Chapter 3 MEMBERSHIP

1. (1) Any person who needs the services of a Co-operative, expresses willingness to accept the responsibilities of membership, meets such other conditions as may be specified in the articles of association of the Co-operative, is in a position to use the services, and is competent to contract under the Indian Contract Act, 1872, may be admitted as a member, subject to the condition that the Co-operative is in a position to extend its services to such person.
2. (2) Every applicant for membership, and every member of a Co-operative must keep each Co-operative of which the applicant is a member, informed or membership in other Co-operatives, and a Co-operative may refuse admission or remove from membership on grounds, among others, of dual or conflicting membership, in other Co-operatives having similar business.

1. (1) Admission to membership shall be made, in accordance with the procedure specified in the articles of association. The articles of association shall have provision for constitution of a board by way of election from among its members and such board may be called by any other names as the articles of association provide.
2. (2) Where admission is refused, the decision with the reasons thereof shall be communicated by registered post to such applicant within fifteen days of the date of the decision, or within sixty days from the date of submission of application for membership, whichever is earlier.
3. (3) Where an applicant has been refused admission by the board or has had no response from the board, the applicant may request the board to place the matter for review by the general body. The board shall place the matter before the general body at its next general meeting and the decision of the general body shall be final:

Withdrawal from membership

1. (1) A member may withdraw from membership in a Co-operative in accordance with the procedure specified in the articles of association of that Co-operative.
2. (2) Withdrawal from membership will nonetheless require the member to fulfil such obligations as were undertaken/assumed as a member, under the provisions of this Act, the articles of association or other agreements.

1. (1) A member shall cease to be a member on the grounds as may be specified in the articles of association.
2. (2) Every Co-operative shall, inform the nominee of the member, in the event of the death of the member, and inform the member about the cessation of membership.

1. (1) The board may terminate the membership of a member who has acted prejudicial to the objects and interests of the Co-operative, violated any of the provisions of the articles of association of the Co-operative, the policies of the general body or board, and/or conditions stipulated in contracts entered into by the member with the Co-operative: Provided that membership under this sub-section shall not be terminated unless the member has been given a reasonable opportunity of showing cause against such termination.
2. (2) Where the membership of a member has been terminated by the board, the member may request the board, within thirty days of such termination, to place its decision for review by the general body. The board shall place the matter before the general body at its next general body meeting and the decision of the general body shall be final:

Register of members

1. (1) Every Co-operative shall maintain a register of members. The name of every member of the Co-operative shall be entered in the register, along with such other particulars deemed necessary by the board.
2. (2) The name of every member whose membership has ceased, or who was terminated or withdrawn shall be struck off from the register.

1. (1) Every Co-operative shall include in its budget annually, provision for expenses for the education and training of members, potential members, staff and members of board for the development of the Co-operative in accordance with the Co-operative principles as specified in Schedule D.
2. (2) Any unspent amount from the budget provided under sub-section
3. (1) shall be transferred at the end of the Co-operative business year to a Co-operative education fund, and may be used only for the purpose of educating and training of members, potential members, staff and members of the board in Co-operative principles and practices.

1. (1) A Co-operative's services shall normally be available to members only.
2. (2) After completion of two Co-operative business years of its being registered under this Act, any Co-operative found to be providing more than 25% of its core services, as specified in its articles of association, in terms of the value of transactions, to non-members in any given financial year, shall be deemed to be an aberrant Co-operative and stand to lose for that Co-operative business year exemptions, if any, provided to it.
3. (3) Any Co-operative found to be aberrant for three Co-operative business years in any continuous period of five Co-operative business years shall be deemed to be a Co-operative not operating on a Co-operative basis.

