Organization and management of cooperatives

At the end of this section, you will be able to:
DUnderstand scope of cooperative
Explain different objectives of cooperative
Discuss benefits of cooperative
Describe 7 Principle of cooperatives such as
Democratic member control
Describes Ethical value
Describe how manage cooperative organization and other related institutions including management functions
Concept and Definition of cooperative
Cooperation is the very basis of human civilization.
The interdependence and mutual help among human beings have been the essentials of social life.
The spirit of association is essential to human progress, b/c man cannot successfully live alone
Therefore working together is as old as human society.

1. CHAPTER-5

Organization and Management of
Cooperatives

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2. Procedures for organizing cooperatives


What are the procedures to be followed in organizing
cooperative?

3. Procedures for organizing cooperatives
1.Form a core group/steering committee
2.Carrying out a feasibility study
3.Preparing a business plan
4.Organizing the inaugural general meeting
5.Applying for registration and/or incorporating the
cooperatives
6.Getting the cooperative started

4. 1.Hold an organization meeting and establish a
steering committee/Form a core group
Core group of individuals should hold an informational
meeting of potential cooperative members and others in
the community.
the meeting is to explain the identified need and how
cooperative would address it, the steps involved in
starting a cooperative and be come to general agreement
A steering committee should be formed of participants at
the meeting and sub-committee formed by SC

5. 2. Conduct a feasibility study
The steering committee can either conduct a feasibility study if
they have the necessary skills or
by an outside person taken on by the cooperative carry out the
study
In some cases, local or state governments or foundations may
provide financial or technical assistance with the feasibility
study
The feasibility study is broken down into six parts:
1. An environmental study aimed at a better understanding of
the socio-cultural scope of the cooperative;
2. A market study
3. A technical study : buildings, machinery, tools, etc. ;
4. A study of the organizational structure
5. A legal study ……..legal format;
6. A financial study …….the total expenses and products of the
cooperative and its foreseen results.

6. The steering committee should hold a follow up meeting
with potential cooperative members to report on the
results of the feasibility study.
Be sure to spend time reviewing the financial section of
the report
If the feasibility study indicates that the cooperation is
not a viable business, or if sufficient commitment does
not exist among the group, the steering committee
should not proceed with forming the cooperation

7. 3. Prepare a business plan
Plan is a planning tool to describe the future direction of a
business.
It is very useful for possible requests for loans or funding
If the feasibility study results are favourable, the SC carries
out or hires a consultant firm to develop a detailed BP
The business plan should include the amount and type of
financing needed by the cooperative and a strategy for
obtaining it

8. 4. Organizing the inaugural general meeting
oAfter working out the rules and internal administration of the
cooperative, members must hold the inaugural general
meeting,
obringing together the entire membership of the cooperative.
oIt is this meeting which is responsible for the adoption of the
cooperative’s rules and regulations/ by-laws as well as the
business plan.
oIt elects the members of the board /management committee.

9. Applying for registration and/or Incorporate the cooperative
A cooperative have to be incorporated under the appropriate state
law/ administrative authorities in order to conduct business
The date of registration corresponds to the date of official recognition
of the cooperative.
The request for registration must contain certain basic information
about the cooperative:
•The cooperative’s trade name:
•The cooperative’s objectives
•Details of the cooperative’s funding: shares .

10. •Internal administration of the cooperative
•The names of the cooperative’s directors (management
bodies)
•A copy of the rules by-laws of the cooperative;
•A certificate confirming the registration of the
cooperative;
•The amount of share capital and its spread among the
different members;
•Details of the 3-5 years business plan
•A note about stock

11. 6. Getting the cooperative started
At this stage of setting up the cooperative,
oselect and recruit workers,
oorganize a programme of job training for them
and
ofinally start up the cooperative’s activities.

12. Formation of a cooperative society
All types of cooperatives should be registered by their respective
authority and will have judicial personality and
Each cooperative shall have its own articles of association prepared in
accordance with state law.
The common items in articles of associations are:
•The name of the cooperative.
•The address of the cooperative and area of its operations.
•The objectives and activities of the cooperatives.
•The rights and duties of members.
•The terms and requirements for admission of members and the
conditions for termination of membership.
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13. Cont…
•Membership fee and other contributions.
•The election, duties and responsibilities of the executive committees,
supervisory committees and other committees.
•The procedures for conveying and conducting the general meeting and
other association, the duties and responsibilities of such meeting.
•The procedures for amending the articles of association of the
cooperative.
•The manner for appropriating surplus for reserves and others.
•The condition under which the shares and other interests of members
can be transferred to his/her legal beneficiaries.
•Other matters that are not contrary to the common provisions of the
relevant Government proclamations or regulation issued.
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14. Management and organizational structure of a cooperative
Management structure of a cooperative
Democratic control in cooperatives is exercised at
three levels namely:
General Body/assembly-the ultimate and supreme authority
in the matters concerning the society


Board of Directors-derives substantial powers for
direction, supervision and control of cooperatives


Chief Executive- responsible for guiding the operations and
leading the organization to success
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15. Management bodies of coop.
1. The General Assembly
2. Management Committee/board.
oGeneral manager/chief executive
3. Control Committee (Audit and Inspection)
4. Other Sub-Committees.
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17. Organizational structure of a cooperative

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18. Powers and duties of the general assembly (GA
 Pass different decisions;
approve and amend the by-laws and internal regulations of the
society;
elect and dismiss the members of the deferent committees,
determine the amount of shares ;
decide on how the annual net profit of the society is distributed;
hear work reports and give proper decision;
decide that a society either be amalgamated or be divided
approve the annual work plan and budget;
Decide any issue submitted by the management committee and
other committees.

