In this edition, we conclude on the tips for establishing a successful cooperative society. Meanwhile, you are invited to share your opinion or thoughts on this subject.
Set the rules: This is one of the first things you must do when you establish your cooperative. You must set the rules, procedure that will govern the affairs of your group. Thus, they are called bye-laws of the cooperative. The rules must include:
Regularity of contributions, what to use money for, procedure and condition for lending, or doing business with third parties, tenure, duties, powers of cooperative executives etc. These are necessary to ensure fairness, equity and harmony among members. They also reduce to barest minimum, opportunity for abuse of rights and privileges, and they facilitate accountability.
You must have records: Records are important for accountability, history, and they serve as indicators of the direction of the business. Now, this can be very challenging, especially for cooperatives in the informal sector. The truth is that everybody, whether literate or illiterate can keep records. Lack of records gives opportunity for embezzlement and misappropriation. There is no point joining a cooperative that won’t keep records
Be registered: The law that guides cooperatives required that they must be registered with the state as a business. So, to operate a cooperative group without registration with the government is illegal. But beyond this, it makes your group a legal entity that can sue and be sued. So, your cooperative can sue anybody that defrauds it, and members can also sue the group if they are aggrieved. Registered cooperatives are mandated to submit returns to the government, and this makes it mandatory for the leaders to be accountable.
The benefits are so numerous. So, ensure your cooperative is registered with the government. In Nigeria, applications for the registration of a cooperative society must be submitted to the federal or state director of cooperatives. Such application must be accompanied by the Bye-Laws of the applicant cooperative society.
It is important to note that the director of co-operatives has the authority to refuse to register a cooperative society where such an applicant society’s Bye-Laws, for example, do not comply with the provisions of the Nigerian Co-operative Societies Act (as amended), CAP. N98, or the Lagos State Co-operative Societies Law, CAP. C15, where the application is made in Lagos State.
However, a cooperative society that is refused registration, for any reason, has the right to appeal against such a decision, within sixty (60) days, to the minister or commissioner charged with supervising cooperative matters at the state or federal tier of government.
Investigate before you invest: To minimise or eliminate the risk of losing money, it is important that cooperatives investigate any investment or business opportunity before making the decision to invest or engage in the business. This is very important, because there is usually more to every business or investment opportunity than meets the eye. Secondly, economic situation and government policies change rapidly, such that what was profitable last year may not be profitable this year.
Engage experts or professionals: Finally, your cooperative must form the habit of engaging experts or professionals in all its business and investment dealings.
Yes! It means additional cost, but that is necessary if you don’t want to lose your entire savings. One of such experts you will always need is a legal expert or lawyer. In all your business transactions, especially with third parties, always involve a lawyer. Why? Every business decision you take has the risk of failing and resulting to dispute.
You need a lawyer to help you draft agreement and contracts or documents that will cover as much as possible all the risk and protect your interest in the business transaction. Also, remember that you are all busy in your individual businesses or career, hence you don’t have time, to read carefully all documents relating to a business transaction. But engage a lawyer to assist you to do this.
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