide for co-operatives. The provision should be clear that the Committee was creating a special type of a co-operative. The Committee should carefully look at the consequences.

The Chairperson said that the Committee had deliberated and received many inputs on the matter. The Bill as it stood, was a product of the engagements the Committee had conducted on all relevant issues.

Mr Godi asked if the amendment to clause 3(3) could lead to a situation where there could be more juristic persons than the actual co-operatives. If this was to happen, the combined voting power of juristic persons could outweigh the voting powers of co-operatives. Ms Maluleke did not think that a situation could arise where juristic persons could outweigh co-operatives.

Mr K Durr asked if the NCT Forestry Co-operative Ltd could still operate under the Bill. Ms Maluleke replied that NCT was a primary co-operative consisting of individual members, companies and trusts. Some of the members became members by default and were not interesting in using the services of the co-operative. Members were expected to use the services of the co-operative.

Mr Rapoo replied that NCT would be given a grace period to plan how to comply with the requirements of the Act. They would not be forced to convert into a company.

Mr Strydom took the Committee through all proposed amendments. Most of them were technical amendments and had already been agreed upon by the Committee. The Chairperson read the Committee’s report and the Committee agreed to adopt the Bill with amendments.

The meeting was adjourned.