The Law on Cooperatives regulates the legal status of cooperatives, their establishment, management and bodies of cooperatives, acquisition and termination of the status of cooperatives, book of cooperatives, property and operations of cooperatives, funds, distribution of profits and coverage of losses in cooperatives, termination of cooperatives, alliances of cooperatives, complex cooperatives, cooperative registration, cooperative audit, as well as other issues vital for the position and work of the cooperative.
The provisions of the Law governing the legal status of limited liability companies shall apply accordingly to all matters related to cooperatives, which are not explicitly regulated by the Law on Cooperatives.
The concept of cooperative and cooperative members
A cooperative is a legal entity representing a unique form of organization of natural persons (from now on: cooperative) who realize their economic, social, cultural and other interests by operating on cooperative principles and managing and controlling the cooperative business.
The cooperative acquires the status of a legal entity by the entry in the Register kept by the body responsible for the registration of business entities (from now on: the Register), following the Law governing the registration of business entities.
A cooperative may not be organized as a company in the sense of the Law governing companies or as another form of organization, nor may it be merged or merged with a company or other legal entity other than a cooperative, nor change its form into a company or other legal entity.
A cooperative may be a founder, i.e. a member of another legal entity, following the law and cooperative rules.
A cooperative may form one or more branches.
A cooperative member is a natural person who is a member of a cooperative and fully or partially operates through a cooperative, i.e. who sells his products or services through a cooperative, procures products or uses services necessary for performing his activity or otherwise directly participates in performing activities for which the cooperative was founded.
Business name
The cooperative operates under a registered business name. The business name of the cooperative must contain an indication of the type of cooperative, legal form, name of the cooperative and location.
Only business entities registered and operating following the Law on Cooperatives have the right and obligation to use “cooperative” in their business name.
In addition to the business name, the cooperative may use an abbreviated business name and a business name in a foreign language if those names are listed in the founding act and registered following the law governing the registration of business entities. The abbreviated business name must contain the name and legal form.
Cooperative activity
The cooperative may perform legally permitted activities.
The principal activity of the cooperative determines the type of cooperative. The principal activity is the activity that is specified as such by the founding act and entered in the Register.
Types of cooperatives
Cooperatives may be established as agricultural or rural, housing, consumer, craft, workers’, student-youth, social, health, and other types of cooperatives for performing production, trade in goods, performing services and other activities in accordance with the Law on Cooperatives.
Cooperatives may also be established to perform other activities that are not prohibited by law.
The education and work of student cooperatives are regulated by regulations in primary and secondary education and upbringing.
Special protection
The cooperative enjoys the special protection of the Republic of Serbia, the autonomous province and the local self-government unit in performing its predominant activities.
Special protection is reflected in the encouragement of cooperatives through economic, agricultural and housing policies, as well as other development policies, including the provision of appropriate facilities and benefits, which are determined by special regulations, as well as the possibility of establishing special funds (foundations) for cooperative development by local units. Self-government or autonomous province or providing funds in the budget of local self-government units, autonomous region and republic.
Establishment of a cooperative
The cooperative is established at the founding assembly by concluding the founding agreement, adopting the cooperative rules and electing the bodies.
At least five non-disabled individuals can establish a cooperative. The smallest number of cooperative founders cannot be persons living in a joint household with the founder. Founders and cooperatives may be domestic and foreign natural persons following the law.
The cooperative bodies are the assembly, the board of directors, the supervisory board and the director.
The President of the Assembly, the President and members of the Board of Directors, the Supervisory Board and the Director are elected for a period determined by the cooperative rules, which may not exceed five years, with the possibility of re-election.
In a cooperative with less than 20 members, the cooperative rules may stipulate that the assembly of the cooperative performs the function of the board of directors and the supervisory board.
Funds for the establishment and operation of the cooperative
Depending on the goals of the establishment and the necessary funds for the establishment and operation, cooperatives may be established by contributions or membership fees, following the founding agreement and cooperative rules.
Founding Assembly
The founding assembly is convened by a representative of the founders who has decided to found a cooperative.
The founding assembly can be held, and correct decisions can be made if at least five founders are present at the assembly.
The founding assembly makes decisions by a majority vote of those present, provided that a minimum of five votes of the founders is required to make decisions. The founding assembly elects the President, who chaired the assembly session by the majority of those present.
The founders are obliged to pay the contributions, i.e. membership fees, to the account of the cooperative within 30 days from the day of the founding assembly.
Minutes shall be kept in writing at the founding assembly of the cooperative.
