Contents

Chapter I General Provisions

Chapter II Establishment and Registration

Chapter III Members

Chapter IV Organizational Structure

Chapter V Financial Management

Chapter VI Merger, Split-up, Dissolution and Liquidation

Chapter VII Supportive Policies

Chapter VIII Legal Liabilities

Chapter IX Supplementary Provisions

Chapter I General Provisions

Article 1 This law is formulated with a view to supporting and directing the development of farmers’ professional cooperatives, regulating the organization and acts of farmers’ professional cooperatives, protecting the legitimate rights and interest of farmers’ professional cooperatives and the members thereof, and promoting the development of agriculture and rural economy.

Article 2 A Farmers’ professional cooperative is a mutual-aid economic organization, which is voluntarily formed by production and business operators of similar agricultural products or by providers or users of similar agricultural production and business operation services on the basis of rural household contractual management and which is subject to democratic management.

A Farmers’ professional cooperative mainly provides its members with services in the purchase of agricultural production materials, sale, processing, transport and storage of agricultural products, as well as the technologies and information relating to agricultural production and business operations.

Article 3 A farmers’ professional cooperative shall observe the following principles:

(1) Most of its members shall be farmers;

(2) It shall aim to provide services to its members and seek the common interests of all members;

(3) Voluntary obtainment of membership and free withdrawal from membership;

(4) All members shall be equal and shall be subject to democratic management; and

(5) The surplus shall be returned to the members according to the volume (amount) of transactions with the farmers’ professional cooperative.

Article 4 A farmers’ professional cooperative shall be registered and obtain the qualification of a legal person under this Law.

A farmers’ professional cooperative shall be entitled to own, use and dispose of the properties derived from the members’ capital contributions, accumulation fund, direct subsidies from the state treasury, donations of others, and other assets lawfully obtained, and shall bear liabilities for the debts with the aforesaid properties.

Article 5 Each member of a farmers’ professional cooperative shall bear liabilities for the debts of the farmers’ professional cooperatives within the limit of capital contribution and its proportion of accumulation fund recorded in its account.

Article 6 The state shall protect the lawful rights and interests of the farmers’ professional cooperatives and of their members. No entity or individual may impair the rights and interests of any farmers’ professional cooperative or of its members.

Article 7 When engaging in production and business operations, a farmers’ professional cooperative shall abide by the laws, administrative regulations, social moralities and commercial ethics, shall be honest and shall have good faith.

Article 8 The state shall promote the development of farmers’ professional cooperatives through fiscal support, tax preferential treatments, support in finance, science, technology and talents, as well as through industrial policies.

The state shall encourage and support all social forces to provide services to farmers’ professional cooperatives.

Article 9 The people’s governments at the county level or above shall organize the agriculture administrative departments, other relevant departments as well as the pertinent organizations to direct, support and serve the construction and development of farmers’ professional cooperatives under this Law and according to their respective functions,.

Chapter II Establishment and Registration

Article 10 To establish a farmers’ professional cooperative, the following requirements shall be satisfied:

(1) Having 5 or more members, who meet the requirements as described in Articles 14 and 15 of this Law;

(2) Having the articles of association, which meet the requirements of this Law;

(3) Having an organizational structure, which meets the requirements of this Law;

(4) Having a domicile, which meets the requirements of the laws and administrative regulations and which is determined in the articles of association; and

(5) Having the capital contributions made by the members who meet the requirements of the articles of association.

Article 11 To establish a farmers’ professional cooperative, a general meeting of establishment for all promoters shall be held. Those who become the members of this cooperative at their own free will shall be promoters.

The general meeting of establishment shall exercise the following powers:

(1) To pass the articles of association of this cooperative. The articles of association shall be subject to unanimous consent of the promoters;

(2) To elect the director-general, directors, executive supervisor or members of the board of supervisors; and

(3) To deliberate other important matters.

Article 12 The articles of a farmers’ professional cooperative shall cover:

(1) its name and address;

(2) business scope;

(3) membership qualifications, admission, withdrawal and removal;

(4) rights and obligations of a member;

(5) organizational structure and its formation, powers, term of office, and rules of procedures;

(6) form and amount of capital contribution of each member;

(7) financial management, distribution of surplus, and handling of losses;

(8) procedures for modifying the articles of association;

(9) causes of dissolution and liquidation methods;

(10) matters to be announced, and announcement ways; and

(11) other items necessary to be covered.

