CO-OPERATIVES ACT 91 OF 1981 - CIPRO forms/coops/Co-operativesAct91of1981.… · CO-OPERATIVES ACT...

CO-OPERATIVES ACT 91 OF 1981

NOTE: The whole of this Act has been repealed by section 98 (1) of the Co-operativesAct 14 of 2005 which will come into operation on a date to be fixed by the President by

proclamation in the Gazette.

[ASSENTED TO 6 OCTOBER 1981] [DATE OF COMMENCEMENT: 1 JANUARY 1982](Afrikaans text signed by the State President)

as amended byIncome Tax Act 96 of 1981

Co-operatives Amendment Act 42 of 1985Co-operatives Amendment Act 80 of 1987Co-operatives Amendment Act 38 of 1988

Abolition of Racially Based Land Measures Act 108 of 1991Financial Institutions Amendment Act 83 of 1992

Co-operatives Amendment Act 37 of 1993General Law Fourth Amendment Act 132 of 1993

Abolition of Restrictions on the Jurisdiction of Courts Act 88 of 1996Judicial Matters Second Amendment Act 122 of 1998

Prevention and Combating of Corrupt Activities Act 12 of 2004

ACTTo provide for the formation, incorporation, functioning, winding-up and dissolution ofco-operatives; for the appointment of a Registrar of Co-operatives; and for incidentalmatters.

ARRANGEMENT OF SECTIONS

Sections1 Definitions...

CHAPTER I2-16 Application and administration of Act

CHAPTER II17-48 Formation, incorporation and dissolution of co-operatives

CHAPTER III49-56 Powers of and restrictions on co-operatives

CHAPTER IV57-68 Membership of co-operatives

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CHAPTER V69-104 Capital and application of surplus

CHAPTER VI105-132 Management of co-operatives

CHAPTER VII133-156 Accounting records, accounting and auditing

CHAPTER VIII157-171 Conversions, amalgamations, compromises and arrangements

[Heading to Chapter VIII substituted by s. 12 of Act 80 of 1987.]

CHAPTER IX172-177 Special statutory pledge

CHAPTER X178-237 Winding-up of co-operatives

CHAPTER XA237A-237N Judicial management

[Chapter XA inserted by s. 18 of Act 80 of 1987.]

CHAPTER XI238-242 General provisions

Schedule 1 .....[Schedule 1 repealed by s. 20 of Act 80 of 1987.]

Schedule 2 Requirements for annual financial statementsSchedule 3 Laws repealed

1. Definitions

(1) In this Act, unless the context otherwise indicates-

'affiliated member', in relation to a co-operative, means a person affiliated to suchco-operative by virtue of his membership of a co-operative which either itself is amember of such co-operative or is a member of another co-operative which is amember of such co-operative or is affiliated to such co-operative in any furtherdegree of membership;

'agricultural product' means any article derived from farming operations, and inrelation to an agricultural co-operative or a special farmers' co-operative also anyproduct derived from the processing or manufacturing of that article, and declared tobe an agricultural product from time to time by the Minister by notice in the Gazette;

[Definition of 'agricultural product' substituted by s. 1 (a) of Act 80 of 1987.]

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'annual financial statements' means the financial statements contemplated in section135(2);

'annual general meeting' means a meeting referred to in section 122;

'branch', in relation to a co-operative, means a place where or from where a co-operative may carry out any or all of its objects, but does not include a place usedexclusively as a place where or from where a co-operative disposes of an agriculturalproduct or any thing which was derived by it from an agricultural product, or of aproduct or thing into which it was converted by it or an article which wasmanufactured by it therefrom;

[Definition of 'branch' substituted by s. 1 (a) of Act 42 of 1985.]

'Companies Act' means the Companies Act, 1973 (Act 61 of 1973);[Definition of 'Companies Act' inserted by s. 1 (a) of Act 37 of 1993.]

'company subsidiary' means a company which is a subsidiary of a co-operative inaccordance with the provisions of subsection (3) of this section;

'competent court', in relation to any application or appeal under this Act, means acourt having jurisdiction in terms of section 15;

'control board' means a control board within the meaning of the Marketing Act 1968(Act 59 of 1968);

'co-operative' means a co-operative incorporated in terms of this Act and includes aco-operative society or co-operative company deemed in terms of section 2 to beincorporated in terms of this Act;

'depot', in relation to a co-operative, means a place where the co-operative limits itsoperations to the receipt, storing or despatch of any agricultural product or thingwhich is derived from an agricultural product;

'deputy registrar' means the Deputy Registrar of Co-operatives referred to in section6(1);

'director-general' means the Director-General: Agriculture;[Definition of 'director-general' substituted by s. 1 (b) of Act 42 of 1985

and by s. 1 (b) of Act 37 of 1993.]

'Directorate Co-operatives' means the Directorate Co-operatives referred to insection 4;

[Definition of 'Directorate Co-operatives', formerly definitionof 'Division of Co-operatives', substituted by s. 1 (c) of Act 37 of 1993.]

'extraordinary general meeting' means a meeting referred to in section 123;

'farming facilities' means facilities contemplated in section 21(1)(c);

'farming requisites' means requisites contemplated in section 21(1)(b);

'farming risk' means a risk in connection with farming operations, including a risk ofdamage to or loss of an agricultural product or a thing from which an agriculturalproduct is derived, or a vehicle or machinery or an implement used for or inconnection with farming operations, or a building or other structural work on a farm;

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'farming services' means services contemplated in section 21(1)(d);

'general meeting' means an annual general meeting or an extraordinary generalmeeting;

'incorporation', in relation to a co-operative, means entering the name of a co-operative in the register of co-operatives, and 'incorporate' shall have acorresponding meaning;

'inspector' means a person designated as an inspector under section 13(1);

'manager', in relation to a co-operative or company subsidiary, means any personwho is the principal executive employee of a co-operative or company subsidiary, bywhatever official name he may be designated;

'members' fund' means a fund contemplated in section 85;

'Minister' means the Minister of Agriculture;[Definition of 'Minister' substituted by s. 1 (c) of Act 42 of 1985

and by s. 1 (d) of Act 37 of 1993.]

'nominal value', in relation to the shares of a co-operative, means the amount fixedin the statute of a co-operative as the amount at which a share of the co-operativeshall be issued;

'non-member' means a person who is not a member of a co-operative;[Definition of 'non-member' inserted by s. 1 (e) of Act 37 of 1993.]

'officer', in relation to a co-operative or company subsidiary, includes a manager orsecretary of a co-operative or company subsidiary, but excludes a secretary who is ajuristic person;

'patronage proportion' means the proportion which the value of the transactionsconducted by a member during any particular period with or through his co-operativebears to the value of the transactions conducted by all the members during the sameperiod with or through the co-operative: Provided that-(a) transactions conducted by a member with or through a co-operative in the co-

operative's capacity as agent of a control board, shall for the purposes of thesaid proportion be deemed to be transactions conducted by such member withor through the co-operative itself;

(b) the statute of a co-operative-(i) may provide that the value of the transactions conducted by a member or

the members with or through the co-operative shall for the said purposesbe calculated on a basis set out in the statute;

(ii) may determine the circumstances in which transactions conducted by amember with or through the co-operative shall for the said purposes notbe taken into account;

(iii) may determine the circumstances in which transactions conducted by amember with any person may for the said purposes be deemed to betransactions conducted by such member with or through the co-operative;

'prescribed' means prescribed by regulation under section 240;

'register of co-operatives' means the register referred to in section 24(1);

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'registrar' means the Registrar of Co-operatives referred to in section 6(1);

'repealed Act' means the Co-operative Societies Act, 1939 (Act 29 of 1939);

'secretary', in relation to a co-operative or company subsidiary, means any personperforming the duties which are normally performed by a secretary of a co-operativeor company;

'self-governing territory' means an area declared under section 26 of the NationalStates Constitution Act, 1971 (Act 21 of 1971), as a self-governing territory;

'share', in relation to a co-operative, means a share in the share capital of a co-operative;

'special resolution' means a resolution passed in terms of section 130 at a generalmeeting;

'statute', in relation to a co-operative, means the statute of a co-operative for thetime being in force;

'this Act' includes the regulations made under section 240.

(2) ......[Sub-s. (2) deleted by s. 1 (b) of Act 80 of 1987.]

(3) (a) For the purposes of this Act a company shall subject to the provisions ofparagraph (c) be deemed to be a subsidiary of a co-operative if-(i) that co-operative either is a member of that company and controls the

composition of its board of directors or holds more than one-half of itsshare capital;

(ii) that company is a subsidiary within the meaning of the Companies Act,1973 (Act 61 of 1973), of another company which in terms of a provisionof this subsection is a subsidiary of that co-operative;

(iii) companies which in terms of a provision of this subsection aresubsidiaries of that co-operative together hold more than one-half of thatcompany's share capital; or

(iv) that co-operative and one or more companies which in terms of aprovision of this subsection are subsidiaries of the co-operative togetherhold more than one-half of that company's share capital.

(b) For the purposes of paragraph (a) the composition of a company's board ofdirectors shall be deemed to be controlled by a co-operative if the co-operativemay, by the exercise of any power, without the consent of any other person,appoint or remove the majority of the directors, and for the purpose of thisparagraph a co-operative shall be deemed to have power so to appoint adirector if-(i) a person cannot be so appointed as a director without the co-operative's

consent; or(ii) a person's appointment as a director follows necessarily from his

appointment as a director of the co-operative.

(c) In determining whether a company is a subsidiary of a co-operative-(i) any shares held or power exercisable by that co-operative in a fiduciary

capacity shall be treated as not held or exercisable by it;(ii) any shares held or power exercisable-

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(aa) by any person as a nominee for that co-operative (except wherethat co-operative is concerned only in a fiduciary capacity); or

(bb) by a company which in terms of a provision of this subsection is asubsidiary of that co-operative or is a nominee of such subsidiary(except where such subsidiary is concerned only in a fiduciarycapacity),

shall, subject to the provisions of subparagraph (iii), be deemed to beheld or exercisable by that co-operative;

(iii) any power exercisable by virtue of any debentures held, shall bedisregarded.

CHAPTER IAPPLICATION AND ADMINISTRATION OF ACT (ss 2-16)

Application of Act (ss 2-3)

2. Application of Act to co-operative societies and co-operative companies registeredunder repealed Act

(1) A co-operative society or co-operative company registered or deemed to beregistered in terms of the repealed Act and existing at the commencement of this Act,shall be deemed to be a co-operative formed and incorporated in terms of this Act,and the regulations of any such society or company shall for such purposes bedeemed to be a statute registered in terms of this Act.

(2) Notwithstanding the provisions of subsection (1)-

(a) any reference in this Act to the date of incorporation of a co-operative shall inthe case of a co-operative society or co-operative company referred to in thesaid subsection be deemed to be a reference to the date on which the societyor company was originally registered under any law;

(b) the provisions of this Act relating to the winding-up of co-operatives shall notapply to a co-operative society or co-operative company referred to in the saidsubsection which is being wound up at the commencement of this Act, and thewinding-up of any such society or company shall be proceeded with as if thisAct had not been passed: Provided that if at such commencement a liquidatorreferred to in section 67(1) of the repealed Act has not yet been appointed inrespect of any such society or company the Minister may by notice in theGazette declare the said provisions applicable in respect of such society orcompany, and the winding-up of such society or company shall thereupon beproceeded with in accordance with the said provisions;

(c) a co-operative society or co-operative company referred to in the saidsubsection shall, subject to any amendment of its statute effected after thecommencement of this Act, not be prohibited from doing anything whichimmediately prior to the said commencement it was by its regulationsempowered to do;

(d) a right, privilege or liability acquired or incurred by a co-operative society or co-operative company referred to in the said subsection prior to thecommencement of this Act shall not be affected by the provisions of this Act.

3. Remedies of Land Bank not affected by this Act

The provisions of this Act shall not affect the rights, remedies and powers of the Land andAgricultural Bank of South Africa referred to in the Land Bank Act, 1944 (Act 13 of 1944), or

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the obligations to that bank imposed on any co-operative or on the members thereof by orunder any law.

Directorate Co-operatives and registrar (ss 4-9)[Heading substituted by s. 2 of Act 37 of 1993.]

4. Directorate Co-operatives

The office in Pretoria established under section 3 of the repealed Act for the registration ofco-operative societies and co-operative companies and for the other purposes of that Actshall, notwithstanding the repeal of that Act, continue to exist and shall for the purposes ofthis Act be called the Directorate Co-operatives of the Department of Agriculture.

[S. 4 amended by s. 2 of Act 42 of 1985 and substituted by s. 3 of Act 37 of 1993.]

5. Seal of Directorate Co-operatives

There shall be a seal of the Directorate Co-operatives, and the impression of such sealshall be judicially noticed in evidence.

[S. 5 substituted by s. 4 of Act 37 of 1993.]

6. Registrar and Deputy Registrar of Co-operatives

(1) The Minister shall designate an officer in the public service as Registrar of Co-operatives and as many such officers as he may deem necessary as DeputyRegistrars of Co-operatives.

[Sub-s. (1) substituted by s. 5 (a) of Act 37 of 1993.]

(2) The registrar shall, subject to the control and directions of the director-general,perform the functions assigned to him by this Act or delegated to him by the director-general, and shall be responsible for the administration of the Division of Co-operatives.

(3) The deputy registrar may, subject to the control and directions of the registrar,perform any functions which may be performed by the registrar.


7. Registrar may assign certain functions to officers in public service

(1) The registrar may delegate any power conferred upon him by or under this Act to anyofficer in the public service or authorize any such officer to perform any duty assignedto the registrar by or under this Act.

(2) A delegation under subsection (1) shall not prevent the exercise of the relevantpower by the registrar himself.

8. Inspection and copies of documents in Division of Co-operatives

(1) Any person may on payment of the prescribed fees-

(a) inspect any document received or kept by the registrar in terms of this Act andmade available by him for public inspection;

(b) obtain a certificate from the registrar as to the contents or part of the contentsof any such document;

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(c) obtain a copy of or extract from any such document.

(2) If-

(a) inspection or the certificate, copy or extract is required on behalf of agovernment of a self-governing territory or a foreign government accredited tothe government of the Republic; and

(b) no fees are payable in the territory or country concerned in respect of suchinspection, certificate, copy or extract required on behalf of the relevantgovernment,

no fees referred to in subsection (1) shall be payable.

(3) If any inspection is requested for the purposes of research by or under the control ofan educational institution the registrar may permit such inspection without payment ofthe said fees.

9. Payment of fees to registrar

The payment of any fees to the registrar in terms of this Act shall be effected by way ofrevenue stamps, which shall be cancelled by the registrar.

Minister and director-general: Delegation of powers and control over registrar(ss 10-12)

10. Minister may assign certain functions to director-general

(1) The Minister may delegate any power conferred upon him by this Act, excluding apower referred to in section 1(2), 2(2)(b), 18(1), 103(1), 104(1), 142, 182, 240 or241(3)(b), to the director-general or any other officer in the public service or authorizethe director-general or any such officer to perform any duty assigned to the Ministerby this Act.

(2) A delegation under subsection (1) shall not prevent the exercise of the relevantpower by the Minister himself.

11. Director-general may assign certain functions to registrar

(1) The director-general may delegate any power delegated to him under section 10 tothe registrar or authorize the registrar to perform any duty assigned to the director-general under that section.

(2) The provisions of section 10(2) shall mutatis mutandis apply in respect of anydelegation under subsection (1).

12. Director-general may perform registrar's functions and review his decisions

The director-general may-

(a) exercise any power or perform any duty conferred upon or delegated or assigned tothe registrar by this Act;

(b) rescind, amend or confirm any decision of the registrar.

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Inspectors (ss 13-14)

13. Designation of inspectors

(1) The Minister may designate persons as inspectors to perform, subject to the controland directions of the registrar, the functions referred to in subsection (3).

(2) Every inspector shall be furnished with a certificate signed by or on behalf of theregistrar and stating that he has been designated as an inspector.

(3) An inspector may-

(a) without previous notice, at all reasonable times enter any premises of a co-operative or company subsidiary or any place where any book, writing or otherdocument of or in connection with a co-operative or company subsidiary iskept;

(b) require from a director or an officer of a co-operative or company subsidiary orany person who has control over a book, writing or other document of or inconnection with a co-operative or company subsidiary to produce to him anysuch book, writing or other document;

(c) examine any such book, writing or other document or make copies thereof orextracts therefrom;

(d) require from any such director, officer or person an explanation of any entry inany such book, writing or other document;

(e) question any person whom he reasonably believes to be in possession ofinformation relating to the affairs of a co-operative or company subsidiary orany contravention or alleged contravention of any provision of this Act;

(f) perform any other act which the registrar may order him to perform inconnection with the administration or application of this Act.

(4) Any person who-(a) hinders or obstructs an inspector in the performance of his functions;(b) refuses or fails to comply to the best of his ability with any requirement made

by an inspector in the performance of his functions;(c) refuses or fails to answer to the best of his ability any question which an

inspector in the performance of his functions has put to him; or(d) wilfully furnishes to an inspector any information which is false or misleading,

shall be guilty of an offence.

(5) Any person who immediately prior to the commencement of this Act is an inspector interms of section 47 of the repealed Act shall at such commencement be deemed tobe designated as an inspector under subsection (1) of this section.

14. Inspection reports

(1) If an inspector in the performance of his functions under section 13 has examined theaffairs of a co-operative or company subsidiary generally or with reference to anyparticular matter he shall draw up a report on his findings and submit it to theregistrar.

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(2) The registrar may refer a report submitted to him under subsection (1) to the directorsof the co-operative, or, in the case of a report relating to a company subsidiary, to thedirectors of such subsidiary and the directors of the co-operative controlling suchsubsidiary, and order such directors to give him an explanation to his satisfaction of amatter dealt with in the report.

(3) The Minister may on the recommendation of the registrar order the directors of a co-operative to whom a report was referred under subsection (2), in a mannerdetermined by him to bring the report to the attention of the members or auditor of theco-operative or such other person or persons as may be determined by him.

(4) If an examination referred to in subsection (1) is conducted at the request of a co-operative or any member thereof, the Minister may direct the co-operative which orthe member who requested the examination to pay the costs of the examination orany portion thereof.

(5) If the directors of a co-operative or company subsidiary fail to comply with an orderunder subsection (2) or (3) every director shall be guilty of an offence.

Jurisdiction of court (ss 15-16)

15. Jurisdiction of court in respect of applications and appeals under this Act

The court which has jurisdiction with respect to any application or appeal under this Actshall be any provincial or local division of the Supreme Court of South Africa within whosearea or jurisdiction the registered office or the main place of business of the co-operativeconcerned is situated.

16. Copies of certain court orders to be transmitted to registrar

Whenever a court makes an order with respect to any application or appeal under this Actthe registrar of the court shall without delay transmit a copy of the order to the registrar.

CHAPTER IIFORMATION, INCORPORATION AND DISSOLUTION OF CO-OPERATIVES (ss 17-48)

General (ss 17-18)

17. Kinds and forms of co-operatives

(1) Three kinds of co-operatives may be formed and incorporated under this Act,namely-

(a) an agricultural co-operative;

(b) a special farmers' co-operative;

(c) a trading co-operative.

(2) An agricultural co-operative, a special farmers' co-operative and a trading co-operative shall be either a primary co-operative or a central co-operative or a federalco-operative.

18. Declaration of co-operative practices as practices to be pursued by co-operativesexclusively

(1) The Minister may by notice in the Gazette-

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(a) declare any co-operative practice defined in the notice as a co-operativepractice which may be pursued exclusively by co-operatives;

(b) prohibit any person who is not a co-operative from pursuing a co-operativepractice so declared;

(c) in special circumstances exempt any class of persons specified in the noticefrom a prohibition under paragraph (b).

(2) Any person who contravenes a provision of a notice under subsection (1) shall beguilty of an offence.

Promoters of co-operatives (s 19)

19. Persons by whom co-operatives may be formed

Subject to the provisions of this Act-

(a) two or more persons qualified in terms of section 57 (1) (a) (i) or (ii) to becomemembers of a primary agricultural co-operative may form a primary agricultural co-operative;

[Para. (a) substituted by s. 6 of Act 37 of 1993.]

(b) two or more persons qualified in terms of section 58 (a) (i), (ii) or (vi) to becomemembers of a primary special farmers' co-operative may form a primary specialfarmers' co-operative;

[Para. (b) substituted by s. 6 of Act 37 of 1993.]

(c) eleven or more persons may form a primary trading co-operative: Provided that if aprimary trading co-operative is formed for the purpose of manufacturing anddisposing of any article, it may be formed by fewer than eleven but not fewer than twopersons;

[Para. (c) substituted by s. 6 of Act 37 of 1993.]

(d) two or more primary agricultural co-operatives or primary special farmers' co-operatives may form a central agricultural co-operative or a central special farmers'co-operative;

(e) two or more primary trading co-operatives may form a central trading co-operative;

(f) two or more central agricultural co-operatives or central special farmers' co-operatives may form a federal agricultural co-operative or a federal special farmers'co-operative;

(g) two or more central trading co-operatives may form a federal trading co-operative.

Objects of co-operatives (ss 20-23)

20. Objects of co-operatives to be carried out according to co-operative practice

A co-operative shall subject to the provisions of this Act and its statute carry out its objectsaccording to co-operative practice.

21. Objects of agricultural co-operatives

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(1) A primary agricultural co-operative may be formed to carry out one or more of thefollowing objects, namely-

(a) to undertake the marketing of any agricultural product or any thing which isderived from an agricultural product, and for such purposes to acquire, or toacquire control over, any agricultural product or any such thing and to disposethereof, or to process it or manufacture any article therefrom and dispose of theproduct or thing into which it was so converted or the article which was somanufactured;

(b) to hire, buy or otherwise acquire, produce or manufacture and to let, sell orotherwise supply requisites necessary or used for or in connection with farmingoperations;

(bA) to hire, buy or otherwise acquire, or produce or manufacture and to let, sell orotherwise supply any article of consumption;

[Para. (bA) inserted by s. 7 (a) of Act 37 of 1993.]

(c) to hire, establish or erect and to use or make available for use facilitiesnecessary for or useful in connection with farming operations;

(d) to render services necessary for or useful in connection with farmingoperations;

(dA) to render any other services, including services relating to the buying, sellingand leasing of immovable agricultural property;

[Para. (dA) inserted by s. 7 (b) of Act 37 of 1993.]

(e) to carry on farming operations and to dispose of the products thereof, or toprocess such products or to manufacture articles therefrom and to dispose ofthe products into which they were converted or the articles which were somanufactured;

(f) to undertake insurance business contemplated in section 51 in respect offarming risks;

(g) to act as-

(i) an agent of a control board in terms of section 53 of the Marketing Act,1968 (Act 59 of 1968);

(ii) a person contemplated in section 64(1) or 84F(1) of the said Act to orthrough whom an agricultural product as defined in that Act shall be sold;

(iii) an agent or intermediary in connection with insurance business referredto in section 49 (1) (s).

[Sub-para. (iii) added by s. 2 (1) of Act 80 of 1987.]

(2) A central or federal agricultural co-operative may be formed to carry out one or moreof the objects for which a primary agricultural co-operative may be formed, and also-

(a) undertake insurance business within the meaning of the Insurance Act, 1943(Act 27 of 1943), in respect of all risks;

[Para. (a) substituted by s. 7 (c) of Act 37 of 1993.]

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(b) to establish and administer a pension fund, pension scheme, provident fund ormedical scheme.

22. Objects of special farmers' co-operatives

(1) A primary special farmers' co-operative may be formed to carry out one or more ofthe objects for which a primary agricultural co-operative may be formed, and also tocarry on business as a dealer in agricultural products or any thing which is derivedfrom an agricultural product.

(2) A central or federal special farmers' co-operative may be formed to carry out one ormore of the objects for which a central or federal agricultural co-operative may beformed, and also to carry on business as a dealer in agricultural products or any thingwhich is derived from an agricultural product.

23. Objects of trading co-operatives

A trading co-operative may be formed to carry out any object.

Incorporation of co-operatives and registration of statutes (ss 24-29)

24. Register of co-operatives

(1) The registrar shall keep a register, to be known as the register of co-operatives,containing the name of and the prescribed particulars relating to every co-operativethe incorporation of which has been approved under this Act.

[Sub-s. (1) substituted by s. 8 of Act 37 of 1993.]

(2) The register of co-operatives shall be prima facie evidence of all particulars containedtherein.


(3) The register of co-operative companies and societies kept by the Registrar of Co-operative Societies in terms of the repealed Act shall be deemed to be part of theregister referred to in subsection (1).

25. Meeting of interested persons to precede application for registration of statute andincorporation of co-operative.

(1) An application under section 26 for the registration of a statute and the incorporationof a co-operative shall be preceded by a meeting of interested persons to considerthe forming of the proposed co-operative, which meeting shall be held within sixtydays before application is so made.

(2) There shall be submitted to such a meeting-

(a) a written exposition of the objects of the proposed co-operative, its businessprospects and the facts and statistics calculated to show that the co-operativewill be able to carry out its objects; and

(b) a proposed statute for the co-operative.

(3) (a) If a number of persons competent to form a co-operative of the proposed kindand form is present or represented at such a meeting and in favour of theformation of the co-operative, they or their representatives, as the case may

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be, shall elect the number of persons mentioned in the proposed statute to bethe first directors of the co-operative.

(b) No person shall participate in any election in terms of paragraph (a) or shall beelected as a director unless he has signed an application form for membershipof the proposed co-operative, either on his own behalf or on behalf of theperson represented by him.

26. Application for registration of statute and incorporation of co-operative

(1) Application for the registration of the statute and the incorporation of a co-operativeshall be made to the registrar on the prescribed form.

(2) An application referred to in subsection (1) shall be accompanied by-

(a) a sworn or solemn statement by the person who acted as chairman of themeeting referred to in section 25 -

(i) that the meeting at which the co-operative was formed was held on adate specified in the statement; and

(ii) that the provisions of section 25(2) and (3) were complied with respect tothe meeting;

(b) a copy of the exposition referred to in section 25(2)(a);

(c) two copies of the proposed statute;

(d) a schedule containing the full names and addresses of the persons whoapplied for membership of the co-operative, the date on which each of themapplied, the number of shares subscribed for by each of them and the amountpaid by each of them on such shares;

[Para. (d) substituted by s. 3 of Act 42 of 1985.]

(e) a schedule containing the full names and addresses of the persons elected interms of section 25(3)(a) to be the first directors of the co-operative;

(f) a detailed statement of the expenses and liabilities incurred on behalf of theproposed co-operative up to the date of transmission to the registrar of theapplication for incorporation;

(g) a copy of a contract (if any) referred to in section 29;

(h) the prescribed application fees;

(i) a prescribed form containing the address of the registered office and the postaladdress of the co-operative.

[Para. (i) added by s. 9 of Act 37 of 1993.]

27. Registration of statute and incorporation of co-operative

(1) After an application referred to in section 26 has been submitted to the registrar, theregistrar may request the applicant concerned to furnish him with such furtherdocuments as he may require.

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(2) If, after considering an application in terms of section 26, the registrar is satisfied thatthe application concerned complies with the provisions of this Act and that theproposed statute and the forming and incorporation of the co-operative concernedare not inconsistent with the provisions of this Act, he shall approve the application,or if he is not so satisfied, he may conditionally approve or reject the application.

(3) If the registrar approves or conditionally approves an application he shall cause-

(a) the name and other particulars of the co-operative to be entered in the registerof co-operatives; and

(b) the seal referred to in section (5) [sic] to be impressed on both copies of thestatute; and

(c) the statute to be registered conditionally or unconditionally and a certificate tobe issued in duplicate that the co-operative has been incorporated and that itsstatute has been registered under this Act.

(4) One copy of the statute and of the certificate shall be sent to the applicants and theother copy shall be retained in the Directorate Co-operatives.


28. Effects of incorporation of co-operative

As from the date on which the entry in terms of section 27 (3) (a) is made in the register ofco-operatives-

(a) the co-operative shall become a juristic person;

(b) the co-operative shall be entitled to commence with its activities;

(c) every person who is competent to become a member of the co-operative and whoprior to the incorporation of the co-operative completed an application form formembership of the co-operative shall become a member of the co-operative oncomplying with the requirements relating to the taking-up of shares in the co-operative;

(d) the statute shall bind the co-operative and each member (including an executor, atrustee or other administrator of a member's estate) to the same extent as if it hadbeen signed by each member, to observe, subject to the provisions of this Act, all theprovisions of the statute;

(e) the persons elected in terms of section 25(3)(a) to be the first directors of the co-operative shall become the first directors of the co-operative.

29. Written contract concluded before incorporation of co-operative

A written contract concluded by a person professing therein that he is acting as arepresentative, trustee or promoter of a co-operative not yet incorporated and a copy ofwhich was lodged with the registrar as required by section 26(2)(g) may, after theincorporation of the co-operative and provided the conclusion of such contract is within theobjects and powers of the co-operative, be ratified or adopted by the co-operative, andthereupon such contract shall be enforceable by or against the co-operative as if it wereconcluded by the co-operative itself.

Statute (ss 30-35)

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30. Contents and validity of statute

(1) The statute of a co-operative shall contain a statement that the undertaking formedthereunder is a co-operative under this Act, and shall-

(a) specify the name of the co-operative;

(b) specify the kind and form of the co-operative;

(c) set out the main and other objects of the co-operative;

(d) indicate whether any of the powers referred to in section 49 are excluded orqualified in respect of the co-operative and, if so, particulars of any suchexclusion or qualification;

(e) ......[Para. (e) deleted by s. 11 of Act 37 of 1993.]

(f) specify the place where the co-operative's main business is situated and theplace where the co-operative may establish a branch or depot;

(g) indicate the period for which the co-operative is formed, if it is formed for alimited period;

(h) contain a set of rules regulating the internal affairs of the co-operative.

(2) A statute of a co-operative-

(a) containing a provision which is inconsistent with the provisions of this Act shallnotwithstanding such provision be valid in so far as the other provisions thereofare consistent with this Act;

(b) shall not be invalid by reason of the fact only that it does not provide for amatter for which it must provide in terms of this Act.

31. Formal requirements concerning statutes

(1) Both copies of a statute submitted to the registrar in terms of section 26 shall besigned-

(a) in the case of a primary agricultural co-operative or a primary special farmers'co-operative or a primary trading co-operative referred to in the proviso tosection 19(c), by at least two promoters of the co-operative;


(b) in the case of a primary trading co-operative, excluding a co-operative referredto in the said proviso, by at least 11 promoters of the co-operative;


(c) in the case of a central or federal co-operative, by the representatives of atleast two promoters of the co-operative.

(2) Each person signing a statute shall do so in the presence of at least one witness whoshall attest the signature.

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32. Amendment of statute

(1) The statute of a co-operative may be amended by the co-operative by specialresolution.

