What is a cooperative society?
This is a voluntary association of persons working together to realize a common economic objective while supporting its members in line with cooperative principles, it is set up for nonprofit motive and limited by liability.
The law regulating cooperative societies in Nigeria is the Nigerian co-operative societies Act 2004
Types of cooperative societies
Section 3 of the Nigerian cooperative societies act provides for the different classes of cooperative societies.
Industrial cooperative societies: these are registered societies established for manufacturing, servicing and assembly of industrial goods where members are craftsmen, artisans and Industrial workers. By the provision of section 3(2) of the Nigerian cooperative societies act the minimum amount of members an industrial society is allowed to have is 6 members and they must be economically viable
Primary cooperative societies: this is a registered society which comprises individual members. section 3( 1) provides that the minimum amount of members a cooperative society is allowed to have is ten members. Furthermore, individuals must have attained the age of sixteen years (16), resident or owns a land within the area of operation of the society
Secondary cooperative societies: these are registered societies which are established to facilitate the operation or registered society in accordance with cooperative principles which can include a central finance society by section 3 (2) the minimum number required is at least five registered societies
Application for registration
For cooperative societies to be registered in Nigeria, an application must be accompanied by the prescribed number of copies of the bye-laws of the society as directed by the director which shall be subject to alterations the director may deem fit to make in accordance with the goal and intent of this act.
In the event of a refusal of registration by the director, the act permits the aggrieved society to within sixty (60) days from notification of the refusal appeal to the minister or commissioner
Effect of Registration
It becomes a body corporate that is an individual distinct and different from members of the society meaning it can hold property in its name, enter into a contract, institute legal proceedings (can sue or be sued) and do things in furtherance of its object.
Cancellation of registration
Sections 38 to 39 laid down the condition for the cancellation of registration of a cooperative
If it is discovered that a cooperative does not have the stipulated number of members required by the act, its registration can be cancelled
Upon inspection and application by not less than ¾ of the members of the society demanding the society ought to be dissolved
Any member has the right to within two months to contest the dissolution by applying to the minister or commissioner
The dissolution takes place at the expiration of the two-month window
The effect of cancellation of registration is that the cooperative ceases to be a body corporate, it is stripped from holding property, entering into a contract and other benefits that are derived from being a distinct legal person
Duties and Privileges
The act confers cooperative societies with the following functions
Power to make bye-laws
Contract with members
Creation of charges in favour of a registered company
Charge and set off in respect
Transfer of interest of a dead member
Rights and liabilities of members
` The rights of members is dependent on payment of membership dues until the society’s dues or acquired any interest in the society, Persons are prohibited from belonging to more than society whose objective is to grant loans to members, Every member has an equal vote with the chairman of the cooperation having a casting vote, the act further prohibits members from holding more than 1/5 of a society’s capital
Any dispute touching on the business of cooperative society is settled by the director or referred to arbitration; the party in whose favour the decision was made must go to any court conferred with jurisdiction to enforce this order. The aggrieved party on the other hand has the liberty to within 30 days appeal to the commissioner. Section 49