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Co-op Societies @ Koperasi

Salam everyone,

As a follow up to the Postal2u Program post, I would like to talk about a good investment vehicle/business opportunity: the co-op society or koperasi in Malay. A co-op society is an incorporated body meaning it is similar to a private limited company. The purpose of a co-op society is, and I quote from the Co-operative Societies Act 1993, the promotion of the economic interest of its members in accordance with co-operative principles.

A co-op society is made up of at least 100 members but usually number in the thousands. A co-op society draws its funds from its members, either through membership fees and/or shares subscribed by its members. So a large co-op society can draw large amount of funds if it can attract a large number of members. For example if a proposed co-op society has about 20,000 members and each member is willing to pay between RM100-RM200 as registration and share subscription, the co-op society can raise around RM 2 to 4 million.

The co-op society can then invest these funds in carrying out a business for e.g. starting a retail store, a goat farm, a sugar cane plantation etc. It can also invest in properties as well as banking instruments. A co-op society can also offer loans to it members, and some co-op societies make money this way as well, charging interest or profit on the loans. The gains from its businesses and investments is then distributed as dividends to its members.

To start a co-op society, you have to apply to the Co-operative Societies Commission of Malaysia, where the application is sent to the Registrar-General for approval. You have to submit the following documents:
1. the application form signed by 10 members
2. the proposed by-laws of the society signed by the 10 members
3. minutes of the inaugural general meeting signed by at least 50 persons present.

This means that before submitting the application form, you have to hold your inaugural general meeting first. All interested members should attend and agree to the incorporation of the co-op society, its objectives, its primary business, the members of the Board, its by-laws etc. It should be noted that members must be a Malaysian citizen, 18 years of age, mentally sound, not a bankrupt, not convicted of any offences, and has not been expelled from a co-op society before.

After submitting the documents and paying the prescribed fee (RM45 I think) the Registrar then will approve the society and issue the relevant certificates. The co-op is then ready to start making money.

The co-op society is a good investment vehicle for groups of people who, individually do not have enough capital, but by pooling their money together, can make the difference. By far, this is better than wasting money with some get rich quick scheme.


2 Responses

  1. Thariq, what is the difference between co-op society and a company..? Does the office bearer of the society has the same responsibilities/liabilities as Director of Company?

    • Hi cheyam, long time no see.

      In a sense a co-op society and a company is not that much different. Both have officers who are responsible for the running of the co-op/company and both have shareholders/members. Both are separate legal entities that can sue and be sued. Liabilities are a bit different however, but its a bit long to explain. Maybe I’ll write another post comparing the liabilities of a co-op member and a company shareholder. You can also read the Co-operative Societies Act and the Companies Act for further study.

      There are also differences in the administration procedures, whereas co-op societies are subject to the Co-op Society Commission of Malaysia or the SKM whilst companies are subject to rules by CCM.

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