(2) An amendment of a statute shall be of no force and effect unless registered with theregistrar, and shall come into operation on the date of registration or on such otherdate (which may be a date prior to the date of registration) as may be specified in thespecial resolution.

33. Registration of amendments

(1) Application for the registration of an amendment of a statute shall be made to theregistrar within 60 days of the date on which the special resolution referred to insection 32 has been passed.


(a) a sworn or solemn statement by the person who acted as chairman of thegeneral meeting at which the said special resolution was passed, or, if thespecial resolution was passed through a series of meetings referred to insection 132, by the person who acted as chairman of the last meeting in theseries-

(i) that the said meeting or meetings, as the case may be, were held on adate or dates mentioned in the statement;

(ii) that he has satisfied himself that proper notice of such meeting ormeetings and the proposed amendment was given to the members ofthe co-operative; and

(iii) that such special resolution was passed by the requisite majority;

(b) an explanation of the reasons for the amendment;

(c) two copies of the special resolution in which the amendment is set out;

(d) the prescribed application fees.

(3) If, after considering an application referred to in subsection (1) the registrar issatisfied that the provisions of this Act have been complied with in respect of suchapplication and that the amendment is not repugnant to the provisions of this Act, heshall approve the application, or if he is not so satisfied, he may conditionally approveor reject such application.


(4) If the registrar approves or conditionally approves the application in terms ofsubsection (3), as the case may be, he shall cause the amendment of the statuteconcerned to be conditionally or unconditionally registered.

[Sub-s. (4) substituted by s. 13 (b) of Act 37 of 1993.]

(5) ......[Sub-s. (5) deleted by s. 13 (c) of Act 37 of 1993.]

(6) One copy of the said special resolution shall be returned to the co-operative and theother copy shall be retained in the Directorate Co-operatives.

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[Sub-s. (6) substituted by s. 13 (d) of Act 37 of 1993.]

(7) If a co-operative contravenes or fails to comply with any condition subject to which anamendment of its statute has been approved by the registrar, the registrar maycancel the registration of the relevant amendment, whereupon such amendment shallbe deemed never to have been registered under this Act.

[Sub-s. (7) substituted by s. 13 (e) of Act 37 of 1993.]

(8) Whenever the statute of a co-operative is amended to alter the name of the co-operative or a translation or abbreviated form thereof the registrar shall-

(a) enter the new name or the translation or abbreviated form thereof in theregister of co-operatives in the place of the previous one; and

(b) issue a certificate to the co-operative specifying the fact that the co-operative'sname or the translation or abbreviated form thereof has been changed inaccordance with this Act, and also the new name or the translation orabbreviated form thereof.


34. Replacement of statute

(1) A co-operative may at any time replace its statute by a new statute.

(2) The provisions of sections 32 and 33 shall mutatis mutandis apply in respect of thereplacement of a statute, and in such application any reference to an amendment ofa statute shall be construed as a reference to a new statute.

35. Amendment of statute by registrar

(1) The registrar may after notice to a co-operative amend the statute of the co-operative-

(a) so as to bring it into conformity with the provisions of this Act or any conditionsubject to which any approval has been granted to or in respect of such co-operative under section 27(2), 33(4), 158(2), 163(2) or 166(2);

(b) by deleting any provision therein relating to the establishment of a branch ordepot if such branch or depot is not established within one year, or within suchfurther period as the registrar may allow, after provision therefor has beenmade in the statute, or if the Minister is of the opinion that the objects oractivities carried out or performed or which may be carried out or performed bythe co-operative at such a branch or depot can with greater benefit to thepersons concerned be carried out or performed by another co-operativeexisting or to be established;

(c) by inserting a provision therein restricting the co-operative from carrying out aparticular object or performing a particular activity generally or at any particularplace (which may also be a branch or depot) or in any particular area or onbehalf of any particular class of persons (which may include or consist ofpersons who are members of the co-operative) if the Minister is of the opinionthat the object or activity in question carried out or performed by the co-operative or carried out or performed by the co-operative at such a place or insuch an area or on behalf of such a class of persons, as the case may be, canwith greater benefit to the persons concerned be carried out or performed byanother co-operative existing or to be established.

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[Sub-s. (1) amended by s. 14 of Act 37 of 1993.]

(2) An amendment of a statute under subsection (1) shall come into operation sevendays after the date on which the registrar forwarded a copy of the amendment,endorsed with the certificate referred to in section 33 (5), to the co-operativeconcerned.

(3) A co-operative which contravenes any restriction imposed on it by virtue of theprovisions of subsection (1) (c) shall be guilty of an offence.

Names of co-operatives (ss 36-42)

36. Names of co-operatives not to be undesirable

The statute of a co-operative shall not contain a name for that co-operative which is in theopinion of the registrar undesirable.

37. Statute may contain translation or abbreviated form of name

The statute of a co-operative may contain a literal translation into the other official languageof the Republic and one abbreviated form of the name of the co-operative which is in theopinion of the registrar not undesirable.

38. Order to change name

(1) If within a period of one year after the incorporation of a co-operative or after theregistration of an amendment of a statute with respect to the name of a co-operativeor a translation or abbreviated form of a name, the registrar is of the opinion that thename of the co-operative or the translation or abbreviated form thereof isundesirable, he shall order the co-operative concerned to alter the relevant name orthe translation or abbreviated form thereof within a fixed period.

(2) A co-operative which fails to comply with an order under subsection (1) shall be guiltyof an offence.

38A Amendment of registers and documents as a result of change of name

(1) Whenever the name of a co-operative has been altered in terms of this Act, anyregistrar or other officer, charged with the maintenance of a register in terms of anylaw shall, upon the mere production to such registrar or officer of the certificatecontemplated in section 33(8)(b), or a certified copy thereof, make the amendmentsin his register and any other document in his office or submitted to him which may benecessary on account of the alteration of the name of the co-operative.

(2) Subsection (1) shall not be construed so as to exempt the co-operative from thepayment of any money which would otherwise have been payable to such registrar orofficer had the co-operative applied in terms of the said law for the making of theamendment in question.

[S. 38A inserted by s. 5 of Act 42 of 1985.]

39. Appeal to court regarding registrar's decisions

(1) Any person aggrieved by a decision of the registrar under section 36 or 37 or anorder by the registrar under section 38 may within 60 days after the date of thedecision or order, as the case may be, appeal against that decision or order by wayof application on notice of motion to any competent court.

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(2) The court to which appeal is made under subsection (1) shall enquire into andconsider the matter and shall confirm, vary or set aside the decision or order of theregistrar, or give such other decision or order as in its opinion the registrar ought tohave given, and may make such order as to costs as it may deem fit.

40. Formal requirements concerning names

(1) The name of a co-operative shall-

(a) include, as its last word, the word 'limited';

(b) include the word 'co-operative';

(c) not include the word 'company' or an abbreviated form thereof.

(2) Unless the Minister otherwise directs the provisions of subsection 1(c) shall not applyto a co-operative company referred to in section 2(1) of which the name includes thesaid word.

41. Use and publication of name by co-operative

(1) Every co-operative shall-

(a) in a conspicuous position and in characters easily legible display its name or atranslation thereof as set out in its statute, on the outside of its registered officeand every branch, depot and other place where business is carried on;

[Para. (a) substituted by s. 6 (a) of Act 42 of 1985.]

(b) have its name or a translation thereof as set out in its statute mentioned inlegible characters in all notices and other official publications of the co-operative and in all bills of exchange, promissory notes, endorsements,cheques or orders for money or goods purporting to be signed by or on behalfof the co-operative, and in all letters, delivery notes, invoices, receipts or lettersof credit of the co-operative:

[Para. (b) amended by s. 6 (b) of Act 42 of 1985.]

Provided that for the purposes of this subsection the abbreviations 'bpk' or 'Ltd','koöp' or 'co-op', 'mpy' or 'co' and '&' may be used for the words 'beperk', 'limited','koöperasie' (or 'koöperatief' or 'koöperatiewe'), 'co-operative', 'maatskappy','company' and 'en' or 'and', respectively, in the name of a co-operative or thetranslation thereof.

[Sub-s. (1) amended by s. 6 (b) of Act 42 of 1985.]

(2) Any co-operative which fails to comply with a provision of subsection (1) shall beguilty of an offence.

42. Improper use of word 'co-operative', etc, an offence

Any person carrying on business under a name in which the word 'co-operative' or theabbreviation 'co-op' is included without being incorporated as a co-operative under this Actshall be guilty of an offence.

Dissolution of co-operatives (ss 43-48)

43. Co-operative to dissolve if struck off register

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A co-operative shall dissolve if the name and other particulars of such co-operative arestruck off the register of co-operatives in terms of section 44.

44. Circumstances under which co-operative shall be struck off register

A co-operative shall be struck off the register of co-operatives by the registrar-

(a) when the co-operative has been wound up to the satisfaction of the registrar;

(b) if the Minister, after a recommendation referred to in section 45(3) has beensubmitted to him, orders that the co-operative be struck off the said register;

(c) when the co-operative has been incorporated as a public or private company in termsof section 161A;

[Para. (c) added by s. 15 of Act 37 of 1993.]

(d) when the co-operative has been incorporated as a close corporation in terms ofsection 161C.

[Para. (d) added by s. 15 of Act 37 of 1993.]

45. Striking off register of dormant co-operative to be preceded by special steps

(1) If the registrar has reasonable cause to believe that a co-operative is not carrying onbusiness or is not in operation he shall send to the co-operative by registered post aletter enquiring whether it is carrying on business or is in operation.

(2) If the registrar does not within 30 days after sending the letter receive any replythereto or receives a reply to the effect that the co-operative is not carrying onbusiness or is not in operation, he may publish in the Gazette and send to the co-operative by registered post a notice that after the expiration of 60 days from the dateof the notice the co-operative mentioned therein will, unless good cause to thecontrary is shown, be struck off the register of co-operatives.

(3) After the expiration of the period referred to in subsection (2) or upon receipt from theco-operative of a written statement signed by at least two directors thereof to theeffect that the co-operative has ceased to carry on business or is not in operation andhas no assets or liabilities, the registrar may, unless good cause to the contrary isshown, recommend to the Minister that the co-operative be struck off the saidregister.

(4) A letter or notice to be sent to a co-operative in terms of this section shall be sent tothe co-operative at its registered office, its postal address and, provided the registrarhas a record of their addresses, to the care of every director and auditor of the co-operative and to any other person as the registrar may deem necessary.

46. Notice in Gazette of co-operative struck off register

The registrar shall give notice in the Gazette of every co-operative struck off the register ofco-operatives under section 44(b).

47. Effects of dissolution on directors, officers and members of co-operative

The dissolution of a co-operative shall not affect the liability of a director, officer or memberof the co-operative, and such liability (if any) shall subject to the law relating to prescriptioncontinue to exist and may be enforced as if the co-operative had not been dissolved.

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48. Court may restore incorporation of co-operative

(1) Any person aggrieved by a co-operative having been struck off the register of co-operatives may within one year after it has been so struck off, by way of applicationon notice of motion apply to any competent court for an order to have the entry inrespect of the said co-operative restored in such register.

(2) The court to which application is made under subsection (1) shall inquire into andconsider the matter and shall reject the application or order the registrar to restorethe entry in such register in respect of that co-operative, and may make such orderas to costs as it may deem fit.

(3) If the court gives an order that the entry in such register be restored in respect ofsuch co-operative, the co-operative shall be deemed to have continued to exist as if ithad not been struck off such register, and the order of the court may contain suchdirections so as to place the co-operative and other persons as far as may bepossible in the same position as if the co-operative had not been struck off suchregister.

CHAPTER IIIPOWERS AND RESTRICTIONS ON CO-OPERATIVES (ss 49-56)

Powers of co-operatives (ss 49-51)

49. Powers of co-operatives

(1) A co-operative may, subject to the provisions of this Act and the exclusions andqualifications contained in its statute, do all such things as may reasonably benecessary to carry out its objects, and may in particular-

(a) cause its work to be performed by persons employed by it on conditionsdetermined by it or with whom it has entered into contracts for the performanceof any particular work;

(b) in the interest of its employees establish training, recreation, sports or otherfacilities or administer a housing scheme;

(c) (i) acquire or hire movable or immovable property, including rights thereon;

(ii) hypothecate, let, sell or otherwise dispose of movable or immovableproperty, including rights thereon;

(d) acquire, hypothecate or dispose of bonds, debentures, stocks and othersecurities;

(e) acquire or alienate patents, licences, concessions, trade marks or the like, andexercise and protect the rights, privileges and powers attached thereto;

(f) in the Republic or elsewhere establish or take over, or acquire interests orshares in, companies or other juristic persons or partnerships and finance themsubject to the provisions of section 52: Provided that the objectives of theinstitution so established or taken over, or in which interests or shares havebeen acquired, shall relate to the objectives of the co-operative concerned;

[Para. (f) substituted by s. 7 (a) of Act 42 of 1985and by s. 16 (a) of Act 37 of 1993.]

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(g) subject to the provisions of section 52 indemnify any person against damage orloss or guarantee the obligations of any person or become surety or givesecurity for the due fulfillment thereof;

(h) undertake studies and do research in connection with any matter which may bebeneficial to the carrying out of its objects or finance or otherwise assist anyperson in undertaking such studies or in doing such research;

(i) award bursaries;

(j) open accounts with banking or other financial institutions;

(k) make, draw, accept, endorse or negotiate negotiable instruments;

(l) subject to the provisions of section 1 of the Banks Act, 1965 (Act 23 of 1965),and of section 53 of this Act, in the Republic or elsewhere borrow or raisemoney or overdraw a banking account;

(m) invest money;

(n) make or accept donations;

(o) with the approval of the Minister procure the registration of the co-operative inany other country or territory;

(p) collaborate with any person in the performance of any act which the co-operative is by law permitted to perform;

(q) become a member of a co-operative of which it is competent to become amember, or of any association or organization which seeks to promote anymatter in which the co-operative has an interest;

(r) act as agent of its members or in the interest of its members as intermediary inconnection with any pension fund, pension scheme, provident fund or medicalscheme;

(s) act as agent of its members or in the interest of its members as intermediary inconnection with-

(i) insurance business referred to in section 51;

(ii) insurance business within the meaning of the Insurance Act, 1943 (Act27 of 1943);

[Sub-para. (ii) substituted by s. 16 (b) of Act 37 of 1993.]

(iii) any other insurance business in terms of which an amount whichbecomes payable at the death of a member or the happening of anyother event is paid over to the co-operative on behalf of such member orhis estate and in terms of which the co-operative is entitled to set off anyamount owing by such a member or his estate to the co-operativeagainst the amount so paid over to it;

(sA) participate in companies, other juristic persons or partnerships established by itin terms of paragraph (f) or in which it acquired interests or shares in terms ofthat paragraph, or in other co-operatives (including the performance of services

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on behalf of such companies, juristic persons, partnerships and co-operatives),as agreed with them in writing;

[Para. (sA) inserted by s. 7 (b) of Act 42 of 1985.]

(t) give information and guidance to its members;

(u) advance money to its members;

(v) carry out any function assigned to it by or under any law.

(2) Apart from the powers mentioned in subsection (1) but subject to the other provisionsof this Act and the provisions of its statute a co-operative shall have unlimited powersto do anything which is not repugnant to the carrying out of its objects and to whichthe Minister has given his prior approval in writing.

(3) If a co-operative performs any act for which it does not have the power undersubsection (1) or (2), the co-operative and each director of the co-operative whoauthorized the performance of such act, or participated in the granting of suchauthorization or in the performance of such act, knowing that the co-operative is notempowered to perform such act, shall be guilty of an offence.

[Sub-s. (3) added by s. 7 (c) of Act 42 of 1985.]

50. Special provision concerning agricultural products of the State

Whenever any agricultural co-operative or special farmers' co-operative in carrying out anobject contemplated in section 21(1)(a) deals with agricultural products of the State orproduced at an institution or on land under the control of the State, the State shall as far asthose products are concerned be subject to the same conditions and obligations to which itwould have been subject had it been a member of that co-operative: Provided that if thestatute of the co-operative concerned provides that its members shall receive considerationother than money for agricultural products delivered by them to the co-operative, theproducts delivered by the State shall nevertheless be paid for in money.

51. Application of Act 27 of 1943 to certain co-operatives in connection with poolinsurance

(1) The provisions of the Insurance Act, 1943 (Act 27 of 1943), shall not apply to anyagricultural co-operative or any special farmers' co-operative in respect of itsactivities in so far as they relate to a scheme or arrangement in terms of the statute ofthe co-operative under which the amount of the benefits afforded by such scheme orarrangement is not guaranteed and the liability of the co-operative in respect ofclaims is limited to the amount standing to the credit of a fund specially maintained inrespect of such claims.

(2) (a) Notwithstanding the provisions of subsection (1) of this section, any trading co-operative referred to in section 17(1)(c) which on the date immediately beforethe date of commencement of section 31 of the Financial InstitutionsAmendment Act, 1992, carried on any activities contemplated in the saidsubsection (1), shall be entitled to continue to carry on such activities until adate* fixed by the State President by proclamation in the Gazette.

(b) Any such co-operative shall be deemed to have been ordered under section182 by the Minister, on the date after the date so fixed, to be wound up inrespect of such activities.


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Restrictions on co-operatives (ss 52-56)

52. Restriction relating to granting of financial assistance

(1) A co-operative shall not advance money to an undertaking referred to in section49(1)(f) or to a co-operative of which it is a member, indemnify its members or anysuch undertaking or co-operative against damage or loss or become surety for orgive security on behalf of its members or any such undertaking or co-operative,except under authority of a special resolution.

(2) Any director or officer of a co-operative who participates in an act in contravention ofsubsection (1) shall be guilty of an offence.

53. Restriction relating to borrowing of money

(1) A co-operative shall not borrow or raise money or overdraw a banking accountexcept under the authority of a special resolution: Provided that a co-operative mayborrow or raise money or overdraw a banking account without the said authority up toan amount not exceeding one half of the aggregate of its share capital and generalreserve.

(2) Money standing to the credit of members in a members' fund administered by a co-operative shall for the purposes of subsection (1) not be deemed to be moneyborrowed or raised by the co-operative.

54. Restriction relating to non-member business

(1) Subject to the provisions of subsections (2) and (3) an agricultural co-operative or aspecial farmers' co-operative shall not conclude with a person who is not a memberof that co-operative a transaction in terms of which that co-operative in carrying outan object contemplated in-

(a) subsection (1)(a) of section 21, acquires from such a person any agriculturalproduct or thing contemplated in the last-mentioned subsection, or the right todispose of any agricultural product or such thing;

(b) subsection (1)(b), (bA), (c), (d) or (dA) of that section, supplies farmingrequisites or articles of consumption, makes available farming facilities orrenders any services to such a person;

[Para. (b) substituted by s. 17 (a) of Act 37 of 1993.]

(c) subsection (1)(f) or (g)(iii) or (2)(a) of that section, does insurance businesswith such a person;

[Para. (c) substituted by s. 3 (a) of Act 80 of 1987.]

(d) subsection (2)(b) of that section, allows such a person to participate in anypension fund, pension scheme, provident fund or medical schemeadministered by it;

(e) section 22 to carry on business as a dealer, acquires any agricultural productor thing contemplated in that section from such a person.

(2) The provisions of subsection (1) shall not apply in respect of the followingtransactions, namely-(a) a transaction concluded by a co-operative in carrying out an object

contemplated in section 21(1)(a) with a control board for the acquisition by that

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co-operative of a quantity of an agricultural product, or of a thing derived froman agricultural product, not exceeding the quantity of such agricultural productor thing delivered by members and affiliated members of the co-operative tothat control board in accordance with a requirement issued under theMarketing Act, 1968 (Act 59 of 1968);

(b) a transaction concluded by a co-operative with the consent of or through amember of such co-operative with any person who is an affiliated member ofsuch co-operative by virtue of his membership of any agricultural co-operativeor special farmers' co-operative;


(c) a transaction concluded by a co-operative in exercising a power contemplatedin section 49(1)(v);

(d) a transaction concluded by a co-operative with another agricultural co-operative or special farmers' co-operative;

(e) a transaction concluded by a co-operative in carrying out an objectcontemplated in section 21(1)(a) with the State to deal with agriculturalproducts of the State or produced at an institution or on land under the controlof the State;

(f) a transaction concluded by a co-operative in carrying out an objectcontemplated in section 21(2)(a) or (b) with another insurer.

(3) An agricultural co-operative or a special farmers' co-operative shall be entitled toconclude transactions prohibited by subsection (1), in so far as the extent of suchtransactions concluded by it during a financial year in the course of carrying out anyparticular object does not exceed the fixed percentage of the business turnoverattained by it during the preceding financial year in carrying out that object.

(4) In this section-

'business turnover', in relation to an object contemplated in-

(a) subsection (1)(a) of section 21, means the value (calculated on a basis set outin the statute or determined by the Minister) of the agricultural products orthings dealt with by a co-operative during a financial year in carrying out thatobject;

(b) subsection (1)(b), (bA), (c), (d) or (dA) of that section, means the gross incomereceived by a co-operative during a financial year from the supply of farmingrequisites or articles of consumption, the making available of farming facilitiesor the rendering of services relating to the buying, selling or leasing ofimmovable agricultural property or any other services, as the case may be;

[Para. (b) substituted by s. 17 (b) of Act 37 of 1993.]

(c) subsection (1)(f) or (g) (iii) or (2)(a) of that section, means the amount ofinsurance premiums received by a co-operative during a financial year;

[Para. (c) substituted by s. 3 (b) of Act 80 of 1987.]

(d) subsection (2)(b) of that section, means the amount of the contributions paid toa co-operative during a financial year in respect of a pension fund, pensionscheme, provident fund or medical scheme;

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(e) section 22 to do business as a dealer, means the value (calculated on a basisset out in the statute or determined by the Minister) of the agricultural productsor things dealt with by a co-operative during a financial year in carrying out thatobject;

'fixed percentage' means in the case of an agricultural co-operative or a specialfarmers' co-operative, 49 per cent.

[Definition of 'fixed percentage' substituted by s. 17 (c) of Act 37 of 1993.]

(4A) A co-operative may not record a transaction concluded with a non-member, in thename of a member.

[Sub-s. (4A) inserted by s. 17 (d) of Act 37 of 1993.]

(5) Any co-operative which contravenes a provision of subsection (1) or (4A) shall beguilty of an offence.

[Sub-s. (5) substituted by s. 17 (e) of Act 37 of 1993.]

55. Closed co-operatives

(1) The registrar may declare any co-operative to be a closed co-operative if he issatisfied that it is not concluding transactions with persons who are not membersthereof to a greater extent than in his opinion is in the particular circumstances of thecase essential to the proper carrying out of the co-operative's objects.

(2) The registrar shall issue to every co-operative declared under subsection (1) to be aclosed co-operative a certificate to that effect.

(3) If the registrar is with respect to a co-operative declared under subsection (1) to be aclosed co-operative no longer satisfied in respect of the matter mentioned in thatsubsection he shall revoke the certificate issued under subsection (2) to that co-operative, and thereupon that co-operative shall cease to be a closed co-operative.

(4) For the purposes of subsection (1) the transactions referred to in section 54(2) andthose concluded by a co-operative in carrying out an object contemplated in section21(1)(g) shall be deemed to be transactions concluded by the co-operative with itsmembers.

56. Carrying out of unauthorized object prohibited

(1) A co-operative shall not carry out an object not authorized by its statute.

(2) Any co-operative which contravenes the provisions of subsection (1) shall be guilty ofan offence.

CHAPTER IVMEMBERSHIP OF CO-OPERATIVES (ss 57-68)

Restrictions on membership and minimum number of members (ss 57-60)

57. Membership of agricultural co-operatives

(1) Membership of an agricultural co-operative shall subject to the provisions ofsubsection (2) be restricted-

(a) in the case of a primary agricultural co-operative to-

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(i) natural persons or juristic persons carrying on farming operations ontheir own account in an area where this Act is applicable, whether aloneor together with any other person or in addition to any other business,occupation or trade;

(ii) persons approved by the registrar who carry on farming operationsoutside the Republic or in an area within the Republic where this Act isnot applicable;

(iii) primary agricultural co-operatives or primary special farmers' co-operatives;

(iv) primary trading co-operatives;

(v) undertakings approved by the registrar which have been incorporatedoutside the Republic or in an area within the Republic where this Act isnot applicable and which carry out an object for which an agricultural co-operative may be formed under this Act;

(vi) a trustee of a trust carrying on farming operations on behalf of the trust inan area where this Act is applicable;

(vii) companies converted into companies from agricultural co-operatives orspecial farmers' co-operatives;

[Para. (a) amended by s. 4 of Act 80 of 1987 andsubstituted by s. 18 (a) of Act 37 of 1993.]

(b) in the case of a central agricultural co-operative to-

(i) primary or central agricultural co-operatives or primary or central specialfarmers' co-operatives;

(ii) primary or central trading co-operatives;[Sub-para. (ii) substituted by s. 18 (b) of Act 37 of 1993.]

(iii) undertakings referred to in paragraph (a) (v) or (a) (vii);[Sub-para. (iii) substituted by s. 18 (b) of Act 37 of 1993.]

(c) in the case of a federal agricultural co-operative to-

(i) central or federal co-operatives;

(ii) primary agricultural co-operatives or primary special farmers' co-operatives which carry out an object for which no central agricultural co-operative or central special farmers' co-operative has been formed;

(iii) undertakings referred to in paragraph (a) (v) or (a) (vii).[Sub-para. (iii) substituted by s. 18 (c) of Act 37 of 1993.]

(2) Any person residing in the Republic may become a member of a primary agriculturalco-operative with the main object of carrying on farming operations.

58. Membership of special farmers' co-operatives

Membership of a special farmers' co-operative shall be restricted-

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(a) in the case of a primary special farmers' co-operative to-

(i) persons or associations of persons (corporate or unincorporate) carrying onfarming operations on their own account in an area in which this Act isapplicable, whether alone or together with any other person or in addition toany other business, occupation or trade;

(ii) persons approved by the registrar who carry on farming operations outside theRepublic or in an area within the Republic where this Act is not applicable;

(iii) primary agricultural co-operatives or primary special farmers' co-operatives;

(iv) primary trading co-operatives;

(v) undertakings approved by the registrar which have been incorporated outsidethe Republic or in an area within the Republic where this Act is not applicableand which carry out an object for which a special farmers' co-operative may beformed under this Act;

(vi) persons who in the course of their activities handle, treat or dispose ofagricultural products;

(vii) companies converted into companies from agricultural co-operatives or specialfarmers' co-operatives;

(viii) a trustee of a trust carrying on farming operations on behalf of the trust in anarea where this Act is applicable;

[Para. (a) amended by s. 5 of Act 80 of 1987and substituted by s. 19 (a) of Act 37 of 1993.]

(b) in the case of a central special farmers' co-operative to-

(i) primary or central agricultural co-operatives or primary or central specialfarmers' co-operatives;

(ii) primary or central trading co-operatives;

(iii) undertakings referred to in paragraph (a) (v) or (a) (vii);

(iv) associations (whether invested with legal personality or not) or companieswhich in the course of their activities handle, treat or dispose of agriculturalproducts;

(v) agricultural unions or associations of farmers;[Para. (b) substituted by s. 19 (a) of Act 37 of 1993.]

(c) in the case of a federal special farmers' co-operative to-

(i) central or federal co-operatives;

(ii) primary agricultural co-operatives or primary special farmers' co-operativeswhich carry out an object for which no central agricultural co-operative orcentral special farmers' co-operative has been formed;

(iii) undertakings referred to in paragraph (a) (v) or (a) (vii);[Sub-para. (iii) substituted by s. 19 (b) of Act 37 of 1993.]

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(iv) associations or companies referred to in paragraph (b) (iv) or unions orassociations referred to in paragraph (b) (v).

59. Membership of trading co-operatives

(1) Membership of a primary trading co-operative shall not be restricted: Provided that aperson who resides or has been incorporated outside the Republic or in an areawithin the Republic where this Act is not applicable, shall not become a member of aprimary trading co-operative without the approval of the registrar.


(2) Membership of a central or federal trading co-operative shall be restricted-

(a) in the case of a central trading co-operative to-

(i) primary or central trading co-operatives;

(ii) primary or central agricultural co-operatives or primary or central specialfarmers' co-operatives;

(iii) undertakings approved by the registrar which have been incorporatedoutside the Republic or in an area within the Republic where this Act isnot applicable;

[Para. (a) substituted by s. 20 (b) of Act 37 of 1993.]

(b) in the case of a federal trading co-operative to-

(i) central or federal trading co-operatives;

(ii) central or federal agricultural co-operatives or central or federal specialfarmers' co-operatives approved by the Minister;

(iii) undertakings referred to in paragraph (a) (iii).

60. Minimum number of members

(1) A co-operative shall not carry on business for more than 30 days while it-

(a) in the case of a primary agricultural co-operative, a primary special farmers' co-operative or a primary trading co-operative referred to in the proviso to section19(c), has fewer than two members;

[Para. (a) substituted by s. 21 (a) of Act 37 of 1993.]

(b) in the case of a primary trading co-operative other than a co-operative referredto in the said proviso, has fewer than 11 members;


(c) in the case of a central or federal co-operative, has fewer than two members.

(2) If the number of members of a co-operative-

(a) in the case of a primary agricultural co-operative, a primary special farmers' co-operative or a primary trading co-operative referred to in the proviso to section19(c), decreases to fewer than two;


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(b) in the case of a primary trading co-operative other than a co-operative referredto in the said proviso, decreases to fewer than 11;

[Para. (b) substituted by s. 21 (b) of Act 37 of 1993.]

(c) in the case of a central or federal co-operative, decreases to fewer than two,the co-operative shall forthwith notify the registrar of such fact in writing.

(3) Any person who is a director of a co-operative at any time during the time which theco-operative carries on business in contravention of subsection (1) and who iscognizant of the fact that the co-operative is so carrying on business shall be liablefor the payment of all the debts of the co-operative incurred during that time, and hemay be sued for the same without the co-operative or any other director being joinedin the action.

(4) Any co-operative which contravenes a provision of subsection (1) or fails to complywith a provision of subsection (2) shall be guilty of an offence.

Acquisition and conditions of membership (ss 61-65)

61. Acquisition of membership in co-operatives

(1) Subject to the provisions of this Act and the statute of a co-operative a person shallbecome a member of a co-operative-

(a) when a share in the co-operative is issued or transferred to him; or

(b) in the manner, or on compliance with the requirements, determined in thestatute of the co-operative:

Provided that the manner in which membership of the co-operative concerned isacquired, shall be the same for all members of that co-operative.


