New laws to beef up governance of co-op societies

Key staff and management committee members from co-operatives may have to undergo training in future, to ensure such societies are overseen by competent people.

The move is among several to strengthen governance standards for the 85 co-ops here, under changes to the Co-operative Societies Act passed in Parliament yesterday.

Senior Minister of State for Culture, Community and Youth Sim Ann said the primary focus at this point is on credit co-ops, which receive members' deposits and disburse loans.

There will also be minimum competency standards on certain roles, with requirements kicking in immediately for new hires, while existing officers will have a transition period to upgrade their skills.

The changes follow a cheating case reported in 2014, involving one of Singapore's oldest credit co-ops - the Singapore Statutory Boards Employees' Cooperative Thrift and Loan Society.

A sum of $5.1 million had gone missing from the co-op. Two employees were later charged with cheating, and sentenced to jail.

There are 24 credit co-ops serving 140,000 members, and members' deposits in credit co-ops amounted to $820 million as at December 2016. Loans to members came up to $209 million.

Under the changes, the Registrar of Co-operative Societies may also impose a cap on a co-op's dividends to members if needed, Ms Sim said.

This is to ensure most of its surplus goes to building institutional capital and strengthening its financial position.

If a credit co-op persistently fails to meet requirements, putting members' deposits at risk, the Registrar may stop it from receiving new deposits, or cancel its registration.

The Registrar will also have enhanced powers for inspection, inquiry or examination. For example, the Registrar can have access to a co-op's premises and documents, and individuals with relevant information to investigate possible mismanagement, she said.

The changes also make it an offence to provide false and misleading information to the Registrar, or wilfully falsify records.

The Registrar will also have wider scope to wind up co-ops that are insolvent, unable to meet financial obligations, or when it is no longer in the interest of a co-op's members to continue its operations.

The Registrar can also intervene in a co-op, for instance by suspending a co-op officer.

At the same time, certain co-op membership rules will be relaxed to facilitate development, said Ms Sim.

Only five individuals will be needed to set up a co-op, down from 10, while the minimum age to qualify for a co-ops management committee will be reduced from 21 to 18.

Seven MPs spoke in support of the changes. Responding to Mr Seah Kian Peng's (Marine Parade GRC) concerns over possible over-regulation, Ms Sim said that while most co-ops comply with requirements, "there are still gaps when it comes to dealing with situations of mismanagement".

She stressed that the Registrar "will intervene and act to protect only as a last resort".

A version of this article appeared in the print edition of The Straits Times on January 10, 2018, with the headline 'New laws to beef up governance of co-op societies'. Print Edition | Subscribe