Cooperatives Act, 2017 An Act Made for Amendment and Consolidation of Laws concerning Cooperatives
Date of Authentication 2074-7-4 (October 18, 2017)
Act No. 41 of the Year 2074
Preamble: Whereas, it is expedient to amend to and consolidate the prevailing laws relating to cooperatives in order to make economic, social and cultural upliftment of members of cooperative through integration of capital, technology and talents scattered amongst farmers, craftsperson, laborers, low income groups and marginalized communities or general consumers in accordance with norms, values and principles of cooperatives; to promote the regulation of cooperative organization as community-based, member-centric, democratic, autonomous, corporate entity; and to develop self-reliant, sustainable and socialism-oriented national economy by way of cooperative farming, industries, goods and services enterprises;
Be it enacted by the Legislature-Parliament referred to in clause (1) of Article 296 of the Constitution of Nepal.
Chapter-1 Preliminary
Short Title and Commencement: (1) This Act may be cited as “Cooperatives Act, 2017.” (2) This Act shall come into force immediately.
Definitions: Unless the subject or context requires otherwise, in this Act,- a) “Internal Procedures” means the Internal Procedures framed by a Cooperative Organization pursuant to Section 28. b) “Offence” means an offence referred to in Section 122. c) "Prescribed" or "as prescribed" means prescribed or as prescribed in the Rules framed under this Act.
d) “Family” means the husband or wife, son, daughter-in law, daughter, adopted son, adopted daughter, father, mother, step mother of a member and elder brother, elder sister-in law, younger brother, younger sister-in-law, elder sister or younger sister to whom the member has to take care of. Provided that this term does not include a member of the family who has been living separate either upon partition of family property or carrying out his or her own profession or business. e) “Primary Capital Fund” means the share capital and reserve fund. f) “Savings” means an amount deposited by a member in a Cooperative Organization. g) “Ministry” means the Ministry of Government of Nepal looking after cooperative affairs. h) “Main transaction” means a transaction having 30% or more share in liability of savings mobilized in the commercial activities or in purchase or sales transactions of members until the latest fiscal year. i) “Registrar” means the Registrar designated pursuant to Section 92. j) “Accounts Supervision Committee” means the Accounts Supervision Committee referred to in Section 48. k) “Byelaws” means the Byelaws framed by the concerned Cooperative Organization pursuant to Section 27. l) “Department” means the Department of Cooperatives. m) “Share” means a divided portion of the share capital of a Cooperative Organization. n) “Local Level” means a Rural Municipality or a Municipality and the words also include Sub-Municipal Corporation and Municipal Corporation as well. o) “Director” means a member of the Board of Directors and the word also includes an official of the Board. p) “Member” means the person who has obtained membership of a Cooperative Organization. q) “Board” means the Board of Directors referred to in sub-Section (1) of Section 41. r) “Cooperative Bank” means a Cooperative Bank Registered pursuant to Section 12.
s) “Cooperative values” means internationally recognized cooperative values including self-reliance, self-responsibility, democracy, equality, equity, solidarity, integrity, openness, social responsibility, and care for others. t) “Cooperative business” means commercial activities operated as provided for in the Byelaws of the Cooperative. u) “Cooperative principles” means internationally recognized cooperative principles including voluntary and open membership; democratic control by members; financial participation of members; autonomy and independence; education, training and information; mutual cooperation amongst cooperatives, and concerns towards community. v) “Cooperative Organization” means an Organization or Association and the word also includes a Cooperatives Bank as well. w) “Association” means the District Sectoral Cooperative Association, District Cooperative Association, Province Sectoral Cooperative Association, Central Sectoral Cooperative Association and Specialized Cooperative Association and the word also includes the National Cooperative Association formed under the same Section. x) “Organization” means a Sectoral or Multipurpose Organization formed pursuant to Section 3 and Registered pursuant to Section 15. y) “General Meeting” means a General Meeting of a Cooperative Organization.
Chapter-2 Formation and Registration of Cooperative Organization
(4) While forming an Organization under this Section, the number referred to in sub-Section (1), (2) and (3) shall be met at the rate of one member per family. Provided that there shall be no hindrance to acquire membership by more than one persons of a family once an Organization is registered pursuant to Section 15.
(5) Notwithstanding anything contained in sub-Section (1), at least one hundred employees, teachers or professors who are incumbent in an office getting remuneration from Government of Nepal, Provincial Government, Local Level or from a school, University or corporate entity getting a grant from, or under the ownership of, such government or level may, based on the professional organization formed according to the prevailing law, form together an organization with a condition to abide by the terms and conditions as prescribed. Provided that in an office with less than one hundred employees, at least thirty employees, teachers or professors may, form together an organization with a condition to abide by the terms and conditions as prescribed.
Formation of District Sectoral Cooperative Association: At least eleven Organizations formed pursuant to Section 15 for carrying out works including works of development, promotion and marketing of Cooperative enterprise may together form District Sectoral Cooperative Association on their specific sector. Provided that least seven Organizations may together form a district Sectoral Cooperative Organization on their specific sector in the remote districts which Government of Nepal has specified as those belonging to Class “A”.
Formation of District Cooperative Association: At least eleven Organizations which have been Registered pursuant to Section 15 and engaged in works including the works of development, promotion and marketing of cooperative enterprises may together form Sectoral District Cooperative Association on their sector. Provided that :-
Cooperative enterprise may together form Provincial Sectoral Cooperative Association on their specific sector.
Provided that while forming Association in such a manner, it shall include in the Association more than fifty percent of the Sectoral Associations Registered in the Province.
Provided that while forming Association in such a manner, more than fifty percent of each of the district cooperative sectoral associations, district cooperative associations or provincial sectoral associations Registered all over the province shall have to be included.
Provided that while forming Association in such a manner, more than fifty percent of each of the district cooperative Sectoral associations, or provincial Sectoral associations registered all over the province shall have to be included.
(2) Its operational procedures shall be as prescribed.
a) More than 50% of the District Sectoral Cooperatives Associations formed pursuant to Section 4;
b) More than 50% of the District Cooperatives Associations formed pursuant to Section 5; c) More than 50% of the Provincial Sectoral Cooperatives Associations formed pursuant to Section 6; d) More than 50% of the Provincial Cooperatives Associations formed pursuant to Section 7; e) More than 50% of the Central Sectoral Cooperatives Associations formed pursuant to Section 8.
(2) Notwithstanding anything contained in sub-Section (1), the National Cooperatives Association Registered at the time of