(2) A co-operative shall enter the name of any person who submits proof of hisappointment as the-

(a) executor, administrator, liquidator or trustee of the estate of a deceasedmember of the co-operative or of a member whose estate has beensequestrated or of a member in respect of whom a notice under section 22 (1)of the Agricultural Credit Act, 1966 (Act 28 of 1966), was published or of amember who is legally incompetent; or

(b) liquidator or a juristic person being wound up which is a member of the co-operative,

in the register referred to in section 66 as a member nomine officii of the co-operative, and any person whose name has been so entered shall be deemed to bea member of the co-operative.

62. Liability of members

The liability of a member of a co-operative by virtue of his membership shall, subject to theprovisions of section 40 of the Land Bank Act, 1944 (Act 13 of 1944), be limited to-

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(a) an amount equal to the nominal value of the shares in the co-operative held by him inso far as that amount has not been paid up;

(b) the amount of any contingent liability that may be attached to his shares by virtue ofsection 72; and

(c) a liability circumscribed in the statute of the co-operative.[Para. (c) added by s. 23 of Act 37 of 1993.]

63. Fines for certain contraventions and omissions

(1) A member of a co-operative may be fined by the co-operative for any contraventionof or failure to comply with a provision of the statute of the co-operative or for anyfailure to perform any obligation imposed upon him by the co-operative under this Actor the statute or which he undertook to perform.

(2) A fine under subsection (1) shall be imposed subject to the provisions of the statuteand shall not exceed the maximum amount fixed by the statute.

(3) A fine shall not be imposed under subsection (1) unless the member concerned hasbeen given prior written notice of the charge and particulars of the allegedcontravention or failure and afforded a reasonable opportunity in a manner set out inthe statute to produce evidence in refutation of the charge or to show cause why thefine ought not be imposed.

(4) A fine imposed under subsection (1) shall constitute a debt in favour of the co-operative.

(5) No fine shall be imposed under subsection (1) in respect of a failure to comply with aprovision of the statute of a co-operative whereby members thereof are obliged todeliver agricultural products produced by them to the co-operative, if the memberwho committed the failure delivered his agricultural products to another co-operativeof which he became a member prior to his becoming a member of the first-mentionedco-operative in compliance with a similar obligation which is imposed by the statute ofthe last-mentioned co-operative on the members thereof.

64. Suspension or expulsion of members

(1) A member of a co-operative who persistently contravenes a provision of the co-operative's statute or who refuses to comply with any such provision or to performany obligation imposed upon him by the co-operative under this Act or the statute orwhich he undertook to perform or who commits misconduct towards the co-operativemay-

(a) be suspended as a member by the board of directors of the co-operative forany period not extending beyond the date of the first annual general meetingheld subsequent to such suspension;

(b) by special resolution be suspended as a member for a period not exceedingthe maximum period stated in the statute or be expelled from the co-operative.

(2) The suspension of a member under subsection (1)(a) or (b) may at any time be liftedby the board of directors of the co-operative.

(3) The statute of a co-operative shall contain provisions relating to-

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(a) the acts (including any acts of omission) which constitute misconduct towardsthe co-operative;

(b) the maximum period for which a member may be suspended under subsection(1)(b);

(c) the disciplinary steps which may or shall be taken against a suspendedmember.

(4) A member of a co-operative shall not be suspended or expelled under subsection (1)unless he has been given prior written notice of the grounds on which his suspensionor expulsion is being considered and afforded a reasonable opportunity in a mannerset out in the statute to produce evidence in refutation of any allegation against himor to show cause why he ought not be suspended or expelled.

(5) A member expelled from the co-operative under subsection (1) shall as from the dateof his expulsion cease to be a member of the co-operative, but his expulsion shall,subject to the proviso to subsection (4) of section 81, not affect any liability he mayhave had under section 62 as a member.

65. Right of members to inspect, or make copies of, certain documents

(1) Subject to any reasonable limitation that may be imposed by a co-operative at ageneral meeting a member of a co-operative shall be entitled free of charge toinspect at the place where the document concerned is kept-

(a) the registered statute of the co-operative with amendments (if any) or acertified copy thereof;

(b) the register of members referred to in section 66;

(c) any trust deed referred to in section 90(2);

(d) the register of pledges, bonds and cessions referred to in section 100;

(e) the register of debenture holders referred to in section 101;

(f) the attendance register referred to in section 114;

(g) the register of directors' interests in contracts referred to in section 118;

(h) the register of directors referred to in section 120;

(i) the minutes of general meetings referred to in section 131.

(2) A member of a co-operative may, subject to any reasonable limitation that may beimposed by the co-operative at a general meeting, apply to the co-operative or suchother person who has control over the document for a copy of or an extract from adocument referred to in subsection (1), and the co-operative or the said other person,as the case may be, shall either furnish such copy or extract on payment of theprescribed fees or free of charge afford such a member an opportunity of making thecopy or extract himself at the place where the document concerned is kept.

(3) If access to a document referred to in subsection (1) for the purpose of inspection orthe making of a copy or an extract is refused or an opportunity for such inspection orsuch making of a copy or extract is not afforded within 14 days after a written request

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to that effect has been delivered to the co-operative or such other person who hascontrol over such a document, as the case may be, the co-operative or the said otherperson, as the case may be, and every director or officer of the co-operative whoknowingly is a party to the refusal or default shall be guilty of an offence.

Register of members and returns relating to members (ss 66-68)

66. Register of members

(1) Every co-operative shall keep in one of the official languages of the Republic aregister of its members at a place referred to in subsection (2) and shall forthwithenter therein-

(a) the names and addresses of the members;[Para. (a) substituted by s. 9 of Act 42 of 1985.]

(b) the number of shares held by each member who became a member of the co-operative on account of shareholding;


(c) the amount paid up on the shares of each member referred to in paragraph (b);[Para. (c) substituted by s. 24 of Act 37 of 1993.]

(d) the date on which each member became a member;

(e) the date on which a member ceased to be a member;

(f) any other particulars that may be prescribed, or required by the co-operative'sstatute.

(2) The register of members shall be kept at the registered office of the co-operative orsuch other place as may be mentioned in the statute of the co-operative.

(3) The register of members shall be prima facie proof of all matters entered therein inaccordance with the requirements of this Act or the statute of the co-operative.

(4) A co-operative which fails to comply with a provision of subsection (1) or (2) shall beguilty of an offence.

66A Member certificates

(1) Each member of a co-operative who acquired membership other than by way ofshareholding and therefore does not qualify for a share certificate, shall be entitled toa member certificate containing particulars of membership as circumscribed in thestatute, and which shall be signed by a director, or an officer duly authorized theretoby the co-operative.

(2) A member certificate which is lost or destroyed shall be replaced by the co-operativeon payment of the prescribed fee.

(3) A signature referred to in subsection (1) may be affixed to the certificate byautographic or mechanical means.


67. Annual return relating to members

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(1) A co-operative shall annually whenever it forwards copies of its annual financialstatements to the registrar in accordance with the provisions of section 139, furnishthe registrar with a return of-

(a) the number of persons who at the first day of the period covered by therelevant annual financial statements were members of the co-operative;

(b) the number of persons who ceased to be members of the co-operative duringthe relevant period;

(c) the number of persons who became members of the co-operative during therelevant period;

(d) the number of persons who at the last day of the relevant period weremembers of the co-operative.

(2) The registrar may at any time order a co-operative to compile a list of the names andaddresses of its members and to submit to him such list and any other particularsrelating to its members as the registrar may specify and which may be available tothe co-operative.

(3) A co-operative which fails to comply with a provision of subsection (1) or an orderunder subsection (2) shall be guilty of an offence.

68. Furnishing of particulars relating to members to Land Bank

(1) The registrar shall at the request of the Land and Agricultural Bank of South Africareferred to in the Land Bank Act, 1944 (Act 13 of 1944), furnish that bank with suchparticulars relating to the members of any agricultural co-operative or special farmers'co-operative as the bank may require and as may be available to the registrar.

(2) If that bank requires particulars relating to the persons who at any particular datewere members of any agricultural co-operative or special farmers' co-operative, theco-operative concerned shall at the request of that bank furnish it with a return of thenames and addresses of the persons who at the relevant date were members of suchco-operative and shall under the name of each member give such further particularsrelating to such member as the bank may require and as may be available to the co-operative.

(3) A co-operative which fails to comply with a request under subsection (2) shall beguilty of an offence.

CHAPTER VCAPITAL AND APPLICATION OF SURPLUS (ss 69-104)

Share capital and shares (ss 69-81)

69. Share capital

The share capital of a co-operative shall be the total nominal value of the shares of the co-operative which have not been cancelled under section 81.

70. Issuing of shares

(1) A share in a co-operative shall come into being when issued and shall lapse whencancelled under section 81.

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(2) Shares issued by a co-operative shall, subject to any contingent liability which may interms of section 72 be attached thereto, all be of the same class, order of preferenceand nominal value.

(3) A co-operative may, subject to such limitations as may be set out in its statute, issueas many shares as it may deem fit.

71. Share certificates

(1) Each member who became a member of a co-operative on account of shareholdingshall be entitled to a share certificate indicating the number of shares in the co-operative of which he is the holder, and which shall be signed by a director, and anofficer duly authorized thereto by the co-operative.


(2) A share certificate which has been lost or destroyed shall be replaced by the co-operative against payment of the prescribed amount.

(3) A signature referred to in subsection (1) may be affixed to a share certificate byautographic or mechanical means.

72. Shares to which contingent liability is attached

(1) Shares to which contingent liability is attached may be issued by a co-operative onlyto members voluntarily subscribing therefor.

(2) The maximum amount of the contingent liability attached to such shares and theconditions on which such shares may be issued shall be as provided by the statute ofthe co-operative.

(3) (a) A co-operative may with the approval of the registrar cancel any contingentliability attached to any shares.

(b) The registrar shall not give his approval under paragraph (a) unless he issatisfied-

(i) that the contingent liability concerned no longer serves any usefulpurpose or that the continuation thereof is undesirable; and

(ii) that the co-operative has given notice of the proposed cancellation of therelevant contingent liability in the Gazette and in a newspaper circulatingin the area in which the co-operative carries on business and that nocreditor of the co-operative has objected within a period mentioned in thenotice against the proposed cancellation.

73. Payment for shares

(1) A share in a co-operative shall not be issued-

(a) at an amount other than the nominal value thereof;

(b) for any consideration other than money.

(2) If authorized thereto by its statute a co-operative may issue shares not fully paid up,and such shares shall be paid for in such manner, at such times and on such

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conditions as may be set out in the statute or determined by the co-operative:Provided that-

(a) no share shall be issued unless at least one-tenth of the nominal value of theshare has been paid to the co-operative;

(b) an amount payable by a co-operative to a member in respect of bonuses orinterest on shares may be set off by the co-operative against any arrears onshares held by such a member;

(c) a co-operative may if it deems fit accept from a member thereof an amount duebut not yet payable on such members' shares.

74. Transfer of shares

(1) A share in a co-operative shall not be transferred except with the approval of the co-operative and in such manner and subject to such limitations as may be determinedin the statute of the co-operative.

(2) Any transfer of shares shall take effect when such transfer is registered in the registerof members referred to in section 66.

75. Minimum number of shares to be held by members

(1) The statute of a co-operative of which membership is acquired by way ofshareholding, may provide that-

(a) a member of the co-operative shall be obliged to hold at least such number ofshares in the co-operative as may be specified in the statute or fixed accordingto a basis set out in the statute;

(b) the co-operative may issue to a member who does not hold the requirednumber of shares such number of shares without his having applied therefor,so as to oblige him to comply with the said requirement.


(2) Paragraph (a) of the proviso to section 73(2) shall not apply in respect of sharesissued by virtue of subsection (1)(b), and such shares shall be paid for in suchmanner, at such times and on such conditions as may be set out in the statute ordetermined by the co-operative.

76. Consolidation or subdivision of shares

(1) A co-operative may, subject to the provisions of this Act relating to the amendment ofstatutes, consolidate its shares into shares with a higher nominal value or subdivideits shares into shares with a lower nominal value.

(2) The consolidation or subdivision of shares under subsection (1) shall not have theeffect that the share capital of a co-operative is increased or decreased.

77. Payment of interest out of share capital prohibited

No interest shall be paid on the share capital of a co-operative out of its share capital.

78. Reduction of share capital

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(1) The share capital of a co-operative may-

(a) subject to the provisions of subsection (2) of this section and the provisions ofthis Act relating to the amendment of statutes, be reduced by fixing the nominalvalue of the shares of the co-operative at a lower amount;

(b) subject to confirmation by the court be reduced in any other manner.

(2) If the reduction of share capital in terms of subsection (1)(a) involves the repaymentor future repayment of paid-up share capital to a member no repayment shall bemade by the co-operative until the court has confirmed such reduction of sharecapital.

(2A) No co-operative shall, subject to subsection (3) of this section and subsection (2) ofsection 81, make a repayment of paid-up share capital to a member thereof unlessthat repayment is caused by a reduction of share capital in accordance with thissection.

[Sub-s. (2A) inserted by s. 10 of Act 42 of 1985.]

(2B) A co-operative which contravenes a provision of this section shall be guilty of anoffence.

[Sub-s. (2B) inserted by s. 10 of Act 42 of 1985.]

(3) The provisions of subsection (1) shall not affect any reduction of share capitalwhenever shares are cancelled under section 81.

79. Powers of court in connection with application for confirmation of reduction of sharecapital

(1) The court may in connection with an application for confirmation of any reduction ofshare capital make such order as it may think fit, including a rule nisi calling on allinterested persons to show cause why the proposed reduction of share capital shallnot be confirmed.

(2) If the proposed reduction of share capital involves the repayment or future repaymentof paid-up share capital by the co-operative to a member thereof, the court shall notissue an order confirming the proposed reduction or the rule nisi referred to insubsection (1) unless the court is satisfied that the co-operative has no creditors orthat the creditors have consented to the proposed repayment of paid-up share capitalor that the interests of the creditors are adequately protected or not materiallyaffected by the proposed repayment of paid-up share capital.

(3) In this section 'creditor', in relation to a co-operative, means a creditor of the co-operative who at the date on which an application referred to in subsection (1) ismade is entitled to a claim which, if that date were the commencement of thewinding-up of the co-operative, would be admissible in proof against the co-operative.

80. Bonus shares

(1) The statute of a co-operative may subject to the provisions of section 70 provide forthe allocation of bonus shares to the members of the co-operative.

(2) Bonus shares referred to in subsection (1) shall be paid up out of the surplus whichmay result from the co-operative's operations during a financial year and shall beallocated to the respective members-

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(a) in the case of a co-operative the main object of which involves that themembers conduct transactions with or through the co-operative, in accordancewith the patronage proportion;

(b) in the case of a co-operative the main object of which does not involve that themembers conduct transactions with or through the co-operative, in accordancewith a basis set out in the statute.

(3) For the purposes of subsection (2)-

(a) an object contemplated in section 21(1)(g)(i) shall be deemed to be an objectinvolving that the members conduct transactions with or through the co-operative;

(b) the patronage proportion shall be determined with reference to the financialyear to which the surplus out of which the relevant bonus shares are paid uprelates.

81. Cancellation of shares

(1) Membership of a co-operative may be terminated, and shares in a co-operativeissued to a member may, subject to the provisions of the statute of a co-operative, becancelled-

(a) if the member dies;

(b) if the estate of the member is sequestrated or if a notice is published in respectof him under section 22(1) of the Agricultural Credit Act, 1966 (Act 28 of 1966);

(c) if the member resigns as a member of the co-operative;

(d) if the member is expelled from the co-operative in terms of the provisions ofsection 64;

(e) if the member no longer qualifies to remain a member of the co-operative;

(f) on any other ground set out in the statute.[Sub-s. (1) amended by s. 28 of Act 37 of 1993.]

(2) (a) The amount paid up on shares cancelled under subsection (1) shall subject tothe provisions of paragraph (b) be refunded by the co-operative to the personwho was the holder of the cancelled shares, in such manner and at such timeor over such period as set out in the statute of the co-operative: Provided that ifthe value of the shares, as determined by the co-operative, is less than thenominal value thereof, the co-operative shall not be bound to refund a largeramount-

(i) if the shares were fully paid up, than the value of the shares as sodetermined; or

(ii) if the shares were not fully paid up, than an amount which bears thesame ratio to the amount paid up on the shares as the value of theshares as so determined bears to the nominal value of the shares.

(b) A co-operative shall not be bound to refund any amount paid up on sharescancelled under subsection (1)(d), and such amount shall be forfeited to the

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co-operative: Provided that shares cancelled on the ground that the holder ofsuch shares has resigned as a member of the co-operative shall for thepurposes of this paragraph be deemed to have been cancelled undersubsection (1)(d) if such member resigned after he has been notified in termsof section 64(4) that his expulsion or suspension was being considered by theco-operative.

(3) A claim in respect of an amount owing by a co-operative by virtue of the provisions ofsubsection (2)(a), shall, in the event of the co-operative being wound up, have nopreference over the claims of members as shareholders in the co-operative.

(4) A person who was the holder of shares immediately before the cancellation thereofunder subsection (1) shall not by reason only of such cancellation be released fromany liability in respect of such shares: Provided that any liability contemplated inparagraph (a) of section 62 shall terminate upon expiry of a period of three years asfrom the date of cancellation of such shares.

Surpluses (ss 82-84)

82. Statute to provide for application of surplus

The statute of a co-operative shall provide for the application of any surplus which mayresult from the operations of the co-operative during a financial year: Provided that-

(a) the amount set aside out of the surplus as a reserve shall not be less than an amountdetermined by the board of directors of the co-operative;

(aA) where a co-operative has obligations in terms of a State-guaranteed credit schemereferred to in section 172, the Minister may direct that the amount set aside underparagraph (a) shall in the case of such co-operative not be less than the amountcalculated in accordance with a basis determined by the Minister;

[Para. (aA) inserted by s. 1 of Act 38 of 1988.]

(b) the amount available out of the surplus for distribution to the members shall beapplied in one or more of the following ways only, namely-

(i) to pay interest to the members on amounts paid up on shares, in accordancewith the provisions of section 83;

(ii) to pay bonuses to the members in accordance with the provisions of section84;

(iii) to set such interest or bonuses aside in a members' fund for future payment tothe members;

(iv) to pay up bonus shares for allocation to the members in accordance with theprovisions of section 80;

(c) subject to the provisions of section 14 of the Wine and Spirit Control Amendment Act,1972 (Act 70 of 1972), no portion of the surplus shall be distributed to any personwho is not a member of the co-operative;

(d) a capital gain, including a gain resulting from the revaluation of a capital asset, shallnot be applied other than for the setting aside thereof as a general reserve.

[Para. (d) substituted by s. 11 of Act 42 of 1985.]

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83. Interest on shares

(1) A co-operative may subject to the provisions of section 77 and its statute pay intereston amounts paid up on its shares.

(2) ......[Sub-s. (2) deleted by s. 29 of Act 37 of 1993.]

(3) ......[Sub-s. (3) added by s. 12 of Act 42 of 1985 and deleted by s. 29 of Act 37 of 1993.]

84. Bonuses

(1) A co-operative may subject to the provisions of its statute pay to its membersbonuses out of the surplus which may result from its operations during a financialyear.

(2) The amount which is applied for the payment of bonuses to the members shall beallocated to them-

(a) in the case of a co-operative the main object of which involves that themembers conduct transactions with or through the co-operative, in accordancewith the patronage proportion;

(b) in the case of a co-operative the main object of which does not involve that themembers conduct transactions with or through the co-operative, in accordancewith a basis set out in the statute.


(a) an object contemplated in section 21(1)(g)(i) shall be deemed to be an objectinvolving that the members conduct transactions with or through the co-operative;

(b) the patronage proportion shall be determined with reference to the financialyear to which the surplus out of which the relevant bonuses are paid relates.

(4) A co-operative carrying out two or more objects may, the provisions of subsection (2)notwithstanding, provide in its statute for the payment of bonuses to its membersaccording to a scheme of distribution whereby the amount available out of the surplusfor the payment of bonuses is first allocated in respect of the different objects set outin the statute of a co-operative and carried out by the co-operative during thefinancial year to which such surplus relates in the same proportion as the proportionin which the co-operative's operations with respect to the different objects eachcontributed to such surplus, and the amount of each allocation is then separatelydistributed among the members-

(a) in the case of an amount so allocated in respect of an object involving that theco-operative's members conduct transactions with or through it, in the sameproportion as the proportion which the value of the transactions conducted by amember with or through the co-operative with respect to such object during thefinancial year concerned, bears to the value of the transactions conducted byall the members with or through the co-operative with respect to that objectduring that financial year;

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(b) in the case of an amount allocated in respect of an object which does notinvolve that the co-operative's members conduct transactions with or through it,on a basis set out in the statute.



(a) an object contemplated in section 21(1)(g)(i) which involves that the membersof a co-operative conduct transactions with or through the co-operative in theco-operative's capacity as an agent of a control board, shall be deemed to bean object involving that the members conduct transactions with or through theco-operative itself;

(b) the provisions of paragraphs (a) and (b)(i) and (ii) of the proviso to thedefinition of 'patronage proportion' in section 1 shall mutatis mutandis applywith respect to the proportion referred to in subsection (4)(a) of this section.

(6) If a co-operative pays a bonus in contravention of the provisions of this section, theco-operative and every director of the co-operative shall be guilty of an offence.

[Sub-s. (6) added by s. 13 of Act 42 of 1985.]

Members' funds and reserves (ss 85-87)

85. Members' funds

(1) The statute of a co-operative may provide for the establishment of one or moremembers' funds in which a member of the co-operative may be credited with-

(a) any contribution made by him to such a fund in terms of the statute;

(b) any interest on an amount paid up on his shares and set aside for futurepayment;

(c) any bonus allocated to him and set aside for future payment;

(d) any amount allocated to him out of a reduction of share capital and set asidefor future payment;

(e) any amount allocated to him out of a distribution of a reserve and set aside forfuture payment;

(f) any other money due to him payment of which was deferred.

(2) The money standing to the credit of members in a members' fund-

(a) may subject to the provisions of its statute be applied for any purpose otherthan for writing off any loss;

(b) shall be paid to the members at such times and in such manner and in suchcircumstances as may be provided in the statute;

(c) may bear interest at a rate which may be fixed in the statute;

(d) may when payment is due be set off by the co-operative against any amountwhich is then payable by the member concerned to the co-operative.

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(3) For the purposes of the Banks Act, 1965 (Act 23 of 1965), a co-operative shall not bedeemed to be carrying on the business of accepting deposits by reason only of thefact that it administers a members' fund.

86. Setting aside of funds as reserves

(1) A co-operative may, subject to the provisions of paragraph (a) of the proviso tosection 82, set aside as a reserve any amount out of any surplus which may resultfrom its operations during a financial year.

(2) A reserve shall be either a general reserve or a contingency reserve.

(3) Unless authorized thereto by its statute a co-operative shall not write off a loss whichis not a capital loss against its general reserve.


87. Distribution of reserves to members

(1) The statute of a co-operative may provide for the distribution of a reserve or anyportion thereof to the members of the co-operative.

(2) A reserve or portion thereof which is distributed to the members of a co-operativeshall be allocated to them-

(a) in the case of a co-operative the main object of which involves that itsmembers conduct transactions with or through it, in accordance with thepatronage proportion;

(b) in the case of a co-operative the main object of which does not involve that itsmembers conduct transactions with or through it, in accordance with a basisset out in the statute.

(3) The patronage proportion mentioned in subsection (2)(a) shall be determined withreference to either such period as may be specified in the statute of a co-operativewhich preceded the commencement of the financial year in which the relevantdistribution of a reserve or portion thereof takes place or the period for which the co-operative has existed, whichever period is the shorter: Provided that the periodmentioned in the statute of a co-operative shall not be less than five years.


(4) For the purposes of subsections (2) and (3)-

(a) an object contemplated in section 21(1)(g)(i) shall be deemed to be an objectinvolving that the members of the co-operative conduct transactions with orthrough it;

(b) the value of the transactions conducted by a former member with or throughsuch co-operative during the period referred to in subsection (3) may be addedto the value of the transactions of a member who is entitled to a distribution inrespect of the relevant reserve or portion thereof, provided-

(i) the former member, or, if he is deceased, his executor, has submitted hiswritten consent to that effect to the co-operative within 90 days after suchformer member has ceased to be a member of the co-operative; and

(ii) the statute of the co-operative so provides;

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(c) a co-operative incorporated in consequence of a conversion under section 163shall be deemed to exist as from the date of incorporation of the previous co-operative so converted, and the value of the transactions conducted by amember of the first-mentioned co-operative during the appropriate period withor through the previous co-operative as a member may be added to the valueof the transactions conducted by him with or through the first-mentioned co-operative;

(d) a co-operative incorporated in consequence of an amalgamation of two ormore co-operatives under section 166 shall be deemed to exist as from thedate of incorporation of the most recent of those co-operatives, and the valueof the transactions conducted by a member of the amalgamated co-operativeduring the appropriate period with or through any of the previous co-operativesof which he was then a member may be added to the value of the transactionsconducted by him with or through the amalgamated co-operative.

Unclaimed moneys (s 88)

88. Forfeiture of certain moneys

Any interest on an amount paid up on shares, any bonus or any amount standing to thecredit of any person in a members' fund which is not claimed by the person entitled theretowithin a period of three years after he became entitled to payment thereof may be declaredforfeited by the co-operative, and thereupon such amount shall be transferred to the co-operative's general reserve.

Debentures (ss 89-104)

89. Creation and issue of debentures

A co-operative may if authorized thereto by its statute create and issue secured orunsecured debentures.

90. Security for debentures

(1) Debentures issued by a co-operative may be secured by-

(a) a deed of pledge and the delivery of movable property to one or moredebenture holders or trustees for debenture holders;

(b) a notarial bond executed in favour of one or more debenture holders ortrustees for debenture holders;

(c) the cession of rights to one or more debenture holders or trustees fordebenture holders;

(d) a mortgage bond over immovable property executed in favour of one or moredebenture holders or trustees for debenture holders.

(2) No person shall be appointed as a trustee contemplated in subsection (1) except inaccordance with a deed of trust in which the powers and duties and the rights andobligations of the trustee are set out.

91. Registration of mortgage bonds and notarial bonds

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(1) A mortgage bond or a notarial bond referred to in section 90 and subsequenttransactions relating thereto shall, with due observance of the applicable provisionsof any law, be registered in a deeds registry.

(2) No such mortgage bond or notarial bond shall be registered unless a certified copy ofthe debenture concerned and of the trust deed concerned (if any) is annexed to thebond.

92. Registration of debenture as if notarial bond

A debenture executed before a notary public may be registered in a deeds registry as if itwere a notarial bond.

93. Order of preference in respect of security held by trustee

Debentures secured by a pledge, bond or cession to or in favour of a trustee for debentureholders and issued on different dates shall in respect of the security concerned rank inpreference concurrently with one another.

94. Rights of debenture holders

(1) Unless the trust deed and debenture concerned otherwise provide, the holder of adebenture secured by a pledge, bond or cession to or in favour of a trustee fordebenture holders shall be entitled to enforce his rights under such debenture as ifhe himself were the pledgee, bondholder or cessionary, as the case may be.

(2) No notice of the transfer of a debenture shall be necessary to confer upon thetransferee the rights of the transferor.

95. Incompetence of director or officer to be trustee

A director or an officer of a co-operative shall not be competent to be a trustee for theholders of debentures of that co-operative.

96. Liability of trustee

(1) Subject to the provisions of subsection (2) a provision contained in a trust deedcontemplated in section 90 (2) or in an agreement between a trustee and thedebenture holders of a co-operative shall be void in so far as the trustee is therebyexempted from or indemnified against liability for breach of trust or contract inconnection with the performance of his functions as a trustee.

(2) The provisions of subsection (1) shall not affect a provision in any such deed of trustor agreement in which provision is made for the release of the trustee from the saidliability with the consent of a majority of at least three-fourths in value of thedebenture holders present and voting in person or by proxy at a meeting summonedfor such purpose.

97. Debenture to be described as secured or unsecured

No debenture, debenture certificate or prospectus relating to debentures shall be issued bya co-operative unless the word 'debenture' or such other expression used therein denotinga debenture is qualified by the word 'secured' or 'unsecured', as the case may be.

98. Re-issue of redeemed debentures

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(1) Unless its statute otherwise provides a co-operative may after the redemption of anydebentures issued by it keep such debentures alive for the purpose of re-issue.

(2) Whenever a co-operative re-issues any debentures it may issue the originaldebentures or issue new debentures in the place of the original debentures.

99. Form of debentures and debenture certificates

(1) No debenture shall be issued by a co-operative unless the conditions on which thedebenture is issued are stated on the debenture or debenture certificate.

(2) A debenture or debenture certificate shall be signed by a director and an officer ofthe co-operative duly authorized thereto by the co-operative.

(3) A signature referred to in subsection (2) may be affixed to a debenture or debenturecertificate by autographic or mechanical means.

(4) A debenture or debenture certificate issued under this Act shall be prima facieevidence of the title of the person named therein to such debenture or debenturecertificate.

100. Register of pledges, bonds and cessions

(1) A co-operative shall keep at a place referred to in subsection (2) a register of all theproperty of the co-operative which serves as security for an obligation of the co-operative, and shall enter forthwith therein-

(a) particulars of the relevant pledge, bond or cession;

(b) a description of the affected property;

(c) the amount of the debt;

(d) the name and address of each pledgee, bondholder or cessionary.

(2) The register referred to in subsection (1) shall be kept at the registered office of theco-operative or such other place as may be determined by the co-operative with theregistrar's approval.


101. Register of debenture holders

(1) A co-operative which issued debentures shall keep at the place referred to insubsection (2) a register of debenture holders and shall forthwith enter therein thenames and addresses of the holders of debentures of the co-operative and thenumber of debentures held by each of them.

(2) The register referred to in subsection (1) shall be kept at the registered office of theco-operative or such other place as may be determined by the co-operative with theregistrar's approval.


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102. Right of debenture holders to inspect or make copies of certain documents

(1) Subject to any reasonable limitation imposed by a co-operative at a general meetinga debenture holder or his proxy shall be entitled free of charge to inspect a registerreferred to in section 100 or 101 at the place where the register concerned is kept.

(2) A debenture holder may, subject to any reasonable limitation imposed by the co-operative at a general meeting, apply to the co-operative or such other person whohas control over a register referred to in subsection (1) for a copy of or an extractfrom such a register and the co-operative or the said other person, as the case mayby, shall either furnish such copy or extract on payment of the prescribed fees, or freeof charge afford such a debenture holder or his proxy an opportunity of making thecopy or extract himself at the place where the register concerned is kept.

(3) A debenture holder having an interest in a deed of trust referred to in section 90 (2)may apply to the co-operative concerned for a copy of or an extract from such deedof trust, and the co-operative shall either furnish such copy or extract on payment ofthe prescribed fees, or free of charge afford such a debenture holder or his proxy anopportunity of making the copy or extract himself at the place where the deed of trustis kept.

