The Multi-State Cooperative Societies Rules, 1985

CHAPTER II: PRIVILEGES, PROPERTIES AND FUNDS OF MULTI-STATE COOPERATIVE SOCIETIES

3. Certifying copies of entries in books-

(1) For the purpose specified in sub-section (1) of section 56, a copy of any entry in a book of a multi-State cooperative society regularly kept in the course of its business shall be certified-

(i) by the Chief Executive of the society or any other member or employee authorised by the bye-laws of the society;

(ii) where an order has been passed under section 48 superseding the board and appointing an administrator or any other officer authorised by him; and

(iii) where an order has been passed under sub-section (1) of section 80 appointing a liquidator of the multi-State cooperative society, by the liquidator.

(2) Every certified copy shall bear the seal of the multi-State cooperative society.

4. Contribution towards Cooperative Education Fund-

(1) Every multi-State cooperative society shall credit a sum calculated at one percent of its net profits every year as contribution to the cooperative education fund maintained by the National Cooperative Union of India Limited, New Delhi. The cooperative education fund shall be administered by a committee nominated for that purpose consisting of the following members:

(i) The President of the national Cooperative Union of India Ltd. New Delhi Chairman

(ii) The Central Registrar Member

(iii) The Financial adviser to the Department of Agriculture & Cooperation in the Ministry of Agriculture Member

(iv) Two representatives of the multi-State cooperative societies to be nominated by the Central Government for every two years Members

(v) The Director General, National Council for Cooperative Training, New Delhi Member

(vi) The Director, Vaikunth Mehta national Institute of Cooperative Management, Pune

(2) The cooperative education fund shall be utilised for the purposes connected with the education of members and human resources development for cooperatives.

5. Disposal of net profits-

The net profits of every multi-State cooperative society shall be disbursed or utilised subject to the following terms and conditions:

(a) No dividend shall be declared or paid except from out of the net profits and shall de shall be decided by the Board.

(b) No dividend shall be declared or paid while a claim due from the multi-State cooperative society to a depositor or lender remains unsatisfied.

(c) No donation made by the multi-State cooperative society out of the net profits of any year shall exceed rupees five lakhs.

6. Investment of funds-

A multi-State cooperative society may invest or deposit its funds in any one or more of the following modes:-

(i) any mode provided in clauses (a) to (e)of section 62;

(ii) any post office saving bank;

(iii) any savings scheme launched by the Central or the State Government;

(iv) the shares of a corporation or other body corporate in which the Central or the State Government or both hold more than fifty percent of the shares; and

(v) the debentures floated by a corporation or a body corporate if such debentures are guaranteed by the Central or the State Government or by the Reserve Bank of India.

7. Objects and investment of reserve fund-

(1) Every multi-State Cooperative society shall maintain a reserve fund to meet any one or more of the following objects:-

(i) unforeseen losses;

(ii) claim of the creditors of the society which cannot be otherwise met;and

(iii) such other financial needs in times of special scarcity.

(2) Every multi-State cooperative society may with the permission of the Central Registrar invest or deposit its reserve funds in:-

(i) acquisition or purpose of land and building and construction of building for:

(a) its office, staff and equipment

(b) installation or operation of its machinery or plant;

(ii) purchase of machinery or plant which is required for its main business;

(iii) acquisition or purchase of land building, and construction of buildings for the purposes mentioned in clause (i)(a) and also for the benefit of its members in accordance with the provisions of its bye-laws; and

(iv) its own business.

(3) The reserve fund of a multi-State cooperative society shall be indivisible and no member shall have any claim or a share in it.

(4) No multi-State cooperative society whose reserve fund has been separately invested or deposited shall draw upon, pledge or otherwise employ such fund except with the sanction of the Central Registrar previously obtained.

(5) The utilisation of the reserve fund for the objects mentioned in sub rule (1) shall be subject to the condition that any amount drawn shall be reimbursed from the profits accruing in subsequent cooperative year or years as directed by the Central Registrar. The Central Registrar may, however, having regard to the special circumstances of the society, permit that the reserve fund drawn and untilised for the objects mentioned under clauses (ii) and (iii)of sub-rule(1) may not be reimbursed wholly or partially as he may direct.

(6) (a) In the case of winding up of a multi-State cooperative society, the reserve fund and the other funds of the multi-State cooperative society shall be applied first in discharge of the liabilities of the multi-State cooperative society in accordance with the priority specified in items (i) to (vi) below:-

(i) salary and wages or other payments, if any, due to the employees of the multi-State cooperative society;

(ii) security deposits of staff, if any;

(iii) borrowings held from Government or on the guarantee of Government, if any;

(iv) deposits of non-members, if any;

(v) loans, if any; and

(vi) deposits of members, if any.

