ANNEX I.34 LAW OF THE REPUBLIC OF INDONESIA NUMBER 25 YEAR1992 CONCERNING COOPERATIVES 1
LAW OF THE REPUBLIC OF INDONESIA NUMBER 25 YEAR1992 CONCERNING COOPERATIVES WITH THE BLESSING OF THE ONE ALMIGHTY GOD THE PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering: a. that Cooperatives, both as people economic movement and as business actors that have parts and to establish developed, fair and prosperous society based on Pancasila and the 1945 Constitution in national economic development managed as joint efforts on the basis of communality and economic democracy; b. that Cooperatives require to more develop itself and shall be developed to be strong and independent based on principles of Cooperatives so that they are capable to take parts as national development central pillar; c. that the development of Cooperatives shall be duties and authorities of Governmetn and entire people of Indonesia; d. that in order to achieve the above issues and to adjust with current situations, it is necessary to rearrange the provisions on Cooperatives into a Law as the amendement of Law Number 12 Year 1967 concerning Principles of Cooperatives; In view of: Article 5 paragraph (1), Article 20 paragraph (1), and Article 33 of the 1945 Constitution; With the joint approval of THE PEOPLE S REPRESENTATIVE ASSEMBLY OF THE REPUBLIC OF INDONESIA and THE PRESIDENT OF THE REPUBLIC OF INDONESIA HAS RESOLVED: To enact: LAW CONCERNING COOPERATIVES. CHAPTER I GENERAL PROVISIONS 2
Article 1 In this Law the following definitions apply: 1. Cooperatives shall business actors that have members of individuals or cooperatives legal entities in which its operation is based on principles of cooperatives as well as treated as people economic movement based on familial principles. 2. Cooperatives shall be all matters related with life of cooperatives. 3. Primary cooperatives shall be cooperatives established by and has members of individuals. 4. Secondary cooperatives shall be cooperatives established by and has members of cooperatives. 5. Cooperatives movement shall be all integrated cooperatives organizations and activities directed to achieve joint goals of cooperatives. CHAPTER II BASIS, PRINCIPLES, AND OBJECTIVES Part One Basis and Principles Article 2 Cooperatives shall be based on Pancasila and the 1945 Constitution as well as familial principles. Part Two Objectives Article 3 Cooperatives shall be particularly aimed to develop its members prosperity and society in general and shall take parts to improve national economic structure in order to establish developed, fair and properous society based on Pancasila and the 1945 Constitution. CHAPTER III FUNCTION, ROLES, AND PRINCIPLES OF COOPERATIVES Function and Roles of Cooperatives shall be: Part One Function and Roles Article 4 a. to develop and improve economic potentials and capability of its members in particular and society in general to encrease its economic and social wealth; 3
b. to take parts actively in the efforts to heighten life quality of human being and society; c. to strengthen people s economic as strong basis and defense of national economy using cooperatives as the central pillar; d. to try to create and develop national economy that is joint efforts based on familial principles and economic democracy. Part Two Principles of Cooperatives Article 5 (1) Cooperatives shall implement principles of cooperatives as the following: a. voluntary and open membership; b. democratic management; c. remaining incomes shall be conducted fairly based on contribution given by each member; d. rewards shall only be given in form of capital; e. independency. (2) In developing cooperatives, cooperatives shall also implement principles of cooperatives as the following: a. Cooperatives education; b. Cooperation among cooperatives. CHAPTER IV ESTABLISHMENT Part One Requirement of Establishment Article 6 (1) Primary cooperatives shall be established by at least 20 (twenty) persons. (2) Secondary cooperatives shall be established by at least 3 (three) cooperatives. Article 7 (1) Establishment of cooperatives as referred to in Article 6 shall be conducted with establishment deed that contains of article of association. (2) Cooperatives shall have position within territory of the Republic of Indonesia. Article 8 Article of association as referred to in Article 7 paragraph (1) shall at least contain: a. list of founders names; b. domicile name and place; 4