(4) If-

(a) access to a register referred to in subsection (1) for the purpose of inspectionor the making of a copy or an extract is refused or an opportunity for suchinspection or such making of a copy or extract is not afforded within 14 daysafter a written request to that effect has been delivered to the co-operative orsuch other person who has control over such a register, as the case may be; or

(b) an opportunity for access to a deed of trust referred to in subsection (3) is notafforded within 14 days after a written request to that effect has been deliveredto the co-operative,

the co-operative or the said other person, as the case may be, and every director orofficer of the co-operative who knowingly is a party to such refusal or default shall beguilty of an offence.

103. Offering of debentures to public and prospectus

(1) The provisions of Chapter VI and Part I and Part II of Schedule 3 of the CompaniesAct, 1973 (Act 61 of 1973), shall, subject to such modifications as may be effectedthereto by the Minister by notice in the Gazette, mutatis mutandis apply in respect ofan offer of debentures by a co-operative, and in such application any referencetherein to-

(a) shares shall be construed as a reference to debentures;

(b) the Companies Registration Office shall be construed as a reference to theDirectorate Co-operatives;


(c) a company shall be construed as a reference to a co-operative;

(d) a director or an officer of a company shall be construed as a reference to adirector or an officer of a co-operative.

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(2) Any person who commits an act or omission which constitutes an offence in terms ofthe provisions of Chapter VI of the Companies Act, 1973, as applied by subsection(1), shall be liable on conviction to the same penalties as those which may beimposed under section 441 of the said Act for such offence.

104. Transfer of debentures

(1) The provisions of sections 134, 135, 136, 137, 138, 139 and 140 (read with section96(2) and (3)) of the Companies Act, 1973 (Act 61 of 1973), shall, subject to suchmodifications as may be effected thereto by the Minister by notice in the Gazette,mutatis mutandis apply in respect of the transfer of debentures issued by a co-operative, and in such application any reference to-

(a) a company shall be construed as a reference to a co-operative;

(b) a memorandum of association or articles of association of a company shall beconstrued as a reference to a statute of a co-operative;

(c) a director or an officer of a company shall be construed as a reference to adirector or an officer of a co-operative.

(2) Any person who commits an omission which constitutes an offence under section139 or 140 (read with section 96(2) and (3)) of the Companies Act, 1973, as appliedby subsection (1), shall on conviction be liable to the same penalties as those whichmay be imposed under section 441 of the said Act for such offence.

CHAPTER VIMANAGEMENT OF CO-OPERATIVES (ss 105-132)

Postal address, registered office, branches and depots (ss 105-106)

105. Postal address and registered office of co-operative

(1) A co-operative shall have in the Republic-

(a) a postal address to which communications and notices may be addressed; and

(b) a registered office to which communications and notices may be addressedand where process may be served.

(2) Any change in the situation of the registered office or of the postal address of a co-operative shall for the purposes of this Act take effect on the date on which a formreferred to in section 26(2)(i), together with the prescribed fees, is handed over to theregistrar.



106. Branches and depots of co-operatives

(1) A co-operative shall not establish a branch or depot or maintain or administer abranch or depot established prior to the commencement of this Act, unless theestablishment of such a branch or depot is authorized by its statute.

(2) A co-operative which contravenes a provision of subsection (1) shall be guilty of anoffence.

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Directors (ss 107-121)107. Board of directors

(1) The affairs of a co-operative shall be managed and controlled by a board of directors,which shall subject to the provisions of this Act and the statute of the co-operativeexercise and perform the powers and duties of the co-operative.

(2) The statute of the co-operative shall determine the maximum and minimum numberof directors of which the board of directors shall consist.


(3) Unless the statute of a co-operative otherwise provides the directors of a co-operative shall subject to the provisions of section 28(e), 159(e), 164(f) or 168(a) beelected at a general meeting in such manner and for such period as may be set outin the statute.

108. Certain persons not competent to be directors

(1) A person shall not hold office as a director of a co-operative-

(a) unless he is-

(i) a member or an affiliated member of the co-operative; or

(ii) a member of a company, a close corporation or an association ofpersons (with or without legal personality) which is either itself a memberof the co-operative or a member of any other company, co-operative orjuristic person which is a member of the co-operative;

[Sub-para. (ii) substituted by s. 35 (a) of Act 37 of 1993.][Para. (a) substituted by s. 15 (a) of Act 42 of 1985.]

(aA) if such person is a member of a company referred to in paragraph (a) (ii) ofwhich another member is a director of the co-operative and such person is notalso a member or affiliated member referred to in paragraph (a) (i) of the co-operative;

[Para. (aA) inserted by s. 15 (b) of Act 42 of 1985.]

(b) if such person is a juristic person;

(c) ......Para. (c) deleted by s. 27 of Act 132 of 1993.]

(d) if he is a minor;

(e) if he becomes a patient as defined in section 1 of the Mental Health Act, 1973(Act 18 of 1973);

(f) save under the authority of a competent court-

(i) if he is an unrehabilitated insolvent;

(ii) if he has at any time been removed from an office of trust on account ofmisconduct;

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(iii) if he or she has at any time been convicted (whether in the Republic orelsewhere) of theft, fraud, forgery or uttering a forged document, perjury,an offence under the Prevention of Corruption Act, 1958 (Act 6 of 1958),the Corruption Act, 1992 (Act 94 of 1992), Part 1 to 4, or section 17, 20or 21 (in so far as it relates to the aforementioned offences) of Chapter 2of the Prevention and Combating of Corrupt Activities Act, 2004, anyoffence involving dishonesty or in connection with the formation ormanagement of a co-operative or company and sentenced therefor toimprisonment without the option of a fine or to a fine exceeding twohundred rand;

[Sub-para. (iii) substituted by s. 36 (1) of Act 12 of 2004.]

(g) if he is incompetent by virtue of a provision of the statute of the co-operative to hold such office.

(1A) Notwithstanding the provisions of subsection (1) a person who by virtue of hismembership of a trading co-operative is an affiliated member of an agricultural co-operative or a special farmers' co-operative shall not hold the office of director of thatagricultural co-operative or special farmers' co-operative unless he is a person whocarries on farming operations as contemplated in section 57 (1) (a) (i).

[Sub-s. (1A) inserted by s. 15 (c) of Act 42 of 1985.]

(1B) If the State has a material interest in the activities of the co-operative, the registrar,or, if provision is made therefor in the statute of a co-operative, the board of directors,may, notwithstanding the provisions of paragraphs (a) and (aA) of subsection (1),appoint non-members to the board in order to obtain expertise on the board:Provided that the total number of directors appointed by the board of directors fromnon-members shall not exceed the number of directors appointed from members:Provided further that the registrar may not appoint more than two directors.

[Sub-s. (1B) inserted by s. 35 (b) of Act 37 of 1993.]

(1C) Non-members appointed by the registrar to the board of directors in terms ofsubsection (1B), shall be so appointed in addition to the number of persons holdingthe office of director in terms of section 107(2).

[Sub-s. (1C) inserted by s. 35 (b) of Act 37 of 1993.]

(1D) Non-members referred to in subsection (1B) who are appointed by the board ofdirectors shall be appointed for the period determined in the statute of a co-operative.

[Sub-s. (1D) inserted by s. 35 (b) of Act 37 of 1993.]

(1E) Non-members referred to in subsection (1B) who are appointed by the registrar shallbe appointed for the period during which the State has a material interest in theactivities of the co-operative.

[Sub-s. (1E) inserted by s. 35 (b) of Act 37 of 1993.]

(2) Any person who in terms of subsection (1) is not competent to hold office as adirector of a co-operative and who acts or purports to act as a director or directly orindirectly takes part in or is concerned in the management of a co-operative, shall beguilty of an offence.

109. Vacation of office by directors and filling of vacancies

(1) A director of a co-operative shall cease to hold office as a director of the co-operative-

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(a) if he becomes incompetent in terms of section 108 to hold such office in the co-operative;

(b) if he has been absent from more than four consecutive meetings of the boardof directors of the co-operative without the board's leave (and such leave shallnot be granted for a period covering more than six consecutive meetingsunless the absence be on the affairs of the co-operative);

(c) upon the expiry of 30 days, or such shorter period as may be approved by theco-operative, after he resigned as a director of the co-operative;

(d) if he is removed from office under subsection (2).

(2) A director of a co-operative may at any time by resolution passed at a generalmeeting of the co-operative be removed from office.

(3) Any vacancy on the board of directors of a co-operative arising from a circumstancereferred to in subsection (1) and every vacancy caused by the death of a membershall be filled in such manner as may be provided in the statute, and every director soappointed shall hold office for the unexpired portion of the period of office of thevacating director.

110. Chairman, vice-chairman and acting chairman of board of directors

(1) Unless the statute of a co-operative otherwise provides the board of directors of a co-operative shall at its first meeting after the incorporation of the co-operative andthereafter as often as it may become necessary elect a director as the chairman andanother director as the vice-chairman of the board.

(2) Whenever the chairman of a board of directors is absent or is unable to perform hisfunctions as chairman the vice-chairman shall act as chairman during the absence orincapacity of the chairman, and if both the chairman and the vice-chairman areabsent or unable to perform the functions of the chairman the board may elect anyother director to act as chairman during such absence or incapacity.

(3) (a) The chairman of the board of directors of a co-operative shall, subject to hisremaining a director of the co-operative, retire as chairman at the first meetingof the board held subsequent to an annual general meeting, and shall beeligible for re-election.

(b) The provisions of paragraph (a) shall mutatis mutandis apply to the vice-chairman of a board of directors.

111. Vacation of office by chairman and vice-chairman

(1) The chairman of the board of directors of a co-operative shall vacate his office-

(a) if he ceases to be a director of the co-operative;

(b) if he resigns as chairman;

(c) if he is removed from office under subsection (2).

(2) The chairman of a board of directors may at any time be removed from office by theboard.

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(3) The provisions of subsections (1) and (2) shall mutatis mutandis apply in respect ofthe vice-chairman of a board of directors.

112. Meetings and resolutions of board of directors

(1) A meeting of the board of directors of a co-operative shall be held at a time and placedetermined by the board or the chairman of the board or any two directors of the co-operative.

(2) Unless the statute of a co-operative otherwise provides-

(a) a majority of all the directors shall constitute a quorum for any meeting of aboard of directors;

(b) the decision of the majority of the directors present at a meeting of a boardshall constitute a resolution of such board, and in the event of an equality ofvotes relating to any matter the chairman of a board or the person acting aschairman, as the case may be, shall have a casting vote in addition to hisdeliberative vote.

(3) No resolution passed by a board of directors or act performed under the authority of aboard shall be invalid by reason only of a vacancy on the board or of the fact that aperson who is not entitled to sit as a director sat as a director at the time when theresolution was passed or the act was authorized, if the resolution was passed or theact was authorized by the requisite majority of the directors who were present at thetime and entitled to sit as directors.

(4) (a) A co-operative shall at the written request of the registrar notify him andforward to him the agenda and relevant documents of any meeting of its boardof directors or of a committee of that board on the same day as the directors ormembers of such committee are notified of any such meeting.

(b) The registrar may attend any meeting of which he was notified in terms ofparagraph (a) and shall have the right to take part in the proceedings thereofbut shall not have the right to vote, and his participation shall be noted in theminutes referred to in section 113(1).

(c) If default is made in complying with any requirement of paragraph (a) the co-operative and every director and officer of the co-operative who knowingly areparties to such default shall be guilty of an offence.


113. Minutes of directors' meetings

(1) The board of directors of a co-operative shall cause minutes in one of the officiallanguages of the Republic to be kept of all proceedings at meetings of the board andto be entered within two months of a board meeting in one or more books to be keptfor that purpose at the registered office of the co-operative or at such other place asmay be determined by the co-operative.

(2) Minutes to be prepared in terms of subsection (1) in respect of any meeting of aboard of directors shall as soon as may be possible, but not later than the firstmeeting of the board held subsequent to the expiration of two months after themeeting to which the minutes relate, be submitted to a meeting of the board.

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(3) A resolution of a board of directors in the form of a written resolution signed by thechairman of the board shall be deemed to be minutes of a meeting and shall beentered in the book or books referred to in subsection (1).

(4) For the purposes of subsection (1) loose leaves of paper shall not be deemed toconstitute a minute book unless they are bound together permanently, without meansprovided for the withdrawal or insertion of leaves, and the pages or leaves areconsecutively numbered.

(5) The minutes of any meeting of a board of directors purporting to be signed by thechairman of the board or a person who acted as chairman, as the case may be, shallin any court be prima facie proof of the taking place of anything which according tosuch minutes took place at such meeting.

(6) If default is made in complying with any requirement of subsection (1) or (2) the co-operative and every director or officer of the co-operative who knowingly is a party tosuch default, shall be guilty of an offence.

114. Attendance register

(1) Every director of a co-operative present at any meeting of the board of directors ofthe co-operative shall at the meeting sign his name under the date of the meeting ina register with permanently bound leaves to be kept for such purpose by the co-operative.

(2) Such register shall be kept at the registered office of the co-operative or such otherplace as may be determined by the co-operative with the approval of the registrar.

(3) A co-operative which or director who fails to comply with a provision of subsection (1)or (2) shall be guilty of an offence.

115. Board of directors may assign functions to a director or committee

(1) The board of directors of a co-operative may subject to such limitations andqualifications as may be set out in the statute of the co-operative delegate any of itspowers, including such powers as it may exercise under section 107(1), to a directoror a committee of directors, or authorize a director or any such committee to performany of the board's duties or to act as the co-operative's representative or agent.

(2) A delegation under subsection (1) shall not prevent the exercise of the relevantpower by the board itself.

(3) The provisions of section 112(3) shall mutatis mutandis apply in respect of acommittee referred to in subsection (1).

116. Liability of directors and officers

(1) A director or officer of a co-operative shall not be liable to any person in his personalcapacity for any loss or damage which may occur in or in connection with theperformance of his duties, unless-

(a) the loss or damage is due to his willful misconduct, dishonesty or grossnegligence or to the fact that he willfully contravened or that he refused tocomply with a provision of this Act or the statute of the co-operative and suchloss or damage is not covered by a fidelity guarantee policy or any other similarpolicy taken out by the co-operative; or

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(b) the loss or damage is due to his reckless conduct, or conduct which is or wasintended to defraud any person or for any other fraudulent purpose, in whichcase he shall be liable in his personal capacity without any limitations ofliability.

(2) Without prejudice to any other criminal liability incurred, where any business of a co-operative is carried on in any manner contemplated in subsection (1), every directoror officer who is knowingly a party to the carrying on of the business in any suchmanner shall be guilty of an offence.


117. Directors to disclose interest in certain contracts

(1) A director of a co-operative who in a capacity other than that of director, member,affiliated member or duly authorized agent of the co-operative is interested in aproposed contract which the co-operative considers entering into or becomesinterested in a contract after it has been entered into by the co-operative, shalldisclose to the co-operative full particulars relating to the nature and extent of hisinterest in accordance with the provisions of subsection (2) or (3), as the case maybe.

(2) A director referred to in subsection (1) who is interested in such a proposed contractshall-

(a) if the proposed contract is or is to be considered at a meeting of the board ofdirectors or a general meeting of the co-operative, disclose his interest prior tosuch meeting by way of a written notice to the board or otherwise at suchmeeting, or, if for any reason it is not possible for him to disclose his interest ator prior to such meeting, he shall do so at the first meeting of the board heldthereafter at which it is possible for him to do so, irrespective of whether thecontract has been entered into or not; or

(b) if the proposed contract is not to be considered at any meeting referred to inparagraph (a), disclose his interest by way of a written notice to the board ofdirectors within seven days as from the day on which he first became aware ofthe proposed contract or, if it has already been entered into, of the contract:

Provided that a written notice given by a director of a co-operative to the board ofdirectors thereof to the effect that he has an interest in a particular undertaking and isto be regarded as interested in every contract which may be entered into with suchundertaking during a period specified in the notice, shall for the purposes of thissubsection be deemed to be sufficient disclosure of interest with respect to allcontracts entered into by the co-operative with such undertaking during the specifiedperiod, provided-

(i) full particulars relating to the nature and extent of such a director'sinterest in such undertaking are set out in the notice; and

(ii) the extent of such a director's interest in such undertaking is at the timewhen a contract is entered into by the co-operative with the undertakingnot greater than is set out in the notice.

(3) A director of a co-operative who becomes interested in a contract after it hasbeen entered into by a co-operative shall disclose his interest by way of a written

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notice to the board of directors of the co-operative within seven days as from theday on which he so became interested.

(4) Any director of a co-operative who fails to comply with a provision of subsection(1) shall be guilty of an offence.

118. Register of directors' interests in contracts

(1) A co-operative shall keep at its registered office or such other place as may bementioned in its statute a register of directors' interests in contracts in one of theofficial languages of the Republic and enter therein particulars of every disclosure ofinterests under section 117.

(2) A co-operative which fails to comply with a provision of subsection (1) shall be guiltyof an offence.

119. Acceptance of commission, remuneration or reward prohibited in certaincircumstances

(1) A director or an employee of a co-operative shall not accept any commission,remuneration or reward from any person for or in connection with any transaction towhich the co-operative is a party unless such commission, remuneration or reward ispaid or given in the course of his usual business or profession and he, if he is adirector, has disclosed his interest in terms of the provisions of section 117.

(2) A director or employee who contravenes a provision of subsection (1) shall be guiltyof an offence.

120. Register of directors

(1) A co-operative shall keep at its registered office or such other place as may bementioned in its statute a register of directors in one of the official languages of theRepublic and enter therein in respect of each director-

(a) his full name and address;

(b) the name and address of each co-operative or company of which he is adirector.


121. Returns relating to directors

(1) A co-operative shall within 30 days after-

(a) an annual general meeting notify the registrar in writing of the full name andaddress of each person who holds office as a director of the co-operativeimmediately after that meeting;

(b) it was informed by a director in terms of subsection (2) of any change ofaddress notify the registrar in writing of such change;

(c) a director vacated his office notify the registrar in writing of such vacation ofoffice;

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(d) a person was appointed as a director notify the registrar in writing of the fullname and address of the person so appointed.

(2) A director of a co-operative who changes his address shall within 30 days after suchchange inform the co-operative in writing of his new address.

(3) A co-operative which fails to comply with a provision of subsection (1) and a directorof a co-operative who fails to comply with a provision of subsection (2) shall be guiltyof an offence.

Meetings of members of co-operatives (ss 122-132)

122. Annual general meetings

(1) A co-operative shall within 180 days, or such shorter period as may be required by itsstatute, after the end of each financial year of the co-operative hold a meeting of themembers of the co-operative so as to-

(a) consider the financial state of affairs of the co-operative and deal with theannual financial statements relating to the preceding financial year;

(b) dispose of any other matters which shall or may in terms of this Act or thestatute of the co-operative be disposed of at an annual general meeting.

(2) The registrar may in respect of any particular general meeting exempt a co-operativefrom compliance with a provision in such co-operative's statute requiring the co-operative to hold its annual general meeting within a period of less than 180 daysafter the end of its financial year.

(3) An annual general meeting shall subject to the provisions of subsections (1) and (2)be held at a time and place determined by the board of directors and shall beconvened on the authority of the board by giving each member of the co-operative atleast 14 days' written notice of the meeting.

(4) A co-operative which fails to comply with a provision of subsection (1), and everydirector of a co-operative who knowingly is a party to such default, shall be guilty ofan offence.

(5) The provisions of section 112(4) shall mutatis mutandis apply to any annual generalmeeting of a co-operative.


123. Extraordinary general meetings

(1) A co-operative may in addition to its annual general meetings from time to time holdextraordinary meetings of its members in order to dispose of any matter relating tothe affairs of the co-operative which is not a matter to be disposed of at an annualgeneral meeting: Provided that any matter dealt with but not disposed of at an annualgeneral meeting may be disposed of at any extraordinary general meeting.

(2) An extraordinary general meeting may be convened-

(a) by the board of directors of the co-operative;

(b) by at least two directors of the co-operative;

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(c) by five or more members of the co-operative constituting in number at leastone-tenth of all the members of the co-operative, if such co-operative is aprimary co-operative; or

(d) by two or more members of the co-operative constituting in number at leastone-tenth of all the members of the co-operative, if such co-operative is acentral or federal co-operative,

and shall be so convened by giving each member of the co-operative at least 14days' written notice of the meeting: Provided that the members referred to inparagraph (c) or (d) shall not be entitled to convene an extraordinary general meetingunless they have petitioned the directors in writing to convene such a meeting andthe meeting is not convened within 21 days after the transmission of the petition, orthere are for any reason no directors to whom such a petition may be addressed.

(3) The notice through which an extraordinary general meeting is convened shall inaddition to the time and place of the meeting state the purpose for which the meetingis convened.

(4) The provisions of section 112(4) shall mutatis mutandis apply to any extraordinarygeneral meeting of a co-operative.


124. Representation of juristic persons and associations of persons at general meetings

(1) A juristic person or association of persons may appoint a person as its representativeto act on its behalf at a general meeting of a co-operative of which such juristicperson or association is a member.

(2) The representative of a juristic person or association of persons referred to insubsection (1) shall be a person who is not in terms of section 108, excluding section108(1)(g), incompetent to be a director of the co-operative of which such juristicperson or association is a member.

(3) Subject to the conditions of his appointment, a representative referred to insubsection (1) may at a meeting concerned do anything on behalf of such juristicperson or association of persons which such juristic person or association wouldhave been able to do as a member of the co-operative had it been a natural person.

[S. 124 amended by s. 16 of Act 42 of 1985 andsubstituted by s. 36 of Act 37 of 1993.]

125. Appointment of proxies

A member of a co-operative or a representative referred to in section 124 may, if authorizedthereto by the co-operative's statute, appoint any person who is not in terms of section 108,excluding section 108(1)(g), incompetent to be a director of the co-operative, as his proxyto attend, to speak and to vote in his stead at a general meeting of the co-operative:Provided that-

(a) a proxy shall not be entitled to cast a vote except in a vote by ballot;

(b) a member or such a representative shall not be entitled to appoint more than oneproxy;

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(c) the same person shall not act as proxy to more members or such representativesthan the number determined by the statute of a co-operative;

[Para. (c) substituted by s. 37 of Act 37 of 1993.]

(d) a proxy at a general meeting shall not represent more than 20 per cent of the votesof all the members of the co-operative or such representatives.

[Para. (d) substituted by s. 37 of Act 37 of 1993.][S. 125 amended by s. 17 of Act 42 of 1985.]

126. Quorum for general meetings

(1) Unless the statute of a co-operative requires a larger quorum, a quorum for a generalmeeting of a co-operative shall be constituted-

(a) in the case of a primary co-operative with not more than fifty members, by atleast five members;

(b) in the case of a primary co-operative with more than fifty members but notmore than two hundred members, by at least one-tenth of the members of theco-operative;

(c) in the case of a primary co-operative with more than two hundred members, bytwenty members plus at least one per cent of the number of members of theco-operative in excess of two hundred;


(d) in the case of a central or federal co-operative with not more than fivemembers, by at least two members;

(e) in the case of a central or federal co-operative with more than five members, byat least one-fifth of the members of the co-operative.

[Para. (e) substituted by s. 38 (b) of Act 37 of 1993.]

(2) A member of a co-operative represented at a general meeting by a representativereferred to in section 124 or a proxy referred to in section 125 shall for the purposesof subsection (1) or (4) be deemed to be present at such meeting.

(3) If a number of persons constituting a quorum in terms of the provisions ofsubsections (1) and (2) are present at a general meeting of a primary co-operativesuch persons shall, the said provisions notwithstanding, be deemed not to constitutea quorum if fewer than five members and representatives referred to in section 124are personally present.

(4) (a) If within one hour from the time appointed for any general meeting of a co-operative a quorum for such meeting is not present, the meeting-

(i) if convened by members or upon a petition from members of the co-operative, shall be deemed to be cancelled;

(ii) if otherwise convened, shall be deemed to be adjourned to the same dayin the next week at the same time and place, or if that day is a publicholiday, to the next day which is not a public holiday or a Sunday.

(b) If within one hour from the time appointed for an adjourned meeting referred toin paragraph (a)(ii) a quorum for such meeting is not present, the memberspresent, not being fewer than five, in the case of a primary co-operative, or two,

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in the case of a central or federal co-operative, shall be deemed to constitute aquorum for such meeting: Provided that a special resolution shall not bepassed at such a meeting.

127. Chairman of general meetings

(1) The chairman of the board of directors of a co-operative or, in his absence, the vice-chairman or, in the absence of both, any other director elected by the meeting, shallact as the chairman of any annual general meeting or of an extraordinary generalmeeting convened in terms of section 123(2)(a) or (b).

(2) A person elected by the meeting shall act as the chairman of an extraordinarygeneral meeting convened in terms of section 123(2)(c) or (d).

128. Voting rights of members

(1) Every member of a co-operative who is not temporarily suspended as a member interms of the provisions of section 64 shall have the right to vote at a general meetingof the co-operative.

(2) A person present at a general meeting of a co-operative and entitled to vote thereatshall-

(a) in the case of a vote on the show of hands, have one vote subject to theprovisions of paragraph (a) of the proviso to section 125;

(b) in the case of a vote by ballot, have one vote and such number of additionalvotes (if any) as may be allotted to him by virtue of the provisions of subsection(3).

(3) The statute of a co-operative may for the purposes of a vote by ballot provide for theallotment to the members of the co-operative of one or more additional votes on abasis set out in the statute: Provided that in the case of a co-operative with more thanfour members, no member shall have more than 20 per cent of the votes of all themembers of the co-operative.


(4) Unless the statute of a co-operative determines otherwise, two or more members of aco-operative which are companies in respect of which any person directly or indirectlyhas the power to exercise control in any respect which the Minister may determine bynotice in the Gazette, shall for the purposes of subsections (1), (2) and (3) of thissection and sections 124, 125, 126, 130 and 180(2) be deemed to be a singlemember.

129. Voting

(1) Any matter for decision by a general meeting shall be decided by means of a vote onthe show of hands or by ballot.

(2) A vote by ballot shall not be held unless it is demanded, in the case of a generalmeeting of a primary co-operative, by at least five persons present at the meetingand entitled to vote in a vote by ballot or, in the case of a general meeting of a centralor federal co-operative, by the number of persons prescribed in the statute of the co-operative.


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(3) Unless the statute of a co-operative otherwise provides the chairman of a generalmeeting shall in the event of an equality of votes relating to any matter have a castingvote in addition to his deliberative vote.

130. Special resolutions

(1) A resolution by a general meeting of a co-operative shall constitute a specialresolution of the co-operative if-

(a) the notice through which the general meeting was convened specifiedparticulars of the proposed resolution and stated the intention to propose theresolution as a special resolution; and

(b) the resolution was passed, in the case of a vote on the show of hands, by notless than two-thirds of the persons present at the meeting and entitled to votein a vote on the show of hands, or, in the case of a vote by ballot, by not lessthan two-thirds of the votes of the persons present at the meeting and entitledto vote in a vote by ballot; and

(c) the resolution relates to-

(i) the conversion of a co-operative into a company or a close corporation;or

(ii) the winding-up of the co-operative,

and was passed by at least 75 per cent of the votes of all the members of theco-operative, both in a vote on the show of hands and a vote by ballot.

[Para. (c) added by s. 40 (a) of Act 37 of 1993.]

(2) Notwithstanding the provisions of subsection (1), the statute of a co-operative may,for the purposes of a special vote, require a larger majority of votes than thatmentioned in the said subsection.

[Sub-s. (2) substituted by s. 40 (b) of Act 37 of 1993.]

131. Minutes of general meetings

(1) A co-operative shall cause minutes in one of the official languages of the Republic tobe kept of all proceedings at its general meetings and to be entered within twomonths of a meeting in one or more books to be kept for that purpose at theregistered office of the co-operative or at such other place as may be determined bythe co-operative.

(2) Minutes to be prepared in terms of subsection (1) in respect of any general meetingshall-

(a) in the case of minutes relating to an annual general meeting, be submitted tothe next annual general meeting;

(b) in the case of minutes relating to an extraordinary general meeting, as soon asmay be possible, but not later than the first general meeting held subsequent tothe expiration of two months after the meeting to which the minutes relate, besubmitted to a general meeting.

(3) For the purposes of subsection (1) loose leaves of paper shall not be deemed toconstitute a minute book unless they are bound together permanently, without means

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provided for the withdrawal or insertion of leaves, and the pages or leaves areconsecutively numbered.

(4) The minutes of a general meeting of a co-operative purporting to be signed by thechairman of the meeting shall in any court be prima facie proof of the taking place ofanything which according to such minutes took place at such meeting: Provided thata record in the minutes of a meeting of a statement by the chairman of the meetingthat a resolution was passed or passed unanimously or passed by a particularmajority of votes by the meeting shall in any court be conclusive evidence of the factthat the resolution was passed or passed unanimously or passed by a particularmajority of votes, as the case may be.

(5) A co-operative which fails to comply with a provision of subsection (1) or (2) andevery director or officer thereof who knowingly is a party to such default, shall beguilty of an offence.

132. Series of meetings

(1) If more than one-tenth of the members of a primary co-operative are resident furtherthan 50 kilometres from the registered office of the co-operative a series of meetingsof members may instead of a general meeting be convened and held on the basis ofthe different areas in which the members are resident, to dispose of any matter whichshall or may be disposed of by a general meeting.


(2) The provisions of this Act pertaining to general meetings of a primary co-operativeshall mutatis mutandis apply in respect of a meeting referred to in subsection (1):Provided that-

(a) the meetings in any particular series shall be convened for the same purposeand that the agenda for the different meetings shall be the same;

(b) the requirements relating to a quorum shall be deemed to have been compliedwith if the persons present at the respective meetings and entitled to votethereat are in the aggregate at least equal to the number constituting a quorumfor a general meeting of the co-operative concerned;

(c) a member of a co-operative shall not have the right to vote at more than one ofthe meetings in the same series;

(d) a vote by ballot may be demanded at the first meeting in any series only andthat if any matter has been decided by the first meeting by a vote by ballot suchmatter shall likewise be decided by the other meetings in the series by a voteby ballot;

(e) only the chairman of the last meeting in a series shall have a casting vote.

(3) (a) Unless the statute of a co-operative otherwise provides the chairman of eachmeeting in a series, except the chairman of the last meeting, shall record thenumber of votes cast at the meeting of which he is the chairman for andagainst each item on the agenda, certify such record and deliver it to the co-operative for transmission to the chairman of the last meeting in the series.

(b) The chairman of the last meeting in a series shall determine the number ofvotes cast by all the meetings jointly for and against each item on the saidagenda and announce the result.

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(4) Any resolution passed in terms of this section by a series of meetings shall bedeemed to be a resolution passed by a general meeting.

