_______________________________________________________ This document has been made in electronic format by the International Co-operative Alliance _______________________________________________________ Source : Tadeusz Kowalak : Co-operatives in Eastern and Central Europe, Poland; Studies and Reports; Twenty -first in the series, ICA, Geneva, 1992, 58pp., Price 12 CHF 2.3 Co-operative legislation ****************************** 2.3.1 The co-operative law of 1982 Unlike some other countries in the region, Poland has no complex new co-operative law. The Act of Parliament - Co-operative Law of 1982 is still formally in force. It includes several regulations which no longer have any meaning, as conditions have changed dramatically since 1982. In common with the former Co-operative Law of 1963, its regulations are formally in accordance with the ICA co-operative principles. Important amendments to the Co-operative Law of 1982, which were passed by Parliament following political changes of 1989, will be discussed below. 2.3.2 The law governing changes in the organization and operation of the co-operative movement (20.01.90) There are four main problems approached by the above Law. First, it dissolved all co-operative unions: regional, branch and central alike. Liquidators nominated and supervised by the Ministry of Finance had to dispose of co-operative unions' assets. Enterprises owned by co-operatives had to be transformed either into workers' co-operatives organized by their employees, or into stock companies or co-operatives of corporate bodies. Enterprises, facilities and other parts of the co-operative unions' assets which were not thus transformed had to be sold. The liquidation process accomplished, any financial means left were to be assigned to the primary co-operatives which were members of the union being liquidated. The Act allowed the establishment of new co-operative unions on the basis of a new Co-operative Law (not yet in existence), or after 31st July 1991. Secondly, the law ordered new elections in all primary co-operatives. These were to be held within a period of less than two months, with the threat of going into liquidation if this were not done. Third, it made it possible to divide existing co-operatives into two or more new co-operatives. This may be done by the decision of general assemblies, at the request of interested groups of members, whose rights and obligations are connected with a separate part of the co-operative. Fourth, it changed the legal nature and competencies of the Supreme Co-operative Council (SCC). The SCC became a voluntary association of primary co-operatives with the purpose of promoting collaboration and mutual aid among co-operative organizations at home and abroad, and of initiating and organizing co-operative research and publishing. The SCC retained its right of legislative initiative and of expressing its opinion about legislative acts concerning co-operatives. One month after the elections in primary co-operatives, new elections to the SCC had to take place. They were to change the composition of the SCC. Instead of nominees from the central co-operative unions it would consist of members elected by representatives of primary co-operatives, two members for each of the 49 voivodships. The Act aimed to attain political, structural and economic goals simultaneously. Politically it eliminated, and thus deprived of power over primary co-operatives, the leaders of the co-operative unions, as these were considered to be followers of the Communist regime. The elections at primary level were intended to eliminate those members of co-operative bodies, especially of the boards of directors who, as nominees of the Party, formerly acted more according to orders from above rather than fulfilling co-operative members' needs. This aim was not achieved. About 85% of the members of existing co-operative bodies were reelected. As far as the structural goal is concerned, the Act cancelled all secondary and tertiary organizations, thus liberating primary co-operatives of all interference from higher levels. Full independence of action was a total surprise. Practically, noprimary co-operative's managing body was prepared to face the new conditions of economic activity. The co-operative unions, which could have become the source of advice, instruction and of eventual financial help, and which were formerly the only way of providing goods or raw materials to co-operative shops, the only channel to market goods whether purchased or produced, were liquidated. The Law did not provide any institution which would substitute for the liquidated unions in activities such as advisory, auditing and training services. This resulted in a chaotic situation which led to a deterioration in the economic situation of the majority of primary co-operatives. 2.3.3 The revalorisation act of 30th August 1991 The worsening situation of co-operatives had a negative impact on the situation of the whole national economy, which, independently, found itself in serious difficulties. It resulted in several legislative initiatives aiming either to amend the Co-operative Law currently in force, or to elaborate a new Co-operative Law. The subject proved to be controversial. As time passed the decision was made to regulate first the most important co-operative problems and, for the time being, to postpone the question of a new Co-operative Law. The question of co-operative ownership or, as desired by some parties, of the privatisation of co-operatives was given priority. All except housing co-operatives have been authorised by the above Law to revalue members' shares through transferring not more than half of their reserve funds to the share fund. The decision regarding revaluing had to be made by co-operative general assemblies by the end of 1991. Revaluing was to be calculated using the relationship between the nominal average public-sector salary of 1990 and that of 1950, according to indices published by the President of the Central Statistical Office for use in the calculation of pensions. There are two other points included in the Law in question which seem to be important. The first allows the restructuring of the enterprises of the former Central Union of Horticultural and Apicultural Co-operatives into limited companies owned by primary horticultural co-operatives - members of the above Union, by employees of these enterprises and by farmers having had delivery contracts with them for at least two years. This regulation ended long controvevsies between primary co-operatives and their members, and employees of the above enterprises, who insisted on transformation of these enterprises into workers' co-operatives. The realization of their demands would have meant denying the justified property claims of primary horticultural co-operatives which, in the past, indirectly financed several important investments in these enterprises. The Law in question also contains a regulation giving all co-operatives, from 31st July 1991 onwards, the right to associate themselves in auditing co-operative unions which perform no economic activities other than training and consulting activities. This regulation permitted the reestablishment of upper-level co-operative structures, as reported above (see 1.4). 2.3.4 The new co-operative law As already mentioned, work on the new Co-operative Law started relatively early. The draft was ready at the end of 1990 and the Lower Chamber of Parliament, after long discussions, passed it on the 19th September 1991. However, the Senate (the Higher Chamber) subsequently made amendments to this Law, and these were neither accepted, nor passed by the Lower Chamber. The dissolution of Parliament at the end of 1991 and the new Parliamentary elections have meant that the stalemate has continued. At the time of writing (the end of June 1992) the new Co-operative law has still not been passed, and a special Parliamentary Commission is about to deliberate on three separate projects. The debate on the new Co-operative Law is not expected to take place before autumn 1992. Summing up the changes in co-operative legislation, it can be stated that: - the question of independence of primary co-operatives from external bodies was legally solved by the Acts of Parliament introducing (from 1st January 1990) economic reform, followed by the Act of 20th January 1990 (see 2.3.2 above); - as far as the problem of introducing an authentic, democratic control within co-operatives is concerned, this is formally ensured by the Co-operative Law currently in force. The above-mentioned Law of 20th January 1990 created the possibility to change the composition of elected co-operative bodies; - ownership questions have been partially settled by the Act of 30th August 1991 (see 2.3.3 above). However, several questions still remain, e.g. transforming co-operatives into other forms of enterprise, the division of net co-operative assets after liquidation, or members' and non-members' capital investments; - the necessary process of decentralization within the co-operative movement was imposed by the provisions of the Act of 20th January 1990. This not only abolished the existing co-operative unions which organized the centralization of co-operatives and their structures, but also promoted the division of big co-operatives into two or more smaller ones. There are, however, several important problems, some of which are listed above, which should be solved by the new Co-operative Law currently under discussion.