c. goals and bbjectives and business sector; d. provisions on membership; e. provisions on members Meeting; f. provisions on management; g. provisions on capital; h. provisions on period of establishment; i. provisions on remaining incomes sharing; j. provisions on sanction. Part Two Legal entity Status Article 9 Cooperatives shall have a legal entity status after its establishment deed is legalized by the Government. Article 10 (1) In order to get legalization as referred to in Article 9, founders shall send a written inquiry associated with the establishment deed of cooperatives. (2) Legalization of the establishment deed shall be granted within no later than 3 (three) months after an inquiry on legalization is obtained. (3) Legalization of the establishment deed shall be announced in the state book of the Republic of Indonesia. Article 11 (1) If the inquiry on legalization of the establishment deed is refused, reasons for rejection shall be announced to founders themselves in writing within no later than 3 (three) months as from an inquiry is obtained. (2) On rejection against legalization of the establishment deed, founders may send again the inquiry within no later than 1 (one) month as from said rejection is obtained. (3) A decision on re-propose the inquiry shall be given within no later than 1 (one) month as from said proposal is obtained. Article 12 (1) Modification of article of association shall be conducted by member s meeting. (2) On modification of article of association related with merger, sharing and alteration of business field of cooperatives shall be requested for its legalization by the Government. Article 13 5
Provisions on requirements and procedure on legalization or rejection of legalization of the establishment deed, and amendment of article of association as referred to in Article 9, Article 10, Article 11, and Article 12 shall be further governed in Government Regulation. Article 14 (1) For business development and/or efficienty, one cooperative or more may: a. gather themselves to be one with other cooperatives; or b. togehter with other cooperatives merge by forming one new cooperative. (2) Merger or liquidation shall be conducted with an approval from members meeting of each cooperative. Part Three Form and Type Article 15 Cooperatives may be formed as primary cooperatives or secondary cooperatives. Article 16 Types of cooperatives shall be based on similarity on economic activities and interests of its members. CHAPTER V MEMBERSHIP Article 17 (1) Members of cooperatives shall be owners as well as users of cooperatives. (2) Membership of cooperatives shall be registered in members list. Article 18 (1) Parties who may be members of cooperatives shall be any Indonesian citizen who is capable to conduct legal conducts or cooperatives that have complied with requirements as stipulated in article of association. (2) Cooperatives may have extraordinary members whose membership requirements, rights and obligation shall be determined in article of association. Article 19 (1) Cooperatives membership shall be based on economic interest similarity included in businesses of cooperatives. (2) Cooperatives membership may be obtained or terminated as from requirements as stipulated in Article of Association are met. 6
(3) Cooperatives membership may not be transferred. (4) Any member shall have similar obligation and rights against cooperatives as stipulated in Article of Association. Article 20 (1) Any member shall have obligations to: a. comply with Article of Association and decisions made in members meeting; b. participate in business activity run by cooperatives; c. develop and maintain togetherness based on familial principles. (2) Any member shall have rights to: a. attend, provide opinions, and votings in members meeting; b. choose and/or be chosen to be member of management or supervision; c. request to held members meeting based on provisions stipulated in Article of Association; d. provide opinions or suggestions to the management outside members meeting, either required or not; e. utilize cooperatives and obtain similar services among members; f. obtain information on the progress of cooperatives based on provisions stipulated in Article of Association. CHAPTER VI ORGANIZATIONAL STRUCTURES Part One General Article 21 Organizational structure of cooperatives shall include: a. Members meeting; b. Management; c. Supervisor. Part Two Members meeting Article 22 (1) Members meeting shall be the highest structure that has power within a cooperative. (2) Members meeting shall be attended by members that its implementation is governed in Article of Association. Members meeting shall determine: a. Article of Association; Article 23 7
b. General policies on management organization and businesses of cooperatives; c. Selection, appointment, termination of management and supervisor; d. Working plan, financial plan of cooperatives, and legalization financial statement; e. Legalization on management s accountability in implementing his/her duties; f. Distribution of remaining incomes; g. Merger, liquidation and termination of cooperatives. Article 24 (1) Decisions of members meeting shall be made based on discussion to achieve an agreement. (2) If a decision is not made based on discussion to avhieve an agreement, this shall be conducted based on voting. (3) If the voting is conducted, any member shall have the right of one vote. (4) The right to have a vote in secondary cooperatives may as stipulated in Article of Association by considering total amount of members and business field of members of cooperatives on the basis of balance ratio. Article 25 Members meeting shall be entitled to request for information and accountability of management