1. (1) No member of a Co-operative shall exercise the rights of membership, including the right to vote unless the member has made such payments to the Co-operative in respect of membership or has acquired and continues to have such interest in the Co-operative, including a minimum use of the services of the Co-operative, as may be specified in the articles of association.
2. (2) Within twenty days of closure of the previous financial year, the chief executive shall prepare a list of members with the right to vote, and a list of members without the right to vote with reasons thereof, valid for the current financial year. The list shall be affixed to the notice board of the Co-operative for information of all members, and any member, not satisfied with the specific instances of inclusion or non-inclusion of members in the lists, may appeal to the board within ten days of the affixation of the lists on the notice board, for re-examination of the records, and the board shall, within forty-five days of closure of the previous financial year, review the lists, finalise them, and have them affixed to the notice board of the Co-operative.

In Primary and Secondary Co-operatives, members shall have equal voting rights i.e. one member, one vote, and shall be organised in a democratic manner:

Liability of members

1. (1) A Co-operative may be registered with limited or unlimited liability.
2. (2) Where a Co-operative amends its articles of association to change the form and extent of its members' liability, it shall give notice thereof together with a copy of the amendment to its members and creditors and notwithstanding any provision in the articles of association or contract to the contrary, any member other than one who voted in favour of the proposed change, or creditor shall, during a period of thirty days from the date of issue of the notice, have the option of withdrawing his/her shares, deposits or loans, as the case may be, subject to the discharge of his/her obligations to the Co-operative.
3. (3) Any member or creditor who does not exercise his/her option within the period specified under sub-section
4. (2) shall be deemed to have assented to the resolution.
5. (4) An amendment passed under sub-section
6. (2) shall not take effect until-
   • (a) all claims of the members and creditors of the Co-operative, who have exercised the option under sub-section
7. (2) have been met in full or otherwise satisfied; and
   • (b) notice of the amendment of the articles of association of the Co-operative has been received by the Registrar in accordance with this Act.
8. (5) Subject to the provisions of sub-section
9. (6) the liability of a member or of the estate of a deceased member for the debts of the Co-operative as they existed-
   • (a) in the case of a past member, on the date on which the person ceased to be a member; and
   • (b) in the case of a deceased member, on the date of his/her death; shall continue for a period of two Co-operative business years from such date.
10. (6) Where a Co-operative is ordered to be dissolved, the liability of a past member, who ceased to be a member, or of the estate of a deceased member, who died, within two Co-operative business years immediately preceding the date of order of dissolution, shall continue until completion of the liquidation proceedings, but such liability shall be limited only to the debts of the Co-operative as they existed on the date of cessation of membership or death, as the case may be. Explanation-I- "Co-operative with limited liability" means a Co-operative in which the liability of its members for the debts of the Co-operative is limited by its articles of association, to such form and such extent as they may undertake to contribute to any deficit in the assets of the Co-operative, in the event of its being wound up. Explanation-II- "Co-operative with unlimited liability" means a Co-operative in which its members are jointly and severally liable for the debts of the Co-operative and to contribute to any deficit in the assets of the Co-operative, in the event of its being wound up.

1. (1) There shall be a general body for every Co-operative consisting of all the members of such Co-operative: provided that where the general body of a Co-operative decides that the size, spread requires a smaller body for more effective decision making, its articles of association may provide for a smaller body called representative general body, to be formed taking some members as representatives in such a democratic manner, with such functions and powers, and such relationship with members, as may be specified in the articles of association.
2. (2) Any reference to the words "general body" in this Act except sub-section
3. (1) and this subsection shall apply to the representative general body where it exists : provided that the representative general body shall not alter any provision in the articles of association or take any decisions relating to such subjects as the general body may have explicitly retained for itself.
4. (3) Subject to the provisions of this Act and the articles of association of a Co-operative, the ultimate power of a Co-operative, shall vest in the general body: Provided that nothing contained in this sub-section shall affect the exercise by the board or any other authority of a Co-operative of any power conferred on such board or such other authority by this Act.
5. (4) Any power, function or responsibility, falling within the scope of a Co-operative as a corporate body, which has not been specifically entrusted by this Act or the articles of association, to any of the several authorities within the Co-operative, may be dealt with by the general body, on a reference by the board of directors.

