This Act is established to enhance the cooperative system, support and promote cooperative enterprises to facilitate the development of national economy and improve social welfare.
For the purposes of this Act, the term “cooperative” refers to an association organized based on the principle of equality and mutual aid, and with a view to boost the economic benefits and living standards for its members by means of joint operation. The number of members and the total amount of shares of a cooperative are variable.

A cooperative is a judicial person.

The competent authorities of cooperatives refer to the Ministry of the Interior at the central level, the municipal governments at the municipal level, and the county (city) governments at the county (city) level. However, the target businesses of cooperatives shall be directed and supervised by the central target business competent authorities.

A cooperative may engage in the following business activities:
1. Production: engaging various kinds of production, processing, and manufacturing activities in whole or in part;
2. Marketing: engaging in product marketing activities;
3. Supply: providing raw materials, equipment, or supplies necessary for production;
4. Utilization: purchasing the production, manufacturing, storage, and distribution equipment for the purpose of production;
5. Labor: offering labor and technical labor or services;
6. Consumption: selling goods for daily use;
7. Public utility: establishing public services and facilities such as housing, medical care, services related to community care for elderly people and young children, etc. for public use;
8. Transportation: providing necessary services for the operation of transportation businesses;
9. Credit: engaging in banking activities;
10. Insurance: engaging in insurance activities;
11. Other business activities approved by the central competent authority together with the central target business competent authorities.
The business activities set forth in subparagraphs 9 and 10 of the preceding paragraph must not be operated along with the other business activities mentioned above.

Credit cooperatives and insurance cooperatives shall be subject to the Credit Cooperatives Act and the Insurance Act respectively. For matters not provided for in these two acts, the provisions of this Act shall apply.
Users of the business activities operated by a cooperative shall be restricted to its members. However, such activities may be offered to non-members if they are entrusted by government agencies, charitable organizations, and for the development of the cooperatives.
The following restrictions shall apply when non-members are offered the business activities of cooperatives as described in the preceding paragraph:
1. In the event that the business activities are entrusted by government agencies or charitable organizations, the approval of the competent authority shall be obtained, and the revenue generated by non-member users shall not exceed fifty percent of the turnover.
2. In the event that the business activities are offered to non-member users for the developmen of the cooperative, the revenue generated shall not exceed thirty percent of the turnover.
The revenue generated by non-member users, as specified in the preceding two paragraphs, shall be set aside as reserves and public welfare fund, and must not be allocated to members. The central competent authority shall set regulations that stipulate the business activities offered to non-members, scope of the offering, standards, quota, handling of the revenue, and other matters to be complied with.

The liabilities of cooperatives are divided into the following three types:
1. Limited liability: a member shall be liable within the range of the shares he holds.
2. Guaranteed liability: a member shall be liable within the range of the shares he holds and the guarantee amounts.
3. Unlimited liability: where the properties of such a cooperative are insufficient to pay the debts, each member shall assume the joint and several liability.

(Deleted)

The name of a cooperative shall indicate its liability and principal business activities.
After being registered with the local competent authority, business activities other than those prescribed in Article 3 of this Act must not be operated in the name of a cooperative.

Cooperatives may be exempted from income tax and business tax.

In carrying out the following tasks, government agencies shall offer a variety of incentives and supportive measures on its own, or by giving grants to cooperatives, combining private resources, or employing other methods, so as to enhance and strengthen cooperative organizations:
1. Promoting the cooperative system;
2. Organizing cooperative education and training;
3. Assisting with the development of cooperatives.
The central competent authority shall set up a cooperative enterprise development fund to implement the aforementioned activities and provide grants for cooperatives. Regulations on the receipt, expenditure, custody, and utilization of the fund shall be established by the Executive Yuan.