Funds not to be divided by way of profit

No part of the funds of a co-operative society shall be divided by way of bonus or dividend or otherwise among its members : Provided that payment may be made to a member for the work done by him as secretary or as clerk on such scale as may be prescribed by the bye-laws : Provided further that after at least one-fourth of the net profits in any year have been carried to a reserve fund, payments from the remainder of such profits and from any profits of past years available for distribution may be made – (a) as a bonus to a member for any specific service rendered by him to the co-operative society including work done as secretary or as clerk ; and (b) among the members to such extent and under such conditions as may be prescribed or as may be specified in the bye-laws : Provided also that no dividend shall be paid on the paid-up share capital of members at a rate exceeding twelve percent per annum. (1) Besides the manner provided in section 41, a co-operative society may invest or deposit its funds or a portion thereof: (a) in any bonds, certificates or loans issued by the Government; (b) in debentures floated by a co-operative society; and (c) with the previous sanction of the Registrar in the purchase of lease of land or building or in the acquisition, construction or in renewal of any building that may be necessary to conduct its business. (2) The amount of the funds invested under clause (c) of the sub-rule (1) shall be recouped in such terms as may be determined in each case by the Registrar. (3) The provisions of clause (c) of sub rule (1) shall not apply: (a) to immovable property purchased (i) by a co-operative society at a sale held in execution of a decree obtained by it or the recovery of any sum due to it; or (ii) by a financing bank at sale held in execution of a decree obtained by a co-operative society financed by it for the recovery of any sum due to such society or at sale brought about by the liquidator of such co-operative society ; or (b) to the purchase or lease for lands or purchase, construction or renewal of buildings by a co-operative society whose object according to its bye-laws includes such purchase, lease, construction or renewal.