Official translation
REPUBLIC OF LITHUANIA
COOPERATIVE LAW
1 June 1993 No. I-164
Vilnius
CHAPTER 1.
GENERAL REGULATIONS
The State of Lithuania supports the cooperative movement,
promotes cooperative activities, legitimises the independence of
cooperative societies (cooperatives).
Article 1. Objectives of the Law
This Law shall regulate cooperative movement, the
establishment of cooperative societies (cooperatives) and their
unions (associations), the basic principles of their activities,
their reorganisation, management, formation of capital,
distribution of profit, and liquidation.
Article 2. Cooperation and Cooperative Societies
Cooperation is the joining of efforts and resources on the
basis of law for the implementation of common aims of its
members. For this purpose, cooperative societies (cooperatives)
may be established.
A cooperative society is an economic entity with changeable
composition and capital established on a voluntary basis by a
group of natural persons or natural and legal persons for the
purpose of satisfying business, economic and social needs of its
members and functioning on their initiative and at their risk.
Article 3. The Status of a Cooperative Society
A cooperative society is a legal person and may engage in
activities which are not prohibited by the laws of the Republic
of Lithuania.
A cooperative society shall be an economic entity of limited
liability liable for its obligations to the extent of its
property and not liable for the obligations of its members which
are not related to the activities of the cooperative society.
A cooperative society has its own name which must not be
similar or identical with any enterprises registered in the
Republic of Lithuania. The name of the cooperative society must
contain the words "kooperatine bendrove" (cooperative society) or
"kooperatyvas" (cooperative) as well as the words specifying the
character of the society activities. Disputes concerning the name
of the society shall be settled in court.
A cooperative society must have no less than 5 natural or
natural and legal persons. The number of legal persons in a
cooperative society may not exceed 1/2 of all the society
members.
CHAPTER 2.
ESTABLISHMENT OF COOPERATIVE SOCIETIES AND THEIR RIGHTS
Article 4. Founders
No less than 5 persons who are citizens of the Republic of
Lithuania and are 18 years of age and over, or citizens and legal
persons registered in Lithuania may be founders of a cooperative
society.
Article 5. Society Bylaws
The legal basis of a cooperative society shall be this Law
and the society bylaws drafted by the founders and adopted at the
organisation meeting. In accordance with this Law, cooperative
societies may be organised for profit-making purposes or as non-
profit societies.
The society bylaws shall be signed by all the founders of
the cooperative society. The bylaws shall be authenticated by a
notary.
The bylaws of the cooperative society must state:
1) the name of the cooperative society (name of the firm),
the address of its principal office;
2) the purpose of the cooperative society and the character
of its business, economic or social activities;
3) duration period of activities in the event that society
activities of a limited duration are planned;
4) the amount of the membership fee and share investment,
the procedure of payment and disposal thereof, and the procedure
for assessing the non-monetary (property) share investments;
5) composition, ownership and formation of capital (the
amount of the authorised capital shall not be specified);
6) first names and surnames as well as addresses of the
cooperative society founders and, in the case of legal persons,
their names and addresses;
7) conditions of membership, rights and duties of the
society members and their liability for the obligations of the
cooperative society;
8) bodies of management and control, the procedure of their
election, and their rights and duties;
9) procedure for joining a cooperative society, and of
withdrawal or expulsion therefrom;
10) procedure for calling meetings of members or their
proxies and the voting procedure;
11) procedure for forming, auditing and adopting the system
of accounting;
12) procedure for distributing profit and losses; and
13) procedure for liquidating a cooperative society.
The bylaws may contain other articles which legitimise the
character of activities of the cooperative society and establish
property and other relations of the members as well as the
relations of the cooperative society with third persons, provided
that said articles are in conformity with the laws of the
Republic of Lithuania.
Amendments and supplements to the society bylaws shall enter
into force from the day of their re-registration.
Article 6. Registration
A cooperative society shall be registered with the higher
level local government in accordance with the procedure
established by the Republic of Lithuania Law on the Register of
Enterprises. The amount of the authorised capital shall not be
registered in the Register of Enterprises.
The following documents shall be filed for registration:
1) application for registration;
2) a copy of the record of the organisation meeting and the
act on the founding of the cooperative society (required for
newly established cooperative societies);
3) the society bylaws;
4) a document certifying to the payment of registration fee;
and
5) a licence to engage in commercial-economic activities,
ecological certificate-licence, if prescribed by the laws of the
Republic of Lithuania.