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19. Structure of the organization
Management committee/Board of Directors –
Every society shall have a management committee/board
The term of office of the management committee shall be three years of
which it is eligible for second term election.
But not be elected for more than two consecutive terms.
They may be dismissed at any time by the general assembly.
Their powers and duties :
maintain the minutes of a meeting in writing;
maintain the documents and books of accounts of the society;
prepare the annual work programme and budget of the society; and
implement same upon approval;
call general assembly
execute such other decisions given by the general assembly;
submit reports to the general assembly on the activities of the society.
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20. Control Committee.
is accountable to the general assembly and the number of which
shall be specified by the by-laws of the society;
The term of office of members of the committee shall be three years.
No members of the control committee shall be elected for more than
two consecutive terms
Powers and Duties of the Control Committee.
follows up that the management committee is carrying out its
responsibilities properly;
follows up that the funds and property of the society are properly
utilized;
controls that the various activities of the society are carried
performs other duties given by the general assembly (GA).
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21. Other Sub-Committees.
Other sub-committees may be established pursuant to the by-laws of the
society.
Chief Executive/GM–
Employed by and accountable for boards and guides the affairs of the
organization in its day-to-day works.
He coordinates the diverse influences exerted by members,
employees, customers, public and Government.
The success of the cooperative institution very much depends on the
initiative; drive and effectiveness of the manager.

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22. His/her Functions includes:
1. Executing Policies:
Manager is responsible for executing policies and accomplishing goals
and objectives set up by the Board.
responsible for planning, organizing, direction, coordination and control.
2. Employing Personnel and Delegating Powers:
Selection of suitable personnel for different cadres is the responsibility of
the manger.
defines their functions and responsibilities and delegates powers that are
necessary for the execution of the responsibilities assigned to his
subordinates.
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23. 3. Furnishing Information to the Board:
The manager should report periodically and should furnish information
needed by the Board for controlling and appraising the operations of the
organization and reviewing of progress
4. Assisting the Board:
The Manager helps the Board in setting up realistic goals for the
organization
provides information and assistance in formulation of policies and
programmes.
He is in a position to guide and advice the Board since he has first hand
knowledge about the affairs of the organization.

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24. CHAPTER SIX
Cooperatives Law

25. Definition and Systemic Nature of Cooperatives laws
Cooperative law is a law constituted by all national, supranational and
international normative, administrative and judicial acts and
the practice commonly accepted among co-operators and cooperatives
members as they bear on the formation, the structure, the operations
and the dissolution of cooperatives in general.
When drafting the law, the legislator must therefore make sure that
other legal provisions do not run counter to cooperatives.
It will be particularly important to be vigilant regarding the provisions
contained in competition law and in social, labour laws and other laws.
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26. The Need for Cooperatives Legislation
In some countries cooperative movements prosper without being
ruled by their own law.
But there are no cooperative movements prospering without any
legal rules applicable to them.
Some of the main reasons for this are:
The existence of a cooperative law is a necessary, though not a
sufficient condition for getting a cooperative policy to work.
The rule of law is a fundamental element in the new approach to
development, which emphasizes the respect for human rights.
Law is a reference point and a guide mark
Law is a suitable and tested means to represent and maintain a just
balance between the autonomy of the co-operators and the
cooperatives, on one hand, and the powers of the state, on the other.
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27. Cooperative proclamation in Ethiopia
Cooperative development in Ethiopia has been guided by a deliberate
legislative framework.
1960 the- “Farm workers cooperative decree” No.44/1960 - the first
legislative called based on which “Farmer workers Cooperative society
Bureau”
declared for the establishment of modern Cooperatives
society.
It was later amended in 1966 into a Cooperative Proclamation
(Proclamation No. 241/1966).

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28. ….cont.
At the beginning of the Derg regime, the government issued service
cooperative proclamation
During this the peasant associations were given legality by Proclamation No.
71/1975 and a number of “Ye’irshaMahber” were established and ,
the objectives, powers and duties of service Cooperatives were clearly stated.
Proclamation No. 138/1978- was issued later in order to include other types
of Cooperatives like Housing, Thrift and credit and Handicrafts etc.
oBut all of these proclamations were essentially geared towards direct control
of Cooperative and turning them into government and political rather than
socio economic development instruments.
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29. ….cont.
Proclamation No. 85/1995 - Development of agricultural cooperatives
and issued of specific legislation on agricultural cooperatives-
oThis proclamation outlined the rules and regulations for
formation, membership, governance and dissolution of
agricultural primary cooperatives in Ethiopia.
Cooperative Society Proclamation (No. 147/1998),- was later issued -
which relatively conforms to universal ICA cooperative principles and the
ILO Promotion of cooperative Recommendation (2002) (No. 193).
oIt also has Amendments No. 402/2004,106/2004
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30. ….cont.
oCurrently, proclamations No. 985/2016 is functional.
o The proclamation has 10 parts and 77 sections.
This proclamation provides for the creation, registration
and administration of cooperatives and provides rule with
respect to their operations, winding up, etc.
Please visit the following link to get the detail of 985 coop.
proclamation.
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