Transition to the Market Economy (1989-1993)

     This document has been made available in electronic 
    format by the International Co-operative Alliance ICA 
                         November 1995

                    ICA Studies and Reports
           Co-operatives in Eastern & Central Europe

               by Professor Dinonysos Mavrogiannis

2   Transition to the Market Economy (1989-1993) 

Governmental policy on restructuring and privatising the economy
officially started in 1990. This had a direct impact on the
co-operative sector. Co-operative societies, both old
(restructured in accordance with the Law of 1991) and new (having
emerged during the last five years), currently contribute to the
implementation of the privatisation policy. Their democratic
values and principles lead to self-sufficiency in food,
income-generating activities and social justice. Thus,
co-operatives should not be looked upon as the passive result of
the privatisation policy. As part of the economic pluralism, they
also participate in the implementation of market conditions at
all levels.

2.1  Privatisation policy

The privatisation policy and its subsequent implementation, begun
in 1989, aimed firstly at dismantling State and municipal
enterprises, means of production and land, and secondly at
establishing a market economy.

Arguments in favour of privatisation were already to be found in
1987. Based on the economic revival plan decided by the 13th
Congress of the Communist Party in 1986, the Council of Ministers
issued regulations on private individual business and
co-operative activities the following year. A special ordinance
permitted 35 co-operatives, old and new, to undertake a wide
range of economic activities. Public authorities were directed
to support and promote such businesses, particularly those
conducted by pensioners, students, women and handicapped people.
No hired labour was permitted to be employed for such activities.
This opening of the Bulgarian authorities to a limited market
economy is a reminder of the Soviet perestroika started by
Gorbatchev at that time.

Later on, reconstruction of the economy began with the passing
of Decree 56 of January 1989, regulating economic activity. A
special team handling questions of small individual and private
forms of entrepreneurship was created for this purpose in the
Ministry of Economy. During the same year, Decree 922 introduced
the dismantling of the agro-industrial complexes which had been
in operation for almost 20 years under the National Agrarian
Union, which the Ministry of Agriculture was then called.

Consequently, a great number of small shops, restaurants and the
like sprung up throughout the country, as a movement of
spontaneous private business and property. In contrast, several
associations and co-operatives working in the areas of food
production and sales were also established during this period.
These co-operative type organisations have not yet fully
assimilated co-operative values and principles, and are thus
known as "wild" co-operatives.

The political changes which began in 1989 opened the door to the
official restructuring and privatisation of the economy through
an adequate legislative policy and texts aiming merely at:

-   creating an institutional framework of economic pluralism
including single traders, commercial firms, co-operative 
societies and banking activities;

-    facilitating the restitution of State and municipal
     enterprises and land;

-    privatising State and municipal enterprises and property;

-    encouraging and protecting foreign investments.

The economic and financial situation of the country, which
worsened in 1990-1992, sped up the process of privatisation.
Industrial production fell by 13% in 1990 and by 27% in 1991,
while inflation rose rapidly. In 1992, industrial output fell by
55% in comparison with that of 1990. The export trade to the
former COMECON countries decreased by 60% and to other countries
by 25%. In 1991, half of the country's State enterprises were
functioning at less than 60% of their previous capacity.

The structure of large enterprises affected by the significant
decrease in productivity and job losses are shown in Table 6.

Table 6:     State enterprises and employment levels in 1990

Number of workers               Number of enterprises

Less than 10                             25
11-30                                   120
31-50                                   162
51-80                                   274
81-140                                  343
141-200                                 287
201-500                                 744
501-1,000                               388
1,001-2,000                             207
2,001-3,000                              70
3,001-5,000                              27
5,001-10,000                              9
Over 10,000                               4

Source: National Statistics Institute

The available data indicate that the number of workers employed
in the State sector fell from 3.7 million to 3 million in 1991.
In 1992, unemployment benefits amounting to 44 million US dollars
were paid to 700,000 redundant workers. The crucial questions of
price liberalisation (the price of some 90% of goods and services
was liberalised at the beginning of 1991), high inflation, wage
fluctuations, high rates of taxation, external debts, lack of
foreign currency and other related problems were the object of
a reform programme introduced in 1991 with the approval and
assistance of the International Monetary Fund.

