Chapter II REGISTRATION

(1) The Government may appoint an officer of the Government to be the Registrar of Co-operatives for the State. (2) The Government may also appoint as many officers of the Government as Additional Registrars, Joint Registrars, Deputy Registrars and Assistant Registrars of Co-operatives as it thinks fit for assisting the Registrar. (3) The Government may, by general or special order, confer all or any of the powers of the Registrar under this Act on the Additional Registrar, Joint Registrar, Deputy Registrar or Assistant Registrar of Co-operatives. In section 5 of the principal Act in sub-section (3) for the words “along with the copy of the bye-laws shall also be sent to the Federal Co-operative” the words “along with the copy of the bye-laws and details of promoters shall also be sent to the Federal Co-operative within a period of sixty days from the date of registration” shall be substituted. In the Principal Act, in section 17, after second proviso, the following shall be inserted, namely:- “Provided also that no Souharda Co-operative societies undertaking credit activities shall not utilize the mobilized deposit for non-credit activities other than lending and investments.”

Co-operatives which may be registered. (1) No co-operative shall be registered under this Act, unless,- (a) its main objects are to serve the interests of the members in the area of operation. (b) its bye-laws provides for economic and social betterment of its members through self help and mutual aid in accordance with the co-operative principles. (2) Subject to the provisions of this Act where,- (a) not less than ten individuals belonging to different families intend to form a Co-operative; or (b) a Co-operative society intends to convert itself into a Co-operative under this Act by passing a resolution in this behalf; or (c) twenty or more cooperatives registered under this Act intend to form into a union Co-operative by passing a resolution in this behalf; they may be to avoid unhealthy competition among different types of Co-operatives, Registrar may issue direction and circulars from time to time, subject to these circular and direction. registered as Co-operative under this Act. Provided that no Co-operative shall be registered if it is likely to be economically unsound or the registration of which may have an adverse impact on the development of the Co-operative movement. Provided further that no Co-operative shall be registered under this Act as a Housing Co-operative and no Housing Co-operative Society shall be converted into a Housing Co-operative. In section 17 of the principal Act, the words “and other than deposits from any other financial institutions and organisations.” shall be inserted, at the end. In the Principal Act, after section 17A, the following shall be inserted, namely:- “17-B. Maintenance of State Statutory Liquidity Reserve.- Every souharda cooperative shall mandatorily maintain 20% of the total deposits held by it at the end of each co-operative year maintained as State Statutory Liquidity reserve as per section 18, except Souharda Cooperative Banks.”

