Laws Information

法規資訊
Title: Cooperatives Act
Am Date: 2015-06-03
Legislative History: Amended on June 03, 2015

Transaction

Amended

Article 7-1
In carrying out the following tasks, government agencies shall offer a variety of incentive and supportive measures on its own, or by giving grants to cooperatives, combining private resources, or employing other methods, so as to enhance and strengthen cooperative organizations:
1. Promoting the cooperative system;
2. Organizing cooperative education and training;
3. Assisting with the development of cooperatives.
The central competent authority shall set up a cooperative enterprise development fund to implement the aforesaid activities and provide grants for cooperatives. Regulations on the receipt, expenditure, custody, and utilization of the fund shall be established by the Executive Yuan.

Article 54-1
The competent authority shall supervise and give guidance to the operational and financial affairs of a cooperative.

Article 54-2
The competent authority in charge of the object enterprise shall supervise and give guidance to the operational and financial affairs of a cooperative.
When carrying out the practices set forth in the preceding paragraph, the central authority in charge of the object enterprise may, if it deems necessary, establish regulations on the guidance for, the management of, and the incentives to business operations of a cooperative and other matters to be complied with.

Article 54-3
The competent authority shall carry out inspections, appraisals, and incentive measures on cooperatives, and may do so together with the competent authority in charge of the object enterprise if necessary.
A cooperative must not evade, hinder, or refuse the said inspections and appraisals, and shall provide necessary assistance.
The inspections and assessments set forth in Paragraph 1 may be entrusted to an agency, an institution, a school, or an organization.
The central competent authority shall establish regulations on the methods, categories, periods, targets, measures and procedures of guidance and management, ratings, categories and methods of incentives of the inspections and appraisals set forth in Paragraph 1, as well as other matters to be complied with.
Article 1
This Act is established to enhance the cooperative system and support and promote cooperative enterprises to facilitate the development of national economy and improve social welfare.
For the purposes of this Act, the term “cooperative” refers to an association organized based on the principle of equality and mutual aid, and with a view to boost the economic benefits and living standards for its members by means of joint operation. The number of members and the total amount of capital stocks of a cooperative are variable.

Article 3
A cooperative may engage in the following business activities:
1. Production: Engaging in whole or in part various kinds of production, processing, and manufacturing activities;
2. Marketing: Engaging in product marketing activities;
3. Supply: Providing raw materials, equipment, or supplies necessary for production;
4. Utilization: Purchasing the production, manufacturing, storage, and distribution equipment for the purpose of production;
5. Labor: Offering labor and technical labor or services;
6. Consumption: Selling goods for daily use;
7. Public utility: Establishing public services and facilities such as housing, medical care, services related to community care for elderly people and young children, etc. for public use;
8. Transportation: Providing necessary services for the operation of transportation businesses;
9. Credit: Engaging in banking activities;
10. Insurance: Engaging in insurance activities;
11. Other business activities approved by the central competent authority together with the central authority in charge of the object enterprise.
The business activities set forth in subparagraphs 9 and 10 of the preceding paragraph must not be operated along with the other business activities mentioned above.

Article 3-1
Credit cooperatives and insurance cooperatives shall be subject to the Credit Cooperatives Act and the Insurance Act respectively. For matters not provided for in these acts, the provisions of this Act shall apply.
Users of the business activities operated by a cooperative shall be limited to its members. However, such activities may be offered to non-members if they are entrusted by government agencies or charitable organizations, or if this act is for the developmental needs of the cooperative.
The following restrictions shall apply when non-members are offered the business activities of cooperatives as described in the preceding paragraph:
1. In the event that the business activities are entrusted by government agencies or charitable organizations, the approval of the competent authority shall be obtained, and the revenue generated by non-member users shall not exceed fifty percent of the turnover.
2. In the event that the business activities are offered to non-member users for the developmental needs of the cooperative, the revenue generated shall not exceed thirty percent of the turnover.
The revenue generated by non-member users, as specified in the preceding two paragraphs, shall be set aside as public accumulated funds and public interest reserve, and must not be allocated to members. The central competent authority shall set regulations that stipulate the business activities offered to non-members, scope of the offering, standards, quota, handling of the revenue, and other matters to be complied with.

Article 6
The name of a cooperative shall indicate its liability and principal business activities.
After being registered with the local competent authority, business activities other than those prescribed in Article 3 of this Act must not be operated in the name of a cooperative.