Foreign investments in the form of joint ventures had grown up
slowly by that time. In 1991 approximately 80 million US dollars
of foreign capital was invested in some 240 joint ventures.

The participation of foreigners in the privatisation process is
encouraged through public sales of State assets and securities.
Foreign citizens and legal bodies are governed by the same legal
texts as Bulgarian persons and legal entities, and also by the
specific provisions of the Law on the Economic Activity of
Foreign Persons and Protection of Foreign Investments (the
Foreign Activity Law) of 1992.

There were more than 210,000 small private enterprises in 1992
and the number of full-time employees was estimated to be around
400,000. A much higher number of part-time employees is hidden
for taxation and other social reasons (e.g. those simultaneously
claiming unemployment benefits).

All actors within the privatised economy are classified as
"merchants" and "non-merchants". Merchants are physical and legal
entities participating in business and profit-oriented
activities. They are individuals, various forms of partnership,
limited liability and joint-stock companies registered in the
commercial register. They are governed by the provisions of the
Commercial Code adopted in May 1991.

Co-operatives are classified as "merchants" (except the housing
co-operatives), but their constitution, functioning and
activities are regulated by the special provisions of the
Co-operative Law of July 1991.

"Non-merchants" are all producers and workers engaged in farming,
handicrafts and various professions as well as the self-employed.
Thus the members of workers' production co-operatives and
agricultural co-operatives are not considered to be "merchants".
Banking institutions and insurance companies must be organised
either as joint-stock companies or as co-operatives.

By June 1993, 30,772 small enterprises and properties of the
54,426 claimed, nationalised or confiscated by the State,
municipal councils and other State bodies, had been returned to
their previous owners or their heirs. The percentage of the above
enterprises and property already returned to the former owners
varies between 43.4% and 90.9% according to each category (see
table 7). Restitution is differently implemented from one region
of the country to the next.

The most important State enterprises facing difficulties with
privatisation are the big industrial complexes. As yet, only a
few have been sold. Unconfirmed sources put the figure at 2%
(including the Razrad pharmaceutical plant, financed with the
help of Belgian investors).

The privatisation law of May 1992 created the Privatisation
Agency. This is governed by a  supervisory board of eleven
members appointed by the Council of Ministers and the National
Assembly, and managed by an appointed executive director. The
activities of the agency are financed through the State budget.
The agency prepares privatisation programmes in the form of
annual targets, lists of enterprises to be privatised and
guidelines for the privatisation process. The programmes are then
approved by the Council of Ministers. The agency, staffed by
legal, administrative and technical personnel, is still in the
process of organisation. Some eleven regional offices are to be
established in the country's main urban centres. The
privatisation of municipal assets is handled by the municipal

The implementation of the privatisation process is centralised
at present, which is both costly and time consuming. The value
of the assets concerned, mechanics of sale by public tender, and
issues concerning employees, are some of the difficult problems
which face the inexperienced administrators. Foreign investments
from abroad are very rare, although Greece, Germany and other
members of the 

EU (European Union, formerly the European Economic Community) are
showing some interest in investing in some of the smaller

Table 7:      Restitution of small enterprises (end of June 1993)

Category                 Claimed     Redistributed      %

Total                     54,426       30,772          56.5
Shops                      9,003        7,452          82.8
Restaurants                  161          134          83.2
Pharmacies                    77           70          90.9
Hotels/guest houses          286          150          52.4
Car stations                  11            5          45.5
Garages                      143           82          57.3
Waterhouses                1,201          882          73.4
Administrative buildings     511          402          78.7
School buildings              56           25          44.6
Hospitals                    164          122          74.4
Children's centres           207          176          85.0
Cultural centres             368          203          55.2
Apartments                11,484        6,775          59.0
Mills                      1,059          713          67.3
Other establishments         159          109          68.6
Dairies                       41           26          63.4
Workshops                    218          158          72.5
Other industrial units     1,563        1,010          64.6
Sport centres                 84           58          69.0
Grounds and courts        25,536       11,090          43.4
Miscellaneous              2,094        1,130          54.0

