Legal Aspects of Cooperatives’ Issuance of Products to Non-Member Communities in Indonesia

Abstract

Regulations in the business activities of savings and loan cooperatives that allow cooperatives to collect funds from prospective members result in the possibility of issuing product to non-member communities. This study analyzed that the practice of issuing products to non-member communities is a deviation of cooperative’s business activity based on the laws and regulations in the cooperative sector and eliminates the identity of the cooperative in the form of the principle of membership, which is the specialty of the cooperative and the purpose of a cooperative business entity for the welfare of its members. The study used a normative approach, which aimed to examine existing regulations and relate to legal principles and theories. This study was descriptive-analytical by explaining, describing, and correlating legal rules and theories with the problems regarding the raise funds business from prospective members. It accounted the cooperative regulations, objectives, and principles of membership in cooperatives to the practice of issuing products to non-member communities that deviate from statutory regulations does not arise. This study showed that the practice of publishing products to non-member communities is a deviation from statutory regulations, objectives, and membership principles in cooperatives. In the meantime, the implementation of cooperatives while maintaining cooperatives' identity requires the role of all cooperative actors, the government, and the general public in preventing and following up on savings and loan cooperative practices that eliminate membership rights for service users. KEYWORDS: Cooperative Law, Cooperatives in Indonesia, Economic Democracy.