Article 13 To establish a farmers’ professional cooperative, the applicant shall file an establishment application with the administrative department for industry and commerce and submit to it the following documents:

(1) An establishment application;

(2) The minutes of the general meeting of establishment, which are under the signatures or seals of all promoters;

(3) The articles of association, which are under the signatures or seals of all promoters;

(4) The appointment documents and identity certificates of the legal representative and directors;

(5) A checklist of capital contributions, which is under the signatures or seals of the members who make capital contributions;

(6) A certification for the use of domicile; and

(7) Other documents as required by any law or administrative regulation.

The registration organ shall complete the relevant formalities within 20 days after it accepts a registration application and shall issue a business license to the qualified applicant.

To modify any of the statutory registration items of a farmers’ professional cooperative, the applicant shall file a registration modification application.

The measures for the registration of farmers’ professional cooperatives shall be formulated by the State Council. No fee may be charged for the registration of farmers’ professional cooperatives.

Chapter III Members

Article 14 Any citizen with civil capacity, or any enterprise, public institution or social organization, which is engaged in the production and business operations directly related to the business of a farmers’ professional cooperative, can make use of the services rendered by this cooperative, recognize and abide by its articles of association and goes through the admission formalities as specified in its articles of association, may become a member of this cooperative. However, no entity administering the public affairs may join any farmers’ professional cooperative.

A farmers’ professional cooperative shall prepare a roster of members and submit it to the registration organ.

Article 15 Farmers of a farmers’ professional cooperative shall constitute at least 80% of the total number of members.

If the total number of members is less than 20, one of these members may be an enterprise, public institution or social organization. If the total number exceeds 20, no more than 5% may be enterprises, public institutions and social organizations.

Article 16 A member of a farmers’ professional cooperative may be entitled to

(1) attend the general meeting of members, have the voting right, election right and right to be elected, and carry out democratic management over this cooperative under the articles of association;

(2) utilize the services rendered by this cooperative and the production and business operation facilities thereof;

(3) share the surplus according to the articles of association or resolution of the general meeting of members;

(4) consult the articles of association, roster of members, minutes of the general meeting of members or general meeting of the members’ representatives, resolution of the meeting of the council, resolution of the meeting of the board of supervisors, financial and accounting statements and account books;

(5) enjoy other rights as specified in the articles of association.

Article 17 The election and voting at the general meeting of members of a farmers’ professional cooperative shall be conducted on the one-person-one-vote basis. Each member shall be entitled to the basic voting right of one vote.

The members, whose amount of capital contribution to or amount (volume) of transactions with this cooperative is relatively large, may enjoy additional voting rights under the articles of association. The total number of the additional voting rights of this cooperative shall not exceed 20% of the total number of basic voting rights of the members of this cooperative. When holding a general meeting of members, the members attending the meeting shall be informed of the members who have the additional voting rights and the number of the additional voting rights.

The articles of association may restrict the scope of exercise of the additional voting rights.

Article 18 Each member of a farmers’ professional cooperative shall perform the following obligations:

(1) to execute the resolutions of the general meeting of members, the general meeting of the members’ representatives, and those of the council;

(2) to make capital contributions under the articles of association;

(3) to conduct transactions with this cooperative under the articles of association;

(4) to bear losses under the articles of association; and

(5) to assume other obligations as specified in the articles of association.

Article 19 Where a member of a farmers’ professional cooperative requests for withdrawal from the cooperative, he shall make a request to the director general or to the council 3 months prior to the end of a fiscal year. If an enterprise, public institution or social organization which is a member requests for withdrawal, it shall make a request 6 months prior to the end of a fiscal year. If the articles of association provide otherwise, the articles of association shall prevail. The membership qualifications of a member who withdraws from the cooperative shall be terminated as of the end of the fiscal year.

Article 20 The contracts, which have been concluded between a member and the farmers’ professional cooperative prior to the termination of his (its) membership qualifications shall be executed continuously, unless it is otherwise provided for in the articles of association or it is otherwise agreed upon by him (it) and this cooperative.