Source :  TRUD (=Labour) Newspaper of 15/9/1993

With regard to the land reforms, a legal framework setting out
the necessary policy guidelines, has been adopted. This consists
of the Law on Ownership and use of Farm Land, passed in February
1991 and since amended, and the Rules of Application issued in
April 1991, together with their amendments. The Government is
watching the process of implementation closely. Difficulties,
therefore, are limited to technical issues, mainly related to the
allocation of land to its previous owners or to their heirs. The
financial cost of the endeavour is funded by the State budget,
and it is estimated that the restitution costs will amount to
three billion levas. All claims and settlement of disputes, at
all levels, are free of charge for the people concerned.

According to the Ministry of Agriculture, 25 to 30% of the
collectivised land for which claims had been registered had been
returned by the end of 1993. Another one or two years will be
necessary for the completion of this huge technical and legal
undertaking. At the national level, the Ministry of Agriculture
(Department of Land Reform) is planning and implementing the land
reform. At the local level, municipal commissions undergo the
day-to-day work, collecting claims (declarations), studying them
and deciding upon their validity. Appeals against their decisions
may be made to the court.

Land seized by the State farming system is returned to:

-   the previous owners or their heirs (Article 10, paragraph 1);

-   co-operatives, such as the consumer societies, whose
cultivated land was seized after 1944 (Article 29);

-    municipalities which owned seized land and have not been 
compensated for its loss (Article 25, paragraph 2);

-    current and retired member-workers of the collective farms
are also entitled to compensation (Article 27);

-    private individuals are allocated other land belonging to
the State and municipalities free of charge (Article 26).

Any other land which is not handed over to those listed above
remains in the hands of the State (Article 24, paragraph 1). All
agricultural land which is not that owned by private individuals,
legal entities or the State shall be municipal property (Article
25, paragraph 1).

Article 8 recognises the right of the new private land owners to
unite in co-operatives and associations for the joint cultivation
of agricultural land.

A comparison between the policies concerning, on the one hand,
the privatisation of State and municipal enterprises and property
and, on the other, land reforms should result in the following

-    At the policy level, the one concerning land reform has
clear and well-defined objectives. The privatisation policy, in
practical terms, does not go beyond the current year;

-    The policy of land reform is the result of a national
consensus of all the social partners involved. Such a consensus
seems to be missing in the case of privatisation policy;

-     The implementation of land reform is mainly in hands of the
local authorities. Reallocation of scattered land property is
being undertaken by technicians from the Ministry of Agriculture.
Implementation of the privatisation policy is highly centralised;

-    Land reform can be performed within the State budget. The
privatisation process depends on foreign investment, which is not
currently forthcoming;

-    The privatisation policy gives little consideration to the
views of trade unions belonging to workers employed in the State
and municipal enterprises, and their participation in the sale
of these units. According to Article 31 of the 1992 Privatisation
Law, 30% of the employees can bid in the auction of the State and
municipal enterprises and obtain up to 20% of the shares of the
privatised enterprises, the value of which is estimated at over
ten million levas. The employee scheme adopted by the Law
provides for a discount, set at a 50% in case of an employee buy
out, to be repaid in instalments from one year's salaries. No
voting rights are allowed, however, at least for the first year.
The Law also provides for the use of a part of the sale proceeds
for social and developmental purposes. The Law missed the
opportunity to include former workers in the privatisation of
State and municipal enterprises in the form of employee-owned
private enterprises, organised in co-operative type and
participatory ventures, whose management and labour would be in
charge of the member-employees. 

The law on land reform does not limit the rights of former
workers to claim against the assets of the collective farms
(Article 27). Similar provisions in transitional clause 8 of the
Law on Co-operatives guarantee the rights of employees of farming
organisations under reorganisation.

