New legislation for cooperatives in Korea

On 29th December 2011, the eve of the International Year of Cooperatives, a new “Framework law on cooperatives”, was passed in the Korean National Assembly.

24 January 2012

In South Korea, due to sectorally fragmented legislation on cooperatives, there were few opportunities for newly emerging cooperatives such as worker cooperatives, social cooperatives and mutual aid organisations, which have appeared as a response to people’s needs, to establish themselves.

In order to change this situation, the framework law on cooperatives was initiated by the “Solidarity for Framework law on cooperatives” composed of cooperative movement organisations and various citizens’ associations. Thanks to the support from all political parties and Government, the legislation process could be very fast. In addition, a political opportunity opened up thanks to the IYC, which provided a favourable environment for this legislation as well.

The law distinguishes two different types of cooperatives. One is for cooperatives in general, which is considered as a “legal person” similarly to a conventional enterprise and can be established by meeting legal conditions. The other is for social cooperatives, which is considered as a “non-profit legal person” so that any surplus cannot be distributed to members. The latter can be registered only through official certification of public authority. Composed of 118 clauses, contents of law generally satisfy internationally-recognised cooperative values and principles. The Ministry of Strategy and Finance will be in charge of this law and plans to create a new division for cooperative affaires. A decree will define some important details of the law and it will take effect on and after 1st December 2012.

However, there is still a lot of work to do. First of all, the law mentions that workers cannot be board members with a possible exception, which would be defined in a decree. In order to make an appropriate legal status for worker cooperatives and multi-stakeholder cooperatives, it is very important to design the decree. Secondly, because the law will give a legal status to federal organisations of cooperatives, it is expected that many new federal organisations could be organised along with a rapid increase in cooperatives. Therefore, it is important to organise an appropriate federal network of organisations in order to strengthen and defend the cooperative movement against opportunism and instrumentalism by private companies and public authorities. Finally, it seems important to prepare a standard manual for transforming existing cooperative types of enterprises into real cooperatives according to the law and also for the establishment of new cooperatives.

International Organisation of Industrial, Artisanal and
Service Producers' Cooperatives

Secretariat: C/O European Cooperative House - avenue Milcamps 105
1030 Brussels, Belgium
Tel: +32 2 543 1033, fax: +32 2 543 1037
E-mail: cicopa[at]

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