Singapore’s parliament has adopted an amendment to the country’s Co-operative Societies Act of 1979 which will enable co-ops to use their reserves to pay dividends and honoraria.
Under the amendment, co-operatives can use their reserves to distribute dividends to members or pay an honorarium to members of their management committee (board fees), provided the payments are approved by the Registrar of Co-operative Societies (RCS).
The changes follow a public consultation by RCS where co-ops provided feedback on the proposed amendments.
The Singapore National Co-operative Federation (SNCF), the industry body responsible for promoting and developing the sector, welcomed the amendment.
“With the markets being more volatile, in a certain year, revenue earned by co-ops may be lower, which limits how much they can pay out to members,” said CEO Hin Kee Ang. “With this change, payouts to members will be more stable, and will also be useful as costs of living rise.
“The new legislation states that any request for the use of the reserves requires the approval of the Registrar. This oversight is still useful but there should be recognition for co-ops with better fiduciary governance. A one-size-fits-all approach to the co-ops may not be the most appropriate as it could be just as restrictive.”
Kee added that co-operatives should be recognised as a distinct enterprise model. “Today, there are many social enterprises with similar aims, but their structure could be one of a company or foundation or charity. A co-op structure is another option that offers regulatory oversight.”
Sanjeev Tiwari, CEO of AUPE Credit Co-op and a member of SNCF’s executive council, also welcomed the change.
“During Covid-19, things might have been slower for a particular co-operative,” he said. “However, they may have built up good reserves over the years but are not allowed to pay out any dividends. This means they can’t help their members even though they have the funds. Sometimes you want to pay for the additional work that staff had to do, but we could not make that gesture of recognition.”