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  • Production cooperative
    Production cooperative is defined in the Civil Code of the Russian Federation as voluntary
    association of persons on the ground of membership for mutual business activity based on their
    personal commitment and union of the property share contributions.
    The property transferred as share contributions turns to the cooperative’s possession, besides its
    part can form non-distributable funds – after this the assets can decrease or increase without
    recording in the Articles of Incorporation and with no announcement to the creditors. It is natural
    that such uncertainty (for the latter) is compensated by the subsidiary liability of cooperative’s
    members under its commitments; the amount and conditions of this liability must be stated by
    the law and the Articles of incorporation.
    One of the peculiarities of management in a production cooperative is the principle of voting on
    the General Meeting of Members which is the highest managing body: each member has one
    vote regardless of any circumstances. The executive bodies are the board or the chairman or both
    together; if the number of members exceeds 50, there can be established the supervisory board
    which controls the activities of executing bodies. The questions under the exclusive jurisdiction
    of the General Meeting are in particular the distribution of profit and losses of the cooperative.
    The profit is distributed between the members in accordance with their statute labour as well as
    in case of dissolution of the cooperative the property is distributed after meeting the
    requirements of creditors (this procedure can be changed by the law or the Articles of
    Incorporation).
    A member of a cooperative can leave it at any time on a voluntary basis as well as be expelled
    upon the decision of the General Meeting. The former member has the right to get the value of
    his/her share or corresponding to the share property after the approval of the annual balance
    account sheet. The transfer of the share to the third party is allowed only with the consent of
    cooperative while other members of it have the priority right to buy it; in case of refusal of other
    members for buying the share (if restricted to sell shares to third parties), the company is not
    obliged to buy this share itself. The same procedure as established for LLC is valid for the
    question of share succession. The procedure of share payment for his/her own debts – such
    payment is permitted only if there is not enough other property of this member, however it can’t
    be applied to the non-distributable funds.
    The dissolution of a cooperative is made in accordance with the traditional grounds: the decision
    of the General Meeting or the decision of the court including for reasons of bankruptcy.
    The initial contribution of a cooperative member is stated in the amount of 10% from his/her
    share contribute, the other part is paid in accordance with the Articles of Incorporation, and in
    case of bankruptcy it can be necessary (also in accordance with the Articles of Incorporation) to
    contribute fixed and unlimited additional payments.
    Cooperatives can carry out business activities only for achieving the aims they were established
    for and if they are appropriate to these aims (non-governmental and religious organizations,
    funds, non-commercial partnerships and autonomous non-commercial organizations have the
    same rights in this issue: there is no right for business activity written down for such
    organization as well as express prohibition).
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