Definition of a multi state cooperative society: -
A multi state cooperative society is registered from the centre i.e. Delhi. The co-operative society orders, with articles not kept to one state and serving the hobbies of parts in more than one state for social and budgetary improvement of its parts through self improvement and common help as per the co-operative society standards are recognized as Multi State Cooperative Societies.
Types of multi state cooperative societies and requirements: -
The basic formalities for forming this society are to arrange at least 50 members from two states each. A multi state cooperative society is of various types- Credit, Housing, Agriculture, Transport, Hospital, Sugar, Stores, Fishery, Handloom, Labor, Consumer and Multi Purpose Co-operative Society. There can be more than 50 members as well but each additional state requires a minimum of 50 members from that state. These first fifty members are ordinary members who have voting right and to whom shares are allotted. The second category of members are nominal members to whom shares are not allotted, who do not have voting right and who never participate in any of the general body meetings.
Role of Governing Body Members of Multi state:-
As far the interim management committee list is concerned who are responsible for the management and handling of the society, the society should minimum 7 members and this list can go unto 21 members. After the 97th Constitutional Amendment Act 2011 from February 2013, it is mandatory to keep 2 ladies and 1 extra member who belong to Scheduled Caste or to Scheduled Tribe in the main governing body list. Till today, there are 900-950 Multi State Cooperative Societies out of which maximum are credit. The governing body members take part in annual general body meetings, special general body meetings, resolutions, notice, quorums etc.
Just for example in a credit cooperative society, if the society wants to make any scheme like gold loan, automobile loan, fixed deposit loan, double deposit plan, triple deposit plan or any special scheme, the society has to give a prior 15 days notice to all its members by speed post, newspaper publication etc. After 15 days, the general body meeting is conducted. The meeting can only happen if the quorum is one-fifth of the total members present and voting during the resolution. The signatures of the governing body members as well as ordinary members present and voting are taken in the minute’s book and maintained for future records. The special general body meeting can be conducted by giving a notice of at least seven days. A society should conduct at least 4 general body meetings in every financial year. Moreover, in every financial year, the society should hire a chartered accountant in a general body meeting by passing a resolution. This CA looks after the accounts of the society and files the balance sheets and income tax return. The societies except Credit, Housing and Multi Purpose can collect money from its members on the basis of shared allotment and advance. They can give dividends to their members on shares and commissions on advance. Moreover as per the rules of MSCS Act 2002, a person already being a member of a society cannot be a member of a multi state cooperative society of the same type.
Management of a Multi State Cooperative Society: -
The election of the cooperative society is held first time within six months from the date of its registration. Thereafter the elections are conducted at every five years. A President can remain as a President for two consecutive times but the third time, the President has to change. No part of the funds, other than net profits of a multi state cooperative society shall be divided by way of bonus or dividend or otherwise distributed among its members. The net profits of the multi state society shall be calculated by deducting from the gross profit for the year, all interest accrued, and accruing in relation to amounts which are overdue, establishment charges, interest payable on loans and deposits, audit fees, working expenses including repairs, rent, taxes and depreciation, bonus payable to employees under the law relating to payment of bonus for the time being in force, and equalization fund for such bonus, provision for payment of income-tax and making approved donations under the Income Tax Act 1961, development rebate, provision for development fund, bad debt fund, price fluctuation fund, dividend equalization fund, share capital redemption fund, investment fluctuation fund, share capital redemption fund, investment fluctuation fund, provision for retirement benefits to employees and after providing for or writing off bad debts and losses not adjusted against any fund created out of profit. The condition is that such society may add to the net profits for the year interest accrued in the preceding years, but recovered during the year. In case of multi state cooperative societies which do not have share capital, the surplus of income over expenditure shall not be treated as net profits and such surplus shall be dealt with in accordance with the bye-laws. A multi state cooperative society shall, out of its net profits in any year transfer an amount not less than twenty-five percent to the reserve fund, credit one percent to cooperative education fund maintained by the National Co-operative Union of India Limited, New Delhi or transfer an amount not less than ten percent to a reserve fund for meeting unforeseen losses. No multi state cooperative society shall make a contribution either in money or in kind, whether directly or indirectly, to an institution which has an object of furtherance of the interest of a political party. There is a restriction on loan as well. No cooperative society other than cooperative bank shall make a loan to a member on the security of this share or on the security of a non-member. But the society can make a loan to a depositor on the security of this deposit. The multi state society my receive deposits, raise loans and receive grants from external sources to such extent and under such conditions as may be mentioned in the memorandum provided that the total amount of deposits and loans received during any financial year shall not exceed ten times of the sum of subscribed share capital and accumulated reserves. The net accumulated reserves are calculated by subtracting accumulated losses from accumulated reserves.
Time Taken for registration: -
Generally, the maximum time period for a multi state cooperative society registration is 4 to 5 months. In case, the application receives an objection, in that case, the application can be filed again and in certain circumstances, the society registration can be done earlier also on the basis of earlier rejections or on political pressures.
Besides registration, the amendment proposal is also filed in the Ministry of Agriculture. It takes normally three to four months. It is very rare that amendment proposal is rejected. We can file amendment if we want to increase our area of operation i.e. number of states or increase our authorized share capital or change our name or change our office address.
The documents filed along with amendment proposal are bank statement, audited balance sheets showing net profit and turnover. The ministry demands justification and proper reasons why a society proposal should be amended.
Benefits of a multi state cooperative society: -
Overall, a multi state cooperative society is a useful alternative for all real estate
companies, public limited, private limited and chit fund companies where almost saturation has reached. This Centre Act has been passed by the parliament in the year 2002. The mission of the multi state society is to facilitate the voluntary formation and democratic functioning of cooperatives as peoples institutions based on self help and mutual aid and enable them to promote their economic and social betterment and to provide functional autonomy.