The capital of a cooperative has the following characteristics:

The Law in its art. 28 establishes that only specific assets that are susceptible to compulsory execution can be provided. These goods are of a tangible nature such as a car, a computer, a table, etc. Therefore, obligations to do such as a person's contribution of work, the obligation to do something or the use and enjoyment of a rental, an action in favor of another person, among others, are left out of the classification.

The restriction is due to the fact that the contribution must consist of an obligation to transfer property, which makes it possible to know exactly the precise designation of the asset contributed and that said object can be alienated by judicial order.

Ancillary benefits must be clearly differentiated from contributions, since any monetary or non-monetary contribution, of economic content derived from the associative link, must have the character of capital. Although they contribute to the realization of the corporate purpose, they may or may not be agreed upon without affecting the essence of the entity.

The Cooperative Law establishes that the valuation of non-monetary contributions will be made by the Constitutive Assembly, and in the event that the contributions are made after the same, the valuation must be carried out by the Board of Directors in agreement with the contributing member but subject to the approval of the assembly, as established in Art. 28 of Law 20337.

The same article (art. 28) elaborates on the liability of the founders and directors, which is unlimited and jointly based on the highest value attributed to the assets until approval by the assembly, in the case of overvaluation of non-monetary assets.

It is worth clarifying that Law 20337 does not have provisions on the responsibility of the contributor in the overvaluation of the contribution. Only from the legal text does it emerge that its responsibility is absorbed by directors and founders.

Both the members absent at the assembly or who voted against, the directors, the trustees, the enforcement authority (see INAES) and the competent local body can challenge the resolution if it violates the law, statute or regulation, in accordance with Art. 62 of the aforementioned law. If the challenge is successful, the founders must respond for the overvaluation within a period of less than 90 days from the closing of the assembly.

The eviction guarantee refers to what the cooperative faces when it suffers the loss of non-monetary property contributed by a member, where whoever transmits, sells or assigns the property guarantees that it does not suffer any kind of disturbance in the right to ownership, enjoyment or possession of what was acquired.

In general terms, whoever transfers something by onerous title is obliged to guarantee the right that is transferred. The cooperative may demand that the member contribute non-monetary goods at the time.

Replacement of the asset: the cooperative will have the option of authorizing or not authorizing the replacement in the event that the asset can be replaced by another of the same type and quality. Here, too, the member is responsible for the damages and expenses caused.

The member integrates the difference generated by the eviction with monetary contributions. If the eviction only falls on a part of the assets contributed, it may be accepted that the member pays the difference in monetary form without giving any deadline. Here also the associate is responsible for any damages and expenses caused.

Subscription reduction: if the capital subscribed by the associate exceeds the minimum established by statute, the entity may authorize the reduction of the subscribed capital until reaching the limit of unaffected values. All this as long as the real value of the contributions in assets not affected by the eviction is equal to or greater than said minimum.

Ultimately Exclusion of the member: the cooperative may always use this measure when moral or material damage has occurred. Regardless of whether the eviction affected all or part of the assets contributed. The associate is responsible for any damages and expenses caused.

This guarantee is established in the Argentine Civil Code Article 2091, when it defines: "There will be eviction by virtue of a judgment and for a cause prior to or contemporaneous with the acquisition, if the acquirer by onerous title was deprived in whole or in part of the right he acquired or suffered a disturbance of the right in the ownership, enjoyment or possession of the thing. But there will be no place for the guarantee, neither by reason of factual disturbances, nor even by reason of legal disturbances, coming from the law, or established in an apparent manner, by the act of man or claims formed by virtue of the real or personal right of enjoyment, the existence of which was known at the time of the alienation.

Redhibitory defects are hidden defects of the thing, whose ownership, use or enjoyment was transmitted by onerous title, existing at the time of acquisition, that make it unsuitable for its destination, if in such a way they diminish the use of it, that if the acquirer had known them, he would not have acquired it, or would have given less for it.