(1) An application for registration of a Co-operative shall be made to the Registrar in such form and in such manner as may be prescribed. (2) Every such application shall be accompanied by,- (a) the original and five copies of the bye-laws of the proposed Co-operative as adopted by the promoters of such Co-operative or by the representatives of Co-operatives who wish to form into a union Co-operative or by the general body of a Co-operative society which intends to convert itself into a Co-operative under this Act; (b) a list of names of individuals or Co-operatives which intend to form a Co-operative and in the case of a Co-operative society, a list of names of members of such society together with the names of members of the committee containing their addresses, occupation and financial commitments; (c) a true copy of the minutes of the meeting at which the bye-laws were adopted, duly signed by atleast a majority of individuals or promoters present or representatives present at such meeting where the bye-laws were adopted, or in the case of a Co-operative society, a true copy of the resolution and the minutes of the general meeting; (d) a copy of the challan for having paid the registration fee of one percent of the total authorised share capital by whatever name called, subject to a minimum of Rs. 500 and a maximum of Rs. 5,000; and (e) in case of a Co-operative society, documents to show that the Co-operative society has not received any share capital and any loans or guarantee by Government or loans and guarantee by any Co-operative society. (3) The Registrar shall, if he is satisfied that,- (a) the application is in conformity with the provisions of this Act and rules; (aa) the proposed Co-operative complies with the requirements of sound business and has reasonable chances of success, (b) the proposed bye-laws are in conformity with section 10; and (c) the name of the proposed Co-operative is not the same as that of a Co-operative already registered under this Act or is not the same as that used by a Co-operative society already registered under section 7 of the Karnataka Co-operative Societies Act, 1959, register the Co-operative and also its bye-laws and send by registered post a certificate of registration and the original registered bye-laws signed and sealed by him to the Chief Promoter mentioned in the application or to the Co-operative society within a period of ninety days from the date of receipt of application. A copy of such certificate of registration along with the copy of the bye-laws and details of promoters shall also be sent to the Federal Co-operative within a period of sixty days from the date of registration. Provided that in the case of a proposed Co-operative Bank, the registration in terms of this section shall take place only with the prior approval of the Reserve Bank. (4) If the conditions laid-down in sub-section (3) are not fulfilled, the Registrar shall communicate by registered post the order of refusal together with the reasons therefor, to the Chief Promoter or to the Co-operative society, as the case may be, within ninety days from the date of receipt of application. (5) An appeal against the order under sub-section (4) may be made,- (a) if the order was made by the Registrar, to the Government; or (b) if the order was made by any other officer to that officerʼs immediate superior officer. (6) If the Registrar fails either to register or to refuse registration within the period specified in sub-section (3) or (4), the Co-operative shall be deemed to have been registered under this Act after the expiry of the said period. In the Principal Act, for section 18, the following shall be substituted, namely:- “18. Investment of Funds.- Such of its funds as are not immediately required for use by a co-operative, shall be invested or deposited outside its business, namely:- (a) With the Karnataka State Co-operative Apex Bank Ltd. or District Central Co-operative Bank Ltd or Urban Co-operative Bank; and (b) With any scheduled bank regulated by the Reserve Bank of India with the prior permission of the Registrar.”

(1) Where a Co-operative is registered or deemed to be registered, the certificate of registration duly signed and sealed by the Registrar shall be conclusive evidence that the Co-operative mentioned therein, is a Co-operative registered or deemed to be registered under this Act. (2) Notwithstanding anything contained in the Karnataka Co-operative Societies Act, 1959, when a certificate of registration is issued to a Co-operative after conversion of a Co-operative society into a Co-operative, the registration of such Co-operative society under the Karnataka Co-operative Societies Act, 1959, shall be cancelled by the Registrar with effect from the date of issue of certificate of registration under this Act. In the Principal Act, in section 20B, in clause (c), after sub-clause (ii), the following sub-clause shall be inserted, namely:- “(iii) Notwithstanding anything contained in this Act or Bye-laws made thereunder, in the Election of the Board of Secondary Co-operative or Federal Co-operative or Apex Co-operative to the reserved seats, irrespective of any class of voters of the said Cooperatives they shall be entitled to exercise their votes, in the manner as may be prescribed.”

A Co-operative registered under this Act shall be a body corporate by the name under which it is registered having perpetual succession and common seal. The Co-operative shall be entitled to acquire, hold and dispose of property, to enter into contracts, to sue and be sued and to do all other things necessary for the purpose for which it is constituted. In the Principal Act, in section 23, in sub section (3), after clause (k-3) the following clause shall be inserted, namely:- “(k-4) Review of the list of board of directors who have borrowed loans from the cooperative and other top twenty defaulting borrowers.”

A Co-operative may be registered with limited or unlimited liability. Where the liability is limited, the expression “limited” shall be suffixed to the name of the Co-operative. In the Principal Act, in section 24, for the beginning paragraph and clause (1) and the entries relating thereto, the following shall be substituted, namely:- “(1) The Board of Souharda Co-operative Society shall consists of not less than thirteen members excluding the Chief Executive, but not exceeding the number of members as may be prescribed; Provided that, one seat shall be reserved in favour of members belonging to the scheduled castes and one seat for the members belonging to the scheduled tribes, two seats shall be reserved in favour of women members and two seats shall be reserved in favour of members belonging to backward classes as may be notified by the State Government, on the board of every primary, secondary or union and apex co-operative society. Provided further that, respective Co-operative shall make provisions in the bye-laws with previous approval of the Registrar to increase the number of seats in the Board of secondary or union and apex co-operative society if their number of board of directors exceeds the limit as specified in sub-section (1). Provided also that, every co-operative shall co-opt persons having experience in the field of banking, management, finance or specialization in any other field relating to the objects and activities undertaken by the co-operative, as members of the board of such co-operative and such co-opted members shall not have the right to vote in any election of the co-operative in their capacity as such member or to be eligible to be elected as office bearers of the board. Provided also that, the number of such co-opted members shall not exceed two in addition to maximum number of directors specified in sub-section (1). Provided also that, not more than three functional directors if necessary of a cooperative shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the sub-section (1).”