CHAPTER VIIACCOUNTING RECORDS, ACCOUNTING AND AUDITING (ss 133-156)

Financial year and accounting records (ss 133-134)

133. Financial year

Unless the statute of a co-operative otherwise provides the financial year of a co-operative shall be a year terminating on the last day of February.

134. Co-operative to keep accounting records

(1) Every co-operative shall keep in one of the official languages of the Republic suchaccounting records as are necessary fairly to reflect the state of affairs and businessof the co-operative and to explain the transactions and financial position of thebusiness of the co-operative, including-

(a) records showing the assets and liabilities of the co-operative;

(b) a register of fixed assets showing in respect of each asset the date ofacquisition, the cost price or, if it stands in the co-operative's books at avaluation, the amount of the valuation, depreciation (if any), the date ofdisposal and the consideration received in respect thereof: Provided that if thecost price or valuation, as the case may be, of any fixed asset acquired beforethe commencement of this Act is not available or cannot be obtained withoutunreasonable expense or delay, the net amount at which the asset is shown inthe co-operative's books at such commencement, shall be deemed to be thecost price or valuation;

(c) records containing daily entries in sufficient detail of all cash received and paidout and of the matters in respect of which cash is received and paid out;

(d) where the business of the co-operative involved dealings in goods, records ofall goods sold and purchased;

(dA) notes indicating the percentage business-turnover referred to in section 54(3)in respect of transactions concluded with non-members; and

[Para. (dA) inserted by s. 41 of Act 37 of 1993.]

(e) statements of an annual stocktaking.

(2) The accounting records referred to in subsection (1) may be kept either by makingentries in bound books or by recording the matters in question in any other manner,and where such records are not kept by making entries in bound books, adequateprecautions shall be taken for guarding against falsification and for facilitating itsdiscovery.

(3) The accounting records shall be kept at the registered office of the co-operative or atsuch other place as may be determined by the co-operative and shall at all times beavailable for inspection by a director.

(4) (a) Any co-operative which fails to comply with a provision of

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subsection (1), (2) or (3) and every director or officer thereof whoknowingly is a party to such default or who fails to take all reasonablesteps to secure compliance by the co-operative with such a provision,shall be guilty of an offence.

(b) In any proceedings against any director or officer of a co-operative in respect ofan offence consisting of a default to take reasonable steps to securecompliance by a co-operative with a provision of subsection (1), (2) or (3), itshall be a defence to prove that the accused had reasonable grounds forbelieving and did believe that a competent and reliable person was chargedwith the duty of seeing to it that such provision was complied with and was in aposition to discharge that duty and that the accused had no reason to believethat the said person had failed in any way to discharge that duty.

Accounting (ss 135-142)

135. Annual financial statements

(1) A co-operative shall in respect of each financial year of the co-operative causefinancial statements to be made out in one of the official languages of the Republic.

(2) The financial statements required to be made out in terms of subsection (1) shallconsist of-

(a) a balance sheet dealing with the assets and liabilities of the co-operative;

(b) an income statement or any similar financial statement dealing with the surplusor deficit of the co-operative;

(c) a directors' report in accordance with section 138; and

(d) an auditor's report in accordance with section 154:

Provided that a co-operative distributing bonuses to its members in accordance withthe provisions of section 84(4) shall in addition to the income statement referred to inparagraph (b) make out separate income statements dealing with the surplus ordeficit of the co-operative in respect of each object carried out by the co-operativeduring the relevant financial year.

(3) The annual financial statements shall, in conformity with generally acceptedaccounting practice, fairly reflect the state of affairs of the co-operative and itsbusiness as at the end of the relevant financial year and the surplus or deficit of theco-operative for that financial year and shall for that purpose be in accordance withand include at least the matters contained in Schedule 2, as far as these areapplicable, and comply with any other requirement of this Act: Provided that a co-operative registered as an insurer in terms of the Insurance Act, 1943 (Act 27 of1943), shall comply with the requirements of the said Schedule only in so far as thoserequirements are not inconsistent with the provisions of that Act.

(4) (a) Any co-operative which fails to comply with a provision of subsection (1) andevery director or officer thereof who knowingly is a party to such default or whofails to take all reasonable steps to secure compliance by the co-operative withsuch a provision, shall be guilty of an offence.

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(b) In any proceedings against any director or officer of a co-operative in terms ofparagraph (a) the defence referred to in section 134 (4) (b) shall be available tohim.


135A When annual financial statements are to be consolidated

Consolidated annual financial statements shall be compiled when-

(a) a co-operative has made an investment in a company or has given financial supportto a company, and the directors of the co-operative are of the opinion that it is themost effective manner of reflecting the required information about the state of affairs,the business and the surplus or deficit of the co-operative or company; or

(b) it is required by virtue of the requirements of Schedule 2.[S. 135A inserted by s. 43 of Act 37 of 1993.]

135B Consolidated annual financial statements

(1) The consolidated annual financial statements referred to in section 135A shall consistof-

(a) a consolidated balance sheet dealing with the state of affairs of the co-operative and a company referred to in section 135A, and the subsidiaries ofthe company, if any; and

(b) a consolidated income statement dealing with the surplus or deficit of the co-operative and such company, and the subsidiaries of the company, if any.

(2) The consolidated annual financial statements may be wholly or partly incorporated inthe company's own annual financial statements.

[S. 135B inserted by s. 44 of Act 37 of 1993.]

136. Right of members to inspect annual financial statements

(1) Unless copies of the annual financial statements, including consolidated annualfinancial statements if section 135A is applicable, were sent to every member of theco-operative at least 14 days before the annual general meeting at which suchstatements are to be dealt with, the co-operative shall for a period of at least 14 daysbefore the said meeting make copies of the said statements available at theregistered office and every branch of the co-operative for inspection by the membersof the co-operative or their proxies.



137. Formal requirements relating to annual financial statements

(1) The annual financial statements referred to in section 135(2) (with the exception ofthe auditor's report), as well as the consolidated annual financial statements referredto in section 135B, if any, shall not be issued, sent out or made available forinspection unless the original or a copy thereof signed by-

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(a) at least two directors of the co-operative duly authorized thereto by the boardof directors, or, where such authority has not been given, by a majority of thedirectors; and

(b) the auditor of the co-operative,

has been filed at the registered office of the co-operative.[Sub-s. (1) amended by s. 46 (a) of Act 37 of 1993.]


(3) Any person who contravenes a provision of subsection (1) shall be guilty of anoffence.

138. Directors' report

(1) The directors of a co-operative shall in respect of every financial year of the co-operative draw up a report in accordance with subsection (2).

(2) The directors' report shall deal with every matter which is material for theappreciation by members of the co-operative of the state of affairs, the business andthe surplus or deficit of the co-operative and shall for that purpose be in accordancewith and include at least the matters contained in Schedule 2, in so far as these areapplicable, and comply with any other requirement of this Act.

139. Copy of annual financial statements to be sent to registrar

(1) A copy of the annual financial statements and the consolidated annual financialstatements, if any, signed in the manner required in section 137 shall be sent by theco-operative to the registrar at least 14 days before the annual general meeting atwhich those statements are to be dealt with.


(1A) If a co-operative fails to comply with a provision of subsection (1), the registrar mayeither of his own accord or at the request of a member or a creditor of the co-operative in question send a letter of demand by certified or registered post to thepostal address or registered office of the co-operative in which it is ordered to rectifysuch omission.

[Sub-s. (1A) inserted by s. 47 (b) of Act 37 of 1993.]

(1B) If the co-operative fails to rectify the omission within seven days after receipt of theletter of demand referred to in subsection (1A), the registrar may send a writtennotice by certified or registered post to the postal address or registered office of theco-operative in which it is ordered to rectify the omission within 14 days after the dateof sending of the notice.

[Sub-s. (1B) inserted by s. 47 (b) of Act 37 of 1993.]

(2) A co-operative shall within 14 days after it is ordered by the registrar to do so furnishthe registrar with a copy of any pool or trading account, duly signed by the co-operative's auditor, or with any information in connection with the state of affairs orbusiness of the co-operative or any transaction to which the co-operative is a party orin which it has an interest.

(3) If the co-operative on which a notice referred to in subsection (1B) has been served,without good cause, fails to rectify the omission concerned within the said period of

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14 days, the registrar may, by delivering a further written notice at the registeredoffice of the co-operative concerned, or by sending such notice by certified orregistered post to the postal address or the registered office of the co-operative,order the co-operative to pay a fine specified in the further notice, but not exceedingR200, within 14 days after delivery or sending of the notice.

[Sub-s. (3) substituted by s. 47 (c) of Act 37 of 1993.]

(4) A co-operative which fails to comply with an order under subsection (1B) or fails topay a fine imposed under subsection (3), shall be guilty of an offence.

[Sub-s. (4) added by s. 47 (d) of Act 37 of 1993.]

140. Special provision relating to company subsidiaries

A company subsidiary shall, notwithstanding anything to the contrary contained in any lawor its articles of association, cause annual financial statements as required by theCompanies Act, 1973 (Act 61 of 1973), to be made out so as to cover an accounting periodending on the same date as the period covered by the annual financial statements of theco-operative of which it is a subsidiary.

141. Special provision relating to co-operatives with interests in other undertakings

(1) Copies of the latest available audited annual financial statements of a companywhich is a subsidiary of a co-operative shall-

(a) for at least 14 days before an annual general meeting of the co-operative bemade available by the co-operative at its registered office for inspection bymembers of the co-operative or their proxies;

(b) be sent by the co-operative to the registrar within 14 days after it was orderedby the registrar to do so.

(2) A co-operative shall within 14 days after it was ordered by the registrar to do sofurnish the registrar with information available to it in connection with the state ofaffairs or business of an undertaking in which it has an interest or any transaction towhich any such undertaking is a party or in which any such undertaking has aninterest.

(3) A directors' report contemplated in section 138 shall in the case of a co-operativehaving an interest in any other undertaking also deal with every matter relating to therelevant undertaking which is material for the appreciation by the members of the co-operative of the state of affairs, the business and the surplus or deficit of the co-operative.

(4) A co-operative which fails to comply with a provision of paragraph (a) of subsection(1) or an order under paragraph (b) of that subsection or subsection (2) shall be guiltyof an offence.

142. Amendment of Schedule 2

The Minister may from time to time amend Schedule 2 by notice in the Gazette.

Auditing (ss 143-156)

143. Annual auditing

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(1) A co-operative shall cause its accounting records and annual financial statements tobe audited annually.


144. First appointment of auditor of co-operative

(1) The board of directors of a co-operative shall before the end of the co-operative's firstfinancial year appoint a person or persons as the co-operative's auditor or auditors.

(2) An auditor appointed under subsection (1) shall hold office until the conclusion of thefirst annual general meeting of the co-operative.

145. Annual appointment of auditor

(1) A co-operative shall at its first and at every subsequent annual general meetingappoint a person or persons as the co-operatives' auditor or auditors.

(2) An auditor appointed under subsection (1) shall hold office until the conclusion of thefirst annual general meeting held subsequent to his appointment.

(3) A person holding office as auditor of a co-operative at the commencement of anyannual general meeting of the co-operative shall be deemed to be reappointed asauditor at such meeting without any resolution being passed, unless-

(a) he has given the co-operative notice in writing that he is not prepared to bereappointed as the co-operative's auditor; or

(b) a resolution is passed at the meeting that he be not reappointed as auditor ofthe co-operative.

(4) No resolution appointing another person as auditor shall be passed at an annualgeneral meeting unless notice in writing of the intention to move such a resolutionwas given to the board of directors of the co-operative not later than the last day ofthe financial year which precedes the annual general meeting at which the resolutionis to be moved: Provided that this subsection shall not apply-

(a) if the office of auditor is vacant at the commencement of such annual generalmeeting or becomes vacant in the course thereof;

(b) if the person holding office as auditor at the commencement of the meetingconcerned has notified the co-operative that he is not prepared to bereappointed as auditor of the co-operative; or

(c) where proper notice has been given of a proposed resolution to appoint acompetent person as auditor and such resolution for any reason is not movedat the meeting.

(5) On receipt of a notice of intention referred to in subsection (4) to propose anotherperson as auditor of a co-operative the board of directors of the co-operative shall-

(a) forthwith send a copy of the notice to the person who is then holding office asauditor of the co-operative (if any), except in the case where that person hasnotified the co-operative that he is not prepared to be reappointed as auditor;and

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(b) simultaneously when notice of the annual general meeting is given to themembers and in the same manner give notice to the members of the proposedresolution.

146. Firm may be appointed as auditor

(1) A firm of auditors may be appointed to hold office as auditor of a co-operative.

(2) A change in the composition of the members of a firm of auditors while holding officeas auditor of a co-operative shall not constitute a casual vacancy in the office ofauditor, but if less than one-half of the members of such a firm remain after any onesuch change it shall be taken as a resignation of the auditor and a casual vacancyshall have been constituted.

147. Filling of casual vacancies

(1) A casual vacancy in the office of auditor of a co-operative-

(a) shall, if there is one incumbent, be filled by the board of directors of the co-operative within 60 days;

(b) may, if there are two or more incumbents, be filled by the board if it deems fit.

(2) Any person appointed in a vacancy under subsection (1) shall hold office until theconclusion of the first annual general meeting held subsequent to his appointment.

148. ......[S. 148 repealed by s. 11 of Act 80 of 1987.]

149. Appointment of auditor by registrar

If a co-operative for any reason omits to appoint an auditor for the co-operative the registrarshall make the necessary appointment.

150. Qualifications for appointment as auditor

A person shall not hold office as auditor of a co-operative-

(a) unless he is registered in terms of the Public Accountants' and Auditors' Act, 1951(Act 51 of 1951), as an accountant and auditor and is engaged in public practice;

(b) if he is or at any time during the relevant financial year was a director, officer ormember of such co-operative;

(c) if he is a partner, employer or employee of a director of such co-operative.

151. Vacation of office by auditor

An auditor of a co-operative shall vacate his office as auditor of such co-operative if hebecomes incompetent in terms of section 150 to hold such office in respect of such co-operative.

152. Rights of auditor

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An auditor of a co-operative, or a person appointed under section 156 (1), shall have theright-

(a) of access to the accounting records, all previous and current annual financialstatements and all other books and documents of the co-operative or a companysubsidiary of the co-operative, and may demand such information and explanationsfrom the directors and officers of the co-operative or any such company subsidiary ashe may think necessary in performing his duties as auditor;

(b) to attend any general meeting of the co-operative and to receive all notices of andother communications relating to any general meeting which a member of the co-operative is entitled to receive and, subject to such reasonable limitations as may beimposed by a general meeting, to be heard at any such meeting attended by him onany part of the business of the meeting which concerns him as auditor.

[S. 152 amended by s. 48 of Act 37 of 1993.]

153. Duties of auditor

It shall be the duty of the auditor of a co-operative, or a person appointed under section156(1), to-

(a) examine the co-operative's annual financial statements referred to in section 135 (2)(a), (b) and (c), as well as the consolidated annual financial statements referred to insection 135A, if any;


(b) satisfy himself that proper accounting records in accordance with the requirements ofthis Act have been kept by the co-operative and that proper returns, adequate for thepurposes of his audit, have been received from branches and depots not visited byhim;

(c) satisfy himself that the minute books contemplated in sections 113 and 131 and theattendance register contemplated in section 114 have been kept by the co-operative;

(d) satisfy himself that the register of directors' interests in contracts contemplated insection 118 has been kept by the co-operative and that the entries therein are inagreement with the minutes of directors' meetings;

(e) examine, or satisfy himself as to the existence of, any securities of the co-operative;

(f) obtain all the information and explanations which to the best of his knowledge andbelief are necessary for the purpose of carrying out his duties;

(g) satisfy himself that the co-operative's annual financial statements are in agreementwith its accounting records;

(h) examine the accounting records of the co-operative and carry out such tests inrespect of such records and such other auditing procedures as he may considernecessary in order to satisfy himself that the annual financial statements fairly reflectthe financial state of affairs of the co-operative and the results of its operations inconformity with generally accepted accounting practice applied on a basis consistentwith that of the preceding year;

(i) satisfy himself that statements made by the directors in their report do not conflictwith a fair interpretation or distort the meaning of the annual financial statements andaccompanying notes;

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(j) perform any other duty that may be prescribed, or imposed on him by this Act;

(k) comply with any applicable requirements of the Public Accountants' and Auditors'Act, 1951 (Act 51 of 1951); and

(l) satisfy himself that the co-operative has complied with the provisions of this Act, in sofar as they relate to the carrying out of its objects, and the provisions of Chapter IIIand of its statute.

[Para. (l) substituted by s. 19 of Act 42 of 1985.][S. 153 amended by s. 49 of Act 37 of 1993.]

154. Auditors' report

(1) When the auditor of a co-operative has complied with the provisions of section 153he shall make a report regarding his audit to the members of the co-operative.

(2) If the auditor is of the opinion that the annual financial statements referred to insection 135(2)(a), (b) and (c), or consolidated financial statements referred to insection 135A, if any, fairly reflect the financial state of affairs of the co-operative andthe results of its activities in the manner required by this Act, he shall issue a report tothat effect.


(3) If the auditor is unable to issue the said report without qualification, he shall set forththe facts or circumstances which prevent him from issuing the said report withoutqualification.


(4) An auditor's report shall in addition to matters referred to in subsection (2) or (3) dealwith any other matter which may be prescribed as a matter to be dealt with in anauditor's report.


(5) An auditor's report shall, unless all the members present agree to the contrary, beread at an annual general meeting.

(6) The auditor of a co-operative shall without delay transmit to the registrar a copy of hisreport, including any other report made by him in pursuance of his functions asauditor of the co-operative.

155. Remuneration of auditor

(1) The remuneration of an auditor of a co-operative shall be fixed by agreementbetween the auditor and the co-operative.


(2) The remuneration of an auditor fixed under subsection (1) shall be paid by the co-operative.

156. Appointment of person not being a registered auditor to carry out functions ofauditor

(1) If the registrar after written representations by a co-operative is of the opinion that theextent or nature of co-operative's affairs during a financial year does not justify theappointment as auditor of a person referred to in section 150 (a), he may authorize

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the co-operative to dispense with the appointment of an auditor and to appoint anyperson approved by him who is not a person registered in terms of the PublicAccountants' and Auditors' Act, 1991 (Act 80 of 1991), as an accountant and auditorand engaged in public practice, to perform the duties mentioned in section 153 inrespect of the co-operative during such financial year.


(2) When a person referred to in subsection (1) is appointed the co-operative and itsboard of directors shall be deemed to have complied with all the requirements of thisAct relating to the appointment of an auditor, and the person concerned shall havethe rights and powers of an auditor of the co-operative and shall perform the duties ofsuch an auditor.

(2A) Any person appointed in terms of subsection (1) who in the performance of hisfunctions in terms of this Act in any manner pretends to be an accountant or auditorwho is registered in terms of the Public Accountants' and Auditors' Act, 1991, shall beguilty of an offence.


(3) The remuneration payable to a person appointed under subsection (1) shall be fixedby the Minister and paid by the co-operative.

CHAPTER VIIICONVERSIONS, AMALGAMATIONS, COMPROMISES AND ARRANGEMENTS (ss 157-171)

[Heading substituted by s. 12 of Act 80 of 1987.]

Conversion of company into co-operative (ss 157-161)

157. Application to convert company into co-operative

(1) A company intending to conduct its affairs according to co-operative practice andwhich passed a resolution at a general meeting authorizing the conversion of thecompany into a co-operative of a particular kind and form may apply to the registraron the prescribed form to be so converted.


(a) a sworn or solemn statement by a person who acted as the chairman of thegeneral meeting referred to in subsection (1)-

(i) that the meeting has passed a resolution authorizing the conversion ofthe company into a co-operative of the required kind and form;

(ii) that the meeting was specially convened to consider the said resolution;

(iii) that he has satisfied himself that proper notice of the meeting was givento the members of the company;

(b) a copy of the said resolution and an explanation of the reasons for theproposed conversion;

(c) proof of the company's registration under any law as a company;

(d) two certified copies of the company's memorandum of association and articlesof association;

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(e) two copies of either a proposed new statute in terms of this Act or a proposedamendment of the memorandum and articles of association of the companybringing the memorandum and articles into line with the provisions of this Act;

(f) a certified copy of the company's latest audited annual financial statements;

(g) a schedule containing the full names and addresses of the members of thecompany, the number of shares of each class held by each one of them in thecompany, and, if application is made to convert the company into a primaryagricultural co-operative or special farmers' co-operative, also the occupationsof the members;

(h) a schedule containing the full names and addresses of the directors of thecompany;

(i) a schedule stating the particulars and extent of the company's interest in anyother company;

(j) the prescribed application fees.

(3) A company may instead of a document referred to in subsection (2) (e) give theregistrar an undertaking in writing that if it is converted into a co-operative it will withinone year of its conversion replace its memorandum and articles of association by astatute in terms of this Act or will otherwise amend its memorandum and articles ofassociation so as to bring them into line with the provisions of this Act.

158. Consideration of application

(1) An application referred to in section 157 shall be submitted to the registrar togetherwith any such other documents as he may require.

(2) The registrar shall consider the application submitted to him in terms of subsection(1), and if he is satisfied that the provisions of this Act have been complied with inrespect of the said application and that-

(a) the conversion of the company into a co-operative;

(b) the incorporation of the proposed co-operative; and

(c) the company's memorandum and articles of association, with due regard to theproposed amendment, or the proposed new statute (if such proposedamendment or new statute accompanied the application),

are not inconsistent with the provisions of this Act, he shall approve the application,or if he is not so satisfied, he may conditionally approve or reject the application.

(3) If the registrar approves or conditionally approves an application, the registrar shallcause-

(a) the name and other particulars of the company to be entered in the register ofco-operatives;

(b) the seal referred to in section 5 to be impressed on both copies of thememorandum and articles of association or new statute, as the case may be;and

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(c) the memorandum and articles of association or new statute, as the case maybe, to be registered conditionally or unconditionally, and a certificate to beissued in duplicate that the company has been incorporated as a co-operativein terms of this Act and that the memorandum and articles of association ornew statute, as the case may be, has been registered as a statute in terms ofthis Act.

(4) One copy of the certificate and of the memorandum and articles of association ornew statute, as the case may be, shall be sent to the applicant and the other copyshall be retained in the Directorate Co-operatives.


159. Effects of incorporation of company as co-operative

As from the date on which the entry is made in terms of section 158 (3) (a) in the register ofco-operatives-

(a) the company shall be converted into a co-operative and such co-operative shallbecome a juristic person;

(b) the company shall cease to exist;

(c) the memorandum and articles of association of the company, if a new statute was notsubstituted for them, shall be deemed to be the statute of the co-operative;

(d) the persons who at the said date were members of the company shall ipso factobecome members of the co-operative;

(e) the persons who at the said date were directors of the company shall become thefirst directors of the co-operative;

(f) all assets, rights, liabilities and obligations of the company shall vest in the co-operative;

(g) the statute shall bind the co-operative and each member (including an executor, atrustee or other administrator of a member's estate) to the same extent as if it hadbeen signed by each member, to observe, subject to the provisions of this Act, all theprovisions of the statute.

160. Special provision relating to company which has given an undertaking under section157 (3)

(1) A co-operative which as a company has given an undertaking under section 157(3)to the registrar shall within one year of the date of its incorporation amend its statuteor replace its statute by a new statute so as to bring it into conformity with theprovisions of this Act.

(2) A co-operative referred to in subsection (1) which has failed to comply with theprovisions of that subsection shall be deemed at all times to have remained acompany.

(3) The name and particulars of a co-operative which has failed to comply with theprovisions of subsection (1) shall without delay be struck off the register of co-operatives by the registrar.

161. Registrar to give notice of conversions to Registrar of Companies

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The registrar shall give notice of any conversion of a company into a co-operative in termsof this Act and of any default referred to in section 160 (2) to the Registrar of Companiesmentioned in section 7 of the Companies Act, 1973 (Act 61 of 1973).

Incorporation of co-operative as company or as close corporation (ss161A-161C)[Heading inserted by s. 54 of Act 37 of 1993.]

161A Incorporation of co-operative as public or private company having a share capital

(1) The board of directors of a co-operative may, if authorized thereto by specialresolution, request the Registrar of Companies to register the co-operative as apublic or private company having a share capital in accordance with the provisions ofthe Companies Act.

(2) The request shall be accompanied by the memorandum of association and thearticles of association of the proposed company, approved by the registrar andcomplying with the requirements of the Companies Act.

(3) (a) On receipt of the said request and the memorandum of association and articlescomplying with the said requirements, the Registrar of Companies shallregister the said memorandum of association and articles in accordance withsection 63 of the Companies Act, and he shall in accordance with section 64(1)of that Act endorse thereon a certificate that the company has beenincorporated.

(b) When the Registrar of Companies registers the memorandum of associationand articles in terms of paragraph (a), he shall notify the registrar of the date ofsuch registration.

(c) No fees shall be payable in terms of the Companies Act in respect of theregistration of the said memorandum and articles.

(d) The Registrar of Companies may, in order to comply with the provisions of thissubsection, issue such directions and authorize such deviations from theregulations made in terms of the Companies Act and the forms prescribed bythat Act, as he may deem necessary.


161B Effect of incorporation of co-operative as company

(1) From the date of incorporation of the company-

(a) the co-operative shall cease to exist;

(b) all the assets, liabilities, rights and obligations of the co-operative shall pass tothe company without any transfer duty, stamp duty, office fee or other moneybeing payable in respect thereof;

(c) any legal proceedings instituted by or against the co-operative, or anythingdone by or on behalf of or in respect of the co-operative, shall be deemed tohave been instituted by or against the company or deemed to have been doneby or on behalf of or in respect of the company;

(d) the name of the co-operative in any document shall be deemed to have beenreplaced by the name of the company;

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(e) all shares or debentures issued by the co-operative shall be deemed to beshares or debentures as defined in section 1 of the Companies Act.

(2) If a co-operative possessed any immovable property that passed to the companyunder this section, the Registrar of Deeds concerned shall at the request of thecompany effect the appropriate endorsements in his registers and on the title deedsin question.


161C Incorporation of co-operative as close corporation

(1) (a) If a co-operative does not have more than 10 members, such members maytake steps to have a founding statement registered in terms of the provisions ofthe Close Corporations Act, 1984 (Act 69 of 1984).

(b) A founding statement referred to in paragraph (a) shall be approved by theregistrar.

(2) If a certificate of incorporation has been issued in terms of section 14 (1) of the CloseCorporations Act, 1984, by the Registrar of Close Corporations, the co-operative inquestion shall cease to exist.

(3) When the Registrar of Close Corporations issues a certificate of incorporation interms of subsection (2), he shall notify the registrar of the date of such issue.

(4) The provisions of section 161B(1)(a), (b), (c) and (d) and (2) shall mutatis mutandisapply in respect of the incorporation of a close corporation under this section.

[S. 161C inserted by s. 54 of Act 37 of 1993.]

Conversion of co-operative into other kind or form of co-operative (ss 162-164)

162. Application to convert co-operative into other kind or form of co-operative

(1) A co-operative which has passed a special resolution authorizing the conversion ofthe co-operative into another kind or form of co-operative shall within 60 days aftersuch resolution was passed, apply to the registrar on the prescribed form to be soconverted.


(1A) A special resolution contemplated in subsection (1) shall be valid only for the periodof 60 days mentioned in the said subsection.



(a) a sworn or solemn statement by a person who acted as the chairman of thegeneral meeting at which the special resolution referred to in subsection (1)was passed-

(i) that the meeting was held on a date mentioned in the statement;

(ii) that he has satisfied himself that proper notice of the meeting and theproposed special resolution was given to the members of the co-operative;

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(iii) that the special resolution was passed by the requisite majority;

(b) a copy of the special resolution and an explanation of the reasons for theproposed conversion;

(c) two copies of either a proposed new statute or a proposed amendment of theexisting statute whereby provision is made for such adaptations as may benecessary to so convert the co-operative;



(1) An application referred to in section 162 shall be submitted to the registrar togetherwith such other documents as he may require.

(2) If, after considering the application submitted to him in terms of subsection (1), theregistrar is satisfied that the provisions of this Act have been complied with and thatthe proposed conversion of the co-operative into the required kind or form of co-operative, the incorporation of the proposed co-operative and the proposed newstatute or amendment of the existing statute, as the case may be, are notinconsistent with the provisions of this Act, he shall approve the application, or if he isnot so satisfied, he may conditionally approve or reject the said application.


(a) the name and other particulars of the existing co-operative to be struck off theregister of co-operatives and the name and other particulars of the new co-operative to be entered in such register; and

(b) the statute to be registered conditionally or unconditionally and a certificate tobe issued in duplicate that the co-operative has been incorporated in terms ofthis Act as a co-operative of the required kind or form and that the amendmentof the statute or new statute, as the case may be, has been registered in termsof this Act.

(4) One copy of the certificate and of the amendment of the statute or new statute, asthe case may be, shall be sent to the co-operative and the other copy retained in theDirectorate Co-operatives.


164. Effects of incorporation of co-operative as co-operative of another kind or form

As from the date on which the entry in terms of section 163(3)(a) is made in the register ofco-operatives-

(a) the co-operative shall be converted into a co-operative of the approved kind or form;

(b) the last-mentioned co-operative shall become a juristic person and the first-mentioned co-operative shall cease to exist;

(c) the amended statute of the first-mentioned co-operative, if its statute has not beenreplaced by a new statute, shall be deemed to be the statute of the last-mentionedco-operative;

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(d) the persons who at the said date were members of the first-mentioned co-operativeshall ipso facto become members of the last-mentioned co-operative;

(e) the shares issued by the first-mentioned co-operative shall be deemed to be sharesin and to have been issued by the last-mentioned co-operative;

(f) the persons who at the said date were directors of the first-mentioned co-operativeshall become the first directors of the last-mentioned co-operative;

(g) all assets, rights, liabilities and obligations of the first-mentioned co-operative shallvest in the last-mentioned co-operative;

(h) the statute shall bind the co-operative and each member (including an executor, atrustee or other administrator of a member's estate) to the same extent as if it hadbeen signed by each member, to observe, subject to the provisions of this Act, all theprovisions of the statute.

Amalgamations (ss 165-169)

165. Application for amalgamation of two or more co-operatives

(1) Two or more co-operatives intending to amalgamate and each of which has passed aspecial resolution authorizing such amalgamation shall within 60 days after the last ofsuch resolutions was passed, apply to the registrar on the prescribed form to beamalgamated.


(1A) A special resolution contemplated in subsection (1) shall be valid only for the periodof 60 days mentioned in the said subsection.