and supervisor on cooperatives management. Article 26 (1) Members meeting shall be conducted at least once a year. (2) Members meeting for legalizing accountability of management shall be conducted within no later than 6 (six) months as from prior calendar year was passed. Article 27 (1) Besides members meeting as referred to in Article 26, cooperatives may conduct Exceptional Members Meeting if a condition requires an immediate decision under the authority of the members meeting. (2) Exceptional members meeting may be organized based on the inquiry of several members or based on a decision of management that its implementation shall be stipulated in Article of Association. (3) Exceptional members meeting shall have similar authority with members meeting as referred to in Article 23 Article 28 Requirement, procedure, and place for organizing members meeting and exceptional members meeting shall be stipulated in Article of Association. 8
Part Three Management Article 29 (1) Management shall be selected from and by members of cooperatives in members meeting. (2) Management shall be the party authorized of members meeting. (3) Initially, the structure and name of members of management shall be included in the establishment deed. (4) Service period of the management shall be within no later than 5 (five) years. (5) Requirement to be able to be selected and appointed as members of management shall be determined in Article of Association. Article 30 (1) Management shall have duties: a. to manage cooperatives and its businesses; b. to propose drafts of working plan and budget estimation of incomes and expenses of cooperatives; c. to organize members meeting; d. to propose financial reports and accountability on implementation of their duties; e. to prepare financial booking and inventory systematically; f. to maintain lise of book of members and management. (2) Management shall be authorized: a. to represent cooperatives inside and outside the court; b. to decide to accept or reject new members and terminate members based on provisions of Article of Association; c. to conduct efforts and measures for the interest and benefit of cooperatives based on their responsibility and decision of members meeting. Article 31 Management shall be responsible on all activities of management of cooperatives and dan their efforts against members meeting or Exceptional Members Meeting. Article 32 (1) Management of cooperatives may appoint operators who are given authority and power to manage businesses. (2) If management of cooperatives is aimed to appoint operators, then said appointment plan shall be proposed to members meeting to get an approval. (3) Operators shall be responsible to management. 9
(4) Business management conducted by operators shall not prejudice responsibility of management as determined in Article 31. Article 33 Relation between business operators as referred to in Article 32 and cooperatives management shall be working relationship based on an agreement. Article 34 (1) Management, both jointly and individually, shall be responsible for financial loss occured by cooperatives, due to actions conducted with the intention or negligence. (2) Besides responsible for finanacial loss compensation, if said action is conducted with the intention, it is possible for a public prosecutor to conduct prosecution. Article 35 As from book year of cooperatives is closed, within no later than 1 (one) bulan pior annual members meeting is organized, management shall prepare annual report that minimum contains: a. annual estimation including end year balance and annual statement on remaining incomes and notes on these documents; b. condition and businesses of cooperatives and remaining incomes that may be gained. Article 36 (1) Annual reports as referred to in Article 35 shall be signed by all members of management. (2) If one of members of management is not signed the annual reports, a member concerned shall explain his/her reason in writing. Article 37 An approval on annual reports, including legalization of annual calculation, shall be responsibility of management thru members meeting. Part Four Supervisor Article 38 (1) Supervisor shall be selected from and by members of cooperatives in members meeting. (2) Supervisor shall be responsible to members meeting. (3) Requirement to be able to be selected and appointed as members of supervision shall eb determined in Article of Association. Article 39 10
