Dividend and Profit Allocation Practices of Performing Cooperatives in Malaysia

This paper explores the dividend payout and profit allocation practices of performing cooperatives in Malaysia, specifically how net profits were distributed as between dividends and various funds established for the benefit of members, after the necessary statutory deduction has been made. This paper is an exploratory study that is confined to performing co-operatives throughout Malaysia of different sizes and activities. Figures were derived from the 2008, 2007 and 2006 audited annual financial statements provided by the co-operatives themselves. Overall the study revealed that micro co-operatives are found to have paid the highest average dividend payouts, followed by the large co-operatives. Credit co-operatives which have a sizeable amount of shares and subscriptions are observed to have the lowest average dividend payout ratio. The highest dividend payout is given out by the construction and consumer co-operatives. Besides dividends, co-operatives normally allocate part of their annual net profit for the benefit of members in the form of specific funds for members’ social and related purposes. It was observed that in 2007, all co-operatives have increased their allocation towards members’ benefits except for co-operatives in the services sector. In conclusion, the credit, agriculture and industrial co-operatives are the top three functions with the highest level of contribution to members' benefit fund.Este articulo analiza el pago de dividendos y practicas de reparto de beneficios que siguen las cooperativas de Malasia, especificamente el sistema en los que los beneficios netos, despues de realizar las deducciones legales pertinentes, se distribuyen entre dividendos y los fondos creados para el beneficio de los miembros. Se ha realizado un estudio exploratorio que analiza las cooperativas de diferente tamano y actividad limitadas a Malasia. Los datos se derivan de las auditorias de los anos 2008, 2007 y 2006, que presentan las propias cooperativas. En general, el estudio demostro que las micro-cooperativas realizan, de media, los pagos de dividendos mas elevados, seguidos por las cooperativas de gran tamano. Se ha observado que las cooperativas de credito, que tienen una considerable cantidad de intereses y suscripciones, mantienen sin embargo media mas baja de reparto de intereses. El pago de dividendos mas elevado lo realizan las cooperativas de la construccion y el consumo. Ademas de los dividendos, las cooperativas normalmente destinan parte de sus beneficios netos a favorecer a sus miembros, mediante fondos especiales destinados a proyectos sociales de los miembros. Se ha observado que, en 2007, todas las cooperativas aumentaron el reparto destinado a los beneficios para los miembros, con la excepcion de las cooperativas en el sector servicios. Como conclusion, las cooperativas de credito, agricolas e industriales son los tres tipos de cooperativas con un mayor nivel de contribucion al fondo para beneficio de los miembros.