Article 9
The founder of a cooperative shall summon an the inaugural meeting to work out the articles of association, elect directors and supervisors, and organize a cooperative affairs committee. The founder shall also submit the minutes of the inaugural meeting, the articles of association, and the roster of the members within one month to the local competent authority for establishment registration.
The following particulars shall be registered:
1. Name;
2. Scope of business;
3. Liability;
4. Address;
5. Name, sex, age, place of birth, position, and dwelling address of the directors and the supervisors;
6. Payment method of the share of cooperatives;
7. Share of cooperatives subscribed and the amount already paid by each member and associate member;
8. Regulations on the membership (as well as the associate membership) qualifications, their affiliation, disaffiliation, and dismissal;
9. Regulations on the operation of the cooperative affairs as well as staff appointment and removal;
10. Members of guaranteed liability cooperatives and their guarantee amounts;
11. Regulations on surplus allocation and deficit sharing;
12. Regulations on public accumulated funds and public interest reserve;
13. Causes for disincorporation (if prescribed)
In case of alteration of the particulars set forth in the preceding paragraph except for the age, place of birth, and position listed in subparagraph 5 and the particulars listed in subparagraph 7, registration of the alteration shall be completed within one month. Prior to such registration, the altered particulars must not be used to act against a bona fides third party.
The articles of association of a cooperative may be amended only with the resolution of the member’s congress, and written proceedings of the congress shall be submitted within one month of the resolution to the competent authority for registration of the amendment.

Article 9-1
The articles of association of a cooperative shall include the following contents:
1. Name;
2. Liability;
3. Address;
4. Organizational area;
5. Type of business operations;
6. The amount of capital stocks and regulations on the payment or refund thereof;
7. Guarantee amounts for members of guaranteed liability cooperatives;
8. Rights and obligations of its members and associate members;
9. Quota, authority, and tenure of the staff;
10. Starting and terminating date of a business year;
11. Regulations on surplus allocation and deficit sharing;
12. Regulations on the public accumulated funds and public interest reserve;
13. Regulations on the membership (as well as the associate membership) qualifications, their affiliation, disaffiliation, and dismissal;
14. Regulations on implementation of cooperatives affairs as well as appointment and removal of directors and supervisors;
15. The period of existence or causes of disincorporation (if prescribed);
16. Handling of other cooperative affairs.

Article 11
Persons that meet any of the following requirements or qualifications may become members of a cooperative:
1. A person who is capable of contracting;
2. A person who is the subject to the order of commencement of assistance obtained the written consent of his/her assistant;
Persons that meet any of the following requirements or qualifications may apply to become associate members of a limited liability cooperative pursuant to its articles of association:
1. An application being filed by the legal representative in the case of a person aged six or older without capacity to contract;
2. Having obtained written consent from the legal representative in the case of a person who is limited in capacity to make juridical acts;
3. A person with capacity to contract who does not meet the qualifications for members as set forth in the articles of association.
Associate members have the same rights and obligations as members do, with the exception of the rights to elect, to be elected, to recall, and to vote.
The central competent authority shall establish regulations on the types of elections and recalls in a cooperative, registration of candidates, qualification screening process, voting, ballot counting, election results, recall methods, and other matters to be complied with.

Article 14
After a cooperative is established, references provided by at least two members or a written request shall be submitted for voluntary affiliation. A decision shall be made pursuant to the following provisions:
1. Affiliation into cooperatives of limited liability or guaranteed liability requires the consent of the board of directors, and shall be reported to the member’s congress.
2. Affiliation into cooperatives of unlimited liability shall be proposed by the cooperative affairs committee and requires the consent of not less than 3/4 of the attendees of the member’s congress.
A cooperative shall submit a report on its new members or associate members within one month of approval of the affiliation to the competent authority for future reference.

Article 19
Cooperatives may capitalize the earned dividend and surplus of a member to make up for the shares that the member has not paid for yet.

Article 20
Without the consent of the cooperative, a member may not transfer the shares he holds to someone else or use it as the guarantee of debts. However, this rule does not apply to the shares which are held by a member and subject to compulsory enforcement or administrative execution according to law, included in bankruptcy estate, or subject to the commencement of a liquidation proceedings as ruled by law.
The transferee or heritor of the shares of a cooperative shall succeed to the rights and obligations of the transferor or the decedent. If the transferee or heritor is not a member, he/she shall be affiliated to the cooperative in accordance with the provisions of Articles 11 and 14, and the amount of his/her capital stocks shall be refunded.

Article 22
The annual interest of the shares of a cooperative shall not exceed ten percent. In the case of no surplus, no interest shall be distributed to members.

Article 23
A cooperative shall use its surplus to offset accumulated deficits and pay the interest. Moreover, it shall set aside no less than ten percent of the surplus as the public accumulated funds, no less than five percent as the public interest reserve, and no more than ten percent as the compensation for its directors, supervisors, clerks, and technicians.
Where the public accumulation fund as referred to in the above paragraph is more than 2 times of the total capital, the cooperative itself may determine the percentage of surplus that should be allocated into the fund every year.
In case that the public accumulated funds referred to in the preceding paragraph is more than twice the total amount of the capital stocks, the cooperative itself may determine the percentage that shall be set aside every year.
Members must not request to allocate the public accumulated funds.
The public interest reserve set forth in Paragraph 1 is accounted as a liability in the balance sheet, as specified in Paragraph 1 of Article 36, and shall only be used for the educational and promotional purposes of social welfare enterprises, charitable enterprises, and cooperative enterprises. No other purposes are allowed. The same rule also applies after the cooperative is disincorporated.