Display of names etc. Every Co-operative shall display its full name and the certificate of registration issued under this Act at its registered office or place at which it carries on business. The Registration number, name and address of its registered office shall be mentioned,- (a) in all notices, other official publications and correspondences; (b) in all its contracts, business letters, order for goods, invoices, statements of accounts, receipts and letters of credit; (c) in all bills of exchange, promissory notes, endorsements, cheques and orders for money it signs or signed on its behalf; and (d) in the corporate seal. In the Principal Act, in section 25, in sub section (1), after clause (f), the following new clause shall be inserted, namely:- “(g) If he/she fails to declare and submit his/her family assets and liabilities statement by end of every cooperative year. Explanation- For the purpose of this clause “family” means “Director and his/her spouse, unmarried daughter and undivided son.”

(1) Subject to the provisions of this Act or rules, every Co-operative shall function in accordance with its bye-laws which as far as possible shall adhere to the Co-operative principles. (2) The bye-laws of every Co-operative shall provide for the following matters, namely:- (i) the name, address and area of operation of the Co-operative; (ii) the objects of the Co-operative; (iii) conditions of eligibility, disqualifications for, and procedure for admission, withdrawal, removal or cessation of membership including that of the directors and office bearers; (iiia) the rights, privileges, duties and liabilities of membership including those of nominal members (iv) recruitment and conditions of service of staff of the Co-operative; (v) procedure to conduct the board meetings, rights of members including the right to vote and contest for elections; (vi) the consequences of default in payment of any sum due by a member to the Co-operative; (vii) the powers and functions of the general body and the manner of election of representative general body, if any, and matters which must be dealt with by the general body and by the representative general body, if any; (viii) the manner and frequency of convening general meetings and quorum required; (ix xxxx) (x) the composition of the board and number of office bearers; and the powers, functions and duties of the board (x-a) the travelling allowance, daily allowance, sitting fee and other allowances of the directors. (xi) the extent and conditions for mobilisation of funds in the form of share capital, deposits, debentures, loans and other contributions from its members other than Government; (xii) the powers, functions and duties of the President or Chairperson; (xiii) the powers, functions and duties of Chief Executive; (xiv) the terms and conditions on which the Co-operative may deal with non-members; (xv) the manner of electing representatives to union Co-operatives and the Federal Co-operative; (xvi) the nature and amount of authorised share capital of the Co-operative; (xvii) the maximum shares which a member can hold; (xviii) the maximum dividend payable to members on paid up share capital; (xix) the purpose for which the funds may be applied; (xx) contribution towards Federal Co-operative Fund and the constitution of various funds and their purposes; (xxi) appropriation of amount out of the net profit specifically for the following:- (a) twenty five percent towards the reserve fund constituted by the co-operative; (a-a) 0.50 percent towards the Sahakara Academy (Reg), Mysore, registered under the Karnataka Societies Registration Act, 1960 and sponsored by the State Government for the purpose of carrying out Co-operative education, training and research. (b) two percent towards the cooperative education fund to the Karnataka State Souharda Federal cooperative. provided that no cooperative which has failed to contribute to the Cooperative Education Fund shall pay dividend to its members. (c) twenty percent towards the operational reserve to meet unforeseen losses or contingencies; (d) five percent towards the Common Good Fund whose purpose is approved by the general body; (e) constitution of, or contribution to, such special funds as may be specified in the bye-laws. (f) bonus not exceeding two months pay to be paid to the employees; (g) dividend to the members. (xxii) fixation of quantum and procedure to make good the operational deficiency incurred by the Co-operative out of its reserve fund and operational reserve fund; (xxiii) the manner of appointment of auditors or Chartered Accountants and their powers and functions; (xxiv) the manner of disposal of funds when the Co-operative is under liquidation; (xxv) the circumstances and manner of winding up of the Co-operative; and (xxvi) any other matter which is required to be or may be provided in the bye-laws. (3) Notwithstanding anything to the contrary contained in this Act, in the case of a co-operative bank, the bye-laws framed under sub-section (2) pertaining to acceptance of deposits, borrowing of funds, maintenance of reserve fund, appropriation of profit. grant of loan, fixation of interest rate on deposits and advances, and such other activities as mentioned in section 6 of the Banking Regulation Act, 1949 as applicable to co-operative societies shall be subject to the provisions of the said Act, the rules, regulations or directions made or issued thereunder from time to time by the Reserve Bank or the National Bank. In the Principal Act, in section 26,- (i) after sub-section (1), the following shall be inserted, namely:- “(1A) Every candidate contesting for the Election of the Board shall, at the time of filing his nomination, file a declaration of his/her and his/her family’s assets and liabilities in the manner as may be prescribed. (1B) Every elected director of the Board shall submit a declaration of assets and liabilities of his/her and his/her family for each financial year of his tenure in the manner as may be prescribed. Explanation- For the purpose of this sub-section “Family” means Candidate and his/her Spouse, Unmarried Daughter and Undivided Son.” (ii) for sub-section (2) the following shall be substituted,

