Chapter III MEMBERS AND THEIR RIGHTS AND LIABILITIES

1. (1) Subject to the provisions of section 28, no person shall be admitted as a member of a society unless such person is,—
   • (a) an individual, who is competent to contract under the provisions of the Indian Contract Act, 1872;
   • (b) a firm, company, any Government company as defined in clause (45) of section 2 of the Companies Act, 2013, or any other body corporate constituted under any law for the time being in force in the Union territory;
   • (c) a society registered, or deemed to be registered, under this Regulation;
   • (d) the Central Government;
   • (e) the Administrator;
   • (f) a local authority;
   • (g) a public trust registered or deemed to have been registered under any other law for the time being in force in the Union territory;
   • (h) the depositor or the financial service user;
     • (i) a group of the individuals eligible under clause (a), whether incorporated or not and whether established or not by or under any law for the time being in force in the Union territory: Provided that the provisions of clause (a) shall not apply to an individual seeking admission to a society exclusively formed for the benefit of students of a school or a college: Provided further that subject to such terms and conditions as may be laid down by the Administrator by general or special order in writing, a firm or company may be admitted as a member only of a society which is a federal or urban society or which conducts or intends to conduct an industrial undertaking: Provided also that any firm or company, which is immediately before the commencement of this Regulation a member of a society deemed to be registered under this Regulation, shall have, subject to the other provisions of this Regulation, the right to continue to be such member on and after such commencement. Explanation.—For the purposes of this section, the expression an “urban society” means a society the business of which mainly falls within the limits of a municipal corporation, municipality, cantonment or notified area committee.
2. (2) Every person seeking admission as a member of a society, if duly qualified for membership of such society under the provisions of this Regulation, the rules and th e bye -laws of the society may make an application to the society for membership and the society shall take decision on the application and shall communicate the decision within a period of three months from the date of the receipt of the application.
3. (3) If the society does not communicate any decision to the applicant within three months from the date of receipt of such application, the applicant shall be deemed to have been admitted as a member of the society.
4. (4) If any question arises whether a person has become a deemed member or

otherwise, the same shall be decided by the Registrar after giving a reasonable

opportunity of being heard to all the concerned parties.

1. (5) Notwithstanding anything contained in sub-section (1), the Administrator

may, having regard to the fact that the interest of any person or class of persons

engaged in or carrying on any profession, business or employment conflicts or is likely to conflict with the objects of any society or class of societies, by general or special order published in the Official Gazette, declare that such person or such class of persons shall be disqualified from being admitted, or for continuing, as members or shall be eligible for membership only to a limited extent, of any society or class of

socie ties, so long as such person or persons are engaged in or carry on that profession,

business, or employment, and the question whether a person is or is not so engaged in or carrying on any profession, business or employment or whether a person belongs or d oes not belong to such class of person as declared under this sub-section and has or has not incurred a disqualification under this sub-section shall be decided by the Registrar under section 11.

1. (6) Where the Registrar has decided under section 11 that a person has incurred a disqualification, he may, after conducting enquiry, by order, remove such person from the membership of the society and such person shall cease to be a member of the society.

1. (1) Where a person becomes a member of any society on his making a declaration as required by the bye-laws of the society or otherwise and such declaration is found to be false, then such person shall be disqualified to continue as a member of the society.
2. (2) Where a person continues as a member of the society notwithstanding the disqualification incurred by him under sub-section
3. (5) of section 25 or under sub -section (1), he shall be removed from the society by the Registrar:

Open membership

1. (1) No society shall without a sufficient cause, refuse admission to membership to any person duly qualified under the provisions of this Regulation and its bye -laws.
2. (2) Where a society refuses to issue or accept the application for membership from an eligible person for admission as a member, or the payment made by him in respect of membership, such person may tender an application in such form as may be prescribed together with payment in respect of membership, if any, to the Registrar, who shall forward the application and the amount, if any, so paid, to the society concerned within a period of thirty days from the date of receipt of such application and the amount and thereupon, if the society fails to communicate any decision to the applicant within a period of three months from the date of receipt of such application and the amount by the society, the applicant shall be deemed to have become a member of such society.
3. (3) If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving him an opportunity of being heard.
4. (4) Any person aggrieved by the decision of a society, refusing him admission to its membership, may prefer an appeal to the Registrar within a period of two months from the date of the decision of the society and every such appeal, as far as possible, be disposed of by the Registrar within a period of three months from the date of its receipt and the decision of the Registrar in appeal shall be final.

