Cooperative Society: It is one made up of people from the working class society who contribute only their work to society.
In this society, when they only contribute PERSONAL WORK, it is called the “PRODUCERS COOPERATIVE SOCIETY”
And when they use the SERVICES they are called "SOCIEDAD COOPERATIVA DE CONSUMIDORES".
The cooperative society exists under a COMPANY NAME followed by the words cooperative or the initials SC
These types of companies are governed by the General Law of Cooperative Societies, created on January 11, 1938 and published in the DOF (Official Gazette of the Federation) on February 15, 1938.
The essential characteristics of this society are the following:
- This society necessarily needs a number of partners NOT LESS THAN 10. A variable capital and mainly must operate on principles of equality within the regime of rights and obligations of its members. It does not pursue profit-making purposes and seeks the social and economic improvement of its workers. Equality begins in the way of distributing among the associates the proportion of the time worked or the amount of the operations carried out. Depending on whether it is a production cooperative or a consumer cooperative.
Within the cooperative society activities other than those for which they are legally authorized cannot be developed, to carry out different activities for their purpose, it will be necessary to obtain the corresponding authorization from the Secretary of Commerce, in accordance with the regulations of the law, of cooperative societies.
The elements that make up this society can also be considered norms that cooperative societies should have and are the following:
- Cooperative societies will only be those that function with the General Law of Cooperative Societies and are registered and authorized by SECOFI * (SE). The Cooperative Society may not grant any privilege to the founders or directors, nor require new members to subscribe more than one contribution certificate.It is prohibited for companies subject to the provisions of the General Law of Commercial Companies to use in their company names the words cooperatives or cooperators or other similar that could lead to believe that it is a cooperative society. The social name of the cooperative may not suggest a field greater than the one that has been authorized. Cooperative societies should not belong to the Chambers of Commerce or producer associations.The cooperative society is obliged to improve in all aspects of the level of its workers.
The liquidation of this company will be for the following reasons:
- By the will of the 2/3 parts of its members. By the decrease in the number of its members to less than 10. Because the object of the company is consummated. Because the economic state of the company does not allow its operations to continue. Because the Secretary of Commerce cancels the authorization for its operation.
Organization and administration.
The management and administration of cooperative societies will be in charge of the following councils:
- General Assembly, Administrative Council, Surveillance Council, Commissions established by law, and others designated by the General Assembly.
The General Assembly will be the supreme authority and the agreements they take oblige all members present and absent to abide by these provisions.
This assembly must solve all the most important problems and establish the general rules for social functioning.
Society Constitution.
This company must be established in writing by means of minutes drawn up in five copies in which the General Assembly held by the interested parties and will contain the bases for its operation and organization, copies of said minutes must be sent to the Secretary of Commerce (SE) for authorization of the operation of the company and for it to register in the national cooperative registry that depends on the secretariat itself.
The bases to establish this company are the following:
- Name and domicile of the company. Object and expression of its activities. Regime of liability either limited or supplemented. Requirements for the admission, exclusion or voluntary separation of partners. Ways of constituting and increasing the share capital. Rules for the dissolution and settlement.
Liability regime:
Cooperative societies may adopt any of the following lines:
LIMITED LIABILITY.
SUPPLEMENTED LIABILITY.
The liability regime is one that for the purposes of covering the social commitments of this company extends beyond the amount of contributions of the partners up to a limit determined in advance.
This responsibility is an intermediate concept between unlimited and limited liability.
In the SOCIAL DENOMINATION the adopted regime and the corresponding registration number must be expressed.
Social Capital, Social Funds.
The capital of the cooperative society must be integrated with the contributions of the members with the donations they receive and with the percentage of return destined to increase the social capital.
These contributions may be made in any of the following ways, in cash, property, rights or work and will be represented by nominative, indivisible certificates of equal value that will be unalterable and transferable in the commissions determined by the regulation or the constitutive act.
Each partner must contribute at least the value of a certificate and may agree that the excess certificates receive interest that may not exceed 9% per year.
The exhibition of 10% of the value of the certificates as a minimum percentage will be required when a new partner enters or when the company is constituted.
When there is a capital reduction agreement, a return will be made to the members who have the largest number of contribution certificates and when it is agreed to increase the capital, the partners are required to sign the increase in the manner determined by the General Assembly.
Cooperative societies are obliged to establish at least one reserve fund and a social security fund and must contribute to the formation of the national cooperative credit fund.
Reserve fund.
This fund is constituted with a percentage ranging from 10 to 20% of the returns obtained with the company in each fiscal year and the constitutive bases may indicate whether it is limited or not. The purpose of this reserve fund is to face the liquid losses experienced by the company and each time it is affected, this fund must be reconstituted and must be deposited in the Banco Obrero and only the Board of Directors may dispose of it for the purposes for which it is intended.
Social Security Fund.
This fund must be constituted at least 2 thousand on the gross income of the company, this figure may be modified at the discretion of the Ministry of Commerce according to the economic capacity of the company. This fund may not be limited and should preferably be used to cover occupational risks and diseases and those of partners and workers, as well as for works of a social nature.