(1) A Co-operative may amend any of the provisions of its bye-laws by a resolution passed by the majority of members with right to vote or two thirds of the members present and voting, whichever is less, at a general meeting or at a representative general meeting: Provided that no such resolution shall be passed unless not less than twenty clear days of written notice of the meeting has been given along with a copy of the proposed amendment to each member of the general body or representative general body, as the case may be, and such notice and the proposed amendment are also displayed on the notice board of the Co-operative for a period of not less than twenty days immediately proceeding the date of the meeting. (2) In case of amendment of its bye-laws by the Co-operative, an application for (2) ...the registration of the amendment with particulars specified in subsection (3), shall be forwarded by registered post to the Registrar within a period of thirty days from the date of the resolution. or by person. If there is delay in submission of proposal, the Registrar, may condone the delay if satisfied with justifiable reasons for the delay and consider bye-law the amendment proposal. (3) Every application forwarded under subsection (2) to the Registrar, shall be signed by the President or Chairperson and shall be accompanied by three copies of the resolution adopting the amendment along with the following particulars, namely:- (a) the date of the meeting at which the amendment was approved; (b) the total number of members on the roll of the Co-operative who were eligible to vote on the date of such meeting, the number present at the meeting and the number of eligible members who voted for the resolution. (c) in the case of a Co-operative Bank, a certificate signed by the President or Chairperson, stating that the proposed amendments are in conformity with sub-section (3) of section 10; (d) a treasury Challan or Demand Draft in favour of the Registrar for having remitted the fee as prescribed. (4) If the proposed amendment is in accordance with the provisions of this Act and rules, the Registrar shall register the proposed amendment within a period of ninety days from the date of receipt of the application. (5) The Registrar shall communicate by registered post to the Co-operative within a period of fifteen days after registration a copy of the amendment so registered together with a certificate duly signed and sealed by him and such certificate shall be conclusive evidence that the amendment has been duly registered. A copy of such certificate and registered amendment shall be sent to the Federal Co-operative. (6) If the proposed amendment is not in accordance with the provisions of this Act and Rules, the Registrar shall refuse to register the proposed amendment within a period of ninety days from the date of receipt of the application failing which the amendment shall be deemed to have been registered: Provided that no order refusing the registration of such amendment shall be made except after giving the Co-operative an opportunity of being heard. (7) The Registrar shall communicate by registered post to the Co-operative, the order of refusal under sub-section (6) together with the reasons therefor within a period of fifteen days from the date of refusal. (8) An appeal against the order under sub-section (6) may be made within sixty days from the date of the order,- (a) if the order was made by the Registrar, to the Government; or (b) if the order was made by any other officer, to that officer's immediate superior officer. (9) An amendment to the bye-laws shall come into effect from the date of registration or deemed date of registration. In the Principal Act, in section 27, after clause (j), the following clauses (k) (l) and (m) shall be inserted, namely:- "(k) Every elected director of the Board shall submit a declaration of assets and liabilities of his/her and his/her family for each financial year of his/her tenure as in the manner as may be prescribed. (l) to collect and review the assets and liabilities of Chief Executive of the souharda co-operative society. (m) if the Chief Executive fails to submit the assets and liabilities to the Board, the Board shall take disciplinary action on Chief Executive such manner as may be prescribed. Explanation: For the purpose of this clause “family” means Candidate/Chief Executive Officer/Director and his/her Spouse, Unmarried Daughter and Undivided Son."