2.2    Co-operatives under restructuring and privatisation

The radical changes of 1989 created a serious identity crisis
regarding the definition and role of Bulgarian co-operatives in
the context of the market economy. Confusion among the population
and some of the liberal political leaders who came to power
during 1990 and 1991, contributed to the perception of
co-operatives as an integral part of the Socialist economic
system.  Taking advantage of the general embarrassment about
State domination of collective farms and other types of
co-operatives, the Government attempted to enforce the obligatory
distribution of co-operatives' property to their members.
Existing co-operative property, at the level of the consumer
societies' unions, was perceived to be similar to that held by
the State and municipal councils.

Co-operative leaders, assisted in their difficult task by the
advisory services of the ICA and the ILO, managed not only to
extinguish such erroneous views about the past role of
co-operatives but also to counter the adverse political views.
Finally, the new policy adopted special legislative texts which
confirm the private nature of co-operative societies. Such a
legal framework favoured the restructuring of existing
co-operative societies. The privatisation process and land
reform, on the other hand, gave the signal, and the opportunity,
for the emergence of new co-operatives.

2.2.1       Spontaneous restructuring

As from 1987, the co-operative movement as a whole felt the need
to proceed to various reforms and improvements regarding
economic, financial and educational structures.

The creation, between 1987 and 1990, of a private individual and
commercial sector had a double impact on existing co-operatives.
Consumer co-operatives gave up a certain number of co-operative
shops with the objective of getting rid of the less productive
part of their retail system. These shops were sold or rented. It
is now planned that the latter are to be reintegrated in the CCU
system. The CCU started also rationalising its administrative
staff, reducing their number by 80%. New consumer, handicraft and
production co-operatives were formed. In 1988, although the legal
basis for individual business and self-employment was still
narrow, the Union of Workers' and Producers' Co-operatives was
revived. Subsequently, the Union claimed separation from the
consumer co-operative system and autonomy from the State.

The most important institutional event in 1990 was the creation
of a Department for Co-operative Management and Business at the
University of Sofia, with provincial branches, and a Co-operative
College. These two new, third and fourth level educational
institutions completed the existing training system financed by
the consumer societies: two higher co-operative centres and
twelve professional schools.

In early 1990, the CCU laid down a policy programme breaking its
previous links with the State and taking decisive steps towards
restructuring and privatisation. The 10th Congress of the CCU
held in Sofia immediately after the political changes (1990)
largely concentrated on the ways in which the transformation and
privatisation of the consumer co-operative system could be

The Resolution of the Congress supported all the democratic
changes under way and focused its task on restructuring
co-operative societies by reviving the co-operative values and

-       "the deep processes of restructuring and democratisation
of Socialist society and the establishment of a democratic
Bulgarian State create the conditions for rapid development of
the co-operative movement. Bulgarian co-operators support all
democratic changes within society and are resolved to work
towards ending the economic crisis";

-       "the primary task now is to restructure the co-operative
system and revive the co-operative values and principles".

The Recommendations of the Congress addressed everyone within the
co-operative movement (members, managers, executives, staff and
workers), and further highlighted and defined in 17 points the
main areas of intervention and objectives of structural,
organisational, economic and social changes of the system:

1.     Revival of co-operative values and principles and
condemnation of previous departures from these due to State
interference. In the future, elected bodies and members should
be honest and open and devoted to the co-operative cause, and
elected bodies should report regularly to the members. Equality
of rights and obligations of members should be restored;

2.     The vertical structure should be completed from the bottom
up-wards according to the needs of the primary societies which,
represented by delegates to the union's General Assembly, should
be the owners of their union's assets;

3.     The role of the CCU should be redefined in the interest
of the member-societies;

4.     Co-operative property should be guaranteed as one of the
forms of private property. New bylaws should be adopted covering
co-operative principles, property, shareholding and distribution
of profits according to the amount of shares, work undertaken and
the volume of transactions. New activities, such as saving and
credit, should be undertaken. This should result in a larger
system of co-operative banking operations;