(a) a sworn or solemn statement by each of the persons who acted as thechairman of the respective general meetings at which the special resolutionreferred to in subsection (1) was passed-

(i) that the meeting of which he was the chairman was held on a datementioned in the statement;

(ii) that he has satisfied himself that proper notice of the meeting and theproposed special resolution was given to the members of the co-operative;

(iii) that the special resolution was passed by the requisite majority;

(b) a copy of each of the relevant special resolutions and an explanation of thereasons for the proposed amalgamation;

(c) two copies of a proposed statute for the amalgamated co-operative approvedby the respective co-operatives at a general meeting;



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(1) An application referred to in section 165 shall be submitted to the registrar togetherwith such other documents as he may require.

(2) If, after considering the application submitted to him in terms of subsection (1), theregistrar is satisfied that the provisions of this Act have been complied with and thatthe proposed statute and the incorporation of the proposed amalgamated co-operative are not inconsistent with the provisions of this Act, he shall approve, or if heis not so satisfied, he may conditionally approve or reject the said application.


(a) the names and other particulars of the co-operatives referred to in section165(1) to be struck off the register of co-operatives and the name and otherparticulars of the amalgamated co-operative to be entered in such register; and

(b) the statute to be registered conditionally or unconditionally and a certificate tobe issued in duplicate that the amalgamated co-operative has beenincorporated in terms of this Act and that the co-operative's statute has beenregistered in terms of this Act.

(4) One copy of the certificate and of the statute shall be sent to the applicants and theother copy shall be retained in the Directorate Co-operatives.


167. Effects of incorporation of amalgamated co-operative

As from the date on which the entry in terms of section 166(3)(a) is made in the register ofco-operatives-

(a) the co-operatives referred to in section 165(1) shall cease to exist;

(b) the amalgamated co-operative shall become a juristic person;

(c) the persons who at the said date were members of the said co-operatives shall ipsofacto become members of the amalgamated co-operative;

(d) all assets, rights, liabilities and obligations of the said co-operatives shall vest in theamalgamated co-operative;

(e) the statute shall bind the co-operative and each member (including an executor, atrustee or other administrator of a member's estate) to the same extent as if it hadbeen signed by each member, to observe, subject to the provisions of this Act, all theprovisions of the statute.

168 Statute of amalgamated co-operative shall provide for certain matters

The statute of an amalgamated co-operative shall contain provisions so as to effectivelyaccomplish the amalgamation of the co-operatives concerned, and shall in particularprovide for-

(a) the appointment of the first directors of the amalgamated co-operative;

(b) the issue of shares in the amalgamated co-operative to the members thereof in theplace of the shares which the said members held in the previous co-operatives;

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(c) the continuation of the members' respective interests in a members' fundadministered by any of the previous co-operatives in a members' fund to beadministered by the amalgamated co-operative;

(d) the application of any surplus which may have resulted from the operations of theprevious co-operatives in respect of a period immediately preceding theamalgamation: Provided that any surplus (or portion thereof) which has resulted fromthe operations of any of the previous co-operatives in respect of the said period maybe separately determined and be distributed among the persons who immediatelybefore the amalgamation were members of such a co-operative in the sameproportion as the proportion in which such surplus (or portion) would have beendistributed among the said persons had the co-operative still existed.

169. Amalgamated co-operative exempted from stamp duty on certain shares

An amalgamated co-operative shall be exempted from the payment of stamp duty inrespect of shares issued in pursuance of section 168(b).

Compromises and arrangements (ss 169A-169C)[Heading inserted by s. 13 of Act 80 of 1987.]

169A Compromise and arrangement between co-operative, its members and creditors

(1) If any compromise or arrangement is proposed between a co-operative and itscreditors or any class of them or between a co-operative and its members, the courtmay, on the application of the co-operative or any creditor or member of the co-operative or, in the case of a co-operative being wound up, of the liquidator, or if theco-operative is subject to a judicial management order, of the judicial manager, ordera meeting of the creditors or class of creditors or of the members of the co-operative,as the case may be, to be summoned in such manner as the court may direct.

(2) If a compromise or arrangement is agreed to by-

(i) a majority in number representing three-fourths in value of the creditors orclass of creditors present and voting either in person or by proxy at themeeting; or

(ii) a special resolution,

as the case may be, such compromise or arrangement shall, if sanctioned by thecourt, be binding on all the creditors or the class of creditors or on the members, asthe case may be, and also on the co-operative or on the liquidator if the co-operativeis being wound up, or on the judicial manager if the co-operative is subject to ajudicial management order.

(3) No such compromise or arrangement shall affect the liability of any person who is asurety for the co-operative.

(4) (a) An order by the court sanctioning a compromise or arrangement shall have noeffect until a certified copy thereof has been lodged with the registrar andregistered by him.

(b) A copy of such order of court shall be annexed to every copy of the statute ofthe co-operative.

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(5) If a co-operative fails to comply with the provisions of subsection (4)(b) the co-operative and every director and officer of the co-operative who are parties to thefailure shall be guilty of an offence.


169B Information as to compromises and arrangements

(1) If a meeting of creditors or any class of creditors or of members is summoned undersection 169A(1) for the purpose of agreeing to a compromise or arrangement, thereshall, with every notice summoning the meeting which is sent to a creditor ormember, be sent also a statement-

(i) explaining the effect of the compromise or arrangement;

(ii) stating all relevant information material to the value of the shares anddebentures concerned in any arrangement.

(2) If a co-operative fails to comply with any requirement of this section the co-operativeand every director or officer of the co-operative who are parties to the failure shall beguilty of an offence, and for the purpose of this subsection any judicial manager ofthe co-operative shall be deemed to be an officer of the co-operative.


169C Provisions facilitating reconstruction or amalgamation

(1) If an application is made to the court under section 169A for the sanctioning of acompromise or an arrangement proposed between a co-operative and any suchpersons as are referred to in that section, and it is shown to the court that thecompromise or arrangement has been proposed for the purposes of or in connectionwith a scheme for the reconstruction of any co-operative or co-operatives or theamalgamation of any two or more co-operatives, and that under the scheme thewhole or any part of the undertaking or the property of any co-operative concerned inthe scheme (in this section referred to as the 'transferor co-operative') is to betransferred to another co-operative (in this section referred to as the 'transferee co-operative'), the court may, either by the order sanctioning the compromise orarrangement or by any subsequent order, make provision for all or any of thefollowing matters:

(a) The transfer to the transferee co-operative of the whole or any part of theundertaking and of the property or liabilities of any transferor co-operative;

(b) the allotment by the transferee co-operative of any shares or other likeinterests in that co-operative which under the compromise or arrangement areto be allotted by that co-operative to the members of the transferor co-operative;

(c) the continuation by or against the transferee co-operative of any legalproceedings pending by or against any transferor co-operative;

(d) the dissolution without winding-up of any transferor co-operative;

(e) the provision to be made for any persons who within such time and in suchmanner as the court may direct dissent from the compromise or arrangement;

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(f) such incidental, consequential and supplementary matters as are necessary tosecure that the reconstruction or amalgamation shall be fully and effectivelycarried out:

Provided that no order for the dissolution without winding-up of any transferor co-operative shall be made under this subsection prior to the transfer in due form of allthe property and liabilities of the said co-operative.

(2) If an order under this section provides for the transfer of property or liabilities, thatproperty shall by virtue of the order vest in, subject to transfer in due form, and thoseliabilities shall become the liabilities of, the transferee co-operative.

(3) If an order is made under this section every co-operative in relation to which the orderis made shall within 30 days after the making of the order cause a copy thereof to belodged with the registrar for registration, and if default is made in complying with thissubsection the co-operative shall be guilty of an offence.

(4) In this section the expression 'property' includes property, rights and powers of everydescription, and the expression 'liabilities' includes 'duties'.


General (ss 170-171)

170. ......[S. 170 repealed by s. 32 (1) of Act 96 of 1981.]

171 Duty of registrar of deeds relating to transfer of fixed property in terms of thisChapter

(1) (a) The registrar of deeds concerned shall on submission to him of-

(i) a certificate referred to in section 158(3)(b), 163(3)(b) or 166(3)(b); or

(ii) an order of court, or a certified copy thereof, referred to in section169A(4)(a) or 169C(3),

make such entries or endorsements in or on any relevant register, title deed orother document in his office or laid before him as he may deem necessary inorder to register any fixed property or real right vested in a co-operative interms of a provision of this Chapter in the name of such co-operative.

(b) If any property or right other than that contemplated in paragraph (a) is vestedin a co-operative as a result of a conversion, amalgamation, compromise orarrangement in terms of this Act, and such property or right is required by anylaw to be registered, the person by whom such registration is to be done shall,on submission to him of a certificate referred to in paragraph (a), make suchentries or endorsements in or on any relevant register or document in his officeor laid before him as he may deem necessary to effect the registration of suchproperty or right in the name of the co-operative.


(2) No transfer duty, stamp duty, office or other fees shall be payable in respect of aregistration contemplated in subsection (1).

CHAPTER IXSPECIAL STATUTORY PLEDGE (ss 172-177)

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172. Definitions

(1) In this Chapter, unless the context otherwise indicates-

'agricultural remedy' means a remedy used for or in connection with the treatmentof an agricultural product or any thing from which an agricultural product is derived, orfor or in connection with the prevention, repelling, control or destruction of any thingwhich adversely affects the production of an agricultural product;

'fuel' means fuel for the propelling of vehicles, machinery or implements used for orin connection with farming operations, and includes oil or any lubricant used in anysuch vehicles, machinery or implements;

'packing material' means containers into which and material with which agriculturalproducts are packed;

'plant material' means the seed, plant or tree from which an agricultural product isderived, or any portion of such seed, plant or tree;

'repair service' means the repair or maintenance of vehicles, machinery orimplements used for or in connection with farming operations;

'spare parts' means spare parts of vehicles, machinery or implements used for or inconnection with farming operations;

'State-guaranteed credit scheme' means a scheme in terms of which a co-operative out of funds made available by the State to the Land and Agricultural Bankof South Africa referred to in the Land Bank Act, 1944 (Act 13 of 1944), or on thestrength of a guarantee given by the State to that bank, gives credit or advancesmoney to its members.

(2) For the purposes of this Chapter money advanced by a co-operative to a membershall be deemed to have been advanced for production purposes only in so far assuch money was advanced for the payment of-

(a) wages in connection with that member's farming operations;

(b) costs in connection with the conveyance of that member's agricultural products;

(c) costs in connection with electricity consumed by that member;

(d) insurance premiums in connection with that member's farming risks;

(e) the purchase price of livestock purchased by that member; or

(f) expenditure incurred by that member in respect of wages, costs or insurancepremiums referred to in paragraph (a), (b), (c) or (d) during a period of sixmonths prior to his application for an advance.

173. Security for production credit and loans given by co-operatives to members

(1) As long as an amount is owing by a member to a primary agricultural co-operative ora primary special farmers' co-operative in respect of fuel, spare parts, fertilizers, plantmaterial, agricultural remedies, packing material, livestock or feeding stuffs suppliedto him by the co-operative, or in respect of fumigating, spraying or cleansing

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operations or repair services performed on his behalf by the co-operative, or inrespect of electricity supplied to him by the co-operative, or in respect of moneyadvanced to him for production purposes by the co-operative-

(a) the ownership in the fuel, spare parts, fertilizers, plant material, agriculturalremedies, packing material, livestock or feeding stuffs supplied shall vest in theco-operative notwithstanding its or their delivery to such member;

(b) the fuel, spare parts, fertilizers, plant material, agricultural remedies, packingmaterial, livestock or feeding stuffs supplied shall not be seized or sold inexecution of a judgment of a court of law at the instance of a creditor, exceptwith the consent of the co-operative;

(c) (i) all agricultural products of a class with which the co-operative deals inthe normal course of business; and

(ii) all agricultural products from which the agricultural products referred to insubparagraph (i) were or are derived; and

(iii) if a State-guaranteed credit scheme is applicable in respect of that debt,also all other agricultural products,

of which that member is the owner at the date on which the debt arose orwhich are produced or acquired by him after that date, shall be deemed to bepledged to the co-operative as fully and effectually as if such products weredelivered to the co-operative;


(d) the co-operative shall have the powers described in subsection (2) in respect ofthe agricultural products referred to in paragraph (c);

(e) such member shall subject to the provisions of section 64(2A) or (2B) of theMarketing Act, 1968 (Act 59 of 1968), not dispose of any of the said productsand no person shall subject to the said provisions acquire such productsotherwise than from the co-operative except through the co-operative or undera permit issued by the co-operative on such conditions as it may determine.

(2) A co-operative may-

(a) require of a member referred to in subsection (1)-

(i) to indicate the agricultural products deemed in terms of paragraph (c) ofthat subsection to be pledged to the co-operative, or the land on whichsuch products are being or are to be produced, or, in the case oflivestock, where such livestock are being or are to be kept; and

(ii) to furnish the name of every other agricultural or special farmers' co-operative of which he is a member and the amount and nature of hisdebt to such co-operative, if any, and to indicate whether that debt or anypart thereof is secured by the pledging of agricultural products in terms ofthis section;


(b) authorize any person to enter, at any reasonable time, any land on which suchmember carries on or presumably carries on farming operations and to view or

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inspect any agricultural products or any thing from which an agriculturalproduct is derived;

[Para. (b) substituted by s. 20 (c) of Act 42 of 1985.]

(c) if agricultural products deemed to be pledged to the co-operative cannot befound by a representative of the co-operative, require an explanation from themember concerned as to what became of such products.

(3) A co-operative which acquired a right or power contemplated in subsection (1) withrespect to any fuel, spare parts, fertilizer, plant material, agricultural remedies,packing material, livestock or feeding stuffs supplied by it to a member or withrespect to any agricultural products of a member, shall not forfeit such right or powerby reason only of the fact that such member ceased to be a member of the co-operative.

(4) If any particular agricultural products of any person (hereinafter referred to as thepledger) are deemed in terms of subsection (1)(c) to be pledged to more than one co-operative-

(a) those products shall, subject to paragraph (b), be deemed as aforesaid to bepledged to those co-operatives jointly;

(b) the powers referred to in subsection (1)(d) may be exercised by each of thesaid co-operatives separately from the other as if the products were pledged tosuch co-operative alone;

(c) the pledger, if he disposes of those products through any one of the said co-operatives, and any other person, if he acquires those products from such co-operative, shall be deemed to have complied with the provisions of subsection(1)(e);

(d) none of the said co-operatives shall, on account of the fact that those productsare deemed to be pledged to it and the other co-operatives jointly, be entitledto a greater part of the proceeds of those products than an amount which bearsthe same ratio to the amount of the net proceeds of the products as the amountowing to it by the pledger as at the date on which the products are received formarketing by a co-operative in accordance with its statute or a provision of theMarketing Act, 1968, or are otherwise disposed of by the pledger, bears to thesum of the respective amounts owing by the pledger to the said co-operativesas at that date;

(e) any one of the said co-operatives having possession of the proceeds of thoseproducts, may, at the written request of any one of the other of the said co-operatives and without the consent of the pledger, on behalf of any such last-mentioned co-operative set off against those proceeds, and pay to the said co-operative, the amount, or any part thereof, owing by the pledger to such co-operative in settlement or part settlement of the said debt.

[Sub-s. (4) substituted by s. 20 (d) of Act 42 of 1985.]

(4A) For the purposes of-

(a) subsection (4)(d)-

(i) any amount owing to a co-operative by the pledger which is not securedby the pledging of the agricultural products in question, shall bedisregarded;

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(ii) agricultural products of which quantities are received by a co-operativementioned therein, or disposed of by the pledger, over a period of two ormore days, shall be deemed to be so received or disposed of, as thecase may be, on the first day of that period; and

(b) subsection (4)(e)-

(i) no amount owing by the pledger to a co-operative which is not securedby the pledging of the agricultural products in question, shall be set off inaccordance with the authority contained therein and paid over to suchco-operative;

(ii) the co-operative having possession of the proceeds of the products shallaccept the amount specified in the written request mentioned therein asthe amount which is owed by the pledger to the co-operative making therequest and which is secured by the pledging of the products in questionif that request is accompanied by either a written acknowledgement bythe pledger or an affidavit by an officer of the co-operative concerned tothe effect that the amount so specified in the written request representsan amount which is owed by the pledger to the co-operative and securedby the pledging of the products in question;

(iii) the co-operative having possession of the proceeds of the products shallgive an account to the pledger of every payment made by him under thesaid subsection.

[Sub-s. (4A) inserted by s. 20 (e) of Act 42 of 1985.]

(5) If a member of a co-operative is desirous of binding a quantity or percentage of anagricultural product of which he is the owner or which is or is to be produced by him,as security for a debt which that member intends contracting for the purposes of hisfarming operations with any person other than the co-operative, the co-operativemay, at the written request of that member and that person, waive in favour of thatperson any right which it may have or which it may acquire in terms of subsection(1)(c) on that quantity or percentage of the said agricultural product, and thereuponthe provisions of subsection (1)(c) and (e) and section 174 shall, as long as that debtor any portion thereof is outstanding, not be applicable to that member and thatperson with respect to that quantity or percentage of the said agricultural product.

174. Seizure or sale of pledged agricultural products in execution of judgement

(1) Agricultural products deemed in terms of subsection (1) (c) of section 173 to bepledged to a co-operative shall not be seized or sold in execution of a judgment of acourt of law at the instance of a creditor of the member concerned except under apermit issued by the co-operative under subsection (1) (e) of that section.

(2) A co-operative shall not refuse a permit for the purpose mentioned in subsection (1)unless the co-operative is of opinion that the agricultural products which will after theseizure or sale in execution remain will not be sufficient security for the amount owingto it by the member.

175. Consumption of pledged agricultural products by members and their employees

The provisions of section 173 shall not prohibit the consumption by a member of a co-operative or his employees of so much of the agricultural products deemed in terms ofsubsection (1)(c) of that section to be pledged to a co-operative as is reasonably necessaryfor his or their households.

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176. Rights or powers of State not affected by this Chapter

The provisions of this Chapter shall not affect any right or power of the State or the Ministerunder the Agricultural Credit Act, 1966 (Act 28 of 1966).

177. Offences

(1) Any person who-

(a) contravenes a provision of subsection (1)(e) of section 173;

(b) fails to comply with a requirement under subsection (2)(a) or (c) of that section;

(c) in response to any such requirement wilfully furnishes information which isfalse or misleading;

(d) hinders or obstructs a person referred to in subsection (2)(b) of that section inthe performance of his functions,

shall be guilty of an offence.

(2) If any person is charged under subsection (1)(a) with having acquired agriculturalproducts deemed to be pledged to a co-operative otherwise than from or through theco-operative or under a permit issued by the co-operative, it shall be a defence if heproves that when he acquired those products he did not know and had no reason tosuspect that they were products which were deemed to be pledged to a co-operative.

CHAPTER XWINDING-UP OF CO-OPERATIVES (ss 178-237)

178. Definitions

In this Chapter, unless the context otherwise indicates-

'contribution' means a contribution to be made by a contributory in terms of a contributionaccount towards the payment of the debt of the co-operative or any portion thereof;

'contribution account' means an account contemplated in section 226;

'contributory' means a member or former member of a co-operative or the estate of anysuch member or former member who is liable in respect of the debt of the co-operative orany portion thereof by virtue of-

(a) shares in the co-operative of which he is or was the holder and which are not fullypaid up;

(b) a condition attached under section 72 to shares in the co-operative of which he is orwas the holder;

(c) section 40 of the Land Bank Act, 1944 (Act 13 of 1944);

'disposition', in relation to property, means any transfer or waiver of a right to property andincludes a sale, donation, exchange, lease, hypothecation or pledge of property, and'dispose' shall have a corresponding meaning;

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'distribution account' means an account contemplated in section 224;

'liquidation account' means an account contemplated in section 217;

'liquidator', in relation to a co-operative being wound up, means a person appointed undersubsection (1) of section 195 to carry out the winding-up of the co-operative, and includes atemporary liquidator contemplated in subsection (2) of that section;

'security', in relation to a creditor's claim, means property over which the creditor has apreferent right for the payment of his claim;

'trading account' means an account contemplated in section 223.

Modes of winding-up (ss 179-183)

179. Modes of winding-up

A co-operative may be wound up-

(a) voluntarily under section 180;

(b) by an order of the court under section 181; or

(c) by an order of the Minister under section 182.

180. Voluntary winding-up

(1) A co-operative may be wound up voluntarily by special resolution.


181. Winding-up by order of court

(1) A competent court may on application by any interested person order that a co-operative be wound up if it appears to the court that it is just and equitable that theco-operative should be wound up.

(2) The court considering an application in terms of subsection (1) may adjourn thehearing thereof conditionally or unconditionally, or before granting or refusing suchapplication, make any provisional or other order it may deem fit.

182. Winding-up by order of Minister

The Minister may on the recommendation of the registrar order that a co-operative bewound up if-

(a) the co-operative has contravened a provision of section 60(1);

(b) the co-operative has twice or more times been convicted of an offence in terms ofsection 54(5), 56(2) or 106(2);

(c) the co-operative has not transacted business during a continuous period of one year;

(d) the co-operative was formed for a particular period or until the occurrence of aparticular event and that period has expired or that event has occurred;

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(e) the co-operative has failed to comply with a condition under section 27(2), 33(4),158(2), 163(2) or 166(2);

(f) the Minister is of the opinion that the incorporation of the co-operative was obtainedthrough fraud;

(g) the Minister is of the opinion that the co-operative does not carry out its objectsaccording to co-operative practice.

183. Suspension of certain proceedings pending decision of application for winding-uporder

At any time after application is made to a competent court for a co-operative to be woundup, any action for the recovery of an amount from the co-operative or in connection with anasset of the co-operative, or any execution of a judgment in any such action may on theapplication of the co-operative or any other interested person be suspended by the court inwhich that action is under consideration or by which that judgment was given pending thedecision of such application.

Provisional winding-up (ss 184-194)

184. Provisional winding-up order

(1) If a court in which an application in terms of section 181 is under consideration inrespect of a co-operative issues a provisional winding-up order in respect of such aco-operative it shall appoint a provisional liquidator for such co-operative or direct theregistrar to appoint a provisional liquidator.

(2) A provisional liquidator appointed under subsection (1) shall hold office for as long asit pleases the court, but not after the date of commencement of the winding-up of theco-operative (if the co-operative is wound up thereafter).

(3) The provisions of sections 196, 198(1), (3) and (4), 199, 200(1), 203(1) and 206 shallmutatis mutandis apply in respect of a provisional liquidator appointed undersubsection (1): Provided that costs referred to in section 196(2) and the remunerationreferred to in section 19(1) shall be paid by the co-operative concerned.

185. Functions of provisional liquidator

(1) A provisional liquidator appointed under section 184 shall-

(a) assume the management of the co-operative concerned and recover and takeinto his possession all the assets of the co-operative;

(b) continue as far as may be possible to carry out the objects of the co-operative;

(c) investigate any matter which the court which issued the provisional liquidationorder required him to investigate, and report to the court on his findings.

(2) A provisional liquidator may subject to the provisions of this Act do anythingreasonably necessary for the effective performance of his duties, and may inparticular exercise any power mentioned in paragraphs (a), (b), (c), (f) and (g) ofsection 207(1).

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(3) Unless the registrar deems it necessary in the interests of the creditors or membersof the co-operative a provisional liquidator shall not have the power to liquidate anyassets of the co-operative.

(4) A provisional liquidator shall, at the request of the registrar and within a perioddetermined by the registrar, compile and submit to the registrar an inventory of allassets and liabilities of the co-operative as at the date of his appointment.


186. Effects of provisional winding-up order

During the period for which a provisional winding-up order is in force in respect of any co-operative-

(a) the functions of the board of directors of the co-operative shall be suspended save inso far as the continuation thereof has been approved by the registrar or theprovisional liquidator;

(b) no judgment in any action against the co-operative for the recovery of an amount orthe delivery of any thing shall be executed;

(c) the issue, transfer or cancellation of shares in the co-operative shall be void.

Provisions relating to the commencement of winding-up

187. Commencement of winding-up

The winding-up of a co-operative shall be deemed to commence-

(a) in the case of a voluntary winding-up, at the time when the special resolutionauthorizing the winding-up is passed;

(b) in the case of a winding-up by an order of the court, at the time when a final orderthat the co-operative be wound up is issued by the court;

(c) in the case of a winding-up by an order of the Minister, on the seventh day after theday on which the Minister's order that the co-operative be wound up was forwardedto the co-operative.

188. Effects of winding-up on status of co-operative and on board of directors

(1) A co-operative being wound up shall continue to be a juristic person, but shall asfrom the commencement of its winding-up cease to carry out its objects except in sofar as it is necessary for the purposes of its winding-up.

(2) The functions of the board of directors of a co-operative being wound up shallterminate at the commencement of its winding-up except in so far as the continuationthereof has been approved by the registrar or liquidator.

189. Persons responsible for the performance of duties of co-operatives being wound-up

The persons who immediately prior to the commencement of the winding-up of a co-operative hold office as a director, manager or secretary of the co-operative shall jointly andseverally be responsible for the performance of a duty to be performed by a co-operative interms of this Chapter.

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190. Effects of winding-up on legal proceedings

After the commencement of the winding-up of a co-operative-

(a) no civil proceedings to which the co-operative is a party shall be instituted orproceeded with until a liquidator has been appointed under section 195(1)(a);

(b) any attachment or execution put into force against an asset of the co-operative undera judgement given by a court before the commencement of the winding-up shall bevoid.

191. Issue, transfer or cancellation of shares in co-operative being wound up

The issue, transfer or cancellation of shares in a co-operative being wound up shall bevoid.

192. Effects of winding-up on assets of co-operative

Unless the court giving a final liquidation order or the registrar otherwise directs, thepersons referred to in section 189 shall as from the commencement of the winding-up of aco-operative up to the appointment of a liquidator jointly and severally be responsible forthe custody of all the assets of the co-operative under the co-operative's control.

193. Notice of voluntary winding-up to be given to registrar

A co-operative shall within 14 days after a special resolution referred to in section 180 waspassed by the co-operative send a certified copy of such resolution to the registrar togetherwith a sworn or solemn statement by the person who acted as the chairman of the generalmeeting at which that special resolution was passed-

(a) that such meeting was held on a date mentioned in the statement;

(b) that he has satisfied himself that proper notice of the meeting and the object thereofwas given to the members of the co-operative;

(c) that such special resolution was passed by the requisite majority.

194. Inventory of assets and liabilities to be submitted to registrar by co-operative

(1) A co-operative being wound up shall draw up an inventory of all the assets andliabilities of the co-operative as at the date of commencement of the winding-up andsubmit such inventory to the registrar within 30 days of such date.

(2) The provisions of subsection (1) shall not apply to a co-operative in respect of whicha liquidator is appointed within 30 days of the commencement of the winding-up.

(3) If a co-operative fails to comply with a provision of subsection (1) every personreferred to in section 189 shall be guilty of an offence.

Liquidators (ss 195-202)

195. Appointment of liquidators

(1) (a) The registrar shall appoint one or more liquidators in respect of a co-operativebeing wound up.

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(b) If a liquidator ceases to hold office the registrar shall, if such liquidator was theonly liquidator, or may, if such liquidator was one of a plurality of liquidators,appoint any person to fill the vacancy.


(2) The registrar may appoint any person as the temporary liquidator of a co-operativebeing wound up until a liquidator is appointed under subsection (1)(a) or a vacancy isfilled under subsection (1)(b).

196. Giving of security by liquidator

(1) A liquidator shall not be deemed to be appointed until he has given security to thesatisfaction of the registrar for the proper performance of his functions as liquidator.

(2) The cost of giving such security to an amount which the registrar considersreasonable, shall form part of the costs of liquidation of the co-operative concerned.

(3) The registrar may on written request by a liquidator consent to a decrease in thesecurity given by such liquidator.

197. Notice of appointment of liquidator

A liquidator or liquidators appointed under section 195 (1) (a) shall after his or theirappointment forthwith publish a notice in the Gazette and in a newspaper circulating in thearea in which the registered office of the co-operative concerned is situated in which hisname and address or their names and addresses are given and his or their appointment ismade known.

198. Remuneration of liquidator

(1) A liquidator shall be entitled to the prescribed remuneration for his services: Providedthat if more than one liquidator is appointed the remuneration shall be distributedamong them on such basis as may be approved by the registrar.


(2) Unless the registrar otherwise directs the remuneration of a liquidator shall not bepaid otherwise than in accordance with a liquidation account.

(3) The registrar may decrease the remuneration of a liquidator or disallow suchremuneration if in his opinion there is good cause for doing so.

(4) No person who employs or is a fellow employee or in the ordinary employment of aliquidator shall be entitled, except with the approval of the registrar, to receive anyremuneration out of the assets of the co-operative for services rendered inconnection with the functions of the liquidator, and no liquidator shall be entitledeither by himself or his partner to receive out of the assets of the co-operativeremuneration for his services except the remuneration to which he is entitled underthis Act.

199. Plurality of liquidators, liability and disagreement

(1) If two or more liquidators have been appointed they shall act jointly in performingtheir functions as liquidators, and shall jointly and severally be liable for every actperformed by them jointly.

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(2) If such liquidators disagree on any matter relating to the co-operative of which theyare the liquidators one or more or all of them may refer the matter to the registrar,who may thereupon settle the issue or give directions as to the procedure to befollowed in settling such issue.

200. Control of registrar over liquidators

(1) A liquidator shall perform his functions subject to the control and directions of theregistrar.

(2) The registrar may at any time require a liquidator to answer any inquiry in connectionwith the winding-up in which such liquidator is engaged and may examine suchliquidator on oath concerning the wind-up.

(3) The registrar may at any time investigate or seize the books and other documentsrelating to the winding-up of a co-operative.

(4) Any expenses incurred by the registrar in carrying out any provision of this sectionshall form part of the costs of liquidation of the co-operative concerned.

201. Removal from office of liquidator

The registrar may at any time remove a liquidator from office if in his opinion there is goodcause for doing so.


202. Circumstances under which winding-up may be carried out without liquidator

If the registrar is of the opinion that the value of the assets of a co-operative being woundup is less than R1 000 or such other amount as the Minister may by notice in the Gazettedetermine, he may order the winding-up of that co-operative to be carried out,notwithstanding anything to the contrary contained in any law, in such manner and by suchperson as may be determined by him.


Functions of liquidators (ss 203-209)

203. Inventory of assets and liabilities to be submitted to registrar by liquidator

(1) A liquidator referred to in section 195(1)(a) shall draw up an inventory of all assetsand liabilities of the co-operative being wound up as at the date of his appointmentand submit such inventory to the registrar within 30 days of his appointment.

(2) The provisions of subsection (1) shall not apply to a liquidator of a co-operative inrespect of which a provisional or temporary liquidator was appointed, if suchprovisional or temporary liquidator drew up and submitted such an inventory to theregistrar.

204. General duty of liquidator

The liquidator of a co-operative shall subject to the provisions of this Act forthwith recoverand take into his possession all the assets of the co-operative, realize those assets andapply the proceeds thereof in accordance with the provisions of this Act.

