Law
of the People's Republic of China on Specialized Farmers Cooperatives
NPC.gov.cn
Order
of the President of the People’s Republic of China No.57
The
Law of the People’s Republic of China on Specialized Farmers Cooperatives,
adopted at the 24th Meeting of the Standing Committee of the Tenth National
People’s Congress of the People’s Republic of China on October 31, 2006, is
hereby promulgated and shall go into effect as of July 1, 2007.
Hu
Jintao
President
of the People’s Republic of China
October
31, 2006
Law
of the People’s Republic of China on Specialized Farmers Cooperatives
(adopted at the 24th Meeting of the Standing Committee of the
Tenth National People’s Congress on October 31, 2006)
Contents
Chapter I
General Provisions
Chapter II
Establishment and Registration
Chapter III
Membership
Chapter IV
Organizational Structure
Chapter V
Financial Management
Chapter VI
Merger, Division, Dissolution and Liquidation
Chapter VII
Supportive Policies
Chapter VIII
Legal Responsibility
Chapter IX
Supplementary Provisions
Chapter
I
General
Provisions
Article 1 This
Law is enacted for the purpose of supporting and guiding the development of
specialized farmers cooperatives, regulating their
organization and behavior and protecting their lawful rights and interests and
those of their members’, and promoting the development of agriculture and of
the economy of rural areas.
Article 2 Specialized
farmers cooperatives are mutual-help economic organizations joined voluntarily
and managed in a democratic manner by the producers and operators of the same
kind of farm products or by the providers or users of services for the same
kind of agricultural production and operation.
Specialized
farmers cooperatives mainly serve their members, offering such services as
purchasing the means of agricultural production, marketing, processing,
transporting and storing farm products, and providing technologies and
information related to agricultural production and operation.
Article 3
Specialized farmers cooperatives shall observe the
following principles:
(1)
Their members are mainly farmers;
(2)
They aim to serve their members, working for the common interests of all the
members;
(3)
The members join the cooperatives voluntarily and are free to withdraw from
them;
(4)
The members are equal in status and democratic management is practiced; and
(5)
Profits are to be distributed mainly in proportion on the volume (amount) of
the transactions effected between the cooperatives and their members.
Article 4 Specialized
farmers cooperatives shall be registered according to this Law to obtain the
status of a legal person.
Specialized
farmers cooperatives shall enjoy the rights to possess, use and dispose of
their property which includes capital contributions by their members, common
reserve funds, subsidies received directly from the
government, donations and other legitimately acquired assets, and shall be
liable for their debts with the aforementioned property.
Article 5
Members of specialized farmers cooperatives shall be
accountable to their cooperatives within the limits of the capital
contributions recorded in their accounts and of their shares of the common
reserve funds.
Article 6 The
State protects the lawful rights and interests of the specialized farmers cooperatives and their members, and no units or
individuals may infringe upon such rights and interests.
Article 7 In
production and operation, specialized farmers cooperatives shall obey the
relevant laws and administrative regulations, observe social and business
ethics, and act in good faith.
Article 8 The
State promotes the development of specialized farmers
cooperatives through such measures as government financing, preferential
taxation, support in fund raising, science and technology as well as human
resources, and guidance through industrial policies.
The
State encourages and supports all social sectors to provide services to
specialized farmers cooperatives.
Article 9
People’s governments at or above the county level shall make arrangements for
the administrative departments of agriculture and the relevant departments and
organizations to provide guidance, support and services to the formation and
development of specialized farmers cooperatives, in accordance with this Law
and within the limits of their respective duties.
Chapter
II
Establishment
and Registration
Article 10 For
establishment of a specialized farmers
cooperative, the following conditions shall be met:
(1)
having five or more members who meet the requirements
as are prescribed in Articles 14 and 15 of this Law;
(2)
having a charter that meets the requirements as are
prescribed by this Law;
(3)
having an organizational structure that meets the
requirements as are prescribed by this Law;
(4)
having a name which is in conformity with the
provisions of relevant laws and administrative regulations and a domicile as
specified in the charter; and
(5)
having capital contributions made by members who meet
the requirements as are specified in the charter.