5.     The relationship between co-operatives and the State
should be redefined on the basis of separation and mutual
autonomy. Income and profits realised by co-operatives should
belong, after payment of taxes, to the co-operatives;

6.     A broad programme of social services, including health,
housing, sport and recreation, social tourism, safety at work and
mutual insurance, should be implemented for the benefit of the
members and workers;

7.     Modernisation of the information system by microcomputer
technology should be implemented, providing for the better
information of member societies on topics such as accounting,
statistics and co-operative activities;

8.     Independence of every co-operative's management from
interference by the unions. The management of the
member-societies should be ensured by its own elected bodies
without inter-ference from the higher level co-operative

9.     A legal framework allowing restructuring should be

10.     Co-operative activities should be diversified and
multiplied through new productive networks;

11.     Improvement of services to the members including new
areas (supplies, repairs, leasing of equipment, agricultural
products) should be sought;

12.     Business-oriented organisations should seek to supply
better quality goods and services through wholesale trade and
retail outlets.

Recommendations 13 to 17 refer to various other priorities and
areas of restructuring of consumer societies and to
joint-ventures, co-operation between co-operatives and
collaboration with the ICA.

During 1990 and 1991, before the adoption of the Co-operative Law
of July 1991 referred to above, changes and improvements were
implemented in most areas. The detailed restructuring programme
was presented by the CCU at the ICA Seminar on the Co-operative
Legislation of Central and Eastern European countries, organised
in Prague in December 1990. The Report of the CCU entitled
"Bulgarian Co-operation Under the New Conditions" was based on
the decisions taken by the 10th Congress of March 1990 and on the
progress of restructuring. The positions and proposals of the
CCU, among the most complete and well-defined, were afterwards
used for the elaboration of the Co-operative Law of 1991 and for
the subsequent restructuring of co-operatives.

2.2.2        Co-operative policy and legislation

Approximately two years were devoted to consultations and
preparatory work for the formulation of an acceptable
Governmental policy on the place and role of co-operatives in the
system of economic pluralism. A national consensus was reached
providing for a new general law applied to all types of
co-operatives within the country, both existing and future.

In all matters controlled by the Government co-operatives enjoy
full and equal rights with other company forms. The Commercial
Law also states that co-operatives are traders with rights which
are equal to those of the country's other economic organisations.
The co-operative organisations (and the Central Co-operative
Union) have a lot of official support. The leaders of the Central
Co-operative Union are well accepted in all the ministries and
departments, and by Members of Parliament in general. Individual
ministers and Members of Parliament are helping to further the
development of, and support for, the country's co-operative
movement, but such support is not properly coordinated.

Regarding the essence and orientation of the new policy on
co-operatives, the Constitution of July 1991 states beyond any
doubt the place and role of co-operatives as part of the free

Article 19, paragraph 1: The economy of Bulgaria is based on free
economic initiative.

Article 19, paragraph 4: The law establishes conditions for the
co-operatives and other forms of association of citizens and
legal entities with regard to the achievement of economic and
social progress.

Article 41, paragraph 1: provides for freedom of association.

Elaboration of the basic and general co-operative law started in
early 1990. The CCU played a leading role in the preparatory
work. It sought and received advisory services from the ICA and
the Co-operative Branch of the International Labour Office.
Several working meetings took place in Sofia and Geneva, which
permitted the Drafting Committee to take advantage of the
international experience on co-operative policy and legislation.
The Draft Law submitted to the Government for consideration by
Parliament was the result of a compromise between the views of
all parties interested in, and concerned by, the co-operative
legislation. The Law adopted on 19 July 1991, is one of the
country's first legislative texts providing for the restructuring
and the creation of private economic institutions. The Law was
largely inspired by and drafted alongside the following
considerations and principles agreed by all social partners:

-      the law should be a legal instrument used for economic and
developmental purposes, rather than an administrative document
sustaining bureaucratic mechanisms;

-      it should create a favourable climate for an improved
working relationship between co-operatives and the State,
excluding any interference by the latter in the day-to-day
management of the societies;