1. (1) The following and such other matters, as are, considered necessary by the board, shall be dealt with by the general body at its annual general body meeting:-
   • (a) long term plan and budget ;
   • (b) annual operational plan and budget for the current financial year ;
   • (c) appointment of auditors for the current financial year ;
   • (d) annual report of activities for the previous financial year ;
   • (e) annual audited statements of accounts, and the auditor's report relating to the previous financial year ;
   • (f) report on deviations, if any, from the approved budget relating to the previous financial year ;
   • (g) disposal of surplus, if any, of previous financial year ;
   • (h) management of deficit, if any, of financial year ;
     • (i) creation of specific reserves and other funds ;
   • (j) actual utilisation of reserves and other funds ;
   • (k) report on the attendance at meetings by directors ;
   • (l) use of the Co-operative's Services by the directors ;
   • (m) remuneration paid to any director or member of any committee or internal auditor in connection with his/her duties in that capacity or his/her attendance at related meetings ;
   • (n) quantum and percentage of services provided to non-members vis-a-vis services provided to the members ;
   • (o) appeal petition of a person whose application for membership has been rejected by the board ;
   • (p) appeal petition of a person whose membership has been terminated by the board ;
   • (q) report of activities and accounts related to education and training of members of the board and Co-operative and staff thereof ; and
   • (r) appointment of liquidator on suggestion of the board.
2. (2) The following and other matters when considered necessary by the board, shall be dealt with by the general body at its annual or any general body meeting:-
   • (a) election of directors ;
   • (b) amendments of articles of association ;
   • (c) removal of President, Vice-president and Directors ;
   • (d) Elections/appointments to casual vacancies in the board ;
   • (e) removal and consequent appointment of auditors ;
   • (f) membership of the Co-operative in Secondary Co-operatives ;
   • (g) partnership with other co-operatives ;
   • (h) amalgamation, division, merger, transfer of assets and liabilities ;
     • (i) dissolution of the Co-operative and appointment of the liquidator ; and
   • (j) consideration of the Registrar's report of inquiry, or reasons for the non-completion of the inquiry :

Meetings of the general body

1. (1) The board may, at any time, call a general body meeting of the members of the Co-operative : Provided that one such meeting known as annual general body meeting shall be held within one hundred and fifty days of the closure of the Co-operative's financial year to deal with the matters specified under sub-section
2. (1) of section 28.
3. (2) The board shall hold a special general body meeting within thirty days from the date of receipt of a requisition from,-
   • (a) at least 500 or 20% of the members whichever is less having the right to vote ; or
   • (b) the Registrar as required under this Act : Provided that any such requisition shall contain the reasons for holding the meeting and the proposed agenda. No subject other than the subjects included in the proposed agenda shall be discussed at the special general body meeting.
4. (3) All directors shall cease to be directors at the end of the period within which an annual general body meeting under sub-section
5. (1) or a special general body meeting under sub-section
6. (2) is required to be held, even if the board fails to convene such general body meetings within the specified period.
7. (4) All directors shall cease to be directors at the annual general body meeting, if the audited annual financial statement and auditor's report, along with the report of activities for the previous financial year were not made available to the members along with the notice to attend the annual general body meeting in which the report and accounts are required to be considered by the general body.
8. (5) The quorum for a general body meeting shall be as specified in the articles of association, but shall not be less than fifty per cent of the members eligible to vote at the meeting :

Minutes of general body meetings

1. (1) Every Co-operative shall record, in the language specified by the articles of association, minutes of all proceedings of every general body meeting in the minutes book and send the copy of the minutes in the manner as specified in the articles of association within fifteen days of the conclusion of every such meeting to all members.
2. (2) The minutes so recorded shall be signed by the member who presided over the said meeting.
3. (3) The minutes so recorded shall be deemed to have been confirmed on the thirtieth day after its despatch to all members, if no comments on the correctness or otherwise of the recorded minutes are received from members within that time : Provided that where comments have been received from members, the board shall take them into consideration while taking action on the resolutions and place the matter before the general body at its next meeting.