The cooperative society shall acquire the rights of a legal
person from the day of its registration.
Local government must register the cooperative society
within a month from the filing of the documents. In the event
that registration is refused, grounds therefor must be specified.
Refusal to register a cooperative society may be appealed in
court in the manner established by the laws of the Republic of
Lithuania.
Article 7. Rights of a Cooperative Society
A cooperative society shall have the right to:
1) engage in activities provided for in its bylaws;
2) keep accounts in the banks of the Republic of Lithuania
and foreign banks;
3) manage the property belonging to it, utilise and dispose
of it in pursuance of the laws of the Republic of Lithuania;
4) form unions (associations) of cooperative societies;
5) conclude contracts and assume property liabilities;
6) fix charges, rates and tariffs for its products, work
and services, with the exception of those charges, rates and
tariffs which are regulated by the State; and
7) determine its organisational structure, establish
branches and other structural subdivisions, as well as
enterprises operating in pursuance of the laws of the Republic of
Lithuania.
A cooperative society may have other rights which do not
contradict the laws of the Republic of Lithuania.
Disputes between a cooperative society and its members or
third persons shall be considered in accordance with the
procedure established by laws of the Republic of Lithuania.
CHAPTER 3.
MEMBERS OF A COOPERATIVE SOCIETY
Article 8. Members
Permanent residents of the Republic of Lithuania who are 16
years of age and over as well as legal persons registered in the
Republic of Lithuania may be members of a cooperative society.
Members of cooperative societies the objective whereof is
catering for the needs of young people (in the sphere of sports,
organisation of leisure, technical-intellectual creative
activities, catering for school children) may also be persons who
are younger than 16 years of age provided that their parents
(legal guardians) have granted permission thereto. The rights and
duties of such members shall be specified in the bylaws of the
cooperative society.
A person joining a cooperative society shall lodge an
application with the society Board ( manager). The members of a
cooperative society shall be registered in the register of
members wherein the name and surname of a member and his
residence address, or, in the case of legal persons, their name
and address, and the date of joining the society or withdrawing
therefrom, the amount of the share investment and of the property
newly created by utilising the share investment as well as
changes therein shall be recorded. A legal person shall be
represented in a cooperative society by a person authorised by
him (authorised representative).
Article 9. Termination of Membership
Membership in the cooperative society shall be terminated:
1) on the member's withdrawal;
2) on the member's death;
3) on the member being recognised legally incapable;
4) on the member's expulsion;
5) on the abolition of the legal person -- member of the
cooperative society or on the reorganisation of its activities
whereafter they longer correspond to the purposes of the
cooperative society; and
6) on the liquidation of the cooperative society.
Article 10. Withdrawal and Expulsion from the Cooperative
Society
Every member of a cooperative society shall have the right
to withdraw from the cooperative society upon notifying thereof
in writing. The conditions and procedure of withdrawing shall be
established in the bylaws.
The settlement of accounts of the cooperative society with
the former members may be postponed until the approval of the
accounts of the upcoming business year. In such case the former
member shall remain bound by property relations to the
cooperative society till the end of the upcoming business year.
A member may be expelled from the cooperative society if he
fails to fulfil the duties of a member or violates the bylaws or
the laws of the Republic of Lithuania and thereby inflicts losses
on the cooperative society.
The resolution concerning the expulsion of a member from a
cooperative society shall be adopted by the meeting of members
(authorised representatives) in accordance with the procedure
established by law. In the event that the expelled member
disagrees with the resolution, he shall have the right to appeal
to court within three months from the adoption thereof.
The cooperative society shall return to the members who
withdrew or were expelled from the cooperative society their
respective share investments and the amount of property newly
created by utilising said share investments (provided that the
newly created property is allocated to the members) and shall
also pay out to them the share of the distributed profit due to
them for the business year. Membership fee shall not be returned.
To the heirs of a deceased member or to the guardians of a
member declared legally incapable, provided that said persons are
not members of the cooperative society and do not join the
society in accordance with the procedure established in the
bylaws, the share investment and the amount of the newly created
property as well as the share of the profit distributed for the
business year shall be returned in the same manner as to the
members who withdrew or were expelled from the cooperative
society.
