Co-operatives

BOKOMO is a household word in South Africa, as the umbrella-brand for a substantial range of breakfast foodstuffs produced by Pioneer Foods, the second biggest food company in the country. The brand comes from the name of the original manufacturers of WEETBIX breakfast cereal, De Boeren Ko-Operatiewe Molen Maatschappy Beperkt, incorporated long before the Second World War. The same applies to KWV, an equally well-known brand but this time for wines and spirits. It stems from the wine farming co-operative Ko-operatiewe Wynbouwers Vereeniging van Zuid Afrika, which was formed in 1918.¹

A co-operative was, and is, a type of incorporated company whose purpose is to benefit the commercial interests of its members. In the context of agriculture, for example, a farmers’ co-operative refers to an organisation of farmers residing in the same locale, that is established for their mutual benefit in regard to the cultivation and harvest of their products, the purchase of farm equipment and supplies at the lowest possible costs, and the sale of their products at the maximum possible price.²

The Co-operatives Act 2005 replaced previous legislation and was promulgated to establish an advisory board, to improve regulation of the formation and registration of co-operatives, and generally for matters connected therewith.

A. Names and functions

1. It is an offence for any entity other than a co-operative registered in terms of the Act to hold itself out as carrying on the business of a registered co-operative.³

2. It is also an offence to use the words ‘co-operative’, ‘co-op’, or ‘co-operative limited’ as part of a name, if the entity is not registered under the Act.⁴

3. Any director of a co-op who authorises the performance of any act by it, outside of the functions established by its constitution, commits a crime.⁵

4. A co-op must keep the following at its offices, and commits an offence by failing to do so:⁶

   • its constitution and its rules, if any;
   • minutes of general meetings, in a minute book;
   • the minutes of meetings of the board of directors, in a minute book;
   • a list of its members, setting out:
     • the name and address of each member;
     • the date on which each member became a member;
     • if applicable, the date on which a person’s membership was terminated; and
     • the amount of any membership fees paid; the number of membership shares owned; and the number and amount of member loans.
   • a register of its directors setting out:
     • the name, address and identity number of each director, including former directors;
     • the date on which such directors became or ceased to be directors; and
     • the name and address of any other co-operative, company or close corporation where both present and former directors are, or were, directors or members.
   • a register of directors’ interests in contracts or undertakings; and
   • adequate accounting records, including records reflecting the transactions between each member and the co-operative.

B. Directors

1. A co-op must notify the Registrar:
   • of the names, address and identity number of each director appointed;
   • of any change of address of a director;
   • if any director has vacated office,
   • within 30 days of such event.

   It is an offence not to do so.⁷

2. A director must inform the co-op of any change of his address, within 30 days, and commits an offence if he does not do so.⁸

3. A director (or manager) of a co-op may not accept any commission, remuneration or reward in connection with any transaction to which the co-op is a party unless:⁹
   • such commission, remuneration or reward is in the course of his usual business or profession; and
   • he has disclosed his interest to the co-operative.

C. Disclosure of and supplying false information

1. It is an offence to disclose any information obtained in the performance of functions under the Act (unless lawfully permitted).¹⁰

2. It is a crime to make a report, or send any notice or document to the Registrar of Co-operatives (or, for that matter, any person) as required by the Act, which contains an untrue statement of a material fact.¹¹

3. It is also a crime to omit to state a material fact in any such report.¹²