The first cooperative regulations in Honduras originated in 1949, specifically Chapter VII of the Commercial Code, in this section the nature of what cooperative societies are was defined, acting under a social name according to the regulations given for the public limited companies, always followed by the words "limited cooperative society" or "supplemented cooperative society" or their respective initials "SCL and SCS", with variable capital and divided into equal shares. The National Congress of Honduras in 1987, promulgated the first Cooperative Law of Honduras, approved by Decree No. 65-87, it is from this law that Honduran cooperativism is regulated autonomously.
The State guarantees the free development of cooperatives and the autonomy of cooperatives as private entities. Cooperativism constitutes a special sector, with its own personality within the national economy and society, and the Cooperatives Law confers representation in State organizations linked to the national economy and development.
There is no incentive in the Cooperatives Law or other laws to contract with the State, therefore, cooperatives are on equal terms with other bidders.
Key recommendations for improvement
- For proper supervision of cooperatives, they must be segmented according to their size, volume of assets and other conditions.
- You should review the definition of Financial Intermediation of the Savings and Credit Cooperatives
- The creation of regulations for the sector must be made aware of it and not lean towards the regulations applicable to the banking sector.
Although there are no legal barriers for the creation of cooperatives, the training process described in the Law “Seminario de Cooperativismo Básico” is onerous, so it is difficult for cooperatives in formation to cover this cost, this situation that can lead to the constitution of other companies in the social sector of the economy whose requirements do not represent such high costs.
Despite having some tax benefits, the non-profit objective of cooperatives is not fully recognized, as well as the economic-social activities that they carry out in order to provide not only in favor of themselves, consequently, they are forced to comply with tax obligations by the tax administration.
The legal frameworks analysis is a tool developed under the ICA-EU Partnership #coops4dev. It is an overview of the national legal frameworks at the time of writing. The views expressed within are not necessarily those of the ICA, nor does a reference to any specific content constitute an explicit endorsement or recommendation by the ICA.