Article 11. Rights and Duties of a Cooperative Society
Member
A member of the cooperative society shall have the right to:
1) elect and be elected to the bodies of management and
control;
2) have one vote during the voting regardless of the amount
of the contributed share investment;
3) work in the cooperative society under employment
contract;
4) receive a portion of the profit distributed to the
members proportionate to the volume of turnover (transactions)
with the cooperative society, to use the society property and to
have priority in making use of the services rendered by the
cooperative society on easy terms in the manner established in
the society bylaws;
5) receive a portion of profit (dividend) proportionate to
his share investment and to the amount of the newly created
property;
6) receive a portion of property of the liquidated society
in accordance with the procedure established in the bylaws;
7) obtain information on the activities of the cooperative
society, its economic condition and property;
8) be a member of several cooperative societies; and
9) withdraw from the cooperative society.
Other rights of a member shall be established in the bylaws
of a cooperative society.
A member of a cooperative society must adhere to the bylaws,
fulfill the obligations of the cooperative society and the
resolutions of the management and control bodies, take part in
the activities of the cooperative society.
A member of a cooperative society shall be liable for the
society's obligations assumed prior to his joining the society,
wherewith the new member shall have the right to familiarise
himself upon joining the cooperative society.
A member of a cooperative society shall be liable only to
the extent of the amount of his share investment (property owned
by him in the cooperative society). The bylaws may also prescribe
a greater amount of liability but not greater than two times the
amount of the share investment, and in the case of insurance and
credit cooperative societies -- up to five times of the amount of
the share investment (property owned).
Article 12. Capital
The capital of a cooperative society shall consist of
internal and borrowed funds. Internal funds shall be formed
from membership fees, share investments, profit received from
business activities and other resources of income not prohibited
by law. The capital of a cooperative society cannot be formed by
issuing shares of said society. The capital of a cooperative
society, with the exception of share investments, may be
indivisible or assigned ( the whole or part of it) to the
members of a society.
Internal funds shall comprise fixed and reserve capital.
Fixed capital shall be used for business activities of a society
or for the acquisition of assets. On the decision of the meeting
of the members (authorised representatives), the reserve capital
shall be used for anticipated future expenditure and for covering
other losses as well as for the training of members and personnel
of a cooperative society.
The minimum amount of internal funds shall not be
established by laws, but it must be sufficient for the
development of activities provided for in the bylaws.
Deductions to the capital reserve fund shall be mandatory
for cooperative societies deriving profit. The reserve fund
ratio and the procedure for its formation shall be established by
laws.
Article 13. A Share Investment of a Member of a
Cooperative Society
The share investment of a member of a cooperative society
may be either cash, intellectual or in kind.
The property to which proprietary rights of a member of a
cooperative society are limited may not be a share investment.
Members of a cooperative society may lease land to their
cooperative society only for utilisation.
A member's share investment and the portion of property
owned by him/her shall be registered in accounting records, and
the member shall be issued a certificate evidencing his
membership and the amount of property owned by him within a
cooperative society.
The members of a cooperative society shall dispose of their
share investments and the portion of property owned according
to the procedure established in the bylaws.
Article 14. Distribution of Profit
The distribution of profit of a cooperative society must be
approved at the meeting of members ( authorised representatives)
within 3 months of the end of a business year.
Balance profit, after deducting mandatory payments, shall
be distributed in the following manner :
1) shall be deducted to reserve capital ;
2) part of profit shall be paid to the members in proportion
to the volume of the turnover ( operations) with a cooperative
society according to the procedure established in the bylaws;
3) dividends paid to the members in proportion to their
shares and the property owned by them.
The undistributed profit shall be utilised according to the
procedure established in the bylaws;
Share dividend must be limited; the maximum amount of the
share dividend shall be established in the bylaws.
Balance profit shall be taxed according to the procedure
established in the bylaws whereas part of profit paid to the
members in proportion to the volume of turnover (operations) with
the cooperative society, and share dividend shall be exempt from
taxation.
CHAPTER 4.
MANAGEMENT AND CONTROL
Article 15. Governing Bodies
The governing bodies shall consist of a meeting of members
and the Board or the manager. Citizens of the Republic of
Lithuania who are 18 years of age and over may be members of a
Board of a cooperative society and audit commission.
In a cooperative society whose membership exceeds 100, the
meeting of members may be replaced by the meeting of authorised
representatives. Procedure for electing authorised
representatives shall be established in the bylaws of a
cooperative society.