These funds cannot be distributed or distributed among the partners in the event of liquidation, the resulting surplus will become part of the National Cooperative Credit Fund.
Accounting Aspect of the Cooperative Society.
The following accounts will be used for the accounting record.
Issuance of contribution certificates. (memorandum accounts)
Contribution certificates issued. (order accounts)
Cooperativistas (Sub-account of various debtors)
Social capital.
| Issuance of Certificates of Contribution. | |
| It is charged for the amount of the authorized Capital | It is paid for the amount of the subscribed capital |
| BALANCE: DEBTOR and represents the outstanding capital to be subscribed. |
| Certificates of contributions issued | |
| It is charged for the amount of the subscribed Capital. | It is paid for the amount of authorized capital |
| BALANCE: CREDITOR and represents the outstanding balance of the subscribed capital. |
| Cooperativists | (Sub-account of Sundry Debtors) |
| It is charged for the amount of the subscribed Capital. | Paid for capital exhibits |
| BALANCE: DEBTOR and represents the amount pending to be exhibited. |
| Variable social capital) | |
| It is paid for the amount of the subscribed capital | |
| BALANCE: CREDITOR and represents the amount of the capital stock. |
Example of accounting entry:
| Concept | Partial | Should | To have |
| Issuance of contribution certificates | XXX | ||
| Contribution certificates issued | XXX | ||
| = By authorized share capital | |||
| Cooperativists | XXX | ||
| Issuance of contribution certificates | XXX | ||
| = By the subscribed share capital | |||
| Contribution certificates issued. | XXX | ||
| Variable social capital | XXX | ||
| = For the variable capital stock according to the agreement of the assembly | |||
| Assets | XXX | ||
| Cooperativists | XXX | ||
| = For the exhibited capital | |||
Example:
On June 1, 2001, the cooperative society "Comercializadora de Guanajuato de SC de RL" was constituted with an authorized capital stock of $ 300,000 of which only $ 240,000 were subscribed and at that time $ 140,000 in cash was exhibited.
You are asked to: record the opening entry in the journal.
| Concept | Partial | Should | To have |
| Issuance of contribution certificates | 300,000 | ||
| Contribution certificates issued | 300,000 | ||
| = By authorized share capital | |||
| Cooperativists | 240,000 | ||
| Issuance of contribution certificates | 240,000 | ||
| = By the subscribed share capital | |||
| Contribution certificates issued. | 240,000 | ||
| Variable social capital | 240,000 | ||
| = For the variable capital stock according to the agreement of the assembly | |||
| Box | 140,000 | ||
| Cooperativists | 140,000 | ||
| = For the exhibited capital |
Practice
On January 1, 2000 the cooperative society of the Escuela de la Esquina SC de RL was created with an authorized capital of $ 3,000,000 of which its members subscribe a capital of $ 2,500,000 contributed by the minimum established by the law in certificates of contribution that corresponds 1 for each member (10 cooperative members) each for $ 250,000 this capital is displayed on this date as follows:
| $ 1,000,000 | In cash of which we deposit 65% in a checking account. |
| $ 350,000 | With goods. |
| $ 150,000 | With a cargo van. |
| $ 85,500 | With computers and printers |
| $ 73,800 | With desks and adding machines |
| $ 123,450 | With a lathe, drill and welding machine. |
It is requested: to register in the Daily Book.
| Concept | Partial | Should | To have |
| Issuance of contribution certificates | 3,000,000 | ||
| Contribution certificates issued | 3,000,000 | ||
| = By authorized share capital | |||
| Cooperativists | 2,500,000 | ||
| Cooperativist 1 | 250,000 | ||
| Cooperative 2 | 250,000 | ||
| Cooperative 3 | 250,000 | ||
| Cooperative 4 | 250,000 | ||
| Cooperative 5 | 250,000 | ||
| Cooperative 6 | 250,000 | ||
| Cooperative 7 | 250,000 | ||
| Cooperative 8 | 250,000 | ||
| Cooperative 9 | 250,000 | ||
| Cooperative 10 | 250,000 | ||
| Issuance of contribution certificates | 2,500,000 | ||
| = By the subscribed share capital | |||
| Contribution certificates issued. | 2,500,000 | ||
| Variable social capital | 2,500,000 | ||
| = For the variable capital stock according to the agreement of the assembly | |||
| Box | 1,000,000 | ||
| Warehouse | 350,000 | ||
| Cast crew | 150,000 | ||
| Comp team | 85,500 | ||
| Office team | 73,800 | ||
| Machinery and equipment | 123,450 | ||
| Cooperativists | 1,782,750 | ||
| = For the exhibited capital | |||
| Banks | 650,000 | ||
| Box | 650,000 | ||
| = For the cash deposit to banks of 65% |
SC Results Applications
According to the General Law of Cooperative Societies there are: two different classes of cooperatives:
Cooperative Production Societies.
