Two apex co-operative bodies are scheduled to have their day in court tomorrow, as they challenge three provisions of the Co-operative Commission Act 2007 and Co-operative Societies (Amendment) Act 2007.

The Co-operative Union of Malaysia and Midlands Co-operative Union are contesting the provisions which came into effect on Jan 1, 2008.

In their originating summons in chambers filed on Jan 6, 2009 at the Shah Alam High Court, they are also disputing the validity of the appointment of the National Co-operative Organisation (Angkasa) as representative of all such societies.

The Finance Ministry, (then) Ministry of Entrepreneur and Co-operative Development, Co-operatives Commission and Angkasa have been named as the defendants.

The two bodies are contesting the following provisions of the Co-operative Commission Act 2007, and seeking a declaration that these contravene relevant articles of the federal constitution:

  • Section 42 - it compels the societies to contribute to a Central Liquidity Fund;

  • Section 50 - it requires funds not in use to be placed in the Co-operative Deposit Account that is managed by the commission; and

  • Section 10 - it empowers the commission to select board-members of co-operative societies.

mangsor saad chairman cooperative commission 290609 The plaintiffs further said the appointment and recognition of Angkasa are beyond the ambit of Section 52(2) of the Societies Act. This only provides recognition of an umbrella group of co-operatives ‘for the purpose of entitlement of funds under the Co-operative Education Trust Fund’, they said.

Commission director Mangsor Saad ( right ) filed an affidavit-in-reply on April 28 stating that the maximum contribution to the Central Liquidity Fund is only 3 percent and that dividends will be paid on this; and that interest will be paid on funds placed in the Co-operative Deposit Account.

The plaintiffs then countered that this is not stated in law and that there is no legal guarantee of compensation for funds held on behalf of the societies.

Last week, the Domestic Trade, Co-operative and Consumerism Minister Ismail Sabri Yaakob held a dialogue with representatives of the societies to address the problems. However, it was deemed a failure due to lack of time to cover all the issues.