Law on Agrarian User Cooperatives is approved

August 12, 2021

On August 11, 2021, Law No. 31335 was published in the Official Gazette El Peruano, approving the Law for the improvement of the associativity of agricultural producers in agrarian cooperatives.

1. what is Agrarian User Coperative?

The users’ agricultural cooperative is a society of persons engaged in whether agricultural, forestry, and/or livestock activity, who have voluntarily joined together through a jointly owned and democratically controlled enterprise that complies with cooperative principles.

2. Services provided by the Agrarian User Coperative

The cooperative provides its members with services for the supply of products and services, marketing, processing, transformation, productive and post-productive services in general, value-added services, financing, and technical advice, as well as any other related or complementary service that contributes to the realization of its purpose.

These services may exceptionally be rendered to third parties, qualifying as commerce acts.

3. What are the cooperative acts?

Cooperative acts are those carried out between agrarian user cooperatives and their members in fulfillment of their corporate purpose.

They are not cooperative acts:

  1. Acts carried out by agrarian cooperatives with third parties that do not fulfill a mandate with representation in favor of their members.
  2. Acts carried out by agricultural cooperatives with their members that do not fulfill their corporate purpose.

These non-cooperative acts are considered commerce acts.

The agrarian user cooperative acquires the status of a legal entity as soon as its registration in the public records. It must prove its registration in the National Registry of Agrarian Cooperatives under the responsibility of the MIDAGRI (Ministerio de Desarrollo Agrario y Riego – Ministry of Agrarian Development and Irrigation).

5. Constitution

A minimum of 25 members is required to constitute an agrarian user cooperative. The bylaws may establish the requirements to be admitted as a member and maintain such status, which may refer to the possession or ownership of a minimum area, the use of the cooperative’s services, or any other requirement.

They can be members of agricultural user cooperatives:

  1. Natural persons.
  2. The conjugal or common-law partnership.
  3. Cooperatives of any kind, peasant or native communities, and any non-profit legal entity.

6. Board of directors

The election of the board of directors and the education and the electoral committee is the responsibility of the general assembly, electing the owners and alternates of said bodies, specifying the term of office to comply with the annual renewal by third parties established by the General Law of Cooperatives.

The general assembly directly elects the president of the board of directors and the president of the supervisory board, whose term of office must be 3 years.

7. Impediments and comflicts of interest

Those who are related to each other up to the fourth degree of consanguinity and second degree of affinity, as well as those who have a common-law relationship with each other, cannot be directors or delegates in the same period.

Board of directors and delegates may not adopt agreements that do not safeguard the interest of the cooperative, but rather their own interests or those ones of related third parties, nor use commercial or business opportunities they were aware of by reason of their position for their own benefit or for the benefit of related third parties. They may not participate on their own behalf or on behalf of third parties in activities that compete with the cooperative without the express consent of the general assembly.

8. Income tax exemption

The net income obtained by the agrarian user cooperative derived from the performance of cooperative acts is not subject to income tax.

The net income obtained by the agrarian user cooperative from operations that do not qualify as cooperative acts is subject to income tax unless, by law, there is any applicable tax benefit.

9. Tax exemption on the VAT

Cooperative acts carried out by agricultural cooperatives are not subject to VAT due to the application scope of this tax does not include them.

10. Effective date

The regulation is effective as of August 12, 2021. The regulation of the law will be approved within sixty (60) calendar days from its entry into force.

Source: El Peruano 11/08/21