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&oYo&-A '1;JlT ;JltfIJFEDERAL NEGARIT GAZETA

OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

h9"il"'~ ~oo-r ck1'C S'%h.atil hOfl-.+"I"P' S' cf>")Ii1f1li

5th Year No. 27ADDIS ABABA - 29thDecem., 1998Oh.-rf-A-.r &..1..t.I\ce .at'fOh/rl'L.rce ~T-ot\.h

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PROCLAMATION NO 147/1998A PROCLAMATION TO PROVIDE FOR THE

ESTABLISHMENT OF COOPERATIVESOCIETIES

WHEREAS, it has become necessary to establishcooperative societies which are fonned by individuals onvoluntary basis and who have similar needs for creatingsavings and mutual assistance among themselves bypooling their resources, knowledge and property;

WHEREAS, it has become necessary to enablecooperative societies to actively participate in the freemarket economic system;

WHEREAS; it has become imperative to issue acomprehensive legislation by which cooperativesocieties are organized and managed in order to achievethe above mentioned objectives;

NOW, THEREFORE, in accordance with Article55(1) of the Constitution of the Federal DemocraticRepublic of Ethiopia, it is hereby proclaimed as follows:

PART ONEGeneral

1. Short TitleThis Proclamation may be cited as the' 'Cooperative

I Societies Proclamation No. 147/1998."2. Dei1nitions

In this Proclamation unless the context otherwisereqUIres:

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I) "Society" means a cooperative society established

and registered in accordance with this Proclamation

and it shall in particular include the following:(a) Agricultural Cooperative Societies;

(b) Housing Cooperative Societies;

(c) Industrial and Artisans Producers' Cooperative

Societies;(d) Consumers Cooperative Societies;

(e) Savings and credit Cooperative societies;

(f) Fishery Cooperative Societies;

(g) Mining Cooperative Societies;

2) "Cooperative Society" means a society established

by individuals on voluntary basis to collectively

solve their economic and social problems and to

democratically manage same;3) "Member" means any physical person, or society

established under this proclamation which is regis-

tered after fulfilling his membership obligations.4) "General Assembly" means a meeting of members

of the Primary Cooperative society or represen-

tatives of societies above primary level;5) "Special resolution" means a resolution passed hy a

two third majority of the members to be hinding on

all members;6) "Management Committee" means a hody elected

and empowered by the general assemhly with theresponsibility to manage the activities of the society;

7) "Appropriate Authority" means an organ es-

tablished at federal level, or a bureau or an organ

established for the same purpose at Regional or City

Administration level, to organize and register

cooperative societies and to give training, conduct

research and provide other technical assistances to

cooperative societies;

8) "Person" means a natural or juridical person.

3. Where the provisions of the Proclamation are set out in

the masculine gender they apply equally to the feminine

gender.

4. Objectives ofa Society

The society to be established under this proclamation

shall have one or more of the following objectives:I) to solve problems collectively which members can

not individually achieve;2) to achieve a better result by coordinating their

knowledge, wealth and labour;

3) to promote self-reliance among members;

4) to collectively protect, withstand and solve

economic problems;5) to improve the living standards of members by

reducing production and service costs by providing

input or service at a minimum cost or by finding a

better price to their products or services;6) to expand the mechanism by which technical

knowledge could be put in to practice;

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2) Any member of a society may leave the society

when it is decided by the general assembly todismiss him from the society because of commit-ting repeated faults;

3) The rights of any dismissed member shall be

respected in accordance with the by-laws of thesociety;

4) Without prejudice to the provisions of Article 13hereof, any dismissed person may reapply formembership. However a member dismissed inaccordance with Sub-Article (2) of this Articlemay become a member of the society only if heobtains the approval of the general assembly.

16. Payment of SharesI) The capital which enables the society to expand its

work activities shall be obtained from paid upshares of each member in accordance of thedecision of the general assembly;

2) The society may sell additional shares if it is foundnecessary to promote the financial capacity of thesociety subject to the decision of the generalassembly;

3) No member shall hold more than 10% of the totalpaid up share capital of such society.

17. Register of MembersEvery society shall keep a register wherein shall beentered:I) the name, address, occupation, age and sex of each

member;2) the date on which he became a member or ceased to

be a member;3) the amount of shares held and the registration fee

paid, by each member;4) the name and address of the heir of the member;5) any other particulars that my be specified in the by-

laws.18. Voting

I) Every member shall, regardless of the number of

shares he has, have only one vote at the meeting ofthe society;

,

2) Every member in a primary society shall personallybe present at the meeting of the society to cast avote;

2) Every member in a primary society shall personally

be present at the meeting of the society to cast avote;

3) Members of a society above primary level shall cast

a vote through their representatives.19. Transfer of Share or Benefit

I) No transfer by a member of his share or benefit in asociety shall be valid unless:(a) the member has held such share or benefit for

at least one year before he transfers;(b) the transfer is approved by the management

committee.2) On the death of a member of a primary society, his

share or benefit shall be transferred to one of hisheirs des.ignated as such in the register of society orfailing such designation to his legal heir at law, andwhere such heir is a member or is willing to be amember.

