Cooperatives in Malta play a significant role in fostering economic and social development. Rooted in principles of mutual aid, democratic governance, and community empowerment, these member-owned enterprises span diverse sectors such as agriculture, fisheries and services. The cooperative movement is characterized by its commitment to sustainable development and social responsibility, addressing the unique needs of its members while contributing to the broader economic stability of the country. Through collective action and shared ownership, Maltese cooperatives not only enhance local productivity but also reinforce social cohesion and resilience, making them an important component of Malta's socio-economic landscape.
The principal legislation governing co-operative societies in Malta is the Co-operative Societies Act. As indicated in the Electoral Manifesto 2022, updating the Co-operative Societies Act is crucial to ensuring the continued relevance, efficiency, and growth of cooperatives in a rapidly changing economic and social environment. Modernizing this legislation can address emerging challenges and opportunities, such as globalization, and evolving market dynamics, enabling cooperatives to remain competitive and innovative. Furthermore, updated regulations can enhance governance standards, transparency, and accountability within cooperatives, fostering greater trust and participation among members. By aligning the legal framework with contemporary best practices and international standards, an updated Co-operative Societies Act can attract investment, support sustainable development, and bolster the cooperative sector's contribution to the broader economy. Ultimately, legislative modernization is essential for empowering cooperatives to fulfill their potential as drivers of inclusive growth and social progress.
Proposed changes include:
a. A change in the minimum amount of members
The startup procedure of a co-operative necessitates a minimum of five members, who may be individuals, limited liability companies, or commercial partnerships, as per the current Article 22(2)(a). Consequently, it is suggested that the minimum number of members be reduced from five to three in order to encourage a greater number of businesses to contemplate the cooperative model.
b. Equity market value
The redemption amount for a member's share or interest is determined by the nominal value of the asset when the member exits a society, as per the current legislation. The new proposed legislation suggests that the redemption amount be determined by the market value of the equity, rather than its nominal value. The aim of this proposal and the proposal in point (a) above is to make cooperatives more attractive to prospective members.
c. Minimum share capital
As of now, Article 23 permits five members to contribute any quantity without establishing a minimum contribution for the issued and paid-up share capital when establishing a cooperative. The new proposed law will mandate that each member contribute a minimum of €300 in share capital, which will be determined by the business plan, enterprise viability, industry nature, required capital expenditure, and other pertinent factors.
d. Apex organisation
The current legislation's definition of the "Apex organisation" generates complications for present organisations, as it designates only one organisation as the Apex, thereby excluding others. The proposed modification will expand the definition to establish an umbrella organisation that will encompass recognised associations under the name "Apex National Association." The Board will acknowledge recognised organisations that satisfy the necessary criteria.
In line with the cooperative principle of concern for the community, the proposed amendments envisage that 30% of funds collected by the Apex National Association, are allocated to community and social initiatives and 20% to finance Board operations. The current legislation only specifies that funds should be allocated to research and education.
e. Better regulation
The new legislation will enhance the regulation of recognised organisations. It will grant the Board additional authority to enhance regulation, which may include the ability to refuse or suspend the organization's recognition, request further documentation to allow it to exercise its functions and other pertinent matters.
Provisions for the deregistration and liquidation of societies will be incorporated into the proposed new legislation to resolve the issue of inactive societies that have been inactive for an extended period.
Kindly refer to the Proposed Amendments to CAP 442 - Cooperatives Societies Act through the following link:
https://economy.gov.mt/wp-content/uploads/2024/07/Cooperatives-Societies-Act-Amendment-Public-Consultation-Document-18072024.pdf
