The State Administration for Market Regulation ("SAMR") has recently issued the Administrative Regulations on the Registration of Specialized Farmers' Cooperatives (Revised Draft for Comment) (the "Draft for Comment") for public comments before July 24, 2019.
The Draft for Comment emphasizes that members of a specialized farmers' cooperative are disallowed to make capital contributions with labor services, credit, the name of a natural person, goodwill, franchise, or the encumbered property, and entities that exercise the function of administering public affairs are banned from joining such cooperative. The Draft for Comment also clearly states that a specialized farmers' cooperative may establish a branch; three or more specialized farmers' cooperatives may, on a voluntary basis, make capital contributions and register themselves as a specialized farmers' cooperative union. Furthermore, the Draft for Comment provides that, where a specialized farmers' cooperative is successfully registered through submitting false materials or by other fraudulent means, the registration authority shall order it to make rectification and may give it a fine of less than CNY5,000; however, if the circumstances are serious, the registration shall be canceled, or its business license shall be revoked. Where the branch of a specialized farmers' cooperative is found to have any violation, punishment shall be imposed in accordance with the provisions of these Regulations.