Corporate governance and compliance in credit cooperatives: the legal liability of cooperative members

Abstract

This essay focuses on credit unions; and specifically, how corporate governance and compliance has been applied to Brazilian credit unions. Members of a credit cooperative society are offered the possibility of bearing financial burdens arising from poor management, or even fraudulent attitudes, which may be perpetrated by third parties or by the governing body or even by a member. The present study is justified by the possibility of civil liability of cooperative members for possible deviations and/or failures in the management of these societies. The general objective of this study resides in verifying whether good corporate governance practices applied to credit cooperative societies can avoid or lessen the liability of cooperative members; and, as specific objectives, to present corporate governance points that are used in the management of cooperative societies; analyze the legislation on the hypotheses of liability of cooperative members, considering whether the observance of good management practices can reduce possible losses to credit cooperatives. In its development, it will adopt the hypothetical-deductive method, and the research will use bibliographical analysis, reviewing the works and studies related to the subject, in addition to a documentary investigation of the national legislative collection related to the subject. In the end, it was identified that, if the techniques and tools of corporate governance are well applied to cooperative credit societies, the risks of economic, civil or criminal liability of the cooperative members are reduced considerably, allowing the continuity of activities with financial and institutional health of society.