Article 11 For
establishment of a specialized farmers
cooperative, an assembly shall be convened with the participation of all of the
founders. Persons who voluntarily become members of the cooperative at the time
of its establishment are founders.
The
founders’ assembly shall exercise the following functions and powers:
(1)
to adopt the charter of the cooperative, which is
required to be adopted unanimously by all of the founders;
(2)
to elect the director-general, directors, the
executive supervisor or members of the board of supervisors; and
(3)
to examine and discuss other major issues.
Article 12 In
the charter of a specialized farmers
cooperative shall clearly be specified the following matters:
(1)
its name and domicile;
(2)
scope of business;
(3)
membership qualifications, joining and withdrawing
from the cooperative, as well as expelling a member;
(4)
rights and duties of members;
(5)
structure of the organization, measures for its
formation, its functions and powers, term of office and the rules of procedure;
(6)
forms and amounts of capital contributions to be made
by members;
(7)
financial management, distribution of profits and
disposition of losses;
(8)
procedures for modification of the charter;
(9)
causes of dissolution and measures for liquidation;
(10)
the items for announcement and the manners of
announcement; and
(11)
other matters that need to be specified.
Article 13 For
establishment of a specialized farmers
cooperative, the following documents shall be submitted to the administrative
department for industry and commerce to apply for registration:
(1)
letter of application for registration;
(2)
minutes of the establishment assembly signed and
sealed by all of the founders;
(3)
charter signed and sealed by all of the founders;
(4)
letters of appointment and identity certifications of
the legal representative and of the directors;
(5)
list of capital contributions signed and sealed by the
members who make such contributions;
(6)
certification for use of the domicile; and
(7)
other documents as prescribed by relevant laws and
administrative regulations.
The
registration authority shall complete the registration procedure within 20 days
from the date it accepts the application for registration and shall issue a
business license to the applicant that meets the conditions for registration.
Where
a specialized farmers
cooperative intends to alter the statutory items for registration, it shall
submit an application for the purpose.
The
measures for registration of specialized farmers
cooperatives shall be formulated by the State Council. No charges may be
collected for registration.
Chapter
III
Membership
Article 14 Citizen
who have the capacity for civil conduct and enterprises, public institutions
and organizations that are engaged in production and operation which are
directly related to the business of a specialized farmers
cooperative may become members of the cooperative, provided that they can make
use of the services offered by the cooperative, recognizes and abides by the
charter of the cooperative and complete the formalities for joining the
cooperative as prescribed in the charter. However, a unit that exercises the
function of administering public affairs shall not join such cooperative.
A
specialized farmers
cooperative shall have a membership roll and file it with the registration
authority.
Article 15
Farmers shall account for at least 80 percent of the membership of a specialized farmers
cooperative.
If
the total number of members of a cooperative is 20 or less, there may be one
enterprise, public institution or organization as its member; if the number
exceeds 20, the number of enterprises, public institutions or organizations
shall not exceed five percent of the total number.
Article 16 A
member of a specialized farmers
cooperative shall enjoy the following rights:
(1)
to attend the membership assembly, have the rights to
vote, to elect and to stand for election, and exercise democratic management of
the cooperative according to the stipulations in the charter;
(2)
to make use of the services and production and
operation facilities provided by the cooperative;
(3)
to share profits according to the stipulations in the
charter or the resolution of the membership assembly;
(4)
to consult the charter, membership roll, minutes of the membership assembly or
of the conference of members’ representatives, resolutions of the board of
directors and of the board of supervisors, and financial statements and account
books; and
(5)
other rights as are stipulated in the charter.
Article 17 The
system of “one person, one vote” shall be adopted for election and voting at
the membership assembly of a specialized farmers
cooperative, and each member shall have the right to one basic vote.