In order to be considered as such, the following requirements are required: they must be serious hidden defects originating before the act of transfer, of ownership unknown to the buyer. The buyer has the power to initiate a redhibitory action, which is what is called by article 1914 of the Argentine civil code, such as the one the buyer has to have the sale rescinded or the price proportionally reduced due to the hidden defects of the thing sold, property or movable, called redhibitories. Article 1701 also refers to contributions against redhibitory defects, this guarantee when it establishes that “the partners are responsible for the eviction of the assets contributed to the company and their redhibitory defects” when non-monetary contributions are made. The cooperative law has not provided for this type of guarantee in any of its articles, however, as in the case of eviction, the statutory provisions regarding the obligations of the members govern, which in most cases are established in the standard statute applied by the application authority (INAES), containing that the members must not morally or materially harm the entity. (Elsa Cuesta).

In the event that the cooperative acquires real estate as a contribution of non-monetary capital as an asset contributed by one of its members and it has hidden defects, such as a structural defect or after a period of time after acquiring it, it collapses, the guarantee protects the cooperative against the alleged event.

At that time, the cooperative can take the same alternative paths as in the case of eviction; it must be the member responsible for the damages and expenses incurred.

In accordance with article 24 of law 20337, they are the minimum parts into which the capital is divided. Their value must be determined in the statute and all must be of the same value (art.8, inc.3 Law 20337)

The title that represents the social quotas is called “share”. Social quotas are transferable only between members in accordance with the statutory conditions that depend on the approval of the administrative body.

The membership fee, in turn, is also the member's participation in the formation of social capital and determines the extent of property rights.

The minimum social quotas that each member must subscribe and integrate is a number required by the statute and thus establishes the minimum economic participation that corresponds to each member and the limit of their responsibility towards the obligations of the cooperatives.

In short, the characteristics of social contributions are:

In a cooperative, shares are an instrument of proof of the right of the member who has contributed the capital quotas. The difference between the two is that the shares represent on paper the social quota(s) in order to prove the right of the associate. Shares, in practice, are not issued by many cooperatives. In any case, the proof of the amount of quotas subscribed and integrated by each member arises from the Member Registry Book") that cooperatives must keep under the rule of article 38 of law 20337.").

Reference: RESOLUTION 250/82 – INAC

Establishes that the Associate Registry book must contain a minimum of data on each associate.

ARTICLE 26 of Law 20337 establishes that the statute must determine the formalities of the actions.

The following are essential:

Co-ownership of social shares exists when two or more people have property rights over them.

The cooperative may demand the unification of representation for the exercise of certain social rights and obligations, such as the right to vote, and thus not generate privileges in accordance with the provisions of Article 30 of Law 20,337.

For example, when one of the associates dies, the condominium of all the social quotas occurs in favor of the heirs, having the right only to the nominal value of the quotas (that is, their historical value). The status of associates is not transferred to them. If provided for in the statute, they may be incorporated as members if they express the will to do so and meet the requirements required by law and as long as the cooperative is able to provide them with the service.

Through the statute, the transfer of social quotas can be foreseen.

It is carried out in accordance with the requirements established by article 24, law 20,337, which contains the following limitations:.

The law gives priority to the interest of the association over that of the current member. The rule provides for the prior consent of the board of directors, with which the risk of allowing the transfer to non-members who do not meet the statutory requirements varies covered, since obviously this body must analyze whether the future entrants meet these conditions, the provision eliminates any possibility of particular interests prevailing over those of the group.

Demand an increase in capital according to the actual or potential use of the services and the associate, once the effective contribution has been made, intends to recover it through its transfer to another associate who has not yet made it.

Another situation could occur when the incipient member has outstanding debts with the cooperative, since in this case the affectation as a guarantee of the social contributions, provided for in art. 33 in fine of the Coop. would be ineffective.

The standard statute given by the authority applying the legal regime of cooperatives establishes in article 14 a temporal limitation by providing that the board of directors will not agree to the transfer of social quotas during the period between the calling of an assembly and its holding.

