The Government has approved changes designed to strengthen the activities of cooperatives

The Government of the Republic of Lithuania has approved the draft amendment to the Law on Cooperative Societies (Cooperatives) prepared by the Ministry of Agriculture. The proposed amendments will reduce the administrative burden, improve the legal framework and create more favourable conditions for the development of cooperation.

Co-operation is one of the priorities for agriculture – it is a way of strengthening farmers’ bargaining power, increasing the added value they generate and ensuring the viability of the rural economy. However, for the model to work, the right conditions must be in place.

“We aim to make the cooperation model simpler, clearer and more attractive. Fewer bureaucratic procedures mean more opportunities for farmers to focus on what matters most – cooperation, value creation and farm growth, ” – says Minister for Agriculture Andrius Palionis.

Fixed-term certificates to be abolished

One of the most significant changes is the abolition of the fixed-term certificate of recognition for agricultural cooperatives and its renewal every two years.

Instead, the Register of Legal Entities’ information system will clearly display a mark confirming the status of an agricultural cooperative. This will be public and easily verifiable by both partners and authorities.

As the granting and monitoring of this status will be based on data from state registers and information systems, cooperatives will no longer need to collect and submit the same documents repeatedly.

Clearer requirements for cooperatives

The draft law proposes establishing a clear system of three mandatory requirements for obtaining the status of an agricultural cooperative:

• at least 90 per cent of the cooperative’s members must be engaged in agricultural activities;
• more than 50 per cent of the value of agricultural produce purchased or services provided must be accounted for by transactions with the cooperative’s members;
• tax arrears and debts must not exceed the threshold of 500 euros.

It is also proposed to legalise the status of a ‘passive member’. This will allow long-standing members who, for objective reasons, no longer carry out agricultural activities to remain part of the cooperative and maintain a connection with the community, whilst ensuring that active members play a dominant role in decision-making.

More transparent governance and a lower risk of disputes

The amendments provide clearer rules on the procedure for electing the chair of the board, board members and members of the supervisory board, and also set out how to resolve situations where candidates receive an equal number of votes.

With a view to strengthening collegial governance, it is proposed that a three-member board should only be able to take decisions when all its members are present at the meeting.

The draft also clarifies the procedure for settling accounts with members who have left the cooperative during the financial year, by more clearly defining the deadlines and principles for such settlements.

The proposed amendments implement the objective set out in the Government’s programme to encourage investment in the agricultural sector, increase the financial sustainability and competitiveness of agricultural cooperatives, and foster cooperation among members.

The draft amendment to the Act will shortly be submitted to the Seimas of the Republic of Lithuania for consideration.