Members
who make considerably large capital contributions or who effect
considerably large amounts (volumes) of transactions with the cooperative may,
according to the stipulations of the charter, enjoy the right to extra votes.
The total number of extra votes of the cooperative shall not exceed 20 percent
of the total number of the members’ basic votes. Each time a membership
assembly is convened, the members present at the assembly shall be informed of
those members who enjoy the right to extra votes and the number of extra votes
they each enjoy.
In
the charter restrictions may be placed on the scope of the extra votes to be
cast.
Article 18 A
member of a specialized farmers
cooperative shall be charged with the following duties:
(1)
to execute the resolutions of the membership assembly,
the conference of members’ representatives and the board of directors;
(2)
to make capital contributions to the cooperative as
stipulated in the charter;
(3)
to effect transactions with the cooperative as
stipulated in the charter;
(4)
to share losses as stipulated in the charter; and
(5)
other duties as stipulated in the charter.
Article 19 If a
member of a specialized farmers cooperative intends
to withdraw from the cooperative, he shall submit a request to the
director-general or the board of directors three months prior to the end of the
fiscal year; and if an enterprise, public institution or organization intend to
withdraw from the cooperative as a member, it shall do so six months prior to
the end of the fiscal year; if the charter stipulates otherwise, the
stipulations there shall prevail. The membership qualifications of such member
shall be terminated at the end of the fiscal year.
Article 20 A member shall continue performing the contract concluded with
the specialized farmers cooperative before the
termination of his membership, unless otherwise stipulated in the charter or
otherwise agreed upon by him and the cooperative.
Article 21 At
the termination of the membership, the cooperative shall, in the manners and
within the time limit as are stipulated in the charter, return to the member
the amount of the capital contributions recorded in his account and his shares
of the common reserve funds; and it shall, according to the provisions in the
second subparagraph of Article 37 of this Law, return to him the distributable
profits earned by the cooperative prior to the termination of his membership
qualifications.
The
member whose membership qualifications are terminated shall, according to the
stipulations in the charter, share the losses and debts incurred by the
cooperative prior to the termination of his qualifications.
Chapter
IV
Organizational
Structure
Article 22 The
membership assembly of a specialized farmers
cooperative shall be composed of all of the members. It is the organ of power
of the cooperative and shall exercise the following functions and powers:
(1)
to modify the charter;
(2)
to elect and remove the director-general, directors,
the executive supervisor or members of the board of supervisors;
(3)
to decide on disposition of major assets, external investment, providing
guarantee to entities and individuals outside the cooperative, and other major
issues in respect of production and operation;
(4)
to grant approval of the annual business report, and
the plans for distribution of profits and for disposition of losses;
(5)
to make a resolution on merger, division, dissolution
or liquidation of the cooperative;
(6)
to decide on the number of managers for business
operation and technicians to be employed and their qualifications and terms of
office;
(7)
to hear reports on the change of membership delivered
by the director-general or board of directors; and
(8)
other functions and powers specified in the charter.
Article 23 When
a specialized farmers
cooperative holds its membership assembly, the number of persons present shall
be two-thirds or more of its membership.
The
outcome of an election held or the resolution made at a membership assembly
shall be deemed to be effective if it is adopted by more than half of the total
votes of the members of the cooperative; for a resolution on modifying the
charter or on merger, division or dissolution of the cooperative to be adopted,
two-thirds or more of the total votes of the members of the cooperative is
required. If the charter requires a greater number of votes on such matters,
the stipulations there shall prevail.
Article 24 Membership
assembly of a specialized farmers
cooperative shall be held at least once every year, and convening of the
assembly shall be stipulated in the charter. A special membership assembly
shall be held within 20 day under one of the following circumstances:
(1)
It is proposed by 30 percent or more of the members;
(2)
It is proposed by the executive supervisor or the board of supervisors; or
(3)
Other circumstances as stipulated in the charter.