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24. Powers and Duties of the Management CommitteeThe powers and duties of the management committeeshall be dertimined in pursuance of the by-laws and inparticular shall include the following:I) maintain the minutes of a meeting in writing;2) maintain the documents and books of accounts of

the society;3) parepare the annual work programme and budget of

the society; implements same upon approval;4) call general assembly in accordance with the by-

laws of the society;5) execute such other decisions given by the general

assembly;6) submit reports to the general assembly on the

activikties of the society.

25. Control Committee

I. Every society shall have a control committee whichis accountable to the General Assembly and thenumber of which shall be specified by the by-lawsof the society;

2. The term of office of members of the committeeshall be three years. No members of the controlcommittee shall be elected for more than twoconsecutive terms. They may, while in term ofoffice, be dismissed by the general assembly.

26. Powers and Duties of the Control CommitteeThe Control Committee:I) follows up that the management committee is

carrying out its responsibilities properly;2) follows up that the funds and property of the society

is properly utilized;3) controls that the various activities of the socjety are

carried out pursuant to the by-laws and internalregulations of the society;

4) performs other duties given by the general assem-bly.

27. Other Sub-CommitteesOther sub-committees may be established pursuant tothe by-laws of the society.

PART FIVESpecial Privileges of Society

28. Priority of claims by SocietyNotwithstanding any provision to the contrary in anylaw, debts owed to the society by member shall takeprecedence over all other debts, except the debt owed tothe Government.

29. Set-off in respect of Share or Benefit of MembersThe shares or benefits of any member may be set-off fordebts due to the society from such a member.

.

30. Share or Benefit not Liable to Attachment or SaleExcept as provided in Article 29 hereof, the share orbenefit of a member in a society shall not be liable toattachment or sale.Government Assistance

I) Without prejudice to incentives permitted underInvestment laws and other laws, Societies which areorganized and registered under this Proclamationshall be entitled to the following:a) to be exempted from income tax; provided

however, members shall pay income tax on theirdividends;

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2) Without prejudice to Sub-Article (1) of this Articleinspection may be made when:(a) a majority of the members of the executive

committee request;(b) not less than one-third of the total number of

members of the society request.

38. Keeping Audit and Inspection ResultsAudit and Inspection result conducted pursuant toArticle 36 and 37 of this Proclamation shall be kept inthe office of the authority and the society, open andeasily accessible to everyone.

39. Actions to be Taken for Losses of Property or Fund ofthe Society1) The auditor or inspector shall make a report to the

management committee or the general assembly orthe appropriate authority, as the case may be,where the person who is or was entrusted with themanagement of the society or who is or has been anofficer or an employee of the society, and who in,the course of an audit or inspection has been foundto have committed the following acts:(a) had made any payment contrary to this

Proclamation, the regulations or the by-laws;(b) had caused any damages to the assets of the

society by breach of trust or willfully ornegligently;

(c) has misappropriated the properties of thesociety.

2) The appropriate authority who received the reportpursuant to Sub-Article 1 of this Article shall givethe person concerned an opportunity to present hisdefense within fifteen days.

3) After fulfillment of the above mentioned con-ditions, the appropriate authority shall ask theperson who has been found responsible for misap-propriation of the fund or property of the society toreturn or pay same with interest including compen-sation and damages. Where the person concernedis not willing to do so, the authority shall take theappropriate legal measure.

PART EIGHT

Dissolution and winding up of Societies

Dissolution of a Society

A Society shall be dissolved on the following grounds:1) Where a special resolution for its dissolution is

given by the members; or2) Without prejudice to Article 6 (4) hereof, where

the number of members of a primary society fallsbelow ten.

3) Without prejudice to sub-Articles (1) and (2) ofthis Article, a society the dissolution of which isdecided shall notify same to the appropriateAuthority within seven days from the decision forits dissolution.

41. Liquidator

1) Where the dissolution of a society has beendecided upon, pursuant to Article 40 of thisProclamation, the appropriate authority may,assign a liquidator. It may, if necessary,determine that his remuneration be paid out ofthe accounts of the society.

2) The liquidator shall receive records, documentsand properties of the society as soon as he isassigned. He shall also take the necessarymeasures to protect the properties and rights,records and documents of the society fromdamages.