1. (1) Notwithstanding anything contained in section 25, a society of such class as may be prescribed may admit any person as a nominal, associate, or sympathiser member: Provided that the total number of associate and sympathiser members in a society shall not exceed ten per cent. of the total number of members thereof.
2. (2) A nominal, associate or sympathiser member shall not be entitled to any share, in any form whatsoever, in the assets or profits of the society:

Provided that subject to the provisions of sub-section

1. (7) of section 32, a nominal, associate or sympathiser member shall have such rights and privileges of a member and be subject to such liabilities of a member, as may be specified in the bye-laws of the society: Provided further that the nominal or associate or sympathiser member may be issued non-voting shares which may not confer any interest in the management of the society including right to vote, to be elected as a member of the Managing Committee or participate in the general body meetings: Provided also that in case of co-operative bank, such shares shall be issued in accordance with the instructions issued by the Reserve Bank in this regard from time to time.

A person shall cease to be a member of a society on his resignation from the membership thereof being tendered in writing to the society and accepted by the society or on the transfer of the whole of his share or interest in the society to another member, or on his death, or removal or expulsion from the society: Provided that, the resignation of a person from the membership of a society, if such member is not in debt to the society or is not a surety for an unpaid debt due to the society, shall unless it is accepted earlier be deemed to have been accepted on the expiry of one month from the date of tendering his resignation in writing to the society.

A member shall be entitled to exercise such rights as provided in this Regulation and rules made thereunder and bye-laws: Provided that, no member shall exercise the rights, until he has made such payment to the society in respect of membership, or acquired such interest in the society, as may be prescribed and specified under the bye-laws of the society, from time to time: Provided further that, in case of increase in minimum contribution of member in share capital to exercise right of membership, the society shall give due notice of demand to the members and reasonable period to comply with.

It shall be the duty of every member of a society,—

1. (a) to attend at least, one general body meeting within a consecutive period of five years: Provided that, nothing in this clause shall apply to the member whose absence has been condoned by the general body of the society;
2. (b) to utilise minimum level of services at least once in a period of five consecutive years as specified in the bye-laws of the society: Provided that a member who does not attend at least one meeting of the general body and does not utilise minimum level of services at least once in a period of five consecutive years, as specified in the bye-laws of such society shall be classified as a non- active member: Provided further that when a society classifies a member as a non-active member, the society shall communicate such classification in such manner as may be prescribed to the concerned member within a period of thirty days from the date of close of the financial year: Provided also that a non -active member who does not attend at least one meeting of the general body and does not utilise minimum level of services as specified in the bye-laws, in next five years from the date of classification as a non-active member, shall have no right to vote: Provided also that a member classified as a non-active member shall, on fulfilment of the eligibility criteria as provided in this section be entitled to be re-classified as an active member: Provided also that, if a question of a member being active or non-active arises, an appeal shall lie to the Registrar within a period of sixty days from the date of communication of such classification and his decision shall be final.

1. (1) No member of any society shall have more than one vote and the right to vote shall be exercised personally, and not by proxy: Provided that in the case of an equality of votes, the Chairperson shall have a casting vote.
2. (2) Where a share of a society is held jointly by more than one person, each such pers on shall have, in the absence of preceding person or persons, a right to vote: Provided that such person shall be present and not be a minor: Provided further that where the manner of voting is by ballot, all the joint holders of the share may appoint one of them to vote on their behalf in the affairs of the society.
3. (3) A society which has invested any part of its funds in the shares of another society, may appoint one of its members to vote on its behalf in the affairs of that other society, and accordingly such member shall have the right to vote on behalf of the first society: Provided that the first society shall not appoint any of its members who is also its paid employee.
4. (4) A company or any other body corporate constituted under any law for the time being in force in the Union territory which has invested any part of its funds in the shares of a society may appoint any one of its directors or officers to vote on its behalf in the affairs of such society and accordingly such director or officer shall have the right to vote on behalf of the company or the body corporate, as the case may be.
5. (5) Where a firm has invested any part of its funds in the shares of a society, any of its partners appointed by the firm shall be entitled to vote in the affairs of the society on behalf of the firm.
6. (6) A local authority or public trust which has invested any part of its funds in the shares of a society may appoint any of its members or trustees to vote on its behalf in the affairs of that society and accordingly, such person shall have the right to vote on behalf of the local authority or the public trust, as the case may be.
7. (7) No nominal or sympathiser member shall have the right to vote and shall not be eligible to be a member of a Committee or being appointed as a representative of the society on any other society.
8. (8) The person who has committed a default and remains as such defaulter for a period of one year from the due date of repayment of such loan or interest or instalment shall not be entitled to vote as a member of a society till all repayments are made.
9. (9) No person shall exercise the right to vote at an election of a member of a Committee in a financial year, unless he is a member of the society for the whole of the financial year preceding the financial year in which the election is being held: Provided that no member society of a federal society shall exercise the right to vote at an election of a member of a Committee unless such society has its last accounts audited in class A, B or C.
10. (10) Nothing in sub-section (9) shall apply to the first election of a Committee to be held immediately after the registration of a society.
11. (11) The voting rights of individual members of a federal society shall be such as may be regulated by the rules and bye-laws of the society.

