Law of the People's Republic of China on Farmers' Cooperatives

Law of the People's Republic of China on Farmers' Cooperatives

Order of the President [2006] No. 57

October 31, 2006

(Adopted at the 24th Meeting of the Standing Committee of the Tenth National People's Congress on October 31, 2006)

Contents
Chapter I General Provisions
Chapter II Establishment and Registration
Chapter III Membership
Chapter IV Organizational Structure
Chapter V Financial Management
Chapter VI Merger, Division, Dissolution and Liquidation
Chapter VII Supportive Policies
Chapter VIII Legal Responsibility
Chapter IX Supplementary Provisions

Chapter I General Provisions

Article 1 This Law is enacted for the purpose of supporting and guiding the development of farmers' cooperatives, regulating their organization and behavior and protecting their lawful rights and interests and those of their members', and promoting the development of agriculture and of the economy of rural areas.

Article 2 Farmers' cooperatives are mutual-help economic organizations joined voluntarily and managed in a democratic manner by the producers and operators of the same kind of farm products or by the providers or users of services for the same kind of agricultural production and operation.
Farmers' cooperatives mainly serve their members, offering such services as purchasing the means of agricultural production, marketing, processing, transporting and storing farm products, and providing technologies and information related to agricultural production and operation.

Article 3 Farmers' cooperatives shall observe the following principles:
1. Their members are mainly farmers;
2. They aim to serve their members, working for the common interests of all the members;
3. The members join the cooperatives voluntarily and are free to withdraw from them;
4. The members are equal in status and democratic management is practiced; and
5. Profits are to be distributed mainly in proportion on the volume (amount) of the transactions effected between the cooperatives and their members.

Article 4 Farmers' cooperatives shall be registered according to this Law to obtain the status of a legal person.
Farmers' cooperatives shall enjoy the rights to possess, use and dispose of their property which includes capital contributions by their members, common reserve funds, subsidies received directly from the government, donations and other legitimately acquired assets, and shall be liable for their debts with the aforementioned property.

Article 5 Members of farmers' cooperatives shall be accountable to their cooperatives within the limits of the capital contributions recorded in their accounts and of their shares of the common reserve funds.

Article 6 The State protects the lawful rights and interests of the farmers' cooperatives and their members, and no units or individuals may infringe upon such rights and interests.

Article 7 In production and operation, farmers' cooperatives shall obey the relevant laws and administrative regulations, observe social and business ethics, and act in good faith.

Article 8 The State promotes the development of farmers' cooperatives through such measures as government financing, preferential taxation, support in fund raising, science and technology as well as human resources, and guidance through industrial policies.
The State encourages and supports all social sectors to provide services to farmers' cooperatives.

Article 9 People's governments at or above the county level shall make arrangements for the administrative departments of agriculture and the relevant departments and organizations to provide guidance, support and services to the formation and development of farmers' cooperatives, in accordance with this Law and within the limits of their respective duties.

Chapter II Establishment and Registration

Article 10 For establishment of a specialized farmers cooperative, the following conditions shall be met:
1. having five or more members who meet the requirements as are prescribed in Articles 14 and 15 of this Law;
2. having a charter that meets the requirements as are prescribed by this Law;
3. having an organizational structure that meets the requirements as are prescribed by this Law;
4. having a name which is in conformity with the provisions of relevant laws and administrative regulations and a domicile as specified in the charter; and
5. having capital contributions made by members who meet the requirements as are specified in the charter.

Article 11 For establishment of a specialized farmers cooperative, an assembly shall be convened with the participation of all of the founders. Persons who voluntarily become members of the cooperative at the time of its establishment are founders.
The founders' assembly shall exercise the following functions and powers:
1. to adopt the charter of the cooperative, which is required to be adopted unanimously by all of the founders;
2. to elect the director-general, directors, the executive supervisor or members of the board of supervisors; and
3. to examine and discuss other major issues.

Article 12 In the charter of a specialized farmers cooperative shall clearly be specified the following matters:
1. its name and domicile;
2. scope of business;
3. membership qualifications, joining and withdrawing from the cooperative, as well as expelling a member;
4. rights and duties of members;
5. structure of the organization, measures for its formation, its functions and powers, term of office and the rules of procedure;
6. forms and amounts of capital contributions to be made by members;
7. financial management, distribution of profits and disposition of losses;
8. procedures for modification of the charter;
9. causes of dissolution and measures for liquidation;
10. the items for announcement and the manners of announcement; and
11.
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