Consumer cooperative societies.
Production cooperative societies are made up of workers and the income obtained can be distributed among the cooperative members, based on:
The following options:
- Total wages earned. Hours of work actually used.
Example:
The cooperative society of production "X" SC obtained income in the exercise of 1999 for the amount of $ 356,529, which must be distributed among the cooperative members based on the total wages earned or paid.
Directly proportional.
How much corresponds to each cooperative member ?, if the salaries during that year were as follows:
| Accrued wages | Yields | |
| 356,529 | ||
| Cooperative | Salaries | |
| one | 15,738 | |
| two | 70,204 | |
| 3 | 13,721 | |
| 4 | 18,880 | |
| 5 | 25,436 | |
| 6 | 27,005 | |
| 7 | 46,892 | |
| 8 | 19,740 | |
| 9 | 65,321 | |
| 10 | 50,403 | |
| 353,340 |
Calculate the performance factor:
The factor is calculated by dividing the performance / the total wages earned would be:
356529/353340 = 1.009025301
| Accrued wages | |||
| Cooperative | Salaries | Factor | Amount |
| one | 15,738 | 1.009025301 | 15,880 |
| two | 70,204 | 1.009025301 | 70,837 |
| 3 | 13,721 | 1.009025301 | 13,845 |
| 4 | 18,880 | 1.009025301 | 19,050 |
| 5 | 25,436 | 1.009025301 | 25,666 |
| 6 | 27,005 | 1.009025301 | 27,249 |
| 7 | 46,892 | 1.009025301 | 47,315 |
| 8 | 19,740 | 1.009025301 | 19,918 |
| 9 | 65,321 | 1.009025301 | 65,911 |
| 10 | 50,403 | 1.009025301 | 50,858 |
| 353,340 | 356,529 |
After having obtained the factor, this is multiplied by each of the salaries and is placed in the column that says amount at the end, this amount column must be added and the result will be equal to the amount of the income distributed.
Example:
Society Cooperativa de Producción "X" SC wishes to distribute the returns it obtained for the 1999 fiscal year in the amount of $ 472,965, among the cooperative members, based on the number of absences they had that year.
Inversely proportional application of the results.
| Hours actually worked | Yields | |
| 472,965 | ||
| Cooperative | Fouls | |
| one | eleven | |
| two | one | |
| 3 | 4 | |
| 4 | 9 | |
| 5 | 3 | |
| 6 | 10 | |
| 7 | 6 | |
| 8 | 8 | |
| 9 | 5 | |
| 10 | two |
Calculate the factor:
In this case it is different we must convert the faults into broken that is:
1/11 + 1/1 + ¼ + 1/9 +1/3 +1/10 + 1/6 +1/8 +1/5 +1/2 =
518400 + 5702400 + 1425600 + 633600 + 19900800 + 570240 + 950400 + 712800 + 1140480 + 2851200/5702400 = 16405920/5702400
The factor =
Yield / Sum of distribution indices = 472965/16405920 = 0.028828922
| Hours actually worked | Yields | |||
| 472,965 | ||||
| Cooperative | Fouls | Base | Factor | Amount |
| one | eleven | 518400 | 0.028828922 | 14945 |
| two | one | 5702400 | 0.028828922 | 164394 |
| 3 | 4 | 1425600 | 0.028828922 | 41099 |
| 4 | 9 | 633600 | 0.028828922 | 18266 |
| 5 | 3 | 1900800 | 0.028828922 | 54798 |
| 6 | 10 | 570240 | 0.028828922 | 16439 |
| 7 | 6 | 950400 | 0.028828922 | 27399 |
| 8 | 8 | 712800 | 0.028828922 | 20549 |
| 9 | 5 | 1140480 | 0.028828922 | 32879 |
| 10 | two | 2851200 | 0.028828922 | 82197 |
| 16405920 | 472965 |
The factor is multiplied by each numerator (which will be the base) which will give us the amount and the sum of this last column will be equal to the distributed yield.
The Consumer Cooperative Society.
Yield distribution for consumer cooperative societies.
Cooperative consumer societies are made up of people who acquire or consume their articles or merchandise. The returns obtained by these cooperatives are distributed among the members, generally taking as a base the total of the operations carried out (acquisitions of goods or services) by each one of the cooperatives.
Example:
Directly proportional
| Cooperative | Purchases (base) | Factor | Amount |
| one | 351,725 | 0.227102871 | 79877.75 |
| two | 125,302 | " | 28456.44 |
| 3 | 93,741 | " | 21288.85 |
| 4 | 252,250 | " | 57286.69 |
| 5 | 435,890 | " | 98991.8701 |
| 6 | 145,623 | " | 33071.401 |
| 7 | 85,431 | " | 19401,625 |
| 8 | 70,720 | " | 16060.71504 |
| 9 | 137,489 | " | 31224.15 |
| 10 | 290,954 | " | 66076.50 |
| 1,989,125 | 451736 |
Factor = 451736/1989125 = 0.227102871
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