No member of any society, other than the Administrator of a society shall hold more than such portion, not exceeding one-fifth of the total share capital of the society:

Restrictions on transfer of shares or interest

1. (1) Subject to the provisions of section 33 and sub-section (2), a tr ansfer of, or charge on, the share or interest of a member in the capital of a society shall be subject to such conditions as may be prescribed.
2. (2) A member shall not transfer any share held by him, or his interest in the capital or property of any society, or any part thereof, unless,—
   • (a) he has held such share or interest for not less than one year;
   • (b) the transfer or charge is made to the society, or to a member of the society, or to a person whose application for membership has been accepted by the society; and
   • (c) the Committee has approved such transfer.
3. (3) Notwithstanding anything contained in sub-sections (1) and (2), where a member is allowed to resign, or is expelled, or ceases to be a member on account of his being disqualified by this Regulation or by the rules made thereunder or by the bye-laws of the society, the society may acquire the share or interest of such member in the share capital by paying for it at the value determined in the manner prescribed: Provided that the total payment of share capital of a society in any financial year for such purposes does not exceed ten per cent. of the paid-up share capital of the society on the last day of the immediately preceding financial year. Explanation.––For the purposes of this sub-section, the expression “financial year” means the year ending on the 31st day of March or, in the case of any society or class of societies the accounts of which are with the previous sanction of the Registrar balanced on any other day, the year ending on such day.
4. (4) Where the Administrator is a member of a society, the restrictions contained in this section shall not apply and that Administrator may, notwithstanding anything contained in this Regulation, withdraw from the society its share capital at any time, after giving to the society notice thereof of not less than three months.

1. (1) On the death of a

The share or interest of a member in the capital of a society, or in the loan stock issued by a housing society, or in the funds raised by a society from its members by way of savings deposits shall not be liable to attachment or sale under any decree or order of a court for or in respect of any debt or liability incurred by the member and accordingly, neither a Receiver under the Insolvency and Bankruptcy Code, 2016, nor any such person or authority under any corresponding law for the time being in force in the Union territory, shall be entitled to or have any claim on, such share or interest.

1. (1) Every member of a society shall be entitled to inspect, free of cost, at the society's office during office hours, or any time fixed for the purpose by the society, the Regulation, the rules, and the bye-laws, the last audited annual

balance sheet, annual audit report, the profit and loss account, a list of the

members of the Committee, a register of members, the minutes of general meetings, and those portions of the books and records in which his transactions with the society have been recorded.

1. (2) A society shall furnish to a member, on request in writing and on payment of such fees as may be prescribed therefore, a copy of any of the documents mentioned in sub-section (1).
2. (3) A society shall appoint any officer or officers as it deems fit as Co-operative Information Officer, for the purpose of discharging the functions as provided under sub-sections (1) and (2).
3. (4) The Co-operative Information Officer shall, within a period of thirty days from the date of receipt of application, either provide the information or reject the application specifying the reason therefor.
4. (5) Any member of the society whose application has been rejected may prefer an appeal to the Co-operative Ombudsman within a period of one month from the date of such rejection and his decision shall be final.

1. (1) Where a person has ceased to be a member of a society under section 29,––
   • (a) his liability in respect of any debt due by him to the society and in respect of any outstanding demand owing to the society by him shall continue as if he had not ceased to be a member; and
   • (b) his liability for the debts of the society as they stood immediately before the date of such cessation shall, save as otherwise provided in sub-section (2), continue for a period of three years from such date, as if he had not ceased to be a member: Provided that the liability shall be attached to the estate of such person, if such cessation was due to his death or such person dies after his ceasing to be a member.
2. (2) Where a society is ordered to be wound up under any provisions of this Regulation, then the liability of a person under clause (b) of sub-section (1), who has ceased to be a member thereof within three years immediately preceding the date of order of winding up, shall continue, until the entire liquidation proceedings are completed.

Notwithstanding anything contained in the Insolvency and Bankruptcy Code, 2016, or any corresponding law for the time being in force in the Union territory, the dues of a society from a member, in insolvency proceedings against him, shall rank in order of priority next to his dues to the Administration or to a local authority.

1. (1) A society may, by resolution passed by three-fourths majority of all the members present and voting at a general meeting of members held for the purpose, expel a member for acts which are detrimental to the society: Provided that no resolution shall be,—
   • (i) valid, unless the member concerned is given an opportunity of representing his case to the general body;
   • (ii) effective, unless it is submitted to the Registrar for his approval and approved by him: Provided further that the approval or disapproval of the Registrar shall be communicated to the society within a period of three months from the date of such submission, and in absence of such communication, the resolution shall be effective.
2. (2) No member of a society who has been expelled under sub-section (1) shall be eligible for re-admission as a member of that society, or for admission as a member of any other society, for a period of two years from the date of such expulsion: Provided that the Registrar may, in special circumstances, sanction the re-admission or admission, within the said period, of any such member as a member of the said society or of any other society, as the case may be.