Article 21 After the termination of the membership qualifications of a member, the farmers’ professional cooperative shall, according to the form and time limit as provided for in the articles of association, refund to him (it) the amount of capital contributions and proportion of accumulation fund as recorded in his (its) account. The distributable surplus prior to the termination of the membership qualifications may be refunded to him (it) according to Paragraph 2 of Article 37 of this Law.

A member whose membership qualifications is terminated shall, under the articles of association, share the losses and debts of this cooperative prior to termination of his (its) membership qualifications.

Chapter IV Organizational Structure

Article 22 The general meeting of members of a farmers’ professional cooperative shall be composed of all members. It is the power body of this cooperative and shall exercise the following powers:

(1) to amend the articles of association;

(2) to elect and remove the director general, directors, executive supervisor or members of the board of supervisors;

(3) to make decisions on the disposal of important properties, investments to outsiders, guaranties to outsiders, and other matters important in the production and business operations;

(4) to approve the annual business reports, surplus distribution plans and loss handling plans;

(5) to make resolutions about the merger, split-up, dissolution and liquidation;

(6) to decide the number, qualifications and term of office of the managers and professional technicians to be hired;

(7) to hear the report on the changes of members made by the director general or by the council; and

(8) other powers as described in the articles of association.

Article 23 Where a farmers’ convenes a general meeting of members, the number of members attending the general meeting shall reach 2/3 of the total number of members or more.

An election or resolution made by the general meeting shall be subject to the consent of more than half of the total number of the voting rights of the members of this cooperative. A resolution about the revisions to the articles of association, or about the merger, split-up or dissolution of the cooperative shall be subject to the consent of 2/3 or more of the total number of the voting rights of the members of this cooperative. If there is a higher requirement in the articles of association, the articles of association shall prevail.

Article 24 The general meeting of a farmers’ professional cooperative shall be held at least once a year under the articles of association. An interim general meeting of members shall be convened within 20 days under any of the following circumstances:

(1) It is so proposed by 30% of the members;

(2) It is so proposed by the executive supervisor or by the board of supervisors;

(3) Other circumstances as described in the articles of association.

Article 25 If there are more than 150 members in a farmers’ professional cooperative, it may, under the articles of association, establish a general meeting of the members’ representatives, which may exercise partial or all the powers of the general meeting of members according to the articles of association.

Article 26 A farmers’ professional cooperative shall be equipped with one director general and may set up a council. The director general shall be the legal representative of this cooperative.

A farmers’ professional cooperative may be equipped with an executive supervisor or set up a board of supervisors. None of the director general, directors, managers and accountants may concurrently assume the position of a supervisor.

The director general, directors, executive supervisor or members of the board of supervisors shall be elected from the members of this cooperative by the general meeting of members. They shall exercise their powers according to this Law and the articles of association and be responsible for the general meeting of members.

The voting at a meeting of the council or board of supervisors shall be conducted on the one-vote-one person basis.

Article 27 The general meeting of members, council and board of supervisors of a farmers’ professional cooperative shall make minutes according to the decisions on the matters discussed, the members, director general or supervisors attending such meetings shall affix their signatures to the minutes.

Article 28 The director general or council of a farmers’ professional cooperative may, according to the decision of the general meeting, hire a manager and accountants. The director general or a director may concurrently assume the position of manager. The manager may, according to the articles of association or the decision of the council, hire other personnel.

The manager shall, under the articles of association or according to the authorization of the director general or of the council, be responsible for the concrete production and business operations.

Article 29 None of the director general, directors and managerial personnel of a farmers’ professional cooperative may conduct any of the following acts:

(1) To usurp, misappropriate or illegally distribute any assets of this cooperative;

(2) To lend the fund of this cooperative to others or provide a guaranty to others with any asset of this cooperative as a collateral by violating the articles of association or without approval of the general meeting;

(3) To accept the commission for any transaction between others and this cooperative as his own; or

(4) To commit any other act which impairs the economic benefits of this cooperative.

The income obtained by any of the director general, directors and managerial personnel in violation of the provisions of the preceding paragraph shall be attributed to this cooperative. If any loss is caused to this cooperative, he shall be liable for the compensation.

Article 30 The director general, directors or manger of a farmers’ professional cooperative shall not concurrently act as the director general, directors or manager of any other farmers’ professional cooperative of a similar business nature.

