S'pore co-ops can use reserves to pay dividends under proposed changes

Payments subject to approval; co-ops’ capital buffer will be assessed, among other things

- Lee Su Shyan

Singapore's cooperatives will be able to use their reserves to pay dividends and honoraria under proposed changes to an Act that governs their operations.

Currently, they are not allowed to touch the reserves. If the changes are passed, co-ops will be permitted to use their reserves to distribute dividends to members or pay an honorarium to members of the committee of management.

These payments will be subject to the Registrar of Co-operative Societies' approval. The Registrar will, for example, assess whether the dividend and honorarium rates proposed are reasonable, and coops are maintaining a sufficient capital buffer for their long-term viability.

The amendments to the Co-operative Societies Act are likely to be read a second time in Parliament in early April.

Worldwide, the cooperative model as a way of doing business has been around for more than a century.

In the Netherlands, Rabobank, which was founded by farmers, says being a co-op allows it "to exert a more positive influence on people, nature and society".

Sunkist is an agricultural coop entirely owned by and operated for the California and Arizona citrus growers who make up its membership.

In Singapore, there are 79 co-ops serving some 900,000 members, according to the co-op collective body, the Singapore National Cooperative Federation (SNCF).

The most familiar among them would be NTUC FairPrice Co-operative, which operates the supermarkets that dot the island.

SNCF chief executive Ang Hin Kee noted that being able to tap the reserves is a welcome amendment.