The article. 33 of Law 20337 provides: “No final settlement in favor of the member can be carried out without having previously deducted all debts they had with the cooperative from the operations that the member carries out.” Common compensation of debts is carried out. The principle is reinforced that social contributions constitute a guarantee of the operations that the member carries out. This article preserves the social assets of the cooperative, strengthening the achievement of objectives and its subsistence that is protected from possible debts of its members.

In case of exclusion and in the event of non-payment by the member of the obligations arising from the use of social services, the cooperative proceeds to compensate for unpaid debts and reimburse the remainder.

The law does not set a minimum capital for cooperatives since it is formed with the contribution of the members.

Given that the Capital "Capital (economy)") is variable and unlimited, its statutory modification or administrative authorization is not necessary for its increase, which occurs for the following reasons:

Reserves[3]​ are the funds that are removed from the net surpluses generated by the cooperative's operations as the difference between the cost and the provisional price of the service provided to the members, and are excluded from the distribution to the members that is made as a return. The reserves are individualized in the balances according to the specific destination assigned to them, which according to article 42 of Law No. 20,337, the destinations of said reserves can be: legal reserve, welfare and labor action fund and cooperative education and training fund, and funds may also be assigned to a special reserve account. These reserve funds have the particularity of being of a collective nature that is not susceptible to direct or indirect appropriation by the members, being limited and contingent, since they must legally be made as long as surpluses are produced in the financial years.

"Cooperative legislation") provides special treatment for reserves, different from the regime applicable to commercial companies. Article 42 of Law 20,337 provides for the reservation regime; it establishes the form and order in which distributable surpluses will be distributed (those that come from the difference between the cost and the price of the service provided to members) as follows:

It also establishes that the surpluses derived from the provision of services to non-members authorized by this law will be allocated to a special reserve account.

The law establishes the irreparability of social reserves in its articles 2nd inc. 12, 36 and 95.

The legal reserve") corresponds to five percent of the distributable surpluses, which come from the provision of services to members; in the case of the surpluses of non-members, they are allocated to a special reserve fund. The legal reserve constitutes a provident fund to face crisis situations that endanger the economic stability of the Cooperative, that is, to face losses or be used to strengthen the entity. In addition, this reserve is intangible, as contemplated in Law 20337, articles 2 and 43, which does not allow the surpluses to be distributed, if restoring the used reserves first allows the proper functioning of the Cooperative, thus overcoming possible losses") and giving creditors greater security.

The constitution of this reserve is prior to any other use of the surplus. It has no limit on the amount, it grows indefinitely as long as there are surpluses, and may even exceed the social capital. It could decrease if it is used to compensate for losses, however it must remain intangible, therefore in this case it must be reconstituted to the level prior to its use (art. 43, 2nd paragraph).

Contenido

Esta reserva se halla previsto en el art. 42, inc 3, de la Ley de Cooperativas, que establece su formación a través del 5% de los excedentes repartibles provenientes de la prestación de servicios a asociados.

Esta regulación legal es inherente a los caracteres de la cooperativa enunciados en el art. 2, inc. 8, de la ley de Cooperativas, cuando expresa: “Fomentan la educación cooperativa”.

Aunque existe este fondo, donde se hace efectiva la reserva y se puede cumplir con la misión de enseñar y capacitar sobre cooperativas, esta característica viene dada desde los orígenes mismos de la Cooperativa, a través de los principios.

Objectives of this fund

Promote and disseminate the Cooperative System in the general population.

Develop the training of cooperative leaders, officials of the competent local bodies, as well as municipal authorities who understand cooperative matters.

Promote cooperative activity with the purpose of generating new jobs in the economic-productive areas and in welfare and recreational services activities in order to improve and reactivate the current situation of regional economies.

Stimulate the creation of solidarity economy entities to address unmet service needs.

For the purposes of guiding the application of cooperative education and training funds, resolution SAC 577/84 has considered these destinations reasonable:

The Cooperative Law establishes that five percent of the surpluses be distributed between the welfare and labor action fund, or for the stimulation of staff.