Article 25
Where the number of members of a specialized farmers cooperative exceeds 150, a conference of
members’ representatives may be organized according to the stipulations of the
charter, which may, according to the stipulations of the charter, exercise part
or all of the functions and powers of the membership assembly.
Article 26 In a
specialized farmers
cooperative there shall be a director-general, and a board of directors may be
set up. The director-general shall be the legal representative of the
cooperative.
In
a specialized farmers cooperative there may be an
executive supervisor or a board of supervisors. The director-general, director,
manager, the book-keeper or accountant shall not concurrently hold the office
of the supervisor.
The
director-general, director, the executive supervisor or members of the board of
supervisors shall be elected at the membership assembly from among the members
of the cooperative, and they shall exercise their functions and powers
according to the provisions prescribed in this Law and the charter and shall be
accountable to the membership assembly.
The
system of “one person, one vote” shall be applied to voting at the meetings of
the board of directors and the board of supervisors.
Article 27 Decisions
made on the matters discussed at the meetings of the membership assembly, the
board of directors and the board of supervisors of a
specialized farmers cooperative shall be
recorded in the minutes, which shall be signed by the members of the assembly,
directors and supervisors present at the meetings.
Article 28 The
director-general or the board of directors of a specialized farmers
cooperative may employ managers, book-keepers and accountants according to the
decision made at the membership assembly, and the director-general or director
may concurrently hold the office of a manager. A manager may, according to the
stipulations of the charter or the decision of the board of directors, employ
other staff members.
A
manager shall be responsible for the specific production and operation as
stipulated in the charter or as authorized by the director-general or the board
of directors.
Article 29 The
director-general, director or manager of a specialized farmers cooperative shall not do any of the
following:
(1)
illegally taking into his own possession,
misappropriating or illegally sharing the assets of the cooperative;
(2)
in violation of the stipulations of the charter or
without permission of the membership assembly, loaning to another person the
funds of the cooperative or providing guarantee to another person with the
assets of the cooperative;
(3)
taking into his own possession the commissions charged
for transactions effected between another person and the cooperative; or
(4)
engaging in other activities jeopardizing the economic
benefits of the cooperative.
Any
incomes derived by the director-general, director or manager in violation of
the provisions in the preceding paragraph shall belong to the cooperative; if
any losses are caused to the cooperative, he shall be liable for compensation.
Article 30 The
director-general, director or manager of a specialized farmers cooperative shall not concurrently hold the
office of the director-general, director, supervisor or manager in another
specialized farmers cooperative that is engaged in
the same nature of business as is the said cooperative.
Article 31 A person who handles official business concerning specialized
farmers cooperatives shall not concurrently hold the office of the
director-general, director, supervisor, manager, book-keeper or accountant in
such a cooperative.
Chapter
V
Financial
Management
Article 32 The
department of finance under the State Council shall establish a financial and
accounting system for the specialized farmers
cooperatives in accordance with relevant laws and administrative regulations of
the State. The specialized farmers cooperatives shall
carry out their accounting according to the said financial and accounting
system.
Article 33 The
director-general or the board of directors of a specialized farmers
cooperative shall, according to the stipulations in the charter, organize
efforts to prepare the annual business report, plans for profit distribution
and for disposition of losses, and financial statements, and shall, 15 days
prior to the convening of the membership assembly, make them available in the
office for the members to consult.
Article 34
Accounting for the transactions effected between a
specialized farmers cooperative and its
members shall be separated from the ones effected between the cooperative and
the non-members that make use of the services provided by the cooperative.
Article 35 A
specialized farmers cooperative may draw common
reserve funds from the profits of the year in accordance with the stipulations
in the charter or the decision made by the membership assembly. The common
reserve funds shall be used for making up for losses, expanding production and
operation or be converted into members’ capital contributions.
The
common reserve funds drawn every year shall be quantified as shares of each
member according to the stipulations of the charter.