-      it should restore legality and give legal guarantees
regarding the rights of citizens to affiliate voluntarily to
autonomous co-operatives, democratically managed by their elected
members. Co-operative activities, services and profits should
benefit their members;

-       it should spell out the role of the co-operative sector
in comparison with the State and private commercial sectors. This
principle implies legal and actual separation of co-operatives
from the State enterprises, but permits working relations based
on contractual agreement. Co-operatives could therefore enjoy
rights to private ownership, make their own plans, act according
to free market conditions and benefit from the same facilities,
guarantees and advantages available to the two other sectors of
the economy;

-      it should refer to co-operative values and principles
accepted and respected by co-operative movements in all developed
countries, periodically fixed by the ICA's Congresses and
presently under review.

The Law is composed of 67 Articles, plus clauses regarding
additional and transitional provisions. It was slightly amended
and completed in 1992.

The new law, abrogating the previous law of 1983, is a unified
and general text which applies to the constitution and
functioning of all 

types of co-operatives, co-operative enterprises and joint
ventures. Its text is published in Annex 3.

Express reference to the international co-operative principles
as referred to above is made in the Explanatory Note (Expos‚ des
Motifs) which accompanied the Draft Law.

The law provides for all issues regarding the constitution and
functioning of voluntary and democratic co-operative
organisations according to practices experienced in West European
and North American countries.

Some provisions of the law, relating to basic topics, are cited
below for ready reference and easy understanding of its
orientations and features:

Article 1 defines the co-operative societies: "A co-operative
shall be a voluntary organisation of physical persons with
variable capital and a variable number of members, who shall
engage in economic and other activity along the lines of mutual
assistance and co-operation in order to meet their interests. A
co-operative shall be a corporate entity".

Article 2 refers to the promotion of co-operatives by the State:
"The State shall assist and promote the co-operatives through
tax, lending rate, customs and other economic concessions".

Article 3 stipulates that a co-operative society must be founded
by a minimum of seven physical persons.

According to Article 4, registration is to be made at the
district court rather than at the local authorities or councils,
as is the case in some other countries of Eastern Europe.

Members' rights and obligations are fixed by Articles 10 and 11
on the basis of equality. Employment conditions concerning
workers who are not members are regulated by the common law
existing in this field. Co-operatives, however, should also
adhere to the above legislation by means of an elected committee
of social affairs (Article 12).

Functions of the General Assembly and elected bodies are
stipulated in law (Articles 17 to 30).

Article 32 enumerates various sources of capital: members'
subscription, share capital, additional capital from the members,
business earnings, loans etc.

Article 34 relates to limited liability according to the
importance of the assets of the co-operative and to the amount
of the members' shares.

Article 36 imposes the annual formation of legal reserves
amounting to at least 20% of the share capital. Statutory
reserves can also be decided upon by the General Assembly. Both
types of reserve are calculated on the basis of each year's

Article 38 authorises co-operatives to organise saving and credit
activities for their members.

Article 39 allows co-operatives to set-up and run mutual
insurance societies for their members.

Article 48, paragraph 3 stipulates that in case of liquidation
members' shares shall be reimbursed only after all other
liabilities have been settled. Although it is not stated that
shares would be reimbursed at their nominal value, this should
be seen as the only possible response.

Article 51 provides for the disposal of the residual assets of
the liquidated co-operative. These should be distributed among
members in proportion to their shares, unless bylaws prescribe

Co-operatives are allowed to proceed to the constitution or
reconstruction of co-operative enterprises (Articles 55 to 57)
the assets and profits of which will be owned by the founder
co-operative. Furthermore, co-operatives can constitute
inter-co-operative enterprises engaged in activities of common
interest to the founder societies (Articles 58 and 59).

The vertical structure of the co-operative organisations is
foreseen by Articles 60 to 63. By decision of their General
Assembly, primary societies can create or join a territorial,
sectorial or other union ("alliance"). "Alliances" must consist
of at least two primary societies, and can form higher-level
unions as well as federations. Higher-level co-operative
organisations can create funds designated for the mutual
assistance, education and professional training of members and

The district court is competent to settle all kind of disputes
concerning the functioning and management of a co-operative
society. Those entitled to call on the court are members, the
body of the elected controllers and the Public Prosecutor.
Consequently, a decision of the court can suspend a resolution
or action taken by the elected managing committee (Articles 66
and 67).