Criticisms have been made:

These criticisms have led to interpreting the rule to achieve the effective use of the fund, in the following way: the provision speaks of two purposes: welfare and labor to stimulate staff.

Can this fund be used for one or both of those objectives?

It can be used first in social works, insurance, general culture course loans, and in the labor part it can be used in awards, special assignments for dedication, initiative, work creativity, improving performance, job training, etc.

In the event that there are no dependents or they are work cooperatives that do not provide services to third parties, they can choose to allocate the fund to cover welfare aspects of their members, given that the law does not establish a deadline for using the fund, that is, use is optional.

The application authority establishes that the use must be carried out in the fiscal year immediately following that of the one that originated it, it is based on the fact that the fund is a consequence of the results of each fiscal year, it also establishes the obligation to detail the use of the fund in the respective report.

Origin

This reservation, provided for in the last paragraph of art. 42 of the Cooperative Law, has its origin in the surpluses generated by the operations of non-members of the cooperative, which are not distributable either among them or among the members.

Purpose

According to Dante Cracogna, their purpose is to safeguard the principle of avoiding the profit of some at the expense of others, whether they are members or not, in the cooperative. Enabling the benefits of cooperative action to reach a greater number of people, and through this the business activities of the cooperative are consolidated.

This reserve will grow permanently in the event that the cooperative continues to provide services to non-members and this situation strengthens the asset structure of the entity, which will result in benefits not only for the members but also for the non-members who gave rise to it. In this sense, the members will not be able to appropriate it either, since it has the irreparable character inherent to the nature of cooperative social reserves. (Manual of Cooperative Legislation, Intercoop Editorial)[4]​.

In art. 2 inc 10 of the Cooperative Law that talks about the provision of services for members and non-Members and that uses what is established in the last point of art. 42 establishes that the surpluses derived from these will be allocated to a special reserve account, the same as being deducted from the net surpluses of the cooperative's operations; of a collective, limited and contingent nature derived from the financial years of the cooperative.

The capital of a cooperative has the following characteristics:

The Law in its art. 28 establishes that only specific assets that are susceptible to compulsory execution can be provided. These goods are of a tangible nature such as a car, a computer, a table, etc. Therefore, obligations to do such as a person's contribution of work, the obligation to do something or the use and enjoyment of a rental, an action in favor of another person, among others, are left out of the classification.

The restriction is due to the fact that the contribution must consist of an obligation to transfer property, which makes it possible to know exactly the precise designation of the asset contributed and that said object can be alienated by judicial order.

Ancillary benefits must be clearly differentiated from contributions, since any monetary or non-monetary contribution, of economic content derived from the associative link, must have the character of capital. Although they contribute to the realization of the corporate purpose, they may or may not be agreed upon without affecting the essence of the entity.

The Cooperative Law establishes that the valuation of non-monetary contributions will be made by the Constitutive Assembly, and in the event that the contributions are made after the same, the valuation must be carried out by the Board of Directors in agreement with the contributing member but subject to the approval of the assembly, as established in Art. 28 of Law 20337.

The same article (art. 28) elaborates on the liability of the founders and directors, which is unlimited and jointly based on the highest value attributed to the assets until approval by the assembly, in the case of overvaluation of non-monetary assets.

It is worth clarifying that Law 20337 does not have provisions on the responsibility of the contributor in the overvaluation of the contribution. Only from the legal text does it emerge that its responsibility is absorbed by directors and founders.

Both the members absent at the assembly or who voted against, the directors, the trustees, the enforcement authority (see INAES) and the competent local body can challenge the resolution if it violates the law, statute or regulation, in accordance with Art. 62 of the aforementioned law. If the challenge is successful, the founders must respond for the overvaluation within a period of less than 90 days from the closing of the assembly.

The eviction guarantee refers to what the cooperative faces when it suffers the loss of non-monetary property contributed by a member, where whoever transmits, sells or assigns the property guarantees that it does not suffer any kind of disturbance in the right to ownership, enjoyment or possession of what was acquired.