(1) A Co-operative may, by a resolution passed at its general body,- (a) decide to amend its bye-laws to change the form or the extent of its liability; (b) decide to transfer its assets and liabilities, in whole or in part, to any other Co-operative which by a like resolution agrees to accept such transfer; (c) divide itself into two or more Co-operatives. (2) Any two or more Co-operatives may, by passing a resolution at respective general meetings, decide to amalgamate themselves and form a new Co-operative. Every such resolution of a Co-operative shall be passed at its general meeting by a majority of total members with right to vote or two thirds of members present with right to vote, whichever is less, and such resolution shall also contain all particulars of the liability, transfer, division, amalgamation, as the case may be : Provided that no such resolution shall be passed unless a notice is issued together with a copy of the proposed resolution to all its members, creditors, union Co-operative, Federal Co-operative to which it is affiliated, and the consent of the members, creditors, union Co-operative and Federal Co-operative has been obtained. "Provided further that in the case of a Co-operative Bank, no resolution under sub-section (1) or under this sub-section, shall be passed without the prior sanction in writing of the Reserve Bank". (3) Notwithstanding anything contained in any bye-law or contract to the contrary, any member, a union Co-operative, Federal Co-operative or creditor who does not consent to the resolution shall have the option to withdraw their shares, deposits, loans or services, as the case may be, within a period of one month from the date of receipt of the notice under subsection (2). (4) The union Co-operative, Federal Co-operative or any member or creditor who does not exercise his option within the period specified under subsection (3), shall be deemed to have consented to the resolution. (5) No resolution of a Co-operative to change liability or for transfer of assets and liabilities, division and amalgamation shall be passed unless,- (a) in case of change of liability or transfer of assets and liabilities,- (i) the members, union Co-operative, Federal Co-operative and creditors have consented or are deemed to have consented to the resolution under subsection (3) or sub-section (4), as the case may be; or (ii) all claims of the members, union Co-operatives, Federal Co-operative and creditors who have exercised the option referred to under subsection (3) within the period specified therein, have been met in full or otherwise satisfied; and (b) amendment of the bye-laws of Co-operative concerned is registered; and (c) in the case of division or amalgamation, certificate of registration of the Co-operative or Co-operatives is issued. (6) Where a resolution passed by a Co-operative in this section involves a transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee. In the Principal Act, in section 28,- (i) for sub-section (1), the following shall be substituted, namely:- "(1) The Chief Executive shall within fifteen days from the date of constitution or deemed constitution of the Board after a general election and immediately before the expiry of the term of office of the President or Chairperson, Vice-President or Vice-Chairperson and any other office- bearers, convene a meeting in the manner as may be prescribed of all members of the committee for the purpose of electing President or Chairperson, Vice-President or Vice-chairperson and such any other office bearers as are required to be elected under the bye-laws of the souharda co-operative society. One of the members who is not a candidate for the election of President or Chairperson, Vice-president or Vice-Chairperson or any office bearer shall be chosen to preside over such meeting: Provided that, the Members of the first Board elected in the first general election held after the registration of a co-operative, shall elect the President or Chairperson, Vice-President or Vice-Chairperson and other office bearers in such manner as may be prescribed. (2) The Chief Executive shall, as and when there is a casual vacancy in the office of the President or Chairperson, Vice-President or Vice- Chairperson or other office bearers convene a meeting of the members of the Board for the purpose of filling up the casual vacancy and the provisions of sub-section (1) shall mutatis mutandis apply. (3) The Chief Executive shall, within three days from the date of the meeting, forward to the Registrar and Co-operative election authority a copy of the notice convening the meeting and also a copy of the proceedings of the meeting. (4) If the Chief Executive fails to convene the meeting in accordance with sub-sections (1) and (2), the Co-operative election authority or any officer authorized by it to do so shall convene a meeting for the purposes specified in the said sub-sections."; and (ii) after sub-sections (1), (2) (3) and (4) as so substituted, the existing sub-sections (2) and (3) shall be re-numbered as (5) and (6).