Article 31 A person who executes the relevant businesses of a farmers’ professional cooperative shall not act as the director general, director, supervisor, manger or accountant of this cooperative.

Chapter V Financial Management

Article 32 The finance department of the State Council shall, in pursuance of the relevant laws and administrative regulations, formulate accounting rules for farmers’ professional cooperatives. A farmers’ professional cooperative shall comply with the accounting rules formulated by the finance department of the State Council.

Article 33 The director general or council of a farmers’ professional cooperative shall, under the articles of association, organize the preparation of annual business report, surplus distribution plan, loss handling plan and financial statement, and shall, 15 days prior to the general meeting of members, put them at the office so as to be ready for the consultation by the members.

Article 34 The transactions between a farmers’ professional cooperative, and the transactions between it and non-members using its services shall be computed, respectively.

Article 35 A farmers’ professional cooperative may, under the articles of association or the resolution of the general meeting of members, draw an accumulation fund from the surplus of the current year. The accumulation fund shall be used to offset the losses, expand production and business operations or to be converted into the capital contribution of members.

The accumulation fund drawn each year shall, under the articles of association, be divided into the shares of each member.

Article 36 A farmers’ professional cooperative shall set up an account for each member, which mainly records:

(1) the capital contribution of this member;

(2) the concrete share of accumulation fund of this member; and

(3) the volume (amount) of transactions between this member and this cooperative.

Article 37 After offsetting the losses and drawing the accumulation fund, the surplus of the current year shall be the distributable surplus of a farmers’ professional cooperative.

The distributable surplus shall be refunded or distributed to the members under the following provisions. The specific distribution methods shall be determined according to the articles of association or the resolution of the general meeting of members:

(1) If it is refunded to the members on the basis of the volume (amount) between the members and this cooperative, the total amount of refund shall not be less than 60% of the distributable surplus;

(2) The balance of the surplus after the refund as mentioned in the preceding paragraph shall be distributed to the members of this cooperative by taking into consideration the amount of capital contributions and the share of accumulation fund as recorded in the accounts of the members, as well as the members’ average share of the properties derived from the direct subsidies from the state treasury and others’ donations which this cooperative accepts.

Article 38 For a farmers’ professional cooperative which has an executive supervisor or board of supervisors, the executive supervisor or board of supervisors shall be responsible for the internal audit over the financial affairs of this cooperative. The audit result shall be reported to the general meeting of members.

The general meeting of members may also entrust an audit institution to audit the financial affairs of this cooperative.

Chapter VI Merger, Split-up, Dissolution and Liquidation

Article 39 For the merger of a farmers’ professional cooperative, the creditors shall be notified of the merger resolution within 10 days after it is made. The credits and debts of all parties concerned to the merger shall be inherited by the organization which survives after the merger or which is newly established.

Article 40 For the split-up of a farmers’ professional cooperative, its properties shall be divided correspondingly and the creditors shall be notified of the split-up resolution within 10 days after it is made. The organizations after the split-up shall bear joint and several liabilities for the debts incurred prior to the split-up, unless it is otherwise stipulated in the debt settlement agreements in writing reached between the farmers’ professional cooperative and the creditors prior to the split-up.

Article 41 A farmers’ professional cooperative shall dissolve for the following reasons:

(1)Any of the dissolution reasons as described in the articles of association occurs;

(2)The general meeting of members makes a resolution on dissolution;

(3)It is necessary to dissolve due to merger or split-up; or

(4)Its business license is withdrawn or revoked.

If a farmers’ professional cooperative dissolves for the reason as mentioned in Item (1) or Item (2) or Item (4) in the preceding paragraph, the general meeting of members shall, within 15 days after the occurrence of the said dissolution reason, choose some members to form a liquidation team to start the liquidation for dissolution. If no liquidation team is formed within the time limit, the members and creditors may file an application with the people’s court for designating some members to form a liquidation team to conduct the liquidation. The people’s court shall accept such an application and shall timely designate some members to form a liquidation team to conduct the liquidation.

Article 42 A liquidation team shall take over the farmers’ professional cooperative from the day when it is formed. It shall be responsible for dealing with the pending businesses relating to the liquidation, settle the properties, credits and debts, distribute the remnant properties after settling the debts, participate in the lawsuit, arbitration or any other legal proceeding on behalf of the farmers’ professional cooperative and go through deregistration formalities after the end of liquidation.