In general terms, whoever transfers something by onerous title is obliged to guarantee the right that is transferred. The cooperative may demand that the member contribute non-monetary goods at the time.

Replacement of the asset: the cooperative will have the option of authorizing or not authorizing the replacement in the event that the asset can be replaced by another of the same type and quality. Here, too, the member is responsible for the damages and expenses caused.

The member integrates the difference generated by the eviction with monetary contributions. If the eviction only falls on a part of the assets contributed, it may be accepted that the member pays the difference in monetary form without giving any deadline. Here also the associate is responsible for any damages and expenses caused.

Subscription reduction: if the capital subscribed by the associate exceeds the minimum established by statute, the entity may authorize the reduction of the subscribed capital until reaching the limit of unaffected values. All this as long as the real value of the contributions in assets not affected by the eviction is equal to or greater than said minimum.

Ultimately Exclusion of the member: the cooperative may always use this measure when moral or material damage has occurred. Regardless of whether the eviction affected all or part of the assets contributed. The associate is responsible for any damages and expenses caused.

This guarantee is established in the Argentine Civil Code Article 2091, when it defines: "There will be eviction by virtue of a judgment and for a cause prior to or contemporaneous with the acquisition, if the acquirer by onerous title was deprived in whole or in part of the right he acquired or suffered a disturbance of the right in the ownership, enjoyment or possession of the thing. But there will be no place for the guarantee, neither by reason of factual disturbances, nor even by reason of legal disturbances, coming from the law, or established in an apparent manner, by the act of man or claims formed by virtue of the real or personal right of enjoyment, the existence of which was known at the time of the alienation.

Redhibitory defects are hidden defects of the thing, whose ownership, use or enjoyment was transmitted by onerous title, existing at the time of acquisition, that make it unsuitable for its destination, if in such a way they diminish the use of it, that if the acquirer had known them, he would not have acquired it, or would have given less for it.

In order to be considered as such, the following requirements are required: they must be serious hidden defects originating before the act of transfer, of ownership unknown to the buyer. The buyer has the power to initiate a redhibitory action, which is what is called by article 1914 of the Argentine civil code, such as the one the buyer has to have the sale rescinded or the price proportionally reduced due to the hidden defects of the thing sold, property or movable, called redhibitories. Article 1701 also refers to contributions against redhibitory defects, this guarantee when it establishes that “the partners are responsible for the eviction of the assets contributed to the company and their redhibitory defects” when non-monetary contributions are made. The cooperative law has not provided for this type of guarantee in any of its articles, however, as in the case of eviction, the statutory provisions regarding the obligations of the members govern, which in most cases are established in the standard statute applied by the application authority (INAES), containing that the members must not morally or materially harm the entity. (Elsa Cuesta).

In the event that the cooperative acquires real estate as a contribution of non-monetary capital as an asset contributed by one of its members and it has hidden defects, such as a structural defect or after a period of time after acquiring it, it collapses, the guarantee protects the cooperative against the alleged event.

At that time, the cooperative can take the same alternative paths as in the case of eviction; it must be the member responsible for the damages and expenses incurred.

In accordance with article 24 of law 20337, they are the minimum parts into which the capital is divided. Their value must be determined in the statute and all must be of the same value (art.8, inc.3 Law 20337)

The title that represents the social quotas is called “share”. Social quotas are transferable only between members in accordance with the statutory conditions that depend on the approval of the administrative body.

The membership fee, in turn, is also the member's participation in the formation of social capital and determines the extent of property rights.

The minimum social quotas that each member must subscribe and integrate is a number required by the statute and thus establishes the minimum economic participation that corresponds to each member and the limit of their responsibility towards the obligations of the cooperatives.

In short, the characteristics of social contributions are:

In a cooperative, shares are an instrument of proof of the right of the member who has contributed the capital quotas. The difference between the two is that the shares represent on paper the social quota(s) in order to prove the right of the associate. Shares, in practice, are not issued by many cooperatives. In any case, the proof of the amount of quotas subscribed and integrated by each member arises from the Member Registry Book") that cooperatives must keep under the rule of article 38 of law 20337.").

