The Korea Federation of Small and Medium Enterprises said on the 23rd that a bill to amend the Small and Medium Enterprise Cooperatives Act, which eases the number of incorporators required to establish a small and medium enterprise cooperative, passed the National Assembly plenary session. The bill was spearheaded by Park Sang-woong of the People Power Party.
Under the amendment, the minimum number of incorporators required to establish a small and medium enterprise cooperative will be significantly lowered. For national cooperatives, the requirement will be eased from 50 to 30, and for regional cooperatives, from 30 to 20. In addition, for federations of cooperatives in the wholesale and retail sectors, the establishment requirement will be reduced from 10 cooperatives to 5.
This amendment reflects a key task of the three-year Fourth Plan to Revitalize Small and Medium Enterprise Cooperatives, which the Ministry of SMEs and Startups released in Oct. last year. The small and medium business community said the passage of the bill is meaningful in that on-the-ground demands for regulatory improvement have led to policy and legislation.
Small and medium enterprise cooperatives have served as a core platform for promoting collaboration among small and medium corporations for more than 60 years. Through joint purchasing and joint sales, establishment of production facilities and logistics systems, and joint research and development (R&D), cooperatives have pursued projects that are difficult for individual corporations to carry out alone. Currently, about 900 cooperatives are in operation, developing various collaborative projects tailored to the characteristics of each industry.
However, in new industries and region-based industries, the number of corporations is often insufficient, and the requirements for the number of incorporators and investment have acted as obstacles to establishment. As a result, there have been many cases in which the establishment of cooperatives was delayed or canceled. By contrast, under the Framework Act on Cooperatives, a general cooperative can be established with only five or more incorporators, and issues of equity between systems have been continuously raised.
The Korea Federation of Small and Medium Enterprises projected that, with this legal revision, the establishment of cooperatives will become more active in new industries and regional flagship industries. In particular, joint projects are expected to proceed more smoothly in areas that are difficult for individual corporations to address, such as supply chain diversification, market development, talent acquisition, and cost reduction.
It is also expected that strengthening a joint response system centered on cooperatives will have positive effects on expense reduction, improved bargaining power, and enhanced market responsiveness for regional small and medium corporations.
Seo Jae-yoon, head of the Cooperative Division at the Korea Federation of Small and Medium Enterprises, said, "With this revision of the Small and Medium Enterprise Cooperatives Act, we expect the establishment of new cooperatives to be promoted in future new industries and regional flagship industries, and that, through invigorating joint projects, the competitiveness and sustainability of regional small and medium corporations will be further enhanced."