(1) Supervisor bertugas: a. conduct supervisoran terhadap pelaksanaan kebijaksanaan dan management Cooperatives; b. membuat laporan tertulis concerning hasil supervisorannya. (2) Supervisor berwenang: a. meneliti catatan yang ada pada Cooperatives; b. menmaykan segala keterangan yang diperlukan. (3) Supervisor harus merahasiakan hasil supervisorannya terhadap pihak ketiga. Article 40 Cooperatives may request for auditing services to the public accountatns. CHAPTER VII CAPITAL Article 41 (1) Cooperatives Capital shall contain of self capital and saving capital. (2) Self capital may come from: a. main savings; b. principle savings; c. reserved funds; d. donations. (3) Saving capital may come from: a. members; b. other cooperatives and/or members; c. other banks and financial institutions; d. bond issuances and other commercial papers; e. other legitimate sources. Article 42 (1) Besides capital as mentioned inarticle 41, cooperatives may also conduct collection of capitals derived from partnership capitals. (2) Provisions on collection of capitals derived from partnership shall be further governed with Government Regulation. CHAPTER VIII BUSINESS FIELDS Article 43 (1) Businesses of cooperatives shall be businesses directly related with the interests of members for improving members businesses and wealth. 11
(2) Surplus of services of cooperatives may used for the interests of society that is not parts of members of cooperatives. (3) Cooperatives shall operate business activities and take parts in all public economic sectors. Article 44 (1) Cooperatives may collect funds and distrubute these thru savings and loan business activity from and for: a. members of cooperatives concerned; b. other cooperatives and/or its members. (2) Savings and loan business activity may be conducted as one of or the only one business activity of cooperatives. (3) Implementation of savings and loan business activity by cooperatives shall be further governed with Government Regulation. CHAPTER IX REMAINING INCOMES Article 45 (1) Remaining incomes of cooperatives shall be revenues of cooperatives obtained within one book year deducted with expenses, depriciations and other liabilities including taxes wihtin said book year. (2) Remaining incomes deducted with reserved funds shall be distributed to standing members with business field operated by, each member with Cooperatives, and used for the interest of education of cooperatives and other purposes of cooperative based on a decision of members meeting. (3) Total amount of reserved funds shall be determined in members meeting. CHAPTER X TERMINATION OF COOPERATIVES Part One Termination Means of Cooperatives Article 46 Termination of cooperatives may be conducted based on: a. a decision of members meeting, or b. a decision of Government. Article 47 12
(1) A decision of termination by Government as referred to in Article 46 letter b shall be conducted if: a. there is evidence that cooperatives concerned do not comply with provisions of this Law; b. its activities are not contrary with general orderliness and/or norms; c. its sustainability may not be expected. (2) A decision of termination of cooperatives by Government shall be issued within no later than 4 (four) months as from a letter on anncouncement of said termination is obtained by cooperatives concerned. (3) Within no later than 2 (two) months as from the date when said announcement is obtained, cooperatives concerned shall be entitled to file a challenge. (4) A decision of Government regareding whether a challenge is granted or not shall be provided within no later than 1 (one) month as from the date when said challenge is obtained. Article 48 Provisions on termination of cooperatives by Government and procedure for filing a challenge as referred to in Article 47, shall be further governed with Government Regulation. Article 49 (1) A decision of termination of cooperatives by members meeting shall be informed in written by a proxy of members meeting to: a. all creditors; b. Government. (2) An announcement to all creditors shall be conducted by Government, if said termination is conducted based on a decision of Government. (3) If an annoucement of termination of cooperatives has not been obtained by creditors, termination of cooperatives has not been applicable for them. Article 50 An announcement as referred to in Article 49 shall include: a. name and address of Mediators, and b. the provisions that all creditors may propose bills within a period of 3 (three) months as from an announcement of termination is obtained. Part Two Settlement Article 51 For the interest of creditor and members of cooperatives, termination of cooperatives shall be conducted thru termination resolution known as settlement. 13
Article 52 (1) Settlement shall be conducted by termination settlers known as Mediators. (2) On the settlement based on a decision of members meeting, mediators shall appointed by members meeting. (3) On the settlement based on a decision of Government, mediators shall be appointed by Government. (4) During the settlement process, said cooperatives shall remain operating called "being settled cooperatives ". Article 53 (1) The settlement shall be immediately conducted as from a decision on termination of cooperatives is issued. (2) Mediators shall be responsible to a Proxy of members meeting if mediators are appointed by members meeting and to Government if they are appointed by Government. Article 54 Mediators shall have rights, authorities and obligations as follows: a. To conduct all legal conducts for and on behalf of "being settled cooperatives "; b. To collect all information required; c. To summons management, members and certain ex-members required, both