1. (1) There shall be an elected board of directors for every Co-operative constituted and entrusted with the direction of the affairs of the Co-operative in accordance with the provisions of this Act and the articles of association : Provided that in the case of a Co-operative newly registered under this Act, the persons who have signed the application for the registration of the Co-operative may constitute a promoter board, for a period not exceeding one calendar year, from the date of registration, to direct the affairs of the Co-operative and to get elections of directors conducted within the period mentioned above, and such promoter board shall cease to function as soon as a regular board has been constituted in accordance with the articles of association. The date on which the first meeting of the board shall be held, will be treated as the date on which the regular board is constituted : Provided further that in the case of a Co-operative society originally registered under the Co-operative Societies Act, and subsequently registered under this Act, the elected members of the board, whose term has not expired at the time of registration under this Act, may be deemed to be the promoter board for a period not exceeding one calendar year from the date of registration under the Act, to direct the affairs of the Co-operative and to get elections of directors conducted within the period mentioned above ; and such deemed promoter board shall cease to function as soon as a regular board has been constituted in accordance with the articles of association. The date on which the first meeting of the board shall be held, will be treated as the date on which the regular board is constituted.
2. (2) In no case the number of members of the board of directors shall be less than three.
3. (3) There shall be a President and a Vice-President of the board who shall be elected from amongst the directors of the board in accordance with the provisions of articles of association.
4. (4) The board shall, on a motion of no confidence moved by one-third of its directors and passed by two-third of its directors, at a meeting held for the purpose, remove the President, or Vice-President, as the case may be, on any of the grounds mentioned in sub-section
5. (1) of section 20.

Functions, responsibilities and powers of board

1. (1) The board may perform functions, discharge responsibilities and exercise powers as specified under and in accordance with the terms, conditions and procedure laid down in the articles of association, which shall, inter alia, include the following functions, responsibilities and powers: -
   • (a) to decide on the organisational objectives, to set up specific targets to be achieved towards the objectives, and to make periodic appraisal of operations;
   • (b) to elect and remove office bearers;
   • (d) to make provisions for regulating the appointment of all employees of the Co-operative, the scales of pay, allowances and other conditions of service including disciplinary action;
   • (e) to finalise long term perspective plan, annual plan and budget to be placed before the general body, and to direct the affairs of the Co-operative in accordance with the plan and budget approved by the general body;
   • (f) to arrange for funds;
   • (g) to decide acquisition and disposal of movable and immovable property;
   • (h) to frame, approve and amend regulations relating to services, funds, accounts and accountability, and information and reporting systems; and
     • (i) to consider the matter specified under subsection
2. (2) of section 28.
3. (2) Every director of a Co-operative while performing duties, discharging responsibilities, and exercising powers shall-
   • (a) act honestly and in the best interests of the Co-operative; and
   • (b) exercise such due care, diligence and skill as a reasonably prudent person would exercise in similar circumstances: Provided that any director who is guilty of misappropriation, breach of trust or any other omission or commission, resulting in loss or shortfall in revenue to the Co-operative, shall be personally liable to make good that loss or shortfall without prejudice to any criminal action to which the director may be liable under law.

In addition to such other conditions as may be specified in the articles of association, a member of a Co-operative shall be eligible for being chosen as a director of the Co-operative, if,-

1. (a) such member has the right to vote in the affairs of the Co-operative;
2. (b) such member has patronised the services of the Co-operative during the previous financial year to the extent and in the manner specified in the articles of association;
3. (c) such member has no interest in any subsisting contract made with or work being done for the Co-operative except as otherwise specified in the articles of association; and
4. (d) three calendar years have elapsed from the date on which such member may have ceased to be a director of the Co-operative for reasons of-
   • (i) non-holding of general body meeting;
   • (ii) non-conduct of elections to the board;
   • (iii) non-submission of annual report of activities, audited annual financial statements and/or auditor's report to the general body; or
   • (iv) absence from board meetings.

