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A cooperative is a business entity composed of individuals or legal entities that operate based on cooperative principles and function as a people’s economic movement founded on the principle of kinship. This is regulated under Article 1, Point 1 of Law Number 25 of 1992 on Cooperatives.

The primary objective of cooperatives is to improve the welfare of their members in particular and society in general, while also contributing to the development of a national economic structure aimed at building an advanced, just, and prosperous society based on Pancasila and the 1945 Constitution.

Legal Basis of Cooperatives:
In addition to being governed by Law Number 25 of 1992 on Cooperatives, cooperatives are also regulated by:

1. Government Regulation (PP) No. 4 of 1994 on the Requirements and Procedures for the Legalization of Deeds of Establishment and Amendments to Cooperative Bylaws
2. Regulation of the Minister of Cooperatives and Small and Medium Enterprises No. 9 of 2018 on the Implementation and Supervision of Cooperatives
3. Government Regulation (PP) No. 7 of 2021 on the Facilitation, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises (MSMEs)

Functions and Roles of Cooperatives:
According to Article 4 points (a), (b), (c), and (d) of Law Number 25 of 1992 on Cooperatives, the functions and roles of cooperatives are as follows:

1. To build and develop the economic potential and capabilities of members in particular, and society in general, in order to improve their economic and social welfare;
2. To actively participate in efforts to enhance the quality of human life and society;
3. To strengthen the people's economy as the foundation of national economic resilience, with cooperatives as its cornerstone;
4. To strive for the realization and development of a national economy based on the principles of kinship and economic democracy.

Forms and Types of Cooperatives:
Cooperatives are categorized into two forms:

1. Primary Cooperatives: Cooperatives established and consisting of individual members;
2. Secondary Cooperatives: Cooperatives formed by primary cooperatives, typically established to increase efficiency and coordination. Their operational scope may cover districts, cities, provinces, or even national levels

According to Article 16 of Law Number 25 of 1992 on Cooperatives, the types of cooperatives include:

1. Savings and Loan Cooperative: A cooperative that exclusively engages in savings and loan activities to serve its members;
2. Consumer Cooperative: A cooperative that conducts business activities in the provision of goods for the needs of members and non-members;
3. Producer Cooperative: A cooperative that provides services related to the supply of inputs, production factors, and marketing of products produced by members, for both members and non-members;
4. Marketing Cooperative: A cooperative that markets products produced by members and non-members;
5. Service Cooperative: A cooperative that provides non-savings and loan services required by members and non-members.

Requirements for Establishing a Cooperative:
The procedure for establishing a cooperative is regulated in Article 12 of the Regulation of the Minister of Cooperatives and Small and Medium Enterprises No. 9 of 2018, which states:

"The establishment of a cooperative shall be carried out through a founding meeting."

Furthermore, Article 6, paragraph (1) of Government Regulation No. 7 of 2021 on the Facilitation, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises (MSMEs) mentions that the founding meeting is the initial step in forming a cooperative. This meeting must be attended by the founding members and may be conducted either online or offline to ensure maximum participation, especially in expressing opinions.

The outcome of the founding meeting must be documented in minutes of meeting or an official report, signed by the meeting chairperson, either by wet ink signature or electronic signature. The founding meeting also includes discussions on the draft articles of association.

Contents of the Articles of Association in the Deed of Establishment of a Cooperative:
The Articles of Association included in the cooperative's deed of establishment must contain the following:

1. List of founding members;
2. Name and registered address;
3. Objectives, purposes, and business activities;
4. Provisions regarding membership;
5. Provisions regarding the General Meeting of Members;
6. Provisions regarding management and governance;
7. Provisions regarding capital;
8. Provisions on the duration of the cooperative’s establishment;
9. Provisions on the distribution of net income (surplus);
10. Provisions on sanctions;

Requirements for Establishing a Primary Cooperative:
To establish a primary cooperative, the founders must submit a written and/or electronic application for the legalization of the deed of establishment to the Minister, accompanied by:

1. Two copies of the cooperative's deed of establishment, one of which is duly stamped;
2. Minutes of the founding meeting, including a power of attorney (if applicable) authorizing the application submission;
3. Proof of capital deposit, at least equal to the amount of the primary share contribution;
4. An initial business activity plan for the cooperative.

Requirements for Establishing a Secondary Cooperative:
The procedure for establishing a secondary cooperative is similar to that of a primary cooperative but requires additional documents, including:

1. Minutes of the founding meeting and power of attorney from the primary and/or secondary cooperatives participating in the formation;
2. Legal establishment decisions of the participating primary and/or secondary cooperatives;
3. Tax Identification Number (NPWP) of the primary and/or secondary cooperatives that will become members.

Cooperative Membership:
As previously explained, there are two forms of cooperatives: primary cooperatives and secondary cooperatives. These two forms have different types of members:

1. Primary cooperatives are composed of individual members, specifically Indonesian citizens (WNI) who are legally capable of performing legal acts;
2. Secondary cooperatives are composed of legal entity cooperatives as their members.

Whether in primary or secondary cooperatives, all members must share the same economic interests as other members.

Rights and Obligations of Cooperative Members:
According to Article 20 of Law Number 25 of 1992 on Cooperatives, cooperative members have the following obligations:

1. To comply with the Articles of Association, Bylaws, and decisions agreed upon in members’ meetings
2. To participate in the business activities organized by the cooperative
3. To develop and uphold solidarity based on the principle of kinship

Meanwhile, the rights of each cooperative member include:

1. To attend, express opinions, and vote in members’ meetings;
2. To elect and/or be elected as a member of the management or supervisory board;
3. To request the convening of a members’ meeting in accordance with the Articles of Association;
4. To express opinions or suggestions to the management outside of members’ meetings, whether requested or unsolicited;
5. To benefit from the cooperative and receive equal services as other members;
6. To obtain information about the cooperative’s development as stipulated in the Articles of Association.

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