Consequences of transfer of assets and liabilities, division and amalgamation. (1) Where the whole of the assets and liabilities of a Co-operative are transferred to another Co-operative, the registration of the first mentioned Co-operative shall stand cancelled and that Co-operative shall be deemed to have been dissolved and shall cease to exist as a corporate body. (2) Where two or more Co-operatives are amalgamated into a new Co-operative, the registration of each of the amalgamating Co-operatives shall stand cancelled on the registration of the new Co-operative and each such Co-operative shall be deemed to have been dissolved and shall cease to exist as a corporate body. (3) Where a Co-operative divides into two or more Co-operatives the registration of that Co-operative shall stand cancelled on the registration of the new Co-operatives and that Co-operative shall be deemed to have been dissolved and shall cease to exist as a corporate body. In the Principal Act, in section 29,- (i) for the words “ may fill” the words “shall fill” be substituted; and (ii) the words “if the remaining term of office of the board is less than half of its original term” shall be omitted.

(1) Any two or more Co-operatives may, by resolutions passed by three-fourth majority of the members present and after voting at a general meeting of each of such Co-operatives, may enter into partnership to carryout any one or more specific business. A written notice of the date of the general meeting shall be given to each member before ten clear days of such meeting; Provide that a co-operative Bank, shall not enter into such a partnership without obtaining prior permission of the Reserve Bank in writing. (2) Nothing in the Indian Partnership Act, 1932 (Central Act 9 of 1932) shall apply to such partnership. In the Principal Act, in section 31, in sub-section (2) after clause (i-6) the following clause (i-7) shall be inserted, namely:- "(i-7) If he/she fails to submit every financial year the declaration of assets and liabilities of his/her and his/her family. Explanation:- For the purpose of this clause “family” means “Chief Executive Officer and his/her Spouse, Unmarried Daughter and Undivided Son."

(1) Any Co-operative may, by a resolution passed at its general meeting by a majority of members present with a right to vote, promote one or more subsidiary organisations for the furtherance of its objectives and such organisations may be registered under any law for the time being in force. Provided that a Co-operative Bank shall not promote a subsidiary, nor shall a Co-operative promote a subsidiary whose by-laws permit the carrying on of banking business, without the prior permission of the Reserve Bank in writing. Provided further that, subject to such rules as may be prescribed, no co-operative shall promote or invest in subsidiary organizations without prior approval of the registrar. (2) The annual reports and accounts of any such subsidiary organisation shall be placed before the general meeting of the Co-operative every year. In the Principal Act, in section 33, after sub-section (1), the following shall be inserted, namely:- "(1-A) Notwithstanding anything contained in sub-section (1), except urban co-operative banks, once in an every three years every co-operative shall get its accounts audited by the Director of Co-operative Audit."

Any Co-operative or Co-operatives may enter into collaboration with any other organisation or organisations approved by the Government to carry out any one or more specified business provided in the bye-laws of such Co-operative or Co-operatives. Where such collaboration requires creation of a new organisation under any other law for the time being in force, such organisation may be registered as an institution under such law for fulfillment of the objectives with which it was created and such collaboration shall be reviewed every year by the general body of the Co-operative. Provided that in the case of a Co-operative Bank, such collaboration shall be entered into with the prior approval of the Reserve Bank in writing. In the Principal Act, in section 38, in sub- section (1), second proviso shall be omitted.