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The government has released a white paper on the Cooperative Societies Regulation Bill.
The bill aims to regulate cooperatives, a move the government says is designed to help them meet modern challenges while opening up to “today’s global, dynamic and innovative markets”.
“These member-owned enterprises are based on the principles of mutual assistance, democratic governance and community empowerment and span sectors as diverse as agriculture, fisheries and services,” the government said. “The cooperative movement is characterised by its commitment to sustainable development and social responsibility, meeting the unique needs of its members while contributing to the country’s wider economic stability. Through collective action and common ownership, Maltese cooperatives not only increase local productivity but also strengthen social cohesion and resilience, making them an essential part of Malta’s socio-economic landscape.”
The proposed changes to the cooperative legislation include several important updates designed to improve the attractiveness and functionality of cooperatives. One of the proposed amendments is to reduce the minimum number of members required to form a cooperative from 5 to 3, as set out in section 22(2)(a).
The change is intended to encourage more businesses to consider the partnership model by lowering the initial membership threshold.
Another proposed reform concerns the redemption value of a member’s shares or interests. Under current legislation, the redemption amount is based on the nominal value of the assets when a member leaves the society. The new proposal suggests determining the redemption amount based on the market value of the equity rather than the nominal value, to ensure fairer compensation and make cooperatives more attractive to potential members.
Additionally, the legislation proposes to set minimum share capital requirements for cooperative members. Currently, Article 23 allows five members to contribute any amount without setting a minimum limit on issued and paid-up share capital. The new law will set a minimum contribution of €300 per member, with the exact amount depending on factors such as the business plan, the viability of the enterprise, the nature of the industry and capital expenditure needs. This change is intended to ensure that cooperatives have sufficient initial funding.
The definition of “supreme body” will also be expanded. The current definition only allows one body to be designated as the supreme body, while excluding others.
The proposed changes would create an umbrella organization called the “Apex National Association” covering multiple recognized associations that meet specific standards.
In addition, the amendments propose that 30% of funds raised by the Apex National Association be allocated to community and social activities, and 20% to fund board operations, as opposed to the current allocations that are only used for research and education. Strengthening the regulation of recognized organizations, including provisions for the deregistration and liquidation of inactive societies, is also a key aspect of the new legislation.
Those interested in participating in the public consultation can here.
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