Replies to LegCo questions
LCQ4: Monitoring co-operative societies
Following is a question by the Hon Chim Pui-chung and a written reply by the
Secretary for Health, Welfare and Food, Dr York Chow, in the Legislative Council
today (April 20):
Question:
Will the Government inform this Council:
(a) whether it will review the Co-operative Societies Ordinance (Cap. 33) with a
view to promoting the development of community economy; if it will, of the time
and scope of the review; if not, the reasons for that; and
(b) how it monitors registered societies?
Reply:
Madam President,
(a) Co-operative is a form of business operation characterized by the pooling of
human resources together with limited capital. Co-operatives worldwide operate
under a set of globally recognized "Co-operative Principles", which include
democratic control and limited capital return.
In Hong Kong, the nature of co-operatives varies widely, including the
production and marketing of agriculture and fisheries products, sale of consumer
goods and the operation of canteens etc. We have recently seen more
co-operatives of social enterprise nature such as operating tuck shops and
undertaking domestic cleansings. Some consider that the promotion of the
formation of such co-operatives would help to develop "community economy".
The operation of co-operatives carries commercial risks. At present, there are
only a limited number of co-operatives of social enterprise nature. The number
of groups with the interest and potential to develop such co-operatives is also
small. Nevertheless, some co-operatives or individuals who are interested in
setting up co-operatives have expressed to us their concerns about business
viability, as well as insufficient capital and management skills. They have also
requested for exemption from the usual statutory business obligations such
business registration, profits tax, Mandatory Provident Fund contributions and
employees' insurance, as well as direct assistance such as rent subsidies.
Besides, they pointed out that some co-operatives might find it difficult to
meet the requirements of the Co-operative Societies Ordinance on the minimum
number of members for forming co-operatives and the allocation of a certain
portion of net profits to the reserve fund of the co-operatives.
In response, the Health, Welfare and Food Bureau is examining the most effective
ways to address the issues raised, including reviewing the Co-operative
Societies Ordinance. In considering the issues, we would take into account the
relevant international principles governing co-operatives, the adequacy of
existing support to co-operatives of social enterprise nature, the applicability
of the Co-operative Societies Ordinance, as well as the principle of fair
competition, etc.
(b) At present, co-operatives of social enterprise nature, like other
co-operatives, are regulated by the Agriculture, Fisheries and Conservation
Department (AFCD) as the Registrar according to the Co-operative Societies
Ordinance. Under the Ordinance, the Registrar shall audit or authorize others to
audit the accounts of every co-operative and submit an audit report at least
once a year. This is to monitor the operation of the co-operatives and to ensure
that their accounts are true and correct so as to safeguard the interests of
both the members and creditors of these co-operatives. Besides, the staff of the
co-operative section under AFCD will pay regular visits to the co-operatives to
advise them on management matters and assist their committees in compiling and
checking the accounts. Upon invitation, the staff will also attend the committee
meetings of co-operatives to be held at least once a month, and help the
committee members to carry out their duties according to the Ordinance and the
by-laws.
Ends/Wednesday, April 20, 2005
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