individually and jointly; d. To obtain, examine and use all notes and archieves of cooperatives; e. To determine and implement all obligations preferred from other debts; f. To use remainign assets of cooperatives for settling remaining liabilities of cooperatives; g. To share remaining incomes of settlement to members; h. To prepare memorandum of settlement. Article 55 If cooperative is terminated, its members shall only be responsible for financial losses occurred based on main savings, principle savings and investment controlled by them. Part Three Termination of Legal entity Status Article 56 (1) The government shall announce termination of cooperatives in the State Book of the Republic of Indonesia. (2) Legal entity status of cooperatives shall be terminated as from the date of announcement of cooperatives termination stated in the State Book of the Republic of Indonesia. 14
CHAPTER XI COOPERATIVES MOVEMENT INSTITUTION Article 57 (1) Cooperatives shall jointly establish a single organization that has function as a media for supporting interests and shall act as an agency bringing inspirations of cooperatives. (2) Said organization shall be based on Pancasila. (3) Name, objectives, structure and organizational working procedure of said organization shall be stipulated in Article of Association. Article 58 (1) Such organization shall conduct activities: a. to support and deliver aspirations of cooperatives; b. to increase awareness to operate cooperatives within society; c. to conduct education on cooperatives for members and society; d. to develop cooperation among cooperatives and between cooperatives and other business actors, both nationally and internationally. (2) In implementing its activities, cooperatives shall collect funds of cooperatives jointly. Article 59 Organization formed as referred to in Article 57 paragraph (1) shall be legalized by Government. CHAPTER XII MENTORING Article 60 (1) The Government shall establish and develop condition and climates that support cooperatives growth and socialization. (2) The Government shall provide mentoring, facilities and protection against cooperatives. Article 61 In the efforts to establish and develop condition and climates that support cooperatives growth and socialization, the Government: a. shall provide business opportinities expansively to cooperatives; b. shall improve and support capability of cooperatives to be constructive, health and independent cooperatives; c. shall attempt conducive business relationship between cooperatives and other business actors; 15
d. shall utilize cooperatives within society. Article 62 In order to provide mentoring and facility to cooperatives, the Government shall: a. mentor businesses of cooperatives based on economic interests of its members; b. support, develop and assist implementation of education, training, socialization and research on cooperatives; c. provide facilities to strengthen cooperatives capital and develop financial institutions of cooperatives; d. assist the development of business network of cooperatives and mutual benefit cooperation among cooperatives; e. provide consultancy in order to solve problems occurred by cooperatives by still considering provisions of Article of Association and principles of cooperatives. Article 63 (1) In order to provide protection to Cooperatives, the Government may: a. determine economic activities that may only be operated by Cooperatives; b. determine economic activities in one area that have been successful to be operated by Cooperatives not to be run by other business actors. (2) Implementing requirement and procedure as referred to in paragraph (1) shall be further governed with Government Regulation. Article 64 Mentoring as referred to in Article 60, Article 61, Article 62, and Article 63 shall be conducted fby considering national economic condition and interest, and even distribution of business opportunity and jobs. CHAPTER XIII TRANSITIONAL PROVISION Article 65 Cooperatives that have legal entity status when this Law comes into effect shall be determined to have legal entity status based on this Law. CHAPTER XIV CLOSING PROVISIONS Article 66 (1) As of the enactment of this Law, Law Number 12 Year 1967 concerning Principles of Cooperatives (State gazette Year 1967 Number 23, Supplement to State gazette Year 1967 Number 2832) shall be no more applicable. (2) Implementing regulations of Law Number 12 Year 1967 concerning Principles of Cooperatives (State gazette Year 1967 Number 23, Supplement to State gazette Year 16
1967 Number 2832) shall be determined to remain applicable as long as not contrary with or have not been replaced based on this Law. Article 67 This Law shall come into effect as of the date of its enactment. For the information of the public, we hereby order that this Law be published in the State Gazette of the Republic of Indonesia. Enacted in Jakarta on 21 Oktober 1992 THE PRESIDENT OF THE REPUBLIC OF INDONESIA ttd SOEHARTO Promulgated in Jakarta on 21 Oktober 1992 MINISTER/STATE SECRETARY OF THE REPUBLIC OF INDONESIA ttd MOERDIONO 17