How Co-ops Handle Money, Assets & Surplus

Registered co-operative societies in Zimbabwe are owned by their members, and the way they use or protect money and property is guided by law. This ensures that the co-op serves everyone fairly, and is not misused by a few.

Let’s break down the key rules every member or investor should understand.

🚫 Can a Co-op Sell or Give Away Its Property?

No – not without permission.
A co-op must get approval from the Registrar before it can sell, donate, or otherwise dispose of its movable or immovable property (like land, vehicles, equipment, etc.).

✅ But there are exceptions. Approval is not required for:

• Goods or products made by members that are being sold by the co-op.

• Everyday trading stock (e.g. items for sale in a shop).

• Property transferred from an apex or secondary co-op to a member society as part of normal business.

⚠️ If property is sold illegally, those involved may be forced to:

• Return the property or

• Pay back its value, whichever is higher.

Anyone who knowingly takes part in such a deal could also be held personally responsible for any losses.

💸 What Makes Up a Co-op’s Funds?

The money a co-op uses to run its operations can come from several sources:

1. Entrance fees (non-refundable).

2. Member shares (paid-up).

3. Voluntary savings deposited by members (withdrawable based on rules).

4. Loans or deposits from members and non-members (with limits and approval).

5. Surplus profits from the year set aside in a reserve fund.

6. Donations from supporters or institutions.

7. Other income the society earns.

🤝 Can a Co-op Lend Out Money?

Yes, but under strict rules:

• It can lend to members only if its by-laws allow.

• Employees can get loans only if members approve the terms in a general meeting.

• Members of the management or supervisory committee need specific approval.

• Lending to non-members needs Registrar approval.

These safeguards stop abuse of funds.

💰 Can a Co-op Borrow Money?

Yes – but only within set limits:

• A general meeting must agree on the maximum amount the co-op can borrow.

• The co-op must inform the Registrar.

• Borrowing beyond this limit is not allowed.

📈 Where Can a Co-op Invest Its Money?

To grow their funds safely, co-ops may invest in:

• Post Office Savings Bank.

• Registered banks in Zimbabwe.

• Guardian’s Fund investment instruments.

• Shares in other co-ops.

• Other options approved by the Registrar.

This ensures the money is protected and grows responsibly.

🏦 What Is a Reserve Fund?

Every co-op must build a reserve fund — a financial cushion for future use.

• At least 20% of the yearly surplus must be added to it (or 5% if the co-op is financially strong).

• The fund is used based on the co-op’s by-laws.

• No member can claim part of it personally — it belongs to the society as a whole.

• It must be partly held in liquid (easily accessible) form.

👵 Pension & Provident Funds

Co-ops can set up pension or provident funds for:

• Their members, and/or

• Their employees.

The rules:

• These funds must not be used in the business.

• They are not part of co-op assets and cannot be seized by creditors.

• They are protected by pension laws in Zimbabwe.

📊 What Happens to Surplus at the End of the Year?

After contributing to the reserve fund, a co-op may:

• Pay dividends to members.

• Give bonuses based on how much members used co-op services (patronage).

• Allocate money to other funds or projects.

• Pay honoraria to members (if allowed in by-laws).

• Donate up to 10% of the surplus to charity, with 2/3 approval of members at a meeting.

⚠️ The Minister may set maximum limits for dividends and bonus shares.

🎁 Bonus Shares

Instead of paying out cash, a co-op can issue bonus shares:

• These are extra shares given to members from the year’s surplus.

• They can only be redeemed or transferred after a period set in the by-laws.

• Bonus shares grow your ownership in the co-op.

✅ Summary for Members & Investors

👥 Why It Matters

For members:
These rules protect your money and ensure fairness in how the co-op is run.

For investors & partners:
They show the co-op is governed transparently, protects assets, and allocates surplus responsibly — making it a sound partner in development.