Article 16. The Meeting of Members (Authorised
Representatives)
The meeting of members ( authorised representatives)
shall be the supreme governing body of a cooperative society
which shall:
1) accept or expel members of a cooperative society and
legitimize the withdrawal from a cooperative society. The meeting
may obligate the Board (manager) to perform this function (
except the expulsion of a member).
2) amend or supplement the bylaws of a cooperative society;
3) elect or remove the Board (manager), chairperson of the
Board, audit commission and their members;
4) assess the work of the Board (manager) and the audit
commission (auditor), approve annual accounting and the
programme of business activities ;
5) approve distribution of profit (losses);
6) establish the procedure for paying wages in a cooperative
society;
7) solve issues concerning the joining and withdrawal of a
cooperative society from unions (associations), establishment of
their structural subdivisions and enterprises, termination of
their activities, as well as other organisational issues;
8) adopt decisions to liquidate a cooperative society;
9) solve other issues concerning the activities of a
cooperative society.
The meeting of members ( authorised representatives) shall
be convoked by the Board once a year no later than within 3
months of the end of a business year.
Unscheduled meetings shall be convoked by the Board ( the
manager) on its own initiative or at the request of the audit
commission (auditor) or at the request of no less than 1/4 of the
members ( authorised representatives) of a cooperative society.
The meeting of members may adopt resolutions if it is
attended by at least 1/2 of all members. The meeting of
authorised members may adopt resolutions if it is attended by at
least 2/3 of the authorised representatives. If the meeting is
not attended by the established number of members (authorised
representatives) a repeated meeting shall be called. At such
meeting resolutions may be adopted if it is attended by at least
1/3 of the members or 1/2 of the authorised representatives.
Resolutions at the meetings shall be adopted by simple
majority vote with the exception of cases specified in Paragraphs
2 and 8 of Article 16 and in cases of expulsion of the members
when resolutions are adopted by at least 2/3 of the votes.
At the meeting voting by open ballot shall be used with the
exception of cases where secret ballot is provided by this law,
the bylaws of a cooperative society or when it is requested by at
least 1/10 of the members ( authorised representatives) of a
cooperative society. Members of the Board and audit commission
shall be elected by secret ballot.
Article 17. Board or Manager of a Cooperative Society
The Board is a collective governing body directing the
activities of a cooperative society in the period between the
meetings of members (authorised representatives). In cooperative
societies the membership of which is at least 100, manager may be
elected instead of a Board.
The Board shall direct business activities of a cooperative
society , manage its affairs, represent a cooperative society in
court or other institutions.
The Board or the manager shall be elected by the meeting of
members ( authorised representatives) for a term not exceeding 3
years. Until the Board is elected, the affairs of a cooperative
society shall be managed by the founders.
The number of the members of the Board and the powers of its
members and the chairperson of the Board shall be established in
the bylaws of a cooperative society and the resolutions of the
meetings of members (authorised representatives). The meeting of
members (authorised representatives) shall have the right to
remove the chairperson (manager) of the Board prior to the
expiration of his/ her term. Upon the expiration of the term,
the Board shall exercise its powers until the new board is
elected.
Members of the Board and the chairperson of the Board
(manager) may resign at any time. Procedure for the resignation
shall be established in the bylaws of a cooperative society.
The Board shall adopt its resolutions at its sittings which
shall be valid if at least 2/3 of all the members of the Board
participate. Resolutions shall be adopted by simple majority
vote.
Members of the Board as well as chairperson of the Board (
manager) must reimburse losses sustained by a cooperative society
incurred by the resolutions of the Board, which are not in
compliance with the bylaws of a cooperative society or the laws
of the Republic of Lithuania. The resignation or removal of the
members of the Board or the chairperson of the Board (manager)
shall not exempt him from the reimbursement of losses incurred
through his fault.
Article 18. Control of Activities
The activities of a cooperative society shall be controlled
by the audit commission ( auditor), which shall be elected at the
meeting of members for a term not exceeding 3 years. On the
decision of the meeting of members ( authorised representatives),
provisional control commissions may be formed.
Members of the audit commission (auditors) may only be
persons who are not on the Board of a cooperative society or who
are next of kin to the members of the Board or related to them by
marriage.
Audit commission (auditor) shall:
1) inspect annual balance sheet and other accounting and
business documents of a cooperative society;
2) report all established violations to the meeting of
members (authorised representatives), the Board (manager);
3) at the end of a business year, submit its findings on the
accounting and financial condition of a cooperative society to
the meeting of members.