Article 36 A specialized
farmers cooperative shall start an account for each
member, in which shall mainly be recorded the
following:
(1)
the amount of capital contributions of the member;
(2)
the quantified common reserve funds as shares of the
member; and
(3)
the volume (amount) of transactions effected between
the member and the cooperative.
Article 37 The
profits of the year left after the losses are made up for and the common
reserve funds are drawn shall be the distributable profits of a specialized farmers cooperative.
The
distributable profits shall be returned or distributed to the members according
to the following provisions, and the specific measures for distribution shall
be decided according to the stipulations in the charter or the resolution of
the membership assembly:
(1)
to return the profits in proportion to the volume (amount) of the transactions
effected between the members and the cooperative, and the total amount returned
shall not be less than 60 percent of the distributable profits; and
(2)
to distribute pro rata to the members of the cooperative the rest of the
profits left after the return according to the provisions in the preceding
subparagraph, on the basis of the capital contributions and shares of common
reserve funds recorded in the members’ accounts and the members’ average
quantified shares of the assets accumulated from subsidies directly given by
the government and donations made by other persons to the cooperative.
Article 38 Where
there is an executive supervisor or a board of supervisors in a specialized farmers cooperative, the executive
supervisor or the board of supervisors shall be responsible for the internal
financial auditing of the cooperative and shall report the auditing results to
the membership assembly.
The
membership assembly may also entrust an auditing body with the financial
auditing of the cooperative.
Chapter
VI
Merger,
Division, Dissolution and Liquidation
Article 39 Where
a specialized farmers
cooperative intends to merge with another cooperative, it shall inform its
creditors of the matter within 10 days from the date the resolution is made to
such an effect. The credits and debts of the merged parties shall be succeeded
by the surviving or newly established entity after the merger.
Article 40 Where
a specialized farmers cooperative intends to be
divided, it shall have its assets divided accordingly, and shall inform its
creditors of the matter within 10 days from the date the resolution on division
is made. The entities after the division shall bear joint and several liability for the debts of the cooperative incurred prior to
the division, except that the written agreement on payment of the debts it
concluded with the creditors prior to the division stipulates otherwise.
Article 41 A
specialized farmers
cooperative shall be dissolved for one of the following reasons:
(1)
The causes for dissolution stipulated in the charter arise;
(2)
A resolution on dissolution is made by the membership assembly;
(3)
Dissolution is necessary because of merger or division; or
(4)
Its business license is revoked or its registration is cancelled according to
law.
Where
a cooperative is dissolved due to the reasons as specified in subparagraph (1),
(2) or (4) of the preceding paragraph, a liquidation team composed of the
members of the cooperative who are elected by the membership assembly shall be
formed within 15 days from the date a cause for dissolution arises, in order to
initiate liquidation for dissolution. If a liquidation team cannot be formed at
the expiration of the time limit, members and creditors of the cooperative may
apply to a people’s court for designating members to form a team for
liquidation, and the people’s court shall accept such an application and in a
timely manner, designate members to form a liquidation team. Article 42 A
liquidation team shall, from the date it is formed, take over the specialized farmers cooperative, and it shall be responsible for
disposing of the outstanding businesses which are related to the liquidation,
straightening out the assets, credits and debts, distributing the assets left
after the debts are repaid, participating in litigation, arbitration or other
legal proceedings on behalf of the cooperative and, at the end of the
liquidation, handle the formalities for canceling registration.
Article 43 A
liquidation team shall, within 10 days from the date it is formed, notify the
members and creditors of the specialized farmers
cooperative of its formation and announce the matter in newspapers within 60
days. The creditors shall, within 30 days from the date they receive the
notification, or for those who fail to receive such notification, within 45
days from the date the announcement is made, declare their claims to the liquidation
team. If all the members and creditors receive the notification within the
prescribed time limit, the liquidation team shall be absolved from the
obligation to make an announcement.
When
declaring their claims, the creditors shall explain the matters concerned and
provide the certifying documents. The liquidation team shall keep a record of
the claims.
During
the period of declaration of claims, the liquidation team shall not pay back
any debts to the creditors.