Article 24
After the surplus is allocated in accordance with the provision of the above article, the residuals shall be distributed according to the transaction amount of the members.
If it is resolved in the member’s congress that the residuals as referred to in the above paragraph should not be distributed, it may be deposited as capital stocks subscribed by the members or allocated into public accumulated funds.

Article 30
A disaffiliated member may request the cooperative to refund all or a part of the capital stocks that he/she holds according to the provision of the articles of association. The capital stocks shall be calculated according to the properties at the end of the business year. However, if it is otherwise prescribed in the articles of association, such prescription shall apply.

Article 32
There shall be at least three directors and three supervisors in a cooperative, and they shall be elected in the member’s congress from the members.
Members who are subject to adjudication of bankruptcy or the commencement of a liquidation proceeding as convicted in accordance with the Consumers Debt Clearance Act and whose rights and privileges have not been reinstated, must not serve as directors or supervisors of a cooperative.

Article 33
Directors and supervisors shall hold office for no more than three years, and shall be re-eligible unless the law or the articles of association provides otherwise.

Article 36
At the end of a business year, the board of directors shall prepare a business report, a balance sheet, a statement of surpluses and deficits, a property inventory, and a surplus allocation or deficit sharing scheme. The said documents shall be submitted to the member’s congress after having been examined by the board of supervisors at least ten days before a meeting of the member’s congress is held. However, this is not applicable when a temporary meeting of the member’s congress is convened.
The central competent authority shall establish regulations on the content of the financial statements set forth in the preceding paragraph, scope of accounting affairs, financial management, payment of expenditures, and other matters to be complied with.
A cooperative shall, within one month after the documents specified in Paragraph 1 are approved by the member’s congress, send a written report to the competent authority for future reference. The competent authority may assign its staff to conduct an on-site inspection, or conduct a joint inspection with relevant agencies if necessary, and the cooperative must not evade, hinder, or refuse such an inspection.
The central competent authority shall establish regulations on the types, methods, and procedures of the said inspection, supervision by the competent authority, and other matters to be complied with.

Article 39
The supervisors have the following authorities:
1. To supervise and inspect the properties of the cooperatives;
2. To supervise and inspect a director’s performance of business activities;
3. To examine the documents set forth in Article 35 and Article 36;
4. To act on behalf of the cooperative when it signs a contract with or is in a lawsuit against its director(s);
For the purpose of performing the duties in the preceding paragraph, a supervisor may convene a temporary meeting of the member’s congress if it is deemed necessary.
The central competent authority shall establish regulations on the supervision and inspection, of the methods, procedures, and scope for a supervisor to exercise his/her authorities, as well as other matters to be complied with.

Article 40
A supervisor shall not act concurrently as a director, clerk, or technician.
A member who was once a director shall not be elected as supervisor before being relieved of his/her responsibilities.
A director or supervisor shall not act concurrently as a director or supervisor in another cooperative at the same level and with the same business scope, or simultaneously hold office in an association or enterprise that competes with the cooperative.
The central competent authority shall establish regulations on organizational systems, staffing, and staff management in cooperatives and other matters to be complied with.

Article 45
The meetings of a cooperative shall be convened pursuant to the following provisions:
1. Meetings of the member’s congress shall be convened at least once every year;
2. Cooperative affairs Meetings shall be convened at least once every six months;
3. Meeting of the board of directors shall be convened at least once every three months;
4. Meeting of the board of supervisors shall be convened at least once every three months.