Reference: RESOLUTION 250/82 – INAC

Establishes that the Associate Registry book must contain a minimum of data on each associate.

ARTICLE 26 of Law 20337 establishes that the statute must determine the formalities of the actions.

The following are essential:

Co-ownership of social shares exists when two or more people have property rights over them.

The cooperative may demand the unification of representation for the exercise of certain social rights and obligations, such as the right to vote, and thus not generate privileges in accordance with the provisions of Article 30 of Law 20,337.

For example, when one of the associates dies, the condominium of all the social quotas occurs in favor of the heirs, having the right only to the nominal value of the quotas (that is, their historical value). The status of associates is not transferred to them. If provided for in the statute, they may be incorporated as members if they express the will to do so and meet the requirements required by law and as long as the cooperative is able to provide them with the service.

Through the statute, the transfer of social quotas can be foreseen.

It is carried out in accordance with the requirements established by article 24, law 20,337, which contains the following limitations:.

The law gives priority to the interest of the association over that of the current member. The rule provides for the prior consent of the board of directors, with which the risk of allowing the transfer to non-members who do not meet the statutory requirements varies covered, since obviously this body must analyze whether the future entrants meet these conditions, the provision eliminates any possibility of particular interests prevailing over those of the group.

Demand an increase in capital according to the actual or potential use of the services and the associate, once the effective contribution has been made, intends to recover it through its transfer to another associate who has not yet made it.

Another situation could occur when the incipient member has outstanding debts with the cooperative, since in this case the affectation as a guarantee of the social contributions, provided for in art. 33 in fine of the Coop. would be ineffective.

The standard statute given by the authority applying the legal regime of cooperatives establishes in article 14 a temporal limitation by providing that the board of directors will not agree to the transfer of social quotas during the period between the calling of an assembly and its holding.

The article. 33 of Law 20337 provides: “No final settlement in favor of the member can be carried out without having previously deducted all debts they had with the cooperative from the operations that the member carries out.” Common compensation of debts is carried out. The principle is reinforced that social contributions constitute a guarantee of the operations that the member carries out. This article preserves the social assets of the cooperative, strengthening the achievement of objectives and its subsistence that is protected from possible debts of its members.

In case of exclusion and in the event of non-payment by the member of the obligations arising from the use of social services, the cooperative proceeds to compensate for unpaid debts and reimburse the remainder.

The law does not set a minimum capital for cooperatives since it is formed with the contribution of the members.

Given that the Capital "Capital (economy)") is variable and unlimited, its statutory modification or administrative authorization is not necessary for its increase, which occurs for the following reasons:

Reserves[3]​ are the funds that are removed from the net surpluses generated by the cooperative's operations as the difference between the cost and the provisional price of the service provided to the members, and are excluded from the distribution to the members that is made as a return. The reserves are individualized in the balances according to the specific destination assigned to them, which according to article 42 of Law No. 20,337, the destinations of said reserves can be: legal reserve, welfare and labor action fund and cooperative education and training fund, and funds may also be assigned to a special reserve account. These reserve funds have the particularity of being of a collective nature that is not susceptible to direct or indirect appropriation by the members, being limited and contingent, since they must legally be made as long as surpluses are produced in the financial years.

"Cooperative legislation") provides special treatment for reserves, different from the regime applicable to commercial companies. Article 42 of Law 20,337 provides for the reservation regime; it establishes the form and order in which distributable surpluses will be distributed (those that come from the difference between the cost and the price of the service provided to members) as follows:

It also establishes that the surpluses derived from the provision of services to non-members authorized by this law will be allocated to a special reserve account.

The law establishes the irreparability of social reserves in its articles 2nd inc. 12, 36 and 95.

