Legal Framework for Income Distribution in Cooperatives: Principles and Practice

To conduct business activities, the first, cooperatives must have charter capital, which members contribute to the cooperative according to their commitment before establishment. The second, In the process of business activities, members must directly contribute labor, that is, participate in the management and operation of cooperative activities, at the same time, members directly use the products and services of the cooperative, create revenue, and ultimately create profits for the cooperative, generating income. When income arises, the cooperative processes the income according to the order and procedures prescribed by the Law on Cooperatives, according to the provisions in the Cooperative Charter or according to the financial regulations of the cooperative. Finally, the cooperative distributes income to members according to the level of use of products and services, according to the level of labor contribution and according to the capital contribution ratio.