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Constitutional (97th Amendment) Act, 2011

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[1] Cooperative societies is a state subject under Entry 32 of the State List of the Seventh Schedule of the Constitution. All states have accordingly enacted their own Cooperative Societies Acts for incorporation, regulation and winding up of cooperative societies within their territorial jurisdiction.

[2]  For cooperative societies working in more than one state, The Multi State Cooperative Societies Act,1984 was enacted by Parliament under Entry 44 of the Union List of the Seventh Schedule a Central Act (replacing the Multi Unit cooperative societies Act, 1942). This act of 1984 was replaced by The MSCS Act, 2002.

[3] Their was a need for uniformity in cooperative legislation, particularly in respect of aspects crucial for autonomous and democratic functioning of cooperatives. The Constitution (97TH Amendment) Act 2011, received Presidential Assent on 12-01-2012 and was notified in the Gazette of India on 13-01-2012 coming into force on 15-02-2012.

[4] The objective of the Constitution (97TH Amendment) Act 2011 is to “ Enhance public faith in Cooperatives “ & insulate them from “ avoidable political or bureaucratic interference “.

[5] As per the amendment the changes done to constitution are :

In Part III of the constitution in Article 19, after words "or unions" the words "Cooperative Societies" was added. The amendment in Article 19 makes Right to form cooperatives is a fundamental right.

In Part IV a new Article 43B was inserted, which says: 

"The state shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of the co-operative societies". (It is general impression that cooperatives are creatures of the state and not of their user members. It is needed the definition of cooperatives as voluntarily formed by user members.)

[5] Main implications of new part IXB are:

1. The state is empowered to make provisions for incorporation, regulation and winding up of cooperatives that are voluntary with democratic member control and economic participation and are autonomous.

2. The maximum number of directors of a cooperative society shall not exceed 21.

3. Reservation of one seat for SC/ST and two seats for women on the board of every co-operative society.

4. The term of a board & its office bearers has been fixed to 5 years from the date of election.

5. If less than a half of the term of board remains to be completed and if there is a vacancy, the board can nominate from the same class of members in respect of vacancy arisen.           

6. Not more than two experts experienced in respective fields can be co-opted in addition of 21 members of board. But these co-opted   members cannot vote or cannot become office bearer.

7. Over and above 21 directors, functional directors shall also be members of the board.

8. Elections are to be held before expiry of the term of earlier board and new elected members will assume office immediately to smoothen continuity.

9. No board is to be superseded or suspended for a period exceeding six months and in case of cooperative banks other than multi state cooperative banks this period cannot exceed  one year.

10. No board can be superseded unless the government has a shareholding / loan / financial assistance in the cooperative society or has guaranteed any financial transaction of cooperative society.

11. Cooperative banks will be governed by The BR ACT, 1949.

12. The general body of a cooperative society will appoint auditors from a government approved panel. The audit is to be completed within six months of  close of the financial year.

13. The general body meeting should be called within six months of close of financial year.

14. Every cooperative society shall file specified returns to the authority within six months of close of financial year.

15. The right of information to the members of the co-operative societies is provided.

16. The specification of offence and penalties in respect of such offences will be provided in state law amendment.

Category Corporate Law
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