205. Banking account and investments

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(1) The liquidator of a co-operative-

(a) shall open with a banking institution registered under the Banks Act, 1965 (Act23 of 1965), a current account in the name of the co-operative, and shalldeposit therein to the credit of the co-operative all the money received by himon the co-operative's behalf as soon as may be possible but not later thanseven days of the receipt thereof;

(b) may, with the written consent of the registrar, open with such a bankinginstitution or a building society registered under the Building Societies Act,1965 (Act 24 of 1965), a savings account in the name of such co-operative,and may transfer thereto money deposited in the account referred to inparagraph (a) and not immediately required;

(c) may, with the written consent of the registrar, place money deposited in theaccount referred to in paragraph (a) and not immediately required on interest-bearing deposit with such a banking institution or building society;

(d) shall not withdraw any money in a savings account referred to in paragraph (b)or on interest-bearing deposit referred to in paragraph (c) otherwise than byway of a transfer to the said current account.

(2) The liquidator of a co-operative shall forthwith notify the registrar of-

(a) the banking institution or building society and the branch with which he hasopened an account referred to in paragraph (a) or (b) of subsection (1) or withwhich he has placed a deposit referred to in paragraph (c);

(b) the number of that account or the reference number under which that deposithas been placed;

(c) any transfer of money in such an account or so placed in deposit to any otherbanking institution or building society or branch of such a banking institution orbuilding society.

(3) A banking institution or building society referred to in subsection (2) shall on theregistrar's request forthwith furnish him with a statement showing deposits paid intoand withdrawals made from an account referred to in subsection (1)(a) or (b).

(4) The registrar and any surety for a liquidator shall have the same right to informationin regard to an account referred to in paragraph (a) or (b) of subsection (1) or adeposit referred to in paragraph (c) of that subsection as the liquidator himselfpossesses, and may examine all documents in relation thereto, whether in thepossession of the liquidator or a banking institution or building society.

(5) The registrar may after notice to the liquidator in writing order a banking institution orbuilding society with which an account referred to in paragraph (a) or (b) ofsubsection (1) has been opened or where a deposit referred to in paragraph (c) ofthat subsection has been placed not to allow any withdrawal from any such accountor of any such deposit except with the approval of the registrar.

(6) All cheques or orders drawn on an account referred to in subsection (1)(a) shallcontain the name of the payee and the cause of payment, and shall be drawn toorder and be signed by the liquidator or his duly authorized agent.

206. Register to be kept by liquidator

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(1) Immediately after his appointment a liquidator shall open a register in which he shallenter a statement of all money and property and all books, accounts and otherdocuments received by him on behalf of the co-operative.

(2) The registrar may at any time order a liquidator to submit to him any such register,book, account or other document or to make any such register, book, account orother document available for inspection by an interested person.

207. Powers of liquidator

(1) A liquidator may subject to the provisions of this Act do anything reasonablynecessary for the effective performance of his duties, and may in particular-

(a) with the approval of the registrar institute, defend or take any action or otherlegal proceeding of a civil nature in the name and on behalf of the co-operative;

(b) with the approval of the registrar obtain legal advice on any question of lawaffecting the winding-up of the co-operative;

(c) carry on any part of the business of the co-operative in so far as may benecessary for the beneficial winding-up thereof;

(d) with the approval of the registrar agree to any reasonable offer of compositionmade to the co-operative by any debtor, and accept payment of any part of adebt due to the co-operative in settlement thereof;

(e) with the approval of the registrar write off any debts;

(f) submit to the determination of arbitrators any dispute concerning the co-operative or a claim by the co-operative;

(g) terminate contracts to which the co-operative is a party.

(2) A liquidator shall not dispose of immovable property of a co-operative except with theapproval of the registrar.

208. Realization of movable assets in possession of creditors as security

(1) A creditor of a co-operative being wound up holding a movable asset as security forhis claim against the co-operative shall within 30 days of publication of the noticereferred to in section 197 notify the liquidator of such co-operative of his possessionof such asset, the nature of such asset and the grounds of his preference to suchasset.

(2) If such asset consists of securities or a bill of exchange the creditor may after he hasgiven such notice realize such asset in terms of subsection (4).

(3) If such asset does not consist of securities or a bill of exchange the liquidator maytake over such asset from the creditor at a value agreed upon between the liquidatorand the creditor or at the full amount of the creditor's claim, and if the liquidator doesnot so take over such asset, the creditor may realize such asset in terms ofsubsection (4).

(4) A creditor may realize an asset referred to in subsection (2) or (3) in the followingmanner, namely-

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(a) if it consists of a thing ordinarily sold through a stockbroker the creditor mayforthwith cause it to be sold by a stockbroker approved by the liquidator;

(b) if it consists of a thing which in the opinion of the liquidator can profitably besold at a public auction, the creditor may cause it to be sold by public auctionthrough an auctioneer approved by the liquidator;

(c) if it consists of a thing which in the opinion of the liquidator cannot profitably besold by public auction, the creditor may cause it to be realized in a mannerapproved by the liquidator.

(5) As soon as a creditor has realized an asset in terms of subsection (4) he shallforthwith pay the net proceeds thereof and submit all supporting documents relatingto the realization of such asset to the liquidator.

(6) If the asset concerned has not been realized within 90 days of the publication of thenotice referred to in section 197 the creditor shall forthwith deliver such asset to theliquidator.

209. Assets acquired by co-operative under hire-purchase contract

A movable asset delivered to a co-operative under a hire-purchase contract may after thecommencement of the winding-up of the co-operative be delivered to the creditor undersuch contract, and thereupon the creditor shall be deemed to be holding that asset assecurity for his claim and the provisions of section 208 shall apply.

Voidable dispositions (ss 210-214)

210. Disposition not for value

(1) Any disposition of property made by a co-operative not for value may on applicationby the liquidator of the co-operative be declared void by a competent court if theproperty was disposed of-

(a) more than two years before the commencement of the winding-up of the co-operative and it is proved that immediately after the disposition was made theliabilities of the co-operative exceeded the value of its assets;

(b) within two years before the commencement of the winding-up of the co-operative and the person to whom the property was disposed of is unable toprove that immediately after the disposition was made the value of the co-operative's assets exceeded its liabilities:

Provided that if it is proved that the liabilities of the co-operative at any time after thedisposition was made exceeded the value of its assets by less than the value of theproperty disposed of, the disposition may be declared void only to the extent of suchexcess.

(2) A disposition of property not made for value which was declared void undersubsection (1) or which was not completed by the co-operative shall not give rise toany claim in competition with the co-operative's creditors.

(3) If the court declares any disposition of property void under subsection (1) the courtmay summarily issue an order directing that the property disposed of be delivered to

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the liquidator or that an amount equal to the value of the relevant property as at thedate of the disposition thereof be paid to the liquidator.

211. Voidable preferences

(1) Any disposition of property made by a co-operative within 180 days before thecommencement of its winding-up and which has had the effect of preferring any oneor more of its creditors above another may on application by the liquidator bedeclared void by a competent court if immediately after such disposition was madethe liabilities of the co-operative exceeded the value of its assets, unless the personto whom the property was disposed of proves that the disposition was made in theordinary course of business and that it was not intended thereby to prefer a creditorabove another.

(2) Any disposition of property by a co-operative made at a time when its liabilitiesexceeded the value of its assets and with the intention of preferring any one or moreof its creditors above another may at any time after the commencement of thewinding-up of the co-operative on application by the liquidator be declared void by acompetent court.

(3) If the court declares any disposition of property void under subsection (1) or (2) thecourt may summarily issue an order directing that the property disposed of bedelivered to the liquidator or that an amount equal to the value of the relevantproperty as at the date of the disposition thereof be paid to the liquidator.

212. Collusive dealings to prejudice creditors or to prefer certain creditors above others

(1) Any collusion to dispose of property of a co-operative in a manner prejudicing the co-operative's creditors or preferring a creditor above another may at any time after thecommencement of the winding-up of such a co-operative on application by theliquidator be declared void by a competent court.

(2) Any person being a party to any collusion declared void by the court undersubsection (1) may summarily be ordered by the court to make good to the co-operative any decrease in the value of the assets of the co-operative caused by suchcollusion, and if such person is a creditor of the co-operative he shall forfeit his claimagainst the co-operative.

213. Voidable set-off

Any set-off of debts between a co-operative and another person within 180 days before thecommencement of the co-operative's winding-up and which has had the effect of preferringsuch person as creditor above another creditor of the co-operative may on application bythe liquidator be declared void by a competent court if at the time when such set-off waseffected the liabilities of the co-operative exceeded the value of its assets, unless suchperson proves that the debts which were set off arose in the ordinary course of businessbetween him and the co-operative.

214. Interested person may make application to court on behalf of liquidator

If the liquidator is requested by any interested person to make application to the courtunder section 210, 211, 212 or 213 and the liquidator omits to make such application within30 days as from the date of the request such person may upon his indemnifying theliquidator against all costs in the action make the relevant application on behalf of theliquidator.

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Admission and proving of claims (s 215)

215. Admission and proving of claims against co-operative being wound up

(1) Any person who has a claim against a co-operative being wound up, excluding aclaim against a members' fund, shall within 90 days after the date of publication ofthe notice referred to in section 197 lodge with the liquidator a sworn or solemnstatement specifying the amount of the claim and the prescribed particulars relatingto the claim together with the supporting documents (if any): Provided that if amember for any reason whatsoever does not want his claim against a members' fundto proceed he shall inform the liquidator in writing thereof.


(2) The liquidator may admit or refuse to admit the co-operative's liability for the amountof a claim referred to in subsection (1) or may admit the co-operative's liability for anyportion of such an amount.

(3) Any person aggrieved by a decision taken by a liquidator under subsection (2) inconnection with his claim may within 30 days after he was notified of such decisionappeal to the registrar against such decision, and the registrar may afterconsideration of the grounds of the appeal and the liquidator's reasons for hisdecision confirm the decision, or set the decision aside and order the liquidator toadmit the claim or to admit it to the extent determined by the registrar.

(4) (a) Any person referred to in subsection (1) who has failed to lodge his claim withthe liquidator within the period mentioned in that subsection, may thereafterwith the consent of the registrar lodge his claim with the liquidator within aperiod of 30 days after the termination of the said period.

(b) The provisions of subsections (2) and (3) shall mutatis mutandis apply inrespect of a claim referred to in paragraph (a).

(5) The provisions of this section shall not prevent a creditor from proving a claim againsta co-operative in any court, but no person shall institute an action to prove a claimagainst a co-operative being wound up or proceed with any such action which hasbeen suspended in terms of section 190, unless he has lodged his claim with theliquidator within the period mentioned in subsection (1), or, with the consent of theregistrar, within the further period mentioned in subsection (4), or has otherwise givennotice to the liquidator in writing of the action or intended action within a period of 120days after the date of publication of the notice referred to in section 197.

Liquidation, trading, distribution and contribution accounts and application of proceeds(ss 216-234)

216. Submission of certain accounts to registrar

(1) The liquidator shall within 180 days after the date of publication of the notice referredto in section 197 draw up the following accounts, certify them and submit them induplicate to the registrar, namely-

(a) a liquidation account;

(b) a trading account, if the liquidator has carried on a business of the co-operative;

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(c) a distribution account, if the proceeds of the co-operative's assets exceed thesum of the amounts to be paid out of such proceeds in terms of sections 218(1)and (2) and 219(a), (b), (c), (d) and (e);

(d) a contribution account, if the said proceeds are less than the sum of the saidamounts and there are contributories.

(2) The accounts referred to in subsection (1) shall be accompanied by all supportingdocuments available to the liquidator.

(3) If the said accounts are not the final accounts the liquidator shall within such periodas the registrar may determine draw up further accounts and submit them to him induplicate.

(4) If the liquidator is unable to submit an account or documents mentioned in subsection(1), (2) or (3) to the liquidator within the required period he shall before thetermination of the period concerned submit to the registrar a written explanation ofthe reasons for his inability, and the registrar may thereupon grant an extension oftime to the liquidator for the submission of the relevant account or documents.

217. Liquidation account

(1) A liquidation account shall contain an accurate record-

(a) of all money received and of all money disbursed by the liquidator otherwisethan in the course of a business which he carries on behalf of the co-operative;

(b) of the expected or real costs of liquidation;

(c) of every claim against the co-operative proved or admitted in terms of section215;

(cA) of the amount standing to the credit of each member in the members' fund ofthe co-operative;

[Para. (cA) inserted by s. 16 of Act 80 of 1987.]

(d) if such a claim is a secured claim, of the property which serves as security forthe claim, or if the property has already been realized, the amount of theproceeds thereof;

(e) in the case of a second or later liquidation account, of the amount paid onevery claim in terms of a previous liquidation account;

(f) in the case of a liquidation account which is not the final liquidation account-

(i) of all assets yet to be realized;

(ii) of all debts yet to be recovered;

(iii) of the reasons why such assets have not yet been realized or such debtshave not yet been recovered.

(2) A liquidation account shall subject to the provisions of sections 218, 219, 220, 221and 222 provide for the application of the proceeds of the assets of the co-operative.

218. Application of proceeds of assets which served as security

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(1) The proceeds of any asset which served as security for a claim admitted or proved interms of section 215 shall, after deducting therefrom the liquidator's expenses withrespect to such asset and such pro rata portion of the costs of liquidation as may bedetermined by the liquidator, in the first place be applied in paying such claim.

(2) If there is more than one such claim the relevant claims shall be paid in the order oftheir preference.

(3) If the portion of the said proceeds which may be applied in paying any such claim orclaims is less than the amount of such claim or claims the creditor or creditorsconcerned shall be an ordinary creditor or ordinary creditors in respect of the unpaidportion of his claim or their claims.

219. Application of proceeds after payment of secured claims

Subject to the provisions of section 218 the proceeds of the assets of a co-operative beingwound up shall be applied as follows, namely-

(a) in the first place in paying expenses incurred by the liquidator in connection with thewinding-up and the other costs of liquidation;

(b) thereafter in paying any amounts due by the co-operative with respect to the mattersreferred to in paragraph (b) of section 98A(1), or in paragraphs (a) to and including(e) of section 99(1), of the Insolvency Act, 1936 (Act 24 of 1936), which have beenadmitted or proved in terms of section 215, or, if the balance of the said proceeds isinsufficient to pay the said amounts in full, in paying a proportionate share of each;

[Para. (b) substituted by s.10 of Act 122 of 1998.]

(c) thereafter in paying outstanding salaries and wages of full-time employees of the co-operative which have been admitted or proved in terms of section 215 for a periodnot exceeding two months prior to the commencement of the winding-up of the co-operative, or, if the balance of the said proceeds is insufficient to pay the saidsalaries and wages in full, in paying a proportionate share of each;

(d) thereafter in paying income tax for which the co-operative is liable;

(e) thereafter in paying all other claims admitted or proved in terms of section 215,including any unpaid portions of secured claims contemplated in section 218(3) andany credit amounts in the members' fund, or, if the balance of the said proceeds isinsufficient to satisfy the said claims, portions of claims and credit amounts in full,paying a proportionate share of each;

[Para. (e) substituted by s. 17 of Act 80 of 1987.]

(f) thereafter any residue shall be applied in accordance with the distribution account.

220. Tacit hypothecs

(1) A tacit hypothec, other than a landlord's legal hypothec, shall not confer anypreference when a co-operative is being wound up.

(2) A landlord's legal hypothec shall confer a preference with regard to property which issubject to that hypothec for any rent calculated in respect of any period immediatelyprior to and up to the commencement of the winding-up but not exceeding-

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(a) three months, if the rent is payable monthly or at shorter intervals than onemonth;

(b) six months, if the rent is payable at intervals exceeding one month but notexceeding three months;

(c) nine months, if the rent is payable at intervals exceeding three months but notexceeding six months;

(d) fifteen months in any other case.

221. Certain mortgage bonds not to confer preference

(1) A mortgage bond, other than a kustingbrief, registered in any office for theregistration of deeds against immovable property of a co-operative for the purpose ofsecuring payment of-

(a) a debt not previously secured which arose more than 60 days prior to thelodging of the relevant bond for registration in such office; or

(b) a debt incurred in novation of or substitution for a debt referred to in paragraph(a),

shall not confer any preference with regard to such property or the proceeds thereof ifthe co-operative is wound up within 180 days after the lodging of such bond.

(2) A general mortgage bond, including a general clause in a mortgage bondhypothecating particular immovable property, shall not confer any preference withregard to the property of a co-operative being wound up or the proceeds thereof.

222. Ranking of mortgage bonds for future debts

Priority under any mortgage bond registered in any office for the registration of deedsagainst immovable property of a co-operative for the purpose of securing payment of futuredebts shall depend on the date of registration of that mortgage bond and not on the dateupon which any such debt arises.

223. Trading account

A trading account shall contain an accurate record of-

(a) the value of the stock on hand at the commencement of the winding-up;

(b) the value of the stock on hand on the last day of the period in respect of which theaccount is made up;

(c) the daily totals of receipts and payments in connection with the business.

224. Distribution account

(1) A distribution account shall subject to the provisions of section 225 provide for aresidue referred to in section 219(f) to be applied according to the provisions of thissection.

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(2) The residue referred to in subsection (1) shall in the first place be applied in payingback the paid-up share capital of the co-operative to shareholders of the co-operative.

(3) If such residue is less than the paid-up share capital the amount to be paid to ashareholder out of such residue shall be an amount which bears the same ratio to theamount of such residue as the paid-up value of his shares bears to the paid-up sharecapital.

(4) If such residue exceeds the paid-up share capital the balance remaining after thepaid-up share capital has been paid back shall subject to the provisions of subsection(8) be allocated to the members of the co-operative-

(a) in the case of a co-operative the main object of which involves that itsmembers conduct transactions with or through it, in accordance with thepatronage proportion;

(b) in the case of a co-operative the main object of which does not involve that itsmembers conduct transactions with or through it, in accordance with a basisset out in the statute.

(5) The patronage proportion mentioned in subsection (4)(a) shall-

(a) in the case of an agricultural co-operative or a special farmers' co-operative, bedetermined with reference to either the period mentioned in the statute of theco-operative which preceded the commencement of the winding-up of the co-operative or the period for which the co-operative has existed, whicheverperiod is the shorter;

(b) in the case of a trading co-operative, be determined with reference to either theperiod specified in the statute of the co-operative which preceded thecommencement of the winding-up of the co-operative or the period for whichthe co-operative has existed, whichever period is the shorter:

Provided that the period mentioned in the statute of the co-operative shall not be lessthan five years.


(6) For the purposes of subsections (4) and (5)-

(a) an object contemplated in section 21(1)(g)(i) shall be deemed to be an objectinvolving that the members of the co-operative conduct transactions with orthrough it;

(b) the value of the transactions conducted by a former member with or throughsuch co-operative during the appropriate period referred to in subsection (5)may be added to the value of the transactions of a member who is entitled toan allocation under subsection (4), provided-

(i) the former member, or, if he is deceased, his executor, has submitted hiswritten consent to that effect to the co-operative within 90 days after suchformer member ceased to be a member of the co-operative; and

(ii) the statute of the co-operative so provides;

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(c) a co-operative incorporated in consequence of a conversion under section 163shall be deemed to have existed as from the date of incorporation of theprevious co-operative so converted, and the value of the transactionsconducted by a member of the first-mentioned co-operative during theappropriate period with or through the previous co-operative as a member maybe added to the value of the transactions conducted by him with or through thefirst-mentioned co-operative;

(d) a co-operative incorporated in consequence of an amalgamation of two ormore co-operatives under section 166 shall be deemed to have existed as fromthe date of incorporation of the most recent of those co-operatives, and thevalue of the transactions conducted by a member of the amalgamated co-operative during the appropriate period with or through any of the previous co-operatives of which he was then a member may be added to the value of thetransactions conducted by him with or through the amalgamated co-operative.

(7) The registrar may notwithstanding the provisions of subsections (4), (5) and (6) directthe liquidator of a trading co-operative to allocate the balance remaining after thepaid-up share capital has been paid back, to the members of the co-operative on anybasis determined by the registrar.

(8) If the statute of a co-operative provides that an amount shall be paid to any particularperson or for any particular purpose in the event of the co-operative being wound up,the balance referred to in subsection (4) shall in the first place be applied for thepayment of such an amount.

(9) For the purposes of-

(a) subsections (2) and (3) a person to whom an amount is due by the co-operative by virtue of the provisions of section 81 (2) (a) shall be deemed to bea shareholder of the co-operative; and

(b) subsections (2), (3) and (4) an amount referred to in paragraph (a) of thissubsection shall be deemed to form part of the paid-up share capital of the co-operative.

225. Disposal of small residues

If a residue referred to in section 219(f) is so small that the payment thereof to the personsreferred to in section 224 is in the opinion of the registrar not justified the registrar maydirect the liquidator to dispose of such residue, the provisions of that sectionnotwithstanding, in any manner determined by the registrar.

226. Contribution account

(1) A contribution account shall provide for the recovery of contribution from suchpersons as are liable for the payment thereof.

(2) A contribution account shall in respect of each contributory indicate the ground onwhich he is liable for the payment of contribution, the amount for which he is liableand the contribution to be paid by him in terms of that contribution account and, in thecase of a second or later contribution account, the contribution recovered from him interms of a previous contribution account.

227. Inspection of liquidation, distribution or contribution account by interested persons

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(1) Every liquidation, distribution or contribution account or a copy thereof shall be madeavailable in the Directorate Co-operatives, and, if the registered office of the co-operative is not situated in the magisterial district of Pretoria, also in the office of themagistrate of the district in which the registered office of the co-operative is situated,for such period as may be determined by the registrar, for inspection by interestedpersons.

Sub-s. (1) amended by s. 66 of Act 37 of 1993.]

(2) The liquidator shall give notice to interested persons in the Gazette and in anewspaper circulating in the area in which the registered office of the co-operative issituated of the period for which and the place or places where the liquidation,distribution or contribution account will be available for inspection and that objectionagainst such account may be lodged with the registrar before a date to be stated inthe notice, which shall be a date not less than seven days after the end of the saidperiod.

(3) The magistrate of the office where an account is available for inspection shall affix anotice in a public place in or at his office in which is mentioned that the accountconcerned is available in his office for inspection by interested persons during therelevant period, and shall upon the expiry of such period issue a certificate that therelevant account was available for inspection during the relevant period and transmitthe certificate and account to the registrar.

228. Objections against liquidation, distribution or contribution account

(1) Any person who has an interest in the winding-up of a co-operative may before thedate stated in the notice referred to in subsection (2) of section 227 lodge anobjection with the registrar against any entry in an account made available forinspection in terms of subsection (1) of that section.

(2) An objection referred to in subsection (1) shall be contained in an affidavit or asolemn declaration in which the grounds of appeal are fully set forth.

(3) The registrar may uphold, partially uphold or reject an objection referred to insubsection (1).

229. Amendment of liquidation, distribution or contribution account

(1) If the registrar upholds or partially upholds an objection against a liquidation,distribution or contribution account under section 228(3), or if he is of the opinion thatany such account is incorrect in any respect, he shall order the liquidator to amendthe relevant account in such manner as may be determined by him.

(2) If the registrar is of the opinion that the interests of any person are materiallyprejudiced by an amendment of a liquidation, distribution or contribution accountunder subsection (1), the provisions of sections 227 and 228 and this section shall beapplicable to the amended account unless the said person submits a writtenstatement to the registrar that he has no objection against such amendment.

230. Appeal to court against registrar's decisions

(1) Any person whose objection against a liquidation, distribution or contribution accounthas been rejected or partially upheld under section 228(3) may within 30 days afterhe was notified of the registrar's decision with regard to his objection appeal againstthat decision by way of application on notice of motion to any competent court.

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(2) A liquidator may within 30 days after he was ordered by the registrar under section229(1) to amend a liquidation, distribution or contribution account appeal against thatdecision by way of application on notice of motion to any competent court.

(3) The court to which appeal is made under subsection (1) or (2) shall inquire into andconsider the matter and shall confirm, vary or set aside the decision or order of theregistrar, or give such other decision or order as in its opinion the registrar ought tohave given, and may make such order as to costs as it may deem fit.

231. Confirmation of liquidation, distribution or contribution account

(1) If the registrar is satisfied that a liquidation, distribution or contribution account hasbeen made available for inspection in accordance with the requirements of this Act,that any objections against it have been finalized and that the necessaryamendments (if any) have been effected thereto, he shall confirm the account.


232. Payments in terms of liquidation or distribution account and recovery of contribution

(1) The liquidator shall as soon as may be practicable after-

(a) a liquidation or distribution account was confirmed in terms of section 231,make all payments to be made in accordance therewith;

(b) a contribution account was so confirmed, recover the contributions to be paid inaccordance therewith.

(2) Any payment in terms of a liquidation or distribution account shall be made by way ofa cheque payable to the person entitled to such payment or his order and drawn onan account contemplated in section 205(1)(a).

(3) The liquidator shall forthwith submit to the registrar proof of every payment made byhim in terms of a liquidation or distribution account.

233. Disposal of unclaimed payments

If a cheque by which any payment is made in terms of a liquidation or distribution account,is not cashed or deposited within 90 days after it was issued, the liquidator shall, unless theregistrar otherwise directs, stop payment of the cheque and forthwith deposit the amountconcerned in the guardian's fund referred to in section 86 of the Administration of EstatesAct, 1965 (Act 66 of 1965), to be credited to the said person.


234. Recovery of contribution

(1) If any contributory liable to pay contribution in terms of a contribution account fails topay the amount of such contribution to the liquidator within 30 days after a letter ofdemand in which particulars of such contribution are set out was sent to him byregistered post to his last-known residential or business address, the magistrate ofthe district in which the registered office of the co-operative is situated shall uponwritten request by the liquidator issue a writ of execution against the property of suchcontributory.

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(2) Any such writ shall be executed against the movable property of such contributory,and if sufficient movable property is not found to satisfy the writ, then against hisimmovable property.

(3) A writ of execution issued under subsection (1) shall be deemed to have been issuedpursuant to a judgment of a magistrate's court.

General provisions (ss 235-237)

235. Summoning and examination of persons concerning affairs of co-operative beingwound up

(1) The magistrate of the district in which the registered office of a co-operative beingwound up is situated may, on application by the registrar, the liquidator of the co-operative or any other person who has an interest in the winding-up of such co-operative, summon before him any person known or suspected to have in hispossession any asset of the co-operative or believed to be indebted to the co-operative, or any person whom the magistrate deems capable of giving informationconcerning the affairs, transactions or assets of the co-operative.

(2) (a) Such magistrate may examine on oath or affirmation any person summonedunder subsection (1), or authorize the registrar, the liquidator or any such otherinterested person to examine such person or to cause such person to beexamined, concerning any matter referred to in that subsection, either orally oron written interrogatories, and may reduce his answers to writing and requirehim to sign them.

(b) Any such person may be required to answer any question put to him at theexamination, notwithstanding that the answer might tend to incriminate him,and any answer given to any such question may thereafter be used in evidenceagainst him.

(3) Such magistrate may require any such person to produce any book or otherdocument in his custody or under his control relating to the co-operative, but withoutprejudice with regard to any right which he or any other person may have to suchbook or document.

(4) If any person summoned under subsection (1) fails to appear before the magistrateconcerned at the appointed time such magistrate may cause him to be apprehendedand brought before him for examination.

236. Release of liquidator

The liquidator of a co-operative may at any time after dissolution of the co-operative interms of section 43 apply to the registrar for his release, who may grant such release if hedeems it expedient.


237. Disposal of books and documents

After six months from the date of release of the liquidator the books and documents of theco-operative and those relating to the winding-up of the co-operative may be destroyed,unless the registrar otherwise directs.

CHAPTER XAJUDICIAL MANAGEMENT (ss 237A-237N)

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[Heading inserted by s. 18 of Act 80 of 1987.]

237A Circumstances in which co-operatives may be placed under judicial management

(1) When any co-operative by reason of mismanagement or for any other cause-

(a) is unable to pay its debts or is probably unable to meet its obligations; and

(b) has not become or is prevented from becoming a successful concern,

and there is a reasonable probability that, if it is placed under judicial management, itwill be enabled to pay its debts or to meet its obligations and become a successfulconcern, a competent court may, if it appears just and equitable, grant a judicialmanagement order in respect of that co-operative.

(2) An application to a competent court for a judicial management order in respect of aco-operative may be made-

(a) by a co-operative voluntarily after a special resolution to that effect;

(b) by any interested person; or

(c) by the Minister on the recommendation of the registrar.

(3) When an application for the winding-up of a co-operative is made in terms of section181 to a competent court and it appears to that court that if the co-operativeconcerned is placed under judicial management the grounds for its winding-up maybe removed and that it will become a successful concern, and that the granting of ajudicial management order would be just and equitable, such court may grant suchan order in respect of that co-operative.


237B Provisional judicial management order

(1) A court may, on an application made under section 237A, grant a provisional judicialmanagement order stating the return day or dismiss the application or make anyother order that it deems fit.

(2) A provisional judicial management order shall contain-

(a) directives that the co-operative named therein shall be under the managementand control, subject to the supervision of the registrar, of a provisional judicialmanager appointed as hereinafter provided, and that any person vested withthe management and control of the co-operative's affairs shall from the date ofthe order be divested thereof;

(b) such other directives as the court may deem necessary as to the managementand control of the co-operative, or any matter incidental thereto, includingdirectives conferring upon the provisional judicial manager the power, subjectto the rights of the creditors, to raise money in any way without the authority ofthe members of the co-operative as the court may deem necessary,

and may contain instructions that while the co-operative is under judicialmanagement, all actions, legal proceedings and the execution of all writs,summonses and other legal process against the co-operative be stayed and not beproceeded with without the leave of the court.

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(3) The court which has granted a provisional judicial management order may at anytime and in any manner on the application of the applicant, the co-operative, acreditor or a member of the co-operative, the provisional judicial manager or theMinister on the recommendation of the registrar, vary the terms of such order ordischarge it.


237C Custody of property and appointment of provisional judicial manager on granting ofjudicial management order

(1) When a provisional judicial management order is granted-

(a) all persons who immediately prior to the commencement of the provisionaljudicial management order of the co-operative hold office as director, manageror secretary of the co-operative shall jointly and severally be responsible for thecustody of all the assets of the co-operative under the co-operative's controluntil a provisional judicial manager is appointed and has assumed office;

(b) the registrar shall without delay appoint a provisional judicial manager, whoshall give such security for the proper performance of his duties in his capacityas such as the registrar may direct, and who shall, subject to the provisions ofsubsection (2), hold office until discharged by the court as provided in section237G (3) (a).

(2) The registrar may at any time and for reasons which he deems fit dismiss aprovisional judicial manager from his office and appoint another person in his place.


237D Effect of provisional judicial management order

(1) When a provisional judicial management order is granted-

(a) no shares in the co-operative or amount of money from a members' fund shallbe refunded to any member or to any member whose membership wasterminated within six months prior to the granting of the provisional judicialmanagement order; and

(b) the statute of the co-operative shall remain in force in so far as it is not inconflict with the directives of the provisional judicial management order, unlessthe registrar is of the opinion that the application of any provision of the statuteis not in the interests of the members or creditors during the provisional judicialmanagement, and he notifies the provisional judicial manager in writing thatsuch provision shall be suspended.

(2) The registrar may at any time terminate the suspension referred to in subsection(1)(b) and notify the provisional judicial manager in writing thereof.

[S. 237D inserted by s. 18 of Act 80 of 1987.]

237E Functions of provisional judicial manager

A provisional judicial manager appointed under section 237C(1)(b) or (2) shall-

(a) assume the management and control of the co-operative and recover and take intohis possession all the assets of the co-operative;

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(b) convene within 60 days, or such longer period as the registrar may determine at thewritten request of the provisional judicial manager, joint or separate meetings of thecreditors and members of the co-operative for the purposes referred to in section237F;

(c) prepare and lay before the meetings convened under paragraph (b) a reportcontaining-

(i) an account of the general state of affairs of the co-operative;

(ii) a statement of the reasons why the co-operative is unable to pay its debts or isprobably unable to meet its obligations or has not become or is prevented frombecoming a successful concern;

(iii) a statement of the assets and liabilities of the co-operative;

(iv) a complete list of creditors of the co-operative, including contingent andprospective creditors, and of the amount and the nature of the claim of eachcreditor;

(v) particulars as to the source from which money has been or is to be raised forthe purposes of carrying on the business of the co-operative and the conditionson which it shall be repaid; and

(vi) the considered opinion of the provisional judicial manager as to the prospectsof the co-operative becoming a successful concern and of the removal of thefacts or circumstances which prevent the co-operative from becoming asuccessful concern.

[S. 237 E inserted by s. 18 of Act 80 of 1987.]

237F Purpose of meetings convened under section 237E(b)

(1) (a) Any meeting convened under section 237E(b) shall be presided over by theregistrar or a magistrate having jurisdiction in the area where the meeting isheld.

(b) Any meeting referred to in paragraph (a) shall be convened-

(i) in the case of a meeting of the members of the co-operative concerned,in the manner prescribed in the statute of that co-operative for theconvening of a general meeting; and

(ii) in the case of a meeting of creditors, by a notice in the Gazette and inone or more newspapers circulating in the area in which the registeredoffice of the co-operative is situated, not less than seven days prior tosuch meeting.

(2) At the meeting the report of the provisional judicial manager under section 237E(c),and the desirability or not of placing the co-operative finally under judicialmanagement, shall be considered, taking into account the prospects of the co-operative becoming a successful concern.

(3) The chairman of any such meeting shall prepare and lay before the court a report ofthe proceedings of such meeting, including a summary of the reasons for anyconclusion arrived at under subsection (2).

[S. 237F inserted by s. 18 of Act 80 of 1987.]

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237G Return day of provisional judicial management order, and powers of court

(1) Any return day fixed under section 237B(1) shall not be later than 60 days after thedate of the provisional judicial management order but may be extended by the courton good cause shown.

(2) On such return day the court may after consideration of-

(a) the opinion and wishes of creditors and members of the co-operative;

(b) the report of the provisional judicial manager under section 237E(c);

(c) the report referred to in section 237F(3); and

(d) a report of the registrar if he does not preside at the meeting referred to insection 237F(1),

grant a final judicial management order if it appears to the court that the co-operativewill, if placed under judicial management, be enabled to become a successfulconcern and that it is just and equitable that it be placed under judicial management,or the court may discharge the provisional order or make any other order it maydeem fit.

(3) A final judicial management order shall contain-

(a) directives for the vesting of the management and control of the co-operative,subject to the supervision of the registrar, in the final judicial manager, thehanding over of all matters and the accounting by the provisional judicialmanager to the final judicial manager, and the discharge of the provisionaljudicial manager, where necessary;

(b) such other directives as to the management and control of the co-operative, orany matter incidental thereto, including directives conferring upon the finaljudicial manager the power, subject to the rights of the creditors of the co-operative, to raise money in any way without the authority of the members ofthe co-operative, as the court may consider necessary.

(4) (a) When a final judicial management order is granted, the registrar shall withoutdelay appoint a final judicial manager, who shall give such security for theproper performance of his duties in his capacity as such as the registrar maydirect, and who shall hold office until he is discharged in terms of paragraph (b)or until the judicial management order is withdrawn or is deemed to bewithdrawn in terms of section 237M.

(b) The registrar may at any time for reasons which he deems fit dismiss a finaljudicial manager from his office and appoint another person in his place.

(5) The court which has granted a final judicial management order may at any time andin any manner vary the terms of such order on the application of the registrar, thefinal judicial manager, or a representative acting on behalf of the creditors ormembers of the co-operative concerned by virtue of a resolution passed, in the caseof creditors, by a majority in value and number of such creditors at a meeting of thosecreditors or, in the case of members, by a majority of members present at a generalmeeting.

[S. 237G inserted by s. 18 of Act 80 of 1987.]

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237H Effect of final judicial management order

The provisions of section 237D shall mutatis mutandis apply when a final judicialmanagement order is granted.

[S. 237H inserted by s. 18 of Act 80 of 1987.]

237I Functions of final judicial manager

A final judicial manager shall, subject to the provisions of the statute of the co-operativeconcerned in so far as they are not inconsistent with any directive contained in the relevantjudicial management order or suspended by the registrar in writing-

(a) take over the management and control of the co-operative from the provisionaljudicial manager;

(b) conduct such management and control, subject to the orders of the registrar, in suchmanner as he may deem most economic and most promotive of the interests of themembers and creditors of the co-operative in order to restore the co-operative as asuccessful concern;

(c) comply with any directive of the court made in the final judicial management order orany variation thereof;

(d) keep such accounting records and have such annual financial statements preparedas the co-operative would have been obliged to keep or have prepared if it had notbeen placed under judicial management;

(e) convene the annual general meeting and other meetings of members of the co-operative provided for by this Act, and in that regard comply with all the requirementswith which the directors of the co-operative would in terms of this Act have beenobliged to comply if the co-operative had not been placed under judicialmanagement;

(f) convene meetings of the creditors of the co-operative by notices issued separately onthe dates on which the notices convening annual general meetings of the co-operative are issued or on which any interim report is sent out to members, andsubmit to such meetings reports showing the assets and liabilities of the co-operative,its debts and obligations as verified by the auditor of the co-operative, and all suchinformation as may be necessary to enable the creditors to become fully acquaintedwith the co-operative's position as at the date of the end of the period covered by anysuch interim report;

(g) lodge with the registrar copies of all the documents submitted to the meetings asprovided for in paragraphs (e) and (f);

(h) examine the affairs and transactions of the co-operative before the commencementof the judicial management in order to ascertain whether any director, past director,officer or past officer of the co-operative has contravened or appears to havecontravened any provision of this Act or has committed any other offence which gaverise to the circumstances referred to in section 237A(1);

(i) examine the affairs and transactions of the co-operative before the commencementof the judicial management in order to ascertain whether any director, past director,officer or past officer of the co-operative is or appears to be personally liable for

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damages or compensation to the co-operative or for any debts or liabilities of the co-operative;

(j) if at any time he is of the opinion that the continuation of the judicial management willnot enable the co-operative to become a successful concern, apply to the court afternot less than 14 days' notice by registered post to all members and creditors of theco-operative for the cancellation of the relevant judicial management order and theissue of an order for the winding-up of the co-operative.

[S. 237I inserted by s. 18 of Act 80 of 1987.]

237J Application of assets during judicial management

(1) A judicial manager shall not without the leave of the court sell or otherwise dispose ofany of the co-operative's assets save in the ordinary course of the co-operative'sbusiness.

(2) Any money of the co-operative becoming available to the judicial manager shall beapplied by him in paying the costs of the judicial management and in the conduct ofthe co-operative's business in accordance with the judicial management order and sofar as the circumstances permit in the repayment of debts of the co-operativeincurred before the date of the provisional judicial order.

[S. 237J inserted by s. 18 of Act 80 of 1987.]

237K Position of auditor in judicial management

Notwithstanding the granting of a judicial management order in respect of any co-operativeand for so long as the order is in force, the provisions of this Act relating to the appointmentand re-appointment of an auditor and the rights and duties of an auditor shall continue toapply as if any reference in the said provisions to the directors of the co-operative were areference to the judicial manager.

[S. 237K inserted by s. 18 of Act 80 of 1987.]

237L Application to judicial management of certain provisions on winding-up

In every case in which a co-operative is placed under judicial management the provisionsof sections 210, 211, 212, 213 and 235 shall apply as if the co-operative under judicialmanagement were a co-operative being wound up and the judicial manager were theliquidator.

[S. 237L inserted by s. 18 of Act 80 of 1987.]

237M Cancellation of judicial management order

(1) If at any time on application by the judicial manager or any person having an interestin the co-operative it appears to the court which granted a judicial management orderthat the purpose of such order has been fulfilled or that for any reason it isundesirable that such order should remain in force, that court may cancel such order,and thereupon the judicial manager shall be divested of his functions.

(2) In cancelling any such order the court shall give such directives as may be necessaryfor the resumption of the management and control of the co-operative by a board ofdirectors referred to in section 107 (1), including directives for the convening of ageneral meeting of members for the purpose of electing such directors.

(3) When a co-operative under judicial management amalgamates with another co-operative it shall be deemed that the judicial management order is cancelled with

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effect from the date on which the first-mentioned co-operative ceased to exist interms of section 167.

[S. 237M inserted by s. 18 of Act 80 of 1987.]

237N Remuneration of provisional and final judicial manager

The registrar shall determine the basis of the remuneration of a provisional or final judicialmanager, and may at any time decrease or disallow such remuneration if in his opinionthere is good cause for doing so.

[S. 237N inserted by s. 18 of Act 80 of 1987.]

CHAPTER XIGENERAL PROVISIONS (ss 238-242)

238. False statements

Any person who in any application, return, report or other document under this Act wilfullyfurnishes information or makes a statement which is false in any material respect shall beguilty of an offence.

239. Penalties for offences

Any person convicted of an offence in terms of this Act shall be liable to a fine notexceeding R5 000 or to imprisonment for a period not exceeding 12 months or to both suchfine and such imprisonment.


240. Regulations

(1) The Minister may make regulations-

(a) as to any matter which is required or permitted to be prescribed by regulationunder this Act;

(b) prescribing, generally, any matter which he considers it necessary or expedientto prescribe in order that the objects of this Act may be better achieved.

(2) Regulations made under this section may in respect of any contravention thereof orfailure to comply therewith prescribe a penalty not exceeding a fine of R500 orimprisonment for a period of six months.

241. Repeal of laws, and savings

(1) Subject to the provisions of subsections (2) and (3) the laws specified in Schedule 3are hereby repealed.

(2) Anything done under a provision of a law repealed by subsection (1) and which maybe done under a provision of this Act shall be deemed to have been done under thelast-mentioned provision.

(3) (a) Any notice or proclamation issued or deemed to be issued under section 102 ofthe repealed Act and which is in force immediately before the commencementof this Act shall, the repeal of such section notwithstanding, continue in forceuntil it is withdrawn by the Minister under paragraph (b).

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(b) A notice or proclamation referred to in paragraph (a) may at any time beamended, substituted or withdrawn by the Minister by notice in the Gazette.


(c) An amendment, substitution or withdrawal of a notice or proclamation referredto in paragraph (a)-

(i) shall take place either at the request of the agricultural co-operative orspecial farmers' co-operative to which that notice or proclamation relatesas a result of a resolution passed at a general meeting of that co-operative or after consultation with such agricultural co-operative orspecial farmers' co-operative;

[Sub-para. (i) substituted by s. 68 of Act 37 of 1993.]

(ii) shall relate to the agricultural product contemplated in that notice orproclamation, or shall pertain to an agricultural product from which theagricultural products contemplated in that notice or proclamationoriginate; and

(iii) is limited to the area referred to in that notice or proclamation.[Para. (c) added by s. 19 (b) of Act 80 of 1987.]

(d) A producer who, when he is by virtue of a notice or proclamation referred to inparagraph (a) compelled to sell or otherwise dispose of the agricultural productto which such notice or proclamation relates through the co-operative stated insuch notice or proclamation, sells or disposes of the said agricultural productotherwise than through the said co-operative, and any person who buys orotherwise obtains that agricultural product except through the said co-operative, shall be guilty of an offence and on conviction liable to a fine notexceeding R1 000 or to imprisonment for a period not exceeding six months orto both such fine and such imprisonment.

[Para. (d) added by s. 19 (b) of Act 80 of 1987.]

242. Short title and commencement

This Act shall be called the Co-operatives Act, 1981, and shall come into operation on adate fixed by the State President by proclamation in the Gazette.

Schedule 1

[Schedule 1 repealed by s. 20 of Act 80 of 1987.]

Schedule 2

REQUIREMENTS FOR ANNUAL FINANCIAL STATEMENTS[Schedule 2 amended by Government Notice R1044 of 20 May 1983 (as corrected byGovernment Notice R1290 of 17 June 1983), substituted by Government Notice R229 of 7February 1986 and amended by Government Notice R1165 of 13 June 1986 and by GovernmentNotice R2051 of 26 September 1986.][NB: Reference should be made to Government Notice R229 of 7 February 1986 regarding theapplication of this Schedule.]

GENERAL

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1. A co-operative may give any information required by this Schedule to be stated in anyannual financial statement, in the form of a note or annexure thereto if such presentation ismore effective or convenient.

2. When the directors of a co-operative are of the opinion that the disclosure of informationrequired to be made known, in terms of items 21, 22, 23, 31(c) and 35(b) and (c) of thisSchedule is not in the interest of, or is prejudicial to the co-operative or any of itssubsidiaries, the registrar may, on application by such co-operative, on such terms andconditions as he may determine, exempt the co-operative concerned from disclosing suchinformation: Provided that the co-operative concerned shall give the information in respectof which such exemption is granted, to the registrar.

A. BALANCE SHEET

General

3. The assets and liabilities shall be summarised with such particulars as are necessary todisclose their general nature and shall be classified under headings and sub-headingsappropriate to the co-operative's business: Provided that if the amount of a particular classof assets or liabilities is not material, it may be included under the same subheading assome other class.

Share capital and shares

4. (1) The issued and the paid-up share capital shall be specified separately.

(2) Under the issued share capital the number of issued shares and the nominal valueper share shall be stated.

(3) Under the paid-up share capital, the following shall be specified:

(a) The amount paid or payable per share at the date of the balance sheet (i.e.application moneys plus calls);

(b) the total amount paid or payable in respect of share capital;

(c) the amount outstanding in respect of calls on shares; and

(d) the amount paid up in advance on shares.

(4) If shares with any contingent liability attached thereto in terms of section 72 havebeen issued by the co-operative the number of such shares and the total amount ofsuch contingent liability shall be indicated.

Reserves and provisions

5. The respective reserves and provisions (other than a provision for depreciation ordiminution in value of an asset which shall be shown in conjunction with the relevant asset)shall, subject to the provisions of item 8, be specified under different headings andsubheadings, indicating the nature of the reserve or provision.

6. (1) The reserves shall be classified under the subheading 'General reserve' and'Contingency reserves'.

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(2) A general reserve shall include any reserve established with the object of acquiring afixed asset or of providing working capital or generally of strengthening the financialposition of the co-operative.

(3) A contingency reserve shall include any reserve established with the object ofmeeting any loss of an unusual nature or of being applied in accordance with specificprovisions of the co-operative's statute.

7. (1) Unless it is either indicated in the income statement or indicated by way of a notethereto or unless the amount involved is not material, the following shall be specified:

(a) The source and the amount of each transfer to a reserve or provision; and

(b) the amount and application of each transfer from a reserve or provision.

(2) Where the heading under which any of the said reserves or provisions are shown isdivided into subheadings, subitem (1) shall apply to each of the amounts shownunder subheadings.

8. If the Minister is satisfied that a separate indication for a particular provision is not in theinterest of the co-operative or its members or that it may prejudice the co-operative, hemay, on the conditions determined by him, grant permission that such provision not beindicated separately.

9. (1) If the amount of a provision is, in the opinion of the board of directors of the co-operative-

(a) in excess of the amount that in its opinion was reasonably necessary for thepurpose of the provision and the board decides to reduce that amount, themanner in which the amount of the reduction was applied shall be shown in anote; or

(b) less than the amount that will be reasonably necessary for the purpose of theprovision, this fact shall be stated in a note.

(2) If the auditor of a co-operative holds an opinion contrary to that of the board ofdirectors referred to in subitem (1), the auditor shall mention this fact in terms ofsection 154 in his report.

Members' funds

10. (1) Members' funds shall be specified under separate headings and subheadings, statingthe name of each fund, particulars of the source thereof, the rate at which interest onmoney in the fund is paid and the fact that such money is repayable in circumstancesother than in the event of termination of membership.

(2) The following shall be specified under each members' fund:

(a) The amounts with which the fund have been credited or debited during thefinancial year; and

(b) the balance of the fund as at the date of the balance sheet.

Liabilities

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11. Long term liabilities, current liabilities and, if applicable, liabilities that are neither long-termnor current liabilities shall be indicated separately.

Debentures

12. The following shall be specified:

(a) The amount and classes of debentures issued; and

(b) particulars of all redeemed debentures that the co-operative may reissue.

Loans

13. (1) Loans due to the Land and Agricultural Bank of South Africa referred to in the LandBank Act, 1944 (Act 13 of 1944), and to members, shall be shown separately underappropriate headings.

(2) Loans obtained for the purpose of paying advances to members in respect ofagricultural products delivered by them to the co-operative or of financing the supplyof farming requisites or of meeting expenses incidental to the handling, storing,treating or processing of such agricultural products, as well as bank overdrafts, shallbe shown under appropriate headings.

Secured liabilities

14. When any liability of the co-operative is secured by any asset of the co-operative other thanby operation of law, such liability shall be indicated separately, and the asset concernedshall be specified.

Amounts due to certain juristic persons and partnerships

15. The following shall be shown under separate headings:

(a) The amount owing otherwise than in the normal course of business, by the co-operative to juristic persons and partnerships in which the co-operative has aninterest, except a company subsidiary of the co-operative; and

(b) the amount owing by the co-operative to its company subsidiaries.

Assets

16. Fixed assets, current assets and assets that are neither fixed nor current shall be reflectedseparately.

Fixed assets

17. The method applied to arrive at the amount of a fixed asset or an asset that is neither fixednor current shall be specified under each heading.

18. (1) The method of arriving at the amount of a fixed asset (or an asset that is neither fixednor current) shall be to take the difference between-

(a) the cost price thereof or, if it appears in the books of the co-operative at avaluation, the amount of the valuation; and

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(b) the aggregate amount provided or written off since the acquisition or valuation,as the case may be, for depreciation.

(2) The following amounts in respect of assets which have been determined inaccordance with subitem (1) shall be indicated under each heading:

(a) The aggregate of the amounts referred to in paragraph (a) of that subitem; and

(b) the aggregate of the amount referred to in paragraph (b) of that subitem.

19. (1) There shall in respect of land and buildings be stated-

(a) a description of the land and buildings and the situation thereof;

(b) the date of acquisition thereof by the co-operative;

(c) the purchase price thereof; and

(d) the cost of improvements since the date of acquisition or the most recentvaluation, as the case may be:

Provided that where there are more than five different items of land and buildings aco-operative may, if it considers that compliance with this subparagraph to beinconvenient or cumbersome, include the information in a register and, in that eventshall state in the financial statements that the said register shall be open forinspection by members at the registered office of the co-operative or such other placereferred to in section 134(4).

(2) As regards any fixed asset referred to in subitem (1) the amount of which is arrived atwith reference to a valuation, the provisions of paragraphs (b) and (c) of that subitemshall not apply, but the years in which the asset was valued, the valuations and in thecase of an asset valued during the financial year in question, the names andqualifications of the persons that carried out the valuation and the basis used bythem for the valuation shall be stated.

Goodwill, patents and trade marks

20. The amount of the goodwill, patents or trade marks shall, in so far as it has not been writtenoff, be shown under separate headings.

Investments

21. The following shall be shown under separate subheadings:

(a) The amount of the co-operative's investment in the shares and members' funds ofother co-operatives separately; and

(b) the amount of the co-operative's investments in shares and securities other thanthose referred to in paragraph (a) and, by way of a note in respect of each suchinvestment, the name of the company or other juristic person, the number of sharesand securities involved and the cost price thereof: Provided that investments incompany subsidiaries of a co-operative shall be shown under a separate heading:

Provided that, if the director's valuation differs from the book value of each suchinvestment, that fact and the amount of the directors' valuation shall also be shown.

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Loans due to co-operative

22. There shall be shown under separate subheadings-

(a) any amount due to the co-operative, otherwise than in the normal course of business,by other co-operatives of which it is a member and, in a note in respect of each suchdebt, the name of such a co-operative, the amount due, the nature of the debt andwhether or not it is a secured debt, the rate at which interest was or is to be paid andthe terms upon which the debt is being or is to be repaid and if such terms have notbeen complied with, the extent of such non-compliance;

(b) any amount due to the co-operative, otherwise than in the normal course of business,by companies in which it holds shares and, in a note in respect of each such debt,the name of the company, the amount due, the nature of the debt and whether or notit is a secured debt: Provided that amounts owing by company subsidiaries shall beshown under a separate heading;

(c) any amount due to the co-operative by employees in respect of loans granted tothem as employees; and

(d) any amount due to the co-operative, otherwise than in the normal course of business,by any person other than the persons mentioned in paragraphs (a), (b) and (c).

Investments in company subsidiaries

23. The aggregate amount of the investments of the co-operative in company subsidiaries,consisting of shares and amounts receivable (whether on account of loan or otherwise)distinguishing between shares, indebtedness and provisions, shall be set out separately.

Current assets

24. (1) (a) The amount of the current assets shall be shown as a separate item and shallbe classified under appropriate subheadings, which shall at least include-

(i) the amount of trading stock and of farming requisites; and

(ii) the amount of agricultural products on hand, excluding pool products orproducts that the co-operative may have on hand as agent.

(b) As regards the method of determining the value of the trading stock, farmingrequisites and agricultural products referred to in paragraph (a), there shall bestated-

(i) whether it is consistent with the method according to which it wasdetermined in the previous financial year;

(ii) whether it is the lower of cost or of net realizable or replacement value orother expressly declared value; and

(iii) the accounting basis that has been applied in determining the value ofthe said stock, farming requisites and agricultural products on hand.

(2) The amount of debtors shall be shown separately and classified under appropriatesubheadings, which shall at least include-

(a) the amount due by members of the co-operative; and

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(b) the amount due by other co-operatives and companies, otherwise than in thenormal course of business, in which the co-operative holds shares: Providedthat the amount due to the co-operative by company subsidiaries shall beshown under a separate heading.

(3) The amount provided for doubtful debts shall be shown separately as a reductionagainst debtors.

(4) The following shall be shown separately:

(a) The balance on a pool account held in respect of agricultural products or anything which is derived from an agricultural product over which the co-operativehas acquired control in the carrying out of an object contemplated in section 21(1)(a);

(b) the balance on an account held in respect of products over which the co-operative has acquired control as the agent of a control board; and

(c) a debit balance on a pool account referred to in paragraph (a), with a noteindicating the net realisable value of any unsold agricultural products or suchthings.

(5) If in the opinion of the board of directors of the co-operative a current asset will onrealisation in the ordinary course of business yield an amount less than the amount atwhich such asset appears in the books of the co-operative, the extent of theestimated deficit shall be stated if no provision has been made for such deficit.

Debenture issues

25. In so far as they have not been written off the following shall be stated under separatesubheadings:

(a) The costs incurred in connection with the issue of debentures;

(b) the amounts paid by way of commission in respect of debentures;

(c) the amounts allowed by way of discount in respect of debentures; and

(d) the manner in which the above items are to be written off.

Contingent liabilities

26. The following matters shall be stated by means of a note, namely:

(a) Particulars of any material guarantee given by the co-operative and of anyencumbrance on the assets of the co-operative: Provided that guarantees of thesame kind may be shown in one total;

(b) particulars of any encumbrance on the assets of the co-operative to secure theliabilities of any other person, including, where practicable, the amount secured; and

(c) the general nature of any other contingent liability not provided for and, wherepracticable, the aggregate or estimated amount of those liabilities, if it is material.

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Contracts for capital expenditure

27. Where practicable, the aggregate amount or estimated amount, if it is material, of contractsfor capital expenditure not otherwise provided for, and the aggregate amount or estimatedamount, if it is material, of capital expenditure authorised by the directors and not beencontracted for, and the source from which funds to meet such expenditure will be provided,shall be stated.

Foreign currency

28. The basis on which foreign currency has been converted into rand, if the effect thereof onthe results for the year is material, shall be stated.

General29. Except in the case of the first balance sheet, the corresponding amounts as at the end of

the preceding financial year shall be shown in the case of all items in the balance sheet andin any note or annexure thereto.

B. INCOME STATEMENT

30. (1) The following shall be shown separately in the income statement:

(a) The amount of income from company subsidiaries in which case dividends,interest, fees and any other income shall be specified;

(b) the amount of income derived from other investments;

(c) the amount of income derived from other loans;

(d) the amount of any material capital gain or loss: Provided that any capital gainor loss resulting from the disposal of vehicles, equipment, furniture andappliances may be shown in one total;

(e) the amount of interest paid on long term loans and debentures;

(f) the amount of interest paid on members' funds;

(g) the amount of interest paid on any other money borrowed;

(h) the amount written off as bad debts;

(i) the amount debited against income for depreciation of fixed assets;

(j) subject to the provisions of subitem (4), the separate amounts debited againstincome by means of provisions, other than provisions for depreciation of fixedassets, specifying the nature of each provision and the amount withdrawn fromsuch provisions and not applied for the purposes thereof;

(k) the amount of any remuneration paid to the directors of the co-operative;

(l) the amount of the auditor's remuneration, in which case a distinction shall bemade between remuneration for the audit, remuneration for other specifiedservices, the auditor's expenses and payments in respect of the audit and anyother matter;

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(m) the amount paid by way of leasing charges for the use of any asset that, ifowned by the co-operative, would have been subject to a charge fordepreciation;

(n) the amount provided for income tax in respect of the financial year concernedand the amount, if any, so provided for in respect of any other financial year;and

(o) the amount, if material, of any credit or debit arising in consequence of anevent in a preceding financial year.

(2) (a) In the event of an income statement being drawn up in compliance with theproviso to section 135 (2) by a co-operative paying bonuses to its membersaccording to a scheme of distribution, the particulars referred to in subitem (1)shall not, if the board of directors and the auditor of the co-operative are of theopinion that these are not applicable, be included in such income statement.

(b) The income statement referred to in paragraph (a) shall, apart from theparticulars referred to in subitem (1) but subject to the provisions of paragraph(a), include such additional particulars as may be necessary to fairly reflect theprofit or loss resulting from the particular object which was carried out by theco-operative, in accordance with generally accepted accounting practiceapplied on a basis consistent with that of the preceding year.

(c) If the auditor of a co-operative holds an opinion contrary to that of the board ofdirectors regarding particulars that are deemed inapplicable in terms ofparagraph (a) or that may be necessary to reflect fairly the profit or loss interms of paragraph (b), the auditor shall mention this fact in terms of section154 in his report.

(3) The manner in which the surplus of the preceding financial year has been appliedshall be stated if this has not already been shown in the statements of the precedingfinancial year.

(4) If the registrar is satisfied that a separate indication for an amount referred to insubitem (1)( j ) is not in the interest of the co-operative or its members or that it mayprejudice the co-operative, he may, on the conditions determined by him, grantpermission that such an amount not be indicated separately.

(5) Except in the case of the first income statement, the corresponding amounts as at theend of the preceding financial year shall be shown for all items in the incomestatement and in any note or annexure thereto.

Notes to income statement

31. The following matters shall be shown by means of a note to the income statement, namely:

(a) If no provision has been made for income tax, a statement to that effect and thereason therefor;

(b) all material respects in which items included in the income statement (with anindication of the amount involved in each case) are affected by-

(i) transactions of a nature not usually entered into by the co-operative orotherwise by circumstances of an exceptional or non-recurrent nature; or

(ii) any change in the accounting policy; and

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(c) the amount of the profit or loss of each company subsidiary of the co-operative forthe accounting period that corresponds with the financial year of the co-operative.

C. STATEMENT OF SOURCE AND APPLICATION OF FUNDS

32. (1) A statement showing the sources and the application of any funds received andapplied during the financial year shall be annexed to the annual financial statementsor separately incorporated therein.

(2) An analysis of changes in working capital shall also be shown.

D. DIRECTOR'S REPORTGeneral

33. (1) The director's report shall deal in narrative form under appropriate headings with alldescriptive matters, and amounts or statistics mentioned therein shall be set out intabular form as far as may be practicable.

(2) Where any amounts are mentioned, the corresponding amounts, if any, in respect ofthe preceding financial year shall also be shown.

General review

34. (1) The report shall give a general review of the business and operations of the co-operative during the financial year and the results thereof and shall deal with eachfact and circumstance material to the appreciation of the state of the co-operative'saffairs by its members.

(2) The report shall deal with any material fact or circumstance that occurred betweenthe end of the financial year and the date of the report.

Specific matters

35. Unless such information is already given in any statement annexed to the annual financialstatements, the report shall state-

(a) the nature of the business of the co-operative and of its company subsidiaries, if any,and any major change therein during the financial year;

(b) any major change in the nature of the fixed assets of the co-operative or of itscompany subsidiaries, if any, during the financial year or any change in policy relatingto the use of fixed assets: Provided that the opening or commissioning of a newbranch or depot shall be deemed to be included therein;

(c) the board of directors' proposals with regard to the application of any surplus of theco-operative and of any profit of a company subsidiary;

(d) the names of the directors, the chief executive officer and the secretary of the co-operative and any change during the financial year; and

(e) the registered address of the co-operative.

Schedule 3LAWS REPEALED

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Number and year of law TitleAct 29 of 1939 Co-operative Societies Act, 1939Act 44 of 1960 Co-operative Societies Amendment Act, 1960Act 56 of 1963 Co-operative Societies Amendment Act, 1963Act 65 of 1964 Co-operative Societies Amendment Act, 1964Act 44 of 1975 Co-operative Societies Amendment Act, 1975Act 69 of 1979 Co-operative Societies Amendment Act, 1979

CO-OPERATIVES ACT 91 OF 1981 - CIPRO forms/coops/Co-operativesAct91of1981.… · CO-OPERATIVES ACT...

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Transcript of CO-OPERATIVES ACT 91 OF 1981 - CIPRO forms/coops/Co-operativesAct91of1981.… · CO-OPERATIVES ACT...