The restructuring of existing co-operatives is dealt with by
means of additional and traditional provisions. These provisions
settle three major problems concerning the reconstruction,
privatisation and smooth functioning of co-operatives:

-     Firstly, the restitution to existing co-operatives (namely
consumer and workers' or producers' societies) of any property
confiscated or nationalised after September 1944. The law
establishes the conditions for proving previous ownership of such
property (additional clause 1). Rules on the implementation of
the above principle were stipulated by the Council of Ministers'
Ordinance 192 of 1 October 1991, amended and completed in 1993
(the text of Ordinance 192 is attached as Annex 4). The
Ordinance, composed of four long articles, laid down all the
conditions for proving ownership and settling claims for the
restitution of co-operative properties. The authorities competent
to decide upon ownership claims are: ministries, municipalities
and liquidation councils in the case of cultivated land, and the
regional court where the property is situated. Officials and
employees who refuse, or fail, to return confiscated properties
to co-operatives risk prosecution, whilst the co-operatives
affected are entitled to seek compensation for damages caused and
profits missed as a result of such administrative failures.

-     Secondly, the distribution of co-operative property to
members. The question regarding the destiny of the property
accumulated by apex co-operative organisations during the
Socialist regime raised contradictory voices and claims during
1990 and 1991. Because of this, in late 1991 the Ministry of
Finances attempted to bring about obligatory redistribution of
co-operative property to the physical members. Opposers of this
plan were supported by the ICA President and the ILO, and these
Governmental proposals failed to be adopted by Parliament. Apex
co-operative organisations accepted, however, to proceed with the
distribution of the accumulated property according to the
provisions of additional clause 2. The CCU distributed all of its
property to the unions and primary member-societies in the form
of shares. The Central Union of Workers' Production Co-operatives
started even distributing such property to its members, to
physical persons. The amount of property to be distributed, and
all other matters of procedure, are decided upon by the General
Assembly of each organisation concerned.

-     Thirdly, the transformation and restructuring of all
co-operatives constituted prior to March 1st, 1992. Transitional
clauses 7 to 10 relate to matters regarding new agricultural
co-operatives created during recent years. Land owners, even
those who were not members of the co-operative, are entitled to
receive a share for the years that their land was cultivated by
the co-operative. If land remains in the hands of the
co-operative, the owners or their heirs are also entitled to
receive both dividends on their shares and rent for their land.

In addition to the basic Co-operative Law of 1991 and Ordinance
192 of 1991, amended in 1993, two other legislative texts
regulate the constitution of co-operatives based on private
ownership. These are the Law on Land Reform of 1991 (Article 8)
and the Law on Private Banking.

The wide legislative policy followed between 1991 and 1993
favours a separate co-operative sector, restructured and
privatised. The co-operative sector is also affected by other
legislative texts redistributing State and municipal property,
returning confiscated properties and enterprises, introducing a
commercial code and creating the other financial, economic and
social institutions and mechanisms required by a market economy.

Therefore, the impact of the new constitutional and legislative
framework for co-operatives, both new and in the process of
reconstruction, was direct and decisive. From the 1990 - 1991
crisis regarding the identity, nature and role of co-operatives
within the conditions of an economy in the process of
privatisation, has emerged a new image of co-operative societies.
They are seen as part of the economic pluralism and pioneer
organisations of the country's privatisation strategy.

In comparison with other countries in Central, and particularly
Eastern Europe, one could safely say that co-operative
legislation in Bulgaria is fair and advantageous. Apex
co-operative organisations were restructured rather than
dismantled. Furthermore, co-operatives form a separate sector of
the economy under privatisation, not only separate from the State
sector but also distinct from the private commercial one.
Although separate, their status is equal to that of the two other