Memorandum of Association
The founding act of a cooperative is a founding agreement that is concluded in writing.
The founders shall verify their signatures on the founding agreement in accordance with the law governing the verification of signatures.
The memorandum of association contains:
- Business name and seat of the cooperative
- Personal name and residence, unique identification number of each founder, i.e. for foreigners passport number and country of issue or ID card number for foreigners following the law governing the conditions for entry, movement and stay of foreigners in the territory of the Republic of Serbia, i.e. business name, the address of the registered office and the registration number of the cooperative which is a legal entity in the case of complex cooperatives
- Predominant activity of the cooperative
- The personal name of the first director of the cooperative or personal name of the person who will represent the cooperative as the acting director
- Information on whether the cooperative operates with deposits or membership fees
- The amount of share capital, the amount and time of payment of the monetary contribution of each founder, description of the type, value, manner and time of entering the non-monetary contribution of each founder
- The amount, time and manner of payment of membership fees for the founders of a cooperative that is established and operates without deposits
- The manner of providing funds to cover the costs of establishment
- Other issues of importance for the establishment of the cooperative.
The founding act is changed by the decision of the assembly of the cooperative in accordance with the Law on Cooperatives.
The signature of the President of the Assembly on the amended founding act shall be verified in accordance with the law governing the verification of signatures, if provided by the founding act and if that obligation is registered in accordance with the law governing the registration of business entities.
The legal representative of the cooperative is obliged to make and sign the consolidated text of that document after each change in the founding act.
Cooperative rules
Cooperative rules are a general act of the cooperative that regulates the management of the cooperative, the internal organization of the cooperative, and other issues of importance for the management and operation of the cooperative according to the Law on Cooperatives.
The legal representative of the cooperative and the president of the assembly of the cooperative are obliged to make and sign the consolidated text of that document after each change in the cooperative rules.
Share capital and contributions of cooperatives
If cooperatives invest contributions in the cooperative, they can be monetary and non-monetary.
Non-monetary contribution is considered to be things and rights expressed in monetary value.
The contributions of the cooperative form the share capital of the cooperative. The minimum share capital of the cooperative is 100 dinars.
Cooperative rules determine the minimum individual contribution. The contribution and part of the contribution may not be returned to the cooperative, pledge or be subject to execution or security for the obligations of the cooperative for the duration of the status of the cooperative member.
A cooperative member may have only one contribution in the cooperative. The contributions of the cooperative members do not have to be equal.
The legal transaction cannot transfer the cooperative’s member contribution.
Increase and decrease of share capital
The share capital of a cooperative may be increased by a decision of the assembly of the cooperative: by the contributions of new cooperative members, by increasing the contributions of existing cooperative members or by converting retained earnings, i.e. available reserves for those purposes by the contributions of cooperative members.
The share capital of a cooperative may be reduced by a decision of the assembly of the cooperative, but not below the statutory minimum monetary founding capital in the amount of 100 dinars.
Membership fee
Cooperatives that are established without cooperative members’ contributions provide funds for the establishment and operation from the membership fee of cooperative members. The amount of the membership fee is determined by the cooperative rules in the same amount for all founders and cooperative members who join the cooperative after the establishment. Upon termination of the status of the cooperative member, the membership fee is not refundable.
The provisions of the Law on Cooperatives, which regulate the share capital, do not apply to cooperatives that are established and operate with membership fees.
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Establishment of a Company, Branch and Representative Offices »
Forms of work engagement in Serbia »
To whom this may concern,
I very much enjoyed reading the text on cooperatives, much of which is clear, some of which not so.
For instance, do/are/can cooperatives…
-be founded by people who have agricultural holdings (poljoprivedno gazvindstvo) under their name?
– enjoy certain tax advantages, such as a non vat registered agricultural holdings (poljoprivredno gazvindstvo)?
– have the right to import certain (agricultural) goods and equipment, including plants?
– receive government grants and/or subsidies?
– apply to the IPARD fund for certain investments?
– sell produce domestically and abroad?
– cooperatives obliged to operate from a head office, staffed by employees
– employee salaries (secretaries, field workers, etc) subject to normal tax and social contributions as if they were employed by a firm/company?
Looking forward to hearing back from you
Dear Terry,
I am glad you enjoyed reading my text and the helpful information. I cannot give you the answers to your questions in this way because the solutions are complex and extensive. If you are interested, you can contact me by email to schedule an appointment for a consultation on the questions you have asked. My email address is: draganadjordjevic@ymail.com