1. (1) The conduct of elections of directors to the board and of representatives to the representative general body of a Co-operative shall be the responsibility of the incumbent board or the promoter board, as the case may be, of the Co-operative.
2. (2) Elections shall be conducted in the manner specified in the articles of association. Elections shall be conducted before expiry of the term of office of the outgoing directors or representatives, as the case may be.
3. (3) Where a board fails to conduct elections in time in accordance with the articles of association of the Co-operative, all directors on the board shall cease to be directors from the date of expiry of the term of office of the outgoing director representative , as the case may be.
4. (4) Elections of directors shall take place at the general body meeting.
5. (5) Where a board fails to conduct elections before the expiry of the term of the directors or representatives, or, where there are no directors remaining on the board, such person , within such time and in such manner as specified in the articles of association, shall convene a general body meeting, for appointing an ad hoc board for the specific purpose of conducting elections within ninety days and, to perform all functions of the board during the interim except those prescribed by the general body.
6. (6) The term of the ad hoc board, so appointed shall not exceed three months and the ad hoc board shall cease to function as soon as a regular board is elected in accordance with the articles of association.
7. (7) The directors shall hold office for the period for which they were elected and the newly elected directors shall assume office at the end of this period.
8. (8) The directors may not be eligible for re-election, if so specified in the articles of association.
9. (9) Where there are vacancies on the board in spite of holding of election or due to death or resignation and where there is a quorum, the remaining director shall discharge all the powers of the board and may fill the vacancies by co-option from among the members of the co-operative having right to vote for the remainder of the respective terms.
10. (10) Where there are vacancies on the board and where there is not sufficient number of directors to constitute a quorum for board meetings, the remaining directors shall call an adjourned meeting for the purpose of electing directors to fill the vacancies.

1. (1) The articles of association shall provide for retirement of directors by rotation in case of Primary Co-operatives.
2. (2) The articles of association shall provide for retirement of directors by rotation or at a time, as the case may be, in case of Secondary Co-operative.
3. (3) The term of the directors shall in no case exceed five years.

1. (1) The President of a Co-operative may, at any time, call a meeting of the board of directors: Provided that at least four board meetings shall be held in a financial year, and the period between two consecutive board meetings shall not exceed one hundred and twenty days.
2. (2) The President shall hold a special board meeting within fifteen days of the date of receipt of a requisition from-
   • (a) at least one-third of the directors on the board; or
   • (b) the Registrar; or
   • (c) the Auditor.
3. (3) Such, requisition shall contain the reasons for requisitioning the meeting along with the proposed agenda, and no subject other than the subjects included in the proposed agenda shall be discussed at the special board meeting.
4. (4) The president shall cease to be the president at the end of the period within which a board meeting under sub-section
5. (1) or
6. (2) or the articles of association has to be held, if he/she fails to hold such board meeting within the specified period.
7. (5) An individual who ceases to be the president under sub-section
8. (4) shall not be eligible to hold the office of president for a period of five years from the date of such cessation.
9. (6) The quorum for a board meeting shall be as specified in the articles of association, but shall in no case be less than fifty per cent of the total number of directors of the board.
10. (7) The procedure to convene and conduct the board meetings shall be such as may be specified in the articles of association.
11. (8) If a director fails to attend three consecutive board meetings without sufficient reasons, he/she shall cease to be a director, from the date of the third board meeting.

1. (1) Every Co-operative shall maintain in the language specified by the articles of association, minutes of all proceedings of board meetings in the minutes book, and send the copy of the minutes within seven days of the concluding of every such meeting to all directors.
2. (2) The minutes so recorded shall be signed by the member who presided over the said meeting.
3. (3) The minutes so recorded shall be deemed to have been confirmed on the fifteenth day after its despatch to all directors, if no comments on the correctness or otherwise of the minutes are received from directors within that time: Provided that where comments have been received from directors, the board shall take them into consideration while taking action on the resolutions and place the matter before the next meeting of the board for consideration.