Share contribution - what is it?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

To achieve various economic and social goals (satisfaction of material and other needs), people and entire organizations create associations based on membership - cooperatives. In a market economy, they act as a third force and are an alternative to the public and private sectors. The cooperative has a direct connection with the economic (or other) interests of its members.

For the formation of such an association and the achievement of its goals, a fund is created, which is formed at the expense of membership fees. This is a kind of direct investment called a "share contribution". These are funds contributed by shareholders (participants) at different stages to ensure the statutory activities of the cooperative and in exchange for a share in its property. We will talk more about what a share is and what it gives to cooperative members in the article.

Share Contribution: Definition

The concept of a share contribution is given, in particular, in the Federal Law of 1995 "On Agricultural Cooperation". According to him, a share is a property contribution to a mutual fund,made by a member of the cooperative in cash or other property (this can be various property rights, land, buildings, etc.).

In civil law, a share is represented as:

• the right to participate in the property of the cooperative, obtained after the payment of share contributions (either by investing money or other property, or by direct participation of a citizen in the activities of the cooperative);
• that part of the cooperative property allocated to one of its members, which consists of shares made by him and the corresponding share of the property created in the course of the cooperative's activities.

The size of the share contribution has a direct impact on the distribution of profits between the participants of the cooperative. At the same time, it does not affect the right to participate in management: each member of the company has exactly one vote at the general meeting. The occupation of certain positions in the cooperative also does not depend on how much the participant made a share contribution. This is an important feature, which is reflected in the Civil Code of the Russian Federation.

Procedure for joining a cooperative

Citizens and legal entities who have made entrance and share contributions and accepted as members of the cooperative are called shareholders. They can become both when creating, and when entering an already existing society. In the first case, the participants act as its founders and become shareholders only after the state registration of the company as a legal entity. In the second, those wishing to join the cooperative first submit an application to its council, which is considered within a month, after whichan appropriate decision is made. If it is positive, then follow:

• make an entry fee - goes mainly to cover the costs of joining;
• pay a share - this property is credited to the fund (the amount is established by the charter of the company);
• get a shareholder's book - a document certifying membership in a cooperative.

In proportion to the contribution made, dividends are accrued, which are paid upon disposal or transferred to the share heir.

Shareholders also have the right to apply for work in a cooperative as a matter of priority compared to other citizens (FZ "On consumer cooperation"). The maximum number of cooperative shareholders is not limited.

Agreement between a shareholder and a cooperative

The main document that determines the procedure for payment by a shareholder of money or other property is a share contribution agreement. It establishes all the main points related to the entry and participation of a citizen in a cooperative organization:

• terms and amounts of payment of share contributions;
• rights and obligations of shareholders;
• rules for terminating this agreement;
• the procedure for returning funds to a shareholder upon leaving the cooperative.

The agreement may also contain rules for holding meetings of members of the cooperative, defines the special rights of the shareholder, regulates the division of property of the cooperative in various cases.

Sharethe form of the share contribution is also determined by the agreement. Mandatory shares in a production cooperative are established in the same size for all, in a consumer cooperative - in proportion to the planned volume of a citizen's participation in the economic activities of this cooperative.

In addition to the mandatory, members of the society can make voluntary contributions to the share fund in order to increase their share of property participation in the cooperative. Due to them, share savings of participants are formed, which include annual cooperative payments in proportion to the size and period of circulation of these savings for each shareholder.

Co-op Benefits: Mutual Fund

The share fund formed by the contributions of the members of the cooperative is one of its strongest sides. Russian legislation does not declare and is not subject to taxes on the share contribution made by a citizen when joining a cooperative. This gives a certain degree of freedom in the use and transfer of the property of the participants, constituting the joint, share capital.

So, for example, not only cash can be contributed to a mutual fund, but also buildings, equipment, land, securities and other property that has a monetary value. At the same time, its legal regime, the regime of taxation and other payments associated with its use are changing. Under the agreement, you can even contribute a computer as a contribution, having discussed its cost only with the leaders of the cooperative. At the same time, the return of the share contribution can be received in cash, without paying any taxes on these funds. In addition, shareholders cancalmly use property (their own and other members of the cooperative), including money that they receive on the security of their share contribution.

The property constituting the mutual fund is well protected from external interference in the activities of the cooperative on the basis of this legislation of the Russian Federation. Therefore, cooperatives are often called alternatives to the public and private sectors of the economy.

Conclusion

From the article you learned about what a share contribution is. This is not just a fee for joining a cooperative, it is the right to receive a share of its property and income received from its use. These are wider opportunities for the effective use of one's (and not only) property on more loyal terms (no need for licensing, declaration, taxation, etc.).