(b) The balance, if any, after discharging the liabilities mentioned in clause (a) shall be applied to the re-payment of the paid-up share capital and thereafter to the payment of dividend where it has not been paid.

(c) Notwithstanding anything contained in clause (b), no dividend shall be paid if the bye-laws of the multi-State cooperative society do not provide for payment of dividend.

(7) Any surplus remaining after payments mentioned in sub-rule (6) shall be applied by the liquidator, after consulting members, for contribution to National Defence Fund or to Cooperative Education Fund referred to in rule 4 or to any other charitable purpose or local objects of public utility subject to the approval of the Central Registrar.

8. Writing off of bad debts and losses-

All loans including interest thereon and recovery charges in respect thereof which are found irrecoverable and are certified as bad debts, by the auditor appointed under section 67, shall first be written off against the Bad Debt Fund and the balance, if any, may be written off against the Reserve fund and the share capital of the multi-State Cooperative society.

All other dues and accumulated losses or any other loss sustained by the multi-State cooperative society which cannot be recovered and have been certified as irrecoverable by the auditor may be written off against the Reserve fund of the multi-State cooperative society;

Provided that:

(a) no bad debts or losses shall be written off without the sanction of the general body;

(b) before any such bad debts or losses are written off, the multi-State cooperative society shall obtain the approval of the Central Registrar.

Provided further that the Central Registrar may, while giving the approval, impose such conditions as to the recoupment of the Bad Debt Fund and restoration of part or whole of the amount written off against the Reserve Fund, from out of future profits as he deems fit.

9. Transactions with non-members-

Save as otherwise provided for in section 65 and except with the general or special sanction of the Central Registrar, no multi-State cooperative society shall enter into any credit transaction with a person other than a member, unless the bye-laws of the multi-State cooperative society permit it to enter into such transactions.

10. Application for loan -

(1) An application for loan shall be in such form as may be required by the board of the multi-State cooperative society and shall state the purpose for which the loan is required in the manner laid down in the bye-laws of the society.

(2) For every loan, a member shall furnish such security as may be required under the bye-laws of the multi-State cooperative society.

(3) The period of repayment of the loan shall be as may be provided in the bye-laws, but in no case exceed five years.

(4) In any multi-State cooperative society in which the liability of the members is limited by shares, no loan shall be granted to a member exceeding ten times the amount of share capital laid down in the bye-laws. times the amount of share capital paid by him or as may be laid down in the bye--laws.

11. Contributory Provident Fund-

(1) Every multi-State cooperative society which has in its service 5 or more regular employees shall establish a Contributory Provident Fund referred to in sub-section (1) of section 66.

(2) The multi-State co-operative society creating such a fund shall provide for the following in its bye-laws:-

(a) Authority to administer the fund.

(b) Amount of contribution to be deducted from the employees salary.

(c) Mode of nomination for payment of the amount of the contributory provident fund in case of employee's death.

(d) Purpose for which, the extent to which, and the period after which, advances may be made against the security of such fund and the number of monthly instalments in which advance is to be repaid.

(e) Refund of employees' contribution and contribution made by the society.

(f) Maintenance of accounts of such fund.

(3) The amount of contribution that can be deducted from the salary of an employees of the multi-State cooperative society shall not be less than 8.33 per centum of his basic salary.

(4) The multi-State cooperative society may make such contribution every year to the employees' contributory provident fund as may be approved by the board. Such contribution shall not exceed 8.33 per cent of the basic salary of the employee.

12. Restriction on borrowings of limited liability of multi-State cooperative society-

No multi-State cooperative society with limited liability shall accept deposits or loans, or by any other way incur liability exceeding 10 times the sum of the paid-up share capital plus accumulated reserves minus any losses.

Provided that the Central Registrar, for reasons to be recorded in writing, may permit a multi-State cooperative society to incur liabilities exceeding the aforesaid limit.

13. Maintenance of liquid resources and distribution of assets-

Every multi-State cooperative society which obtains any portion of its working capital by deposit, shall-

(a) maintain such liquid resources and in such form as may be specified by the Reserve Bank of India in the case of those multi-State cooperative credit societies which are coming under the purview of the Banking Regulation Act, 1949 (10 of 1949) and by the Central Registrar in the case of other multi-State cooperative societies; and

(b) utilise only such portion of its working capital in lending business and distribute its assets in accordance with such standards as may be specified from time to time by the Central Registrar.

14. Share not to be hypothecated to the multi-State cooperative society-

The share of a multi-State cooperative society shall not be hypothecated to the society by its members as security for a loan.

15. Loan on security of non-members-

No multi-State cooperative society shall make any loan to a member on a security bond given by a non-member:

Provided that the Central Registrar may for reasons, to be recorded in writing, exempt any multi-State cooperative society or class of multi-State cooperative societies from the operation of this rule.