Critical Analysis of Legislative Gaps and Legal Ambiguities in the Governance Structure of Cooperative Companies in Iran

Document Type : Scientific research

Author

mohammad mehryar

Assistant Professor, Faculty of Law, University of Religions and Denominations, Qom, Iran

https://doi.org/10.22067/economlaw.2025.91517.1416

Abstract

The legal structure of cooperatives in the Iranian legal system faces gaps and ambiguities that have created numerous challenges in implementing the rules of governance of cooperatives, especially in the areas of managers’ responsibilities, supervisory bodies, and institutional relations. Despite the passage of several decades since the enactment of the Cooperative Sector Law and its limited amendments, some concepts and executive mechanisms of these companies still lack a clear and efficient legal definition. The main question of this research, conducted with a focus on pathology, is what are the legislative gaps and legal ambiguities in the governance structure of cooperatives, and how can the existing gaps be addressed by providing practical solutions and legislative amendments? This research, using the descriptive-analytical method and with a legal pathology approach, has conducted a comparative and analytical study of existing laws in the field of cooperatives. In this regard, the Cooperative Sector Law of 1991, the Cooperative Companies Law of 1971, and the Law on the Implementation of General Policies of Article 44 of the Constitution have been analyzed. The findings show that the legal structure of cooperatives requires serious review in terms of precisely determining the responsibilities of managers and providing effective guarantees of criminal and civil enforcement against them, determining the legal status of transactions outside the managers' authority, and accurately criminalizing the violations of managers. Also, suggestions have been made, including the extension of the theory of appearance in cooperatives to protect third parties in good faith, legally stipulating that general assembly resolutions are binding on non-member shareholders, and designating a specific authority to cancel the membership of ineligible individuals.

Keywords

Cooperative Law

Governance

Legislative Gaps

Director Liability

Ultra Vires Transactions

Unfair Competition

Legal Entities’ Representatives

Indivisible Reserves

Cooperative Chambers

Legal Reform

Iran

Subjects

• Corporate Law

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