Statement of the Regional Assembly for Europe on Corporate Governance & (1996)

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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
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                         December, 1996

          (Source: Review of International Co-operation
                    Vol.89, No.4/1996, pp.11-12)

          Statement of the Regional Assembly for Europe on     
            Corporate Governance and Management Control
                 Systems in European Co-operatives
                    Budapest, 30th October 1996
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1.    The review of Corporate Governance and Management Control
Systems in European co-operatives has been one of the top
priorities within the work of ICA Europe - all the more so as
many co-operatives had experienced grave problems which have
threatened to undermine the profile and identity of the whole
co-operative movement.

References are made to the 1994 ICA Report on Corporate
Governance and Management Control Systems in European
Co-operatives; to the Code of Best Practice adopted by the
British Consumer Co-operatives in 1995  and to the papers,
presented on the Regional Assembly 1996 in Budapest. This
documentation is available through ICA channels.

2.   The Regional Assembly (RA) acknowledges the vital importance
of good governance and management control systems for the future
existence and well-being of the co-operative system, enabling
members actively to participate in setting policies, making
decisions and controlling results.

In this context it has to be recognised that the main objective
of co-operatives today, as in the past, is to promote the common
economic, social and cultural interests of their members - as it
was underlined by the statement on the CoŠ operative Identity
adopted on the ICA Congress in Manchester, October 1995. An
efficient business operation is therefore an absolute must to
reach the targets for member promotion.

3.   Ready-made solutions to improve corporate governance and
management control systems are not available. The RA recommends
that the individual societies and their Boards carefully consider
their own situation related to broad guidelines and, if
necessary, draw up and implement the necessary measures. Changes
can only be made locally.

4.   The RA underlines the decisive role of the elected members
in the Governing Bodies, especially in the Boards, within the
democratic structure of co-operative societies. 

*    An open and easily understandable election procedure is
     required and contested elections are desirable, and should
     be encouraged.

*    The elected members should be made fully aware of their
     duties and responsibilities, which require their
     involvement, the need for appropriate qualifications, and
     regular training programmes.

*    There should be a clear-cut division of legally binding
     responsibilities between the Governing Body (the Board) and
     Senior Management (the Chief Executive) set out in the
     society's rules and/or standing orders where the law does
     not provide for it.

*    Details of working procedures in Boardrooms, Executive and
     Board remuneration, key information and figures regularly
     supplied by the management should be open in each
     co-operative society.

5.   In co-operative societies, the RA recommends efforts should
be made to elect more women to the Governing Bodies thus securing
a better representation and participation of members.

6.   The reports of external and internal audits are of great
help for the control of the business operations of the individual
society. These should be thoroughly evaluated by the Board and
discussed with the top management.

7.   Only a minority of members are able to participate actively
within the Governing Bodies. The RA sees it therefore of utmost
importance that the societies develop and introduce new ways of
information, consultation and control as already adopted by
consumer co-operatives and societies in some other sectors. In
addition members should receive on a regular basis information
about their society and other co-operative matters.

8.   The RA would encourage each member organisation to introduce
a Co-op Code of Best Practice - similar to the Code adopted by
the British Consumer Co-operatives, with the objective of helping
societies to redefine the duties and responsibilities of the
Governing Bodies and Management, to make governing and control
issues more transparent and to formulate strategies to achieve
this.