The legal reserve") corresponds to five percent of the distributable surpluses, which come from the provision of services to members; in the case of the surpluses of non-members, they are allocated to a special reserve fund. The legal reserve constitutes a provident fund to face crisis situations that endanger the economic stability of the Cooperative, that is, to face losses or be used to strengthen the entity. In addition, this reserve is intangible, as contemplated in Law 20337, articles 2 and 43, which does not allow the surpluses to be distributed, if restoring the used reserves first allows the proper functioning of the Cooperative, thus overcoming possible losses") and giving creditors greater security.

The constitution of this reserve is prior to any other use of the surplus. It has no limit on the amount, it grows indefinitely as long as there are surpluses, and may even exceed the social capital. It could decrease if it is used to compensate for losses, however it must remain intangible, therefore in this case it must be reconstituted to the level prior to its use (art. 43, 2nd paragraph).

Contenido

Esta reserva se halla previsto en el art. 42, inc 3, de la Ley de Cooperativas, que establece su formación a través del 5% de los excedentes repartibles provenientes de la prestación de servicios a asociados.

Esta regulación legal es inherente a los caracteres de la cooperativa enunciados en el art. 2, inc. 8, de la ley de Cooperativas, cuando expresa: “Fomentan la educación cooperativa”.

Aunque existe este fondo, donde se hace efectiva la reserva y se puede cumplir con la misión de enseñar y capacitar sobre cooperativas, esta característica viene dada desde los orígenes mismos de la Cooperativa, a través de los principios.

Objectives of this fund

Promote and disseminate the Cooperative System in the general population.

Develop the training of cooperative leaders, officials of the competent local bodies, as well as municipal authorities who understand cooperative matters.

Promote cooperative activity with the purpose of generating new jobs in the economic-productive areas and in welfare and recreational services activities in order to improve and reactivate the current situation of regional economies.

Stimulate the creation of solidarity economy entities to address unmet service needs.

For the purposes of guiding the application of cooperative education and training funds, resolution SAC 577/84 has considered these destinations reasonable:

The Cooperative Law establishes that five percent of the surpluses be distributed between the welfare and labor action fund, or for the stimulation of staff.

Criticisms have been made:

These criticisms have led to interpreting the rule to achieve the effective use of the fund, in the following way: the provision speaks of two purposes: welfare and labor to stimulate staff.

Can this fund be used for one or both of those objectives?

It can be used first in social works, insurance, general culture course loans, and in the labor part it can be used in awards, special assignments for dedication, initiative, work creativity, improving performance, job training, etc.

In the event that there are no dependents or they are work cooperatives that do not provide services to third parties, they can choose to allocate the fund to cover welfare aspects of their members, given that the law does not establish a deadline for using the fund, that is, use is optional.

The application authority establishes that the use must be carried out in the fiscal year immediately following that of the one that originated it, it is based on the fact that the fund is a consequence of the results of each fiscal year, it also establishes the obligation to detail the use of the fund in the respective report.

Origin

This reservation, provided for in the last paragraph of art. 42 of the Cooperative Law, has its origin in the surpluses generated by the operations of non-members of the cooperative, which are not distributable either among them or among the members.

Purpose

According to Dante Cracogna, their purpose is to safeguard the principle of avoiding the profit of some at the expense of others, whether they are members or not, in the cooperative. Enabling the benefits of cooperative action to reach a greater number of people, and through this the business activities of the cooperative are consolidated.

This reserve will grow permanently in the event that the cooperative continues to provide services to non-members and this situation strengthens the asset structure of the entity, which will result in benefits not only for the members but also for the non-members who gave rise to it. In this sense, the members will not be able to appropriate it either, since it has the irreparable character inherent to the nature of cooperative social reserves. (Manual of Cooperative Legislation, Intercoop Editorial)[4]​.

In art. 2 inc 10 of the Cooperative Law that talks about the provision of services for members and non-Members and that uses what is established in the last point of art. 42 establishes that the surpluses derived from these will be allocated to a special reserve account, the same as being deducted from the net surpluses of the cooperative's operations; of a collective, limited and contingent nature derived from the financial years of the cooperative.