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42. Powers and Duties of the Liquidator1) The liquidator shall have all (he necessary powers

to complete the winding up proceedings. He shallin particular perform the following in order to carryout his duties properly:(a) investigate all claims against the society and

decide on priority of payment among them;(b) collect the assets of the society;(c) distribute the assets in accordance with the

plan of liquidation approved by the generalmeeting of the society;

(d) carry on the work activities of the society inso far as may be necessary for the properliquidation of the affairs of the society;

(e) represent the society in legal proceedings;(f) call meetings of the members as may be

necessary for the proper conduct of theliquidation.

2) The liquidator shall issue notice in a newspaper,before the distribution of property of the societytakes place in accordance with Sub-Article (l) (c)of this Article, that the society is to be dissolved. Itshall proceed with the distribution where no claimis presented within two months from the date ofsuch notice. No claimant shall have a right after theexpiration of such limitation.

3) Upon completion of the winding up proceedingsthe liquidator ~hall prepare and submit a report tothe appropriate authority, he shall deposit therecords and documents of the society in such placesas the appropriate authority may direct.

43. Calling on CreditorsI) Creditors shall be paid on the basis of a balance

sheet prepared by the liquidator upon the commen-cement of his assignment.

2) Creditors shall be informed ofthe dissolution of thesociety and required to file their claims withsupporting documents.

3) Creditors appearing in the society's records or whoare otherwise known shall be notified directly byregistered letter. Notice to other creditors shall begiven by notice, published in two successivemonthly issues of a newspaper, and also in the formlaid down in the by-laws of the society.

44. Protection of Creditors1) Until the creditors of the society have been paid or

amounts required for payment be deposited, theliquidators may not distribute any part of assetsamong the members.

2) Where known creditors have failed to present theirsupporting documents, the amounts owing to themshall be deposited according to the decision of thecourt.

3) Sums shall be set aside to meet the claims inrespect of undertakings of the society which arenot completed or which are under liquidationunless the creditors are guaranteed or distributionof assets is postponed until such undertakings arecompleted.

4) After the payment of claims have been completedor verified that sufficient deposit for payment hasbeen made, the liquidators may distribute theassets of the society among the members based onthe amount due to them.

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45. Cancellation of a society from the RegisterWhen the winding up proceedings are completed thecertificate of registration shall be returned to theappropriate authority who shall cancel the registrationof the society, and the society shall, upon the date ofsuch cancellation, cease to exist.

PARTNINESettlement of Disputes

46. Conciliation

The disputes provided under Article 49 of thisproclamation shall be heard by a third party appointedby the disputing parties before they are referred to thearbitrators.

47. Arbitration

I) When the disputes provided under Article 49regarding cooperative societies are not settled byconciliation they shall be referred to arbitration.

2) The arbitration shall consist of three persons ofhigh reputation and impartiality.

3) The arbitrators shall conduct their hearing andfulfill any of their duties in accordance with theCivil Procedure Code.

48. Appointment of the Arbitrators1) Each party to the dispute shall appoint one ar-

bitrator. The third arbitrator, who shall be thechairperson, shall be appointed by both parties.

2) The appropriate authority shall appoint the chair-person arbitrator when the parties fail to reach anagreement.

49. Disputes to be referred to ArbitrationThe arbitrators shall have the power to hear disputes notsettled by conciliation regarding the organization,management, or operations of a society which arisesbetween:I) members or former members and members and

members or representatives of former members orpersons claiming in the name of deceased mem-bers; or

2) members, former members or members orrepresentatives of former members or heirs ofdeceased members and any officer, representativeof the management committee or employee of thesociety; or

3) the society or the management committee and anyformer management committee, any officer, agentor employee, or any former officer, agent oremployee or the nominee heirs or representativesor representatives of deceased former members oremployees; or

4) the society and any other society.

50. Civil Court Powers of ArbitratorsThe Arbitrators shall have the same power, with regardto the cases provided under Article 49 of thisProclamation, as a Civile Court for the summoning ofwitnesses, production of evidence, the issuing of ordersor the taking of any legal measures.

51. ExecutionAny decision, order or award made under thisProclamations shall be taken as though made by a civilcourt, and, where appropriate, the courts shall havejurisdiction to order the enforcement of any suchdecision, order or award.

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59. Issuance of Implementing Legislations

The Council of Ministers of the Federal Government orthe appropriate organ of a Region or city accountable tothe Federal Government may issue legislations for theproper implementation of this Proclamation.

hCP~ fll?O'i"OT 1.11.60. Effective Date

f,U hCP~ h;J-..,..,F 0 cf>'}IIIf.1li ~'9" 'f.9"r.' fO'i"This Proclamation shall come into force as of the 291hday

f,tf'i"A::of December, 1998.

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Done at Addis Ababa, this 29thday of December, 1998.

NEGASO GIDADA (DR)

PRESIDENT OF THE FEDERAL DEMOCRATICREPUBLIC OF ETHIOPIA

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aERHANENA SELAM PRINTING ENTERPRISE