Legal Updates

Cooperative societies are subject to principles of corporate law mutatis mutandis

August 3, 2017

A cooperative society executed a joint venture agreement with an investor under which the society grows and sell calves and at the end of each year the investor receives a fixed annual payment in addition to a fixed yield on the principle of the investment.  The society ceased to pay and a claim was filed both against it and personally against the general manager who is also a member of the society.

The Court accepted the claim against the society but rejected the claim against the manager and held that generally cooperative societies are subject to principles of corporate law, mutatis mutandis. In this case no grounds for piercing the corporate veil were proven and it was not shown that the manager himself committed any tortuous acts as he did not even personally conduct the negotiations with the investor.