Article 43 Within ten days after a liquidation team is formed, the members and creditors of the farmers’ professional cooperative shall be given a notice, and an announcement shall be made on a newspaper within 60 days. A creditor shall, within 30 days from the day when he (it) receives the notice, or within 45 days after the date of announcement if he (it) fails to receive a notice, declare his (its) credits to the liquidation team. If all members and creditors have received such a notice within the prescribed time limit, the liquidation team is not required to make an announcement.

When creditor declares his (its) credits, it shall state the matters relating to the credits and provide certification materials. The liquidation team shall register the credits.

During the credit declaration period, the liquidation team shall not settle the debts owing to any creditor.

Article 44 If a farmers’ professional cooperative dissolves for the reason as mentioned in Paragraph 1 of Article 41, or when the people’s court accepts a bankruptcy application, no member may go through the formalities for the withdrawal from this cooperative.

Article 45 The liquidation team shall be responsible for working out a liquidation plan, which includes the settlement of wages and social insurance premiums of the employees of the farmers’ professional cooperative, the payments of outstanding taxes and other debts, and the distribution of the remnant properties. The liquidation plan shall be executed after it is adopted by the general meeting of members or confirmed by the people’s court.

If the liquidation team finds that the properties of the farmers’ professional cooperative are not enough to settle its debts, it shall apply to the people’s court for bankruptcy.

Article 46 At the time of liquidation for the dissolution or bankruptcy of a farmers’ professional cooperative, its properties derived from the direct subsidies from the state treasury shall not be distributed to the members as the distributable remnant assets. The relevant disposal measures shall be formulated by the State Council.

Article 47 The members of the liquidation team shall be dutiful. They shall perform their liquidation obligations. If their intentional or gross negligence causes any loss to any of the members or creditors of the farmers’ professional cooperative, they shall be liable for compensation.

Article 48 The bankruptcy of a farmers’ professional cooperative shall be governed by the relevant provisions of the Enterprise Bankruptcy Law. However, for the remnant properties after settling the liquidation expenses and the debts of the cooperative, priority shall be given to the payment of the prices of transactions made between the farmers’ professional cooperative and its farmer members prior to bankruptcy.

Chapter VII Supportive Policies

Article 49 The state may authorize or arrange qualified farmers’ professional cooperatives to undertake the construction projects supporting the development of agriculture and rural economy.

Article 50 The central and local finance shall separately arrange funds to support the farmers’ professional cooperatives to carry out services relating to information, training, quality standard and certification of agricultural products, construction of the basic facilities of agricultural production, marketing, as well as technology popularization. The state shall give prior support to the farmers’ professional cooperatives in the areas of ethnic minorities, remote areas and poverty-stricken areas, and to those producing important agricultural products that the state and the society badly need.

Article 51 The policy financial institutions of the state shall provide diversified forms of monetary support to the farmers’ professional cooperatives. The concrete supportive polices shall be formulated by the State Council.

The state encourages the commercial financial institutions to provide monetary support to the farmers’ professional cooperatives in various forms.

Article 52 A farmers’ professional cooperative shall be entitled to the tax preferential treatments regarding the agricultural production, processing, circulation, services and other economic activities relating to agriculture.

The State Council shall formulate other tax preferential policies on supporting the development of farmers’ professional cooperatives.

Chapter VIII Legal Liabilities

Article 53 Anyone, who usurps, misappropriates, retains, illegally distributes or encroaches on the legitimate property of any farmers’ professional cooperative or of any of its members, illegally intervenes the production and business operation of any farmers’ professional cooperative or of any of its members, impose any fee on any farmers’ professional cooperative or of any of its members, forces any farmers’ professional cooperative or any of its members to accept any paid service, or causes any economic loss to any farmers’ professional cooperative, shall bear legal liabilities.

Article 54 Where any farmers’ professional cooperative is registered by providing false registration materials or by any other fraudulent means, the registration organ shall order it to make a correction. If the circumstance is serious, the registration shall be revoked.

Article 55 If the financial statements and other materials provided to the relevant competent organ by a farmers’ professional cooperative contains any false record or in which any important fact is concealed, the farmers’ professional cooperative shall bear legal liabilities.

Chapter IX Supplementary Provisions