The Multi-State Cooperative Societies Act, 1984

CHAPTER VI: PROPERTIES AND FUNDS OF MULTI-STATE COOPERATIVE SOCIETIES

60. Funds not to be divided by way of profit -

(1) No part of the funds, other than net profits, of a multi-State cooperative society shall be divided by way of bonus or dividend or otherwise distributed among its members.

(2) The net profits of a multi-State cooperative society referred to in sub-section (1) in respect of a society earning profit shall be calculated by deducting from the gross profits for the year, all interest accrued and accruing in relation to amounts which are overdue, establishment charges, interest payable on loans and deposits, audit fees, working expenses including repairs, rent, taxes and depreciation, bonus payable to employees under the law relating to payment of bonus for the tem being in force, and equilisation fund for such bonus, provision for payment of income-tax and making approved donations under the Income-tax Act, 1961, development rebate, provision for development fund, bad debt fund, price fluctuation fund, dividend equalisation fund, share capital, redemption fund, investment fluctuation fund, provision for retirement benefits to employees, and after providing for or writing off bad debt and losses not adjusted against any funds created out of profit.

Provided further that in case of such multi-State cooperative societies as do not have share capital, the surplus of income over expenditure shall not be treated as net profits and such surplus shall be dealt with in accordance with the bye-laws.

61. Disposal of net profits -

(1) A multi-State cooperative society shall out of its net profits in any year -

(a) transfer an amount not less than twenty-five per cent to the reserve fund, and

(b) credit such portion, as may be prescribed, to the cooperative education fund maintained by the National Cooperative Union of India Limited, New Delhi.

(2) Subject to such conditions as may be prescribed, the balance of the net profits may be utilized for all or any of the following purposes, namely;

(a) payment of dividend to members on their paid-up share capital at a rate not exceeding the prescribed limit;

(b) constitution of, or contribution to, such special funds including education funds, as may be specified in the bye-laws;

(c) donation of amount not exceeding five per cent of the net profits for any purpose as defined in section 2 of the Charitable Endowments Act, 1890;

(d) payment of ex gratia amount to employees of the multi-State cooperative society to the extent and in the manner specified in the bye-laws.

(3) The funds of a multi-State cooperative society shall not be utilised for any political purpose.

62. Investment of funds -

A multi-State cooperative society may invest or deposit its funds -

(a) in a cooperative bank, State cooperative bank, cooperative land mortgage bank, cooperative land development bank or Central cooperative bank; or

(b) in any of the securities specified in section 20 of the Indian Trusts Act, 1882; or

(c) in the shares or securities of any other multi-State cooperative society or any cooperative society; or

(d) in the shares, securities or assets of any other institution, with the previous approval of the Central Registrar; or

(e) with any bank; or

(f) in such other mode as may be prescribed.

Explanation -

In clause (e), "bank" means any banking company as defined in clause (e) of section 5 of the Banking Regulation Act 1949, and includes -

(i) the State Bank of India constituted under the State Bank of India Act, 1955;

(ii) a subsidiary bank as defined in clause (k) of section 2 of the State Bank of India (Subsidiary Banks) Act, 1959;

(iii) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Under-takings) Act, 1970 or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

63. Restrictions on loans -

(1) A multi-State Cooperative society, other than a cooperative bank, shall not make a loan -

(a) to a member on the security or his share or on the security of a non-member; or

(b) to a non-member;

Provided that with the general or special sanction of the Central Registrar, a multi-State cooperative society may make loans to another multi-State cooperative society.

(2) Notwithstanding anything contained in sub-section (1), a multi-State cooperative society may make a loan to a depositor on the security of his deposit.

64. Restrictions on borrowing -

A multi-State cooperative society shall receive deposits and loans only to such extent and under such conditions as may be specified in the bye-laws;

Provided that a cooperative bank shall be governed by the provisions of the Banking Regulation Act, 1949.

65. Restrictions on other transactions with non-members -

Save as provided in section 63 and 64, the transaction of a multi-State cooperative society with any person other than a member shall be subject to such prohibitions and restrictions, if any, as may be prescribed.

66. Contributory Provident Fund -

(1) A multi-State cooperative society having such number or class of employees as may be prescribed may establish a contributory provident fund for the benefit of such employees to which shall be credited all contributions made by the employees and the society in accordance with the bye-laws of the society.

(2) Monies standing to the credit of any contributory provident fund established by a multi-State cooperative society under sub-section (1) shall not -

(a) be used in the business of the society;

(b) form part of the assets of the society;

(c) be liable to attachment or be subject to any other process or any court or other authority.

(3) Notwithstanding anything contained in this section, a provident fund established by a multi-State cooperative society to which the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, apply, shall be governed by that Act.