Share as a concept enshrined in law. The share contribution also corresponds to this definition. The law establishes it as a percentage of the contribution of own property by members of an agricultural production or consumer cooperative (SEC) for the further implementation of economic activity.
Is there a difference between the two?
Despite the fact that these two concepts are combined, they are different. A share is property that already belongs to the cooperative and is divided into its members, and share contributions of members of the cooperative are property that each participant makes when the SEC is founded.
The legislation on agrarian cooperation states that the share consists not only of the contributions of the participants, but also of the net assets of the agricultural production cooperative. However, its size is limited to the property that the member contributed when joining the cooperative.
What is a mutual fund?
All the property of the agricultural cooperative is divided between its participants and expressed in cash. An exception is foundations that are not divided among participants.
Associations of property shares and form a mutual fund. All these principles are enshrined in the charter of the cooperative. On the collected property and economic activity is launched. Depending on its size, the activity of each participant in the process of all work depends.
Mandatory Contributions
They are also enshrined in the charter of the cooperative, and after their receipt, shareholders receive the right:
- vote;
- participation in activities;
- receiving benefits;
- using the services of a cooperative;
- relying on earnings.
At the same time, making a contribution and share give different opportunities for a cooperative member. More simplistically, it sounds like this: the larger the contribution, the more privileges there will be during economic activity and the higher the income. If the contribution was small, then the size of the share will be small.
Additional fees
This is a voluntary share contribution that each participant can make over the share received as a result of making a mandatory contribution to enter the cooperative.
It is the amounts of both the main and additional contributions that have been made that indicate what payments each member will receive after the termination of the cooperative's activity or upon its voluntary withdrawal from it.
This is because the cooperative’s property is shared and common rights and obligations apply to each shareholder. At the same time, property can be represented both by own funds and borrowed, which should not exceed 60% of all funds collected by the cooperative. The property of process participants includes:
- securities;
- things;
- property rights.
The amount of borrowed funds of not more than 60% indicates the solvency of the organization and gives a guarantee to creditors to repay the debt obligations.
What is a mutual fund?
Before the start of the cooperative’s activities, shareholders hold a meeting at which they adopt the charter and assign the size of the share contribution, which is also fixed in the charter.
All issues in the field of creating a mutual fund and the development of project documentation on the activities of a cooperative are handled by an organizational committee.
In the process of economic activity, amendments may be made to the charter on issues of the amount of the contribution. Since this information pertains to each employee of the organization, the law establishes a complex procedure for these actions, which begins with a meeting of shareholders and ends with the registration of these changes in a document regulating the organization’s actions.
The value of the mutual fund may increase in two cases:
- If members contribute additional funds to the development of production through payments made by the cooperative.
- As a result of the recruitment of new participants in the production process, the number of shares is growing.
The growth of a mutual fund occurs only when at a public meeting the majority of its members cast their votes for this.
What should be the first installment?
Each participant in a production organization, prior to its registration, must pay at least ten percent (and for a consumer cooperative 25%) of the value of the share contribution, which is recognized as mandatory.
The remaining 90% or 75%, respectively, he can periodically contribute to the total authorized capital, but only in the first year of production life. In this case, the value of the mutual fund may change up or down after the meeting of the participants in the cooperative.
All changes to the set of organizational rules are recorded in accordance with the rules established by law.
Indivisible fund
It represents those funds of the cooperative members that are not equal to shares and, accordingly, are not divided among the members of the SEC.
By a majority vote, part of the units may be transferred to an indivisible fund, as a result of this, the size of the share for each participant will decrease in proportion to the money transferred to it.
Within four weeks after the changes in the units are registered in the charter and take effect, it is necessary to inform the creditors of the cooperative about this. If they are not satisfied with the new data and put forward their requirements within 24 weeks after the publication of the changes, then they must be implemented.
What does the income consist of?
The extra earnings represents the final profit that accountants determine in their accounting in the process of studying and evaluating the balance received at the end of the year.
Those payments that the participants in the production process will receive are fixed by law or in the organization’s charter.
Usually, the payment depends on what share of participation each employee of the cooperative takes during the course of economic activity.
All the nuances relating to the division of profit between production participants are discussed and accepted by all shareholders together. These meetings are held within three months from the end of the financial year.
It must be remembered that payments are made after all mandatory payments to the pension and social insurance funds and the tax service.
How is the income of the cooperative divided?
The income that was determined by the end of the year, having studied the balance sheet, is divided between the participants as follows:
- A certain part is sent to the reserve and other general funds of the cooperative, which are not divided and are fixed by the charter of the organization.
- Based on applicable laws, part of the money goes to pay tax obligations and other payments to the budgets of the required levels.
- On the payment of dividends, but in the amount of not more than 30% of the total amount, for separation among the cooperative members.
The amount of cash disbursement depends on the total balance sheet at the end of the year.
How are cooperative payments divided?
Payments that serve as income for shareholders and the organization as a whole are divided:
- For the payment of wages to cooperative employees who are not among the shareholders, in proportion to their participation in the organization.
- After all non-members have received their income, all shareholders can gather and decide the remaining profit to use for the growth of their share contributions. However, this value should not exceed 80%.
- The rest of the income goes to pay the labor of shareholders.
Using payouts to increase the share
Organization payouts can be used as follows:
- If the participants in the economic activity decided to increase the mutual fund at the expense of these funds, then the funds are sent there.
- Funds can be directed by cooperatives to pay members their shareholdings that have not yet been paid, and the deadlines are already running out.
Moreover, repayment can be either full or partial. This can be done if the cooperative has funds that exceed the value of the mutual fund established by the charter. Including payments of the cooperative, which are sent to increase the mutual fund, are also taken into account. Until it is formed in full, funds for the repayment of contributions are not allocated.
An exception is the repayment of shares of associate members of the cooperative, that is, those individuals or legal entities that have contributed their property and receive dividends on it. However, they carry a risk of damage to the organization.
Is the cooperative accountable to creditors?
Yes, it does! The legislation of the Russian Federation establishes property liability.
In case of failure to fulfill its promises to creditors, the organization loses all its property. In this case, you will have to give only your own funds, not borrowed funds.
The cooperative is not liable for the obligations of its individual members, unless, of course, this is enshrined in law.
What is subsidiary liability?
This responsibility lies with members of the cooperative for failure to fulfill their obligations.
It is regulated by law and represents an additional to the primary responsibility of the organization, which appears when it is impossible for the cooperative to fulfill all the submitted requests of creditors. The law establishes the following features:
- Production participants are liable in the amount of the fee, which is prescribed in the charter of the cooperative. Moreover, its value should not exceed 0.5% of the amount of the principal contribution.
- The amount of payment shall be adopted by a majority of votes at the general meeting, but at the same time, it shall not be higher than the legislatively established value.
- The accepted value is approved by the charter of the cooperative.
In other words, it can be said that shareholders cover accounts payable when the cooperative itself does not have the money and property to do so.
Cooperative losses
Losses are seen at the end of the year on the balance sheet. They are divided between shareholders according to their remuneration.
Losses are compensated first of all due to reserve funds or making additional share contributions of the cooperative.