Article 44 When
a specialized farmers
cooperative is dissolved due to the causes specified in the first paragraph in
Article 41 of this Law, or when its application for bankruptcy is being
processed by a people’s court, it shall not handle any formalities for any
member to withdraw from the cooperative. Article 45 The liquidation team shall
be responsible for drawing up liquidation plans for paying off the salaries and
social insurance premiums of the employees of the cooperative, the taxes in
arrears and other debts and for distributing the remaining assets, and shall
execute the plans after they are adopted by the membership assembly, or
confirmed by the people’s court upon the team’s application.
If
the liquidation team discovers that the assets of the specialized farmers cooperative is
insufficient to pay off the debts, it shall apply for bankruptcy to a people’s
court according to law.
Article 46 When
a specialized farmers
cooperative is being liquidated for dissolution or bankruptcy, the subsidiaries
it directly received from the government which form part of its property shall
not be distributed to the members of the cooperative as distributable surplus
property, and the measures for disposing of such assets shall be formulated by
the State Council.
Article 47 Members
of a liquidation team shall be devoted to their duty and perform their duty of
liquidation according to law, and they shall be liable for compensation if they
intentionally cause losses to the members or creditors of a specialized farmers cooperative or do so through gross negligence.
Article 48 The
relevant provisions of the Enterprise Bankruptcy Law shall be applicable to the
specialized farmers cooperatives that go bankrupt.
However, after the bankruptcy assets are used for paying off the expenses for
bankruptcy proceedings and the debts incurred for the common good of creditors,
priority shall be given to settling the outstanding accounts resulted from
transactions with the farmer members of the cooperatives effected prior to
bankruptcy.
Chapter
VII
Supportive
Policies
Article 49 The
State supports the construction projects for developing agriculture and the
rural economy, and the relevant competent specialized farmers cooperatives may
be entrusted with or assigned such tasks.
Article 50 The
Central and local governments shall respectively allot funds to support the
specialized farmers cooperatives in providing services in respect of
information, training, quality standards for farm products and their
authentication, construction of infrastructure for agricultural production,
marketing, technology dissemination, etc. Priority shall be given to the
specialized farmers cooperatives in ethnic areas,
outlying areas and poverty-stricken areas and to the ones engaging in the
production of major farm products which are urgently needed by the State and
the society.
Article 51 The
policy-oriented financial institutions of the State shall adopt diversified
means to provide funds through various channels in support of the specialized farmers cooperatives. The specific supportive policies shall
be formulated by the State Council.
The
State encourages the commercial financial institutions to provide financial
services to the specialized farmers cooperatives by
diversified means.
Article 52 The
specialized farmers cooperatives shall enjoy
preferential treatment in taxation prescribed by the State in respect of
agricultural production, processing, circulation and services and other
economic activities involving agriculture.
Other
preferential taxation policies in support of the development of specialized farmers cooperatives shall be formulated by the State
Council.
Chapter
VIII
Legal
Responsibility
Article 53 A
person who illegally takes into his own possession, misappropriates, withholds,
illegally shares or by other means infringes on the lawful property of a
specialized farmers cooperative or its members,
illegally intervenes with the production and operation of such cooperative or
its members, apportions expenses or tasks to the cooperative or its members, or
compels the cooperative or its members to accept paid services, thus causing
financial losses to the cooperative, shall be investigated for legal
responsibility according to law.
Article 54 Where
a specialized farmers cooperative provides false
materials for registration to the relevant registration authority or gets
registered by other deceptive means, it shall be ordered by the registration
authority to rectify; and if the circumstances are serious, its registration
shall be canceled. Article 55 Where a specialized farmers
cooperative makes false entries or conceals important facts in such materials
as financial statements submitted in accordance with law to the relevant
department in charge, it shall be investigated for legal responsibility
according to law.
Chapter
VX
Supplementary
Provisions
Article 56 This
Law shall go into effect as of July 1, 2007.