The meeting of members (authorised representatives), the
Board (manager), audit commission (auditor) may invite experts to
participate in inspections.
CHAPTER 5.
LIQUIDATION OF A COOPERATIVE SOCIETY
Article 19. Termination of the Activities of a Cooperative
Society
The activities of a cooperative society shall be
terminated:
1) on the resolution of the meeting of members (authorised
representatives);
2) upon the expiration of the term provided for in the
bylaws;
3) when the remaining number of members is less than the
number prescribed by the bylaws;
4) on court's decision recognizing a cooperative society
insolvent;
5) when governmental institutions cancel the registration of
a cooperative society for the violation of the laws of the
Republic of Lithuania.
Article 20. Liquidation Procedure
Procedure for the liquidation of a cooperative society shall
be established by this and other laws of the Republic of
Lithuania, and by the bylaws of a cooperative society.
Institution which has adopted the decision to terminate the
activities of a cooperative society shall appoint liquidators or
obligate the Board (manager) of a cooperative society to do that.
Upon appointing the liquidator, a cooperative society shall
acquire the status of a cooperative society under liquidation.
The Board (manager) of a cooperative society shall loose its
powers. Its functions shall be taken over by the liquidators
which:
1) shall re-register a cooperative society into a
cooperative society under liquidation;
2) shall announce in the press twice, with one months break,
about the liquidation of a cooperative society or inform each
member and creditor of a cooperative society about it;
3) shall represent the cooperative society in court, in its
relations with state and governmental institutions as well as
other legal and natural persons;
4) during the liquidation, shall make accounting balances
of a cooperative society;
5) complete the fulfillment of obligations pursuant the
contracts of a cooperative society and conclude new ones which do
not contravene the laws regulating the activities of a
cooperative society under liquidation;
6) within 6 months after the announcement of the
liquidation, accept and satisfy demands and claims of creditors,
recover debts payable;
7) in case of disputable liabilities, an adequate sum shall
be appropriated from the funds of a cooperative society and paid
into the deposit account of a notary's office;
8) shall satisfy creditor's demands. The surplus property
shall be distributed to the members of a cooperative society
according to the procedure established in the bylaws and in
proportion to their share investments and the amount of property
owned by them. When disputes arise between the members of a
cooperative society concerning the distribution of the surplus
profit, the liquidators shall suspend the distribution of
property. Disputes between members and members' disputes with
liquidators shall be settled at the meeting of members (
authorised representatives) and if the meeting fails to settle
them, they shall be settled in court;
9) During the liquidation, shall submit performance reports
to the meeting of members on dates fixed by it.
Upon completion of the liquidation, it shall submit its
final account.
Liquidators shall be jointly liable to a cooperative society
and third persons for losses incurred through their fault. If a
liquidator acts individually, he shall be liable severally.
Documents of a liquidated cooperative society shall be kept
according to the procedure established by the Government of the
Republic of Lithuania. Former members of a cooperative society
and their heirs shall have the right to familiarise with these
documents and obtain their copies.
CHAPTER 6.
UNIONS (ASSOCIATIONS) OF COOPERATIVE SOCIETIES
Article 21. Establishment and Activities of Unions
(Associations)
Cooperative societies may join into unions (associations)
for the solution of tasks provided for in their bylaws. Members
of unions (associations) may be also other legal persons (
companies, societies, associations, etc), if their membership is
in conformity with the objectives of the unions (associations) of
cooperative societies. The union ( association) of cooperative
societies may be formed from two or more legal persons.
Unions (associations) of cooperative societies shall be
established, registered, managed, shall function and be
liquidated according to the same procedure as cooperative
societies.
Unions (associations) of cooperative societies shall
function according to their bylaws which shall be adopted by the
congresses, conferences or meetings of their delegates
(authorised representatives). A union (association) shall be
deemed established when it is registered according to the
established procedure.
Cooperative societies and their unions (associations) may
take part in the activities of international cooperative
organisations and develop other international activities.
CHAPTER 7.
FINAL PROVISIONS
Article 22. Enforcement of this Law
This law shall become effective beginning from 1 July 1993.
I promulgate this law adopted by the Seimas of the Republic
of Lithuania.
Algirdas Brazauskas
President
Republic of Lithuania