Chapter 3 Members’ Shares in a Cooperative, Surpluses, and Deficits
Persons that meet any of the following requirements or qualifications may become members of a cooperative:
1. A person who is capable of contracting;
2. A person who is the subject to the order of commencement of assistance obtained the written consent of his/her assistant;
Persons that meet any of the following requirements or qualifications may apply to become associate members of a limited liability cooperative pursuant to its articles of association:
1. An application being filed by the legal representative in the case of a person aged six or older without capacity to contract;
2. Having obtained written consent from the legal representative in the case of a person who is limited in capacity to make juridical acts;
3. A person with capacity to contract who does not meet the qualifications for members as set forth in the articles of association.
Associate members have the same rights and obligations as members do, with the exception of the rights to elect, to be elected, to recall, and to vote.
The central competent authority shall establish regulations on the types of elections and recalls in a cooperative, registration of candidates, qualification screening process, voting, ballot counting, election results, recall methods, and other matters to be complied with.
A legal person may only be a member of a cooperative of limited liability or guaranteed liability, and such legal person shall be a non-profit one.
A member of a cooperative of unlimited liability may not be a member of another cooperative of unlimited liability.
After a cooperative is established, references provided by at least two members or a written request shall be submitted for voluntary affiliation. A decision shall be made pursuant to the following provisions:
1. Affiliation into cooperatives of limited liability or guaranteed liability requires the consent of the board of directors, and shall be reported to the member’s congress.
2. Affiliation into cooperatives of unlimited liability shall be proposed by the cooperative affairs committee and requires the consent of not less than 3/4 of the attendees of the member’s congress.
A cooperative shall submit a report on its new members or associate members within one month of approval of the affiliation to the competent authority for future reference.
New members shall burden the same liability as old members do for the debts burdened before they are affiliated.
The par value of each share of a cooperative shall be not less than NT$6 and not more than NT$150, and must be unified in a same cooperative.
The proportion of shares subscribed by a member shall be not less than 1 share and not more than 20% of the total capital. And the first payment may not be less than 1/4 of the amount of the shares subscribed.
The shares that a member has subscribed but has not paid may not be charged off by the member’s claim of creditor’s rights against the cooperative or other members, and the shares that have been paid may not be used to set off the debts owed by the member to the cooperative or other members.
Cooperatives may capitalize the earned dividend and surplus of a member to make up for the shares that the member has not paid for yet.
Without the consent of the cooperative, a member may not transfer the shares he holds to someone else or use it as the guarantee of debts. However, this rule does not apply to the shares which are held by a member and subject to compulsory enforcement or administrative execution according to law, included in bankruptcy estate, or subject to the commencement of a liquidation proceedings as ruled by law.
The transferee or heritor of the shares of a cooperative shall succeed to the rights and obligations of the transferor or the decedent. If the transferee or heritor is not a member, he/she shall be affiliated to the cooperative in accordance with the provisions of Articles 11 and 14, and the amount of his/her capital stocks shall be refunded.
If a cooperative of limited liability reduces the par value of each share, or a cooperative of guaranteed liability reduces the par value of each share or the guarantee money, it shall be resolved in the member’s congress; and notices shall be given to the creditors or a public announcement shall be made to inform the creditors about the reduction, and a time limit of not less than one month shall be set for the creditors to file an opposition against the reduction.
If a creditor files an opposition within the time limit set forth in the above paragraph, the cooperative may not reduce the par value of each share or the guarantee money unless it pays off the debts owed to the creditor or provides an equivalent guarantee.
The annual interest of the shares of a cooperative shall not exceed ten percent. In the case of no surplus, no interest shall be distributed to members.
A cooperative shall use its surplus to offset accumulated deficits and pay the interest. Moreover, it shall set aside no less than ten percent of the surplus as the public accumulated funds, no less than five percent as the public interest reserve, and no more than ten percent as the compensation for its directors, supervisors, clerks, and technicians.
Where the public accumulation fund as referred to in the above paragraph is more than 2 times of the total capital, the cooperative itself may determine the percentage of surplus that should be allocated into the fund every year.
In case that the public accumulated funds referred to in the preceding paragraph is more than twice the total amount of the capital stocks, the cooperative itself may determine the percentage that shall be set aside every year.
Members must not request to allocate the public accumulated funds.
The public interest reserve set forth in Paragraph 1 is accounted as a liability in the balance sheet, as specified in Paragraph 1 of Article 36, and shall only be used for the educational and promotional purposes of social welfare enterprises, charitable enterprises, and cooperative enterprises. No other purposes are allowed. The same rule also applies after the cooperative is disincorporated.
After the surplus is allocated in accordance with the provision of the above article, the residuals shall be distributed according to the transaction amount of the members.
If it is resolved in the member’s congress that the residuals as referred to in the above paragraph should not be distributed, it may be deposited as capital stocks subscribed by the members or allocated into public accumulated funds.
Public accumulation fund shall be stored in credit cooperatives or other reliable banks with the resolution of the member’s congress.
Where the public accumulation fund is more than 50% of the total capital stock, the excessive proportion may be used to operate the cooperative with the resolution of the member’s congress.
In any of the following occasions, a member shall be disaffiliated:
2. Application for disaffiliation on one’s own initiative
A member may quit from the cooperative at the end of a business year, but shall submit a letter of application three months before.
The term prescribed in the above paragraph may be prolonged to six months in the articles of association; if the member is a legal person, the term may be prolonged to one year.
Dismissal of a member requires the consent of not less than 3/4 of the directors and supervisors who attend the cooperatives affairs meeting and shall be reported to the member’s congress, and a written notice shall be sent to the dismissed member.
Causes for dismissal shall be prescribed in the articles of association.
A disaffiliated member may apply for affiliation again pursuant to Article 14.
A disaffiliated member may request the cooperative to refund all or a part of the capital stocks that he/she holds according to the provision of the articles of association. The capital stocks shall be calculated according to the properties at the end of the business year. However, if it is otherwise prescribed in the articles of association, such prescription shall apply.
A disaffiliated member of a cooperative of unlimited liability or guaranteed liability may, after he has been disaffiliated for two years, be relieved from the liability that has come into existence before he is disaffiliated.
If the cooperative referred to in the above paragraph is disincorporated within six months after a member is disaffiliated, the member shall be regarded as affiliated all the same.