Article 55-1
The competent authority may issue an order to disincorporate a cooperative if any of the following conditions occurs:
1. The information stated in the establishment registration application or the submitted documents has been found to be false, and its registration has been cancelled by the competent authority.
2. The competent authority has made an announcement on the abolition of its registration in accordance with Paragraph 2 of Article 57.
3. The majority of its members did not express their opinions when being requested to cast a vote by correspondence within a specified time limit pursuant to the provisions of Article 51.
4. The cooperative failed to convene the annual meetings of the member’s congress for two consecutive years, and still failed to do so within a specified time limit after the competent authority sent a written notice, issued a notice by publication, or made an announcement.
5. The cooperative violated the provisions of Article 10-1 or subparagraph 2 of Article 58 and was subject to more than three consecutive punishments pursuant to the provisions of subparagraph 1 of Article 73-1, without any improvements within a given time limit.
6. The cooperative violated the provisions of Article 56 and was subject to over three consecutive punishments pursuant to the provisions of subparagraph 4 of Article 74, without any improvements within a given time limit.
7. The occasion set forth in subparagraph 1 or 3, Paragraph 1 of Article 55 has occurred, but the cooperative failed to register its disincorporation with the competent authority within a month.
8. The cooperative violated the provisions of Paragraph 2 of Article 54-3 and was subject to more than three consecutive punishments pursuant to subparagraph 5 of Article 74-1, without any improvements within a given time limit.
9. The cooperative violated the provisions of Paragraph 3 or 4 of Article 3-1 regarding handling of the revenue and the regulations established by the central competent authority regarding the business activities offered by a cooperative to non-members, scope of the offering, standards, quota, handling of the revenue, and other matters to be complied with, and was subject to more than three consecutive punishments pursuant to the provisions of subparagraph 1 of Article 74-1, without any improvements within a given time limit.
The competent authority shall make an announcement on the abolition of the registration when issuing an order to disincorporate a cooperative in accordance with the preceding paragraph except for subparagraphs 1 and 2, and shall request the cooperative to carry out liquidation pursuant to the applicable provisions of this Act

Article 60
In case of disincorporation of a cooperative, a director shall be appointed as the liquidator unless otherwise provided for in the constitution of the cooperative or elected by the member’s congress.
If a liquidator cannot be appointed in accordance with the preceding paragraph, the court may appoint a liquidator at the request of the competent authority, a prosecutor, or a stakeholder, or ex officio.
In the event that the competent authority issues an order to disincorporate a cooperative due to causes attributable to any of its directors, the court may reappoint a liquidator at the request of the competent authority, a prosecutor, or a stakeholder, or ex officio.
The liquidator shall, within fifteen days of the accession, report his/her name, residence or domicile, and the date of accession to the competent authority for future reference. If the liquidator is appointed by the court, a report shall also be sent to the court for future reference.

Article 73
A director or liquidator of a cooperative who commits any of the following acts shall be subject to a fine of not less than NT$2,000 and not more than NT$10,000:
1. Violating the provisions of Paragraph 2 of Article 47, which govern the time limit of notices;
2. Violating the provisions of Article 51 or 64, which govern the time limit of notices or announcements;
3. Violating the provisions of Paragraph 4 of Article 60.
In case of the act specified in subparagraph 2 or 3 of the preceding paragraph, a fine will be imposed, and a time limit will be set for the director or liquidator to correct the misconduct. If correction is not made within the time limit, consecutive punishments will be imposed.

Article 73-1
A cooperative that commits any of the following acts shall be subject to a fine of not less than NT$2,000 and not more than NT$10,000, and shall be required to correct the misconduct within a specified time limit; if correction is not made within the time limit, consecutive punishments will be imposed:
1. Violating the provisions of Paragraphs 1 and 3 of Article 9, Article 10-1, Article 10-2, Paragraph 3 of Article 36, Paragraph 1 of Article 57, or Article 58, which govern the time limit for registration, commencement of operation, and reporting for future reference or approval;
2. Violating the provisions of Paragraph 1 of Article 21 or Paragraph 1 of Article 59, which govern the time limit of notices or announcements.

Article 74
A director, supervisor, or liquidator of a cooperative who commits any of the following acts shall be subject to a fine of not less than NT$4,000 and not more than NT$20,000, and shall be required to correct the misconduct within a specified time limit; if correction is not made within the time limit, consecutive punishments will be imposed:
1. Failing to prepare, produce, compile, file, present, or submit the related registers and documents pursuant to the provisions of Article 35, Paragraph 1 of Article 36, Paragraph 1 of Article 63, or Article 65, or making false records;
2. Evading, hindering, or refusing a member or creditor of the cooperative looking over the documents pursuant to the provisions of Article 37;
3. Violating the provisions of Article 40-1 or Article 63-1;
4. Failing to apply for an announcement of bankruptcy in the circumstances specified in Article 56.

Article 74-1
A cooperative that commits any of the following acts shall be subject to a fine of not less than NT$4,000 and not more than NT$50,000, and shall be required to correct the misconduct within a specified time limit; if correction is not made within the time limit, consecutive punishments will be imposed:
1. Violating the provisions of Paragraph 3 or 4 of Article 3-1 regarding handling of the revenue and the regulations established by the central competent authority regarding the business activities offered by the cooperative to non-members, scope of the offering, standards, quota, handling of the revenue, and other matters to be complied with;
2. Violating the provisions of Paragraph 1 of Article 6;
3. Violating the provisions of Article 22 or Paragraphs 1 and 4 of Article 23;
4. Violating the provisions of Article 40;
5. Violating the provisions of Paragraph 2 of Article 54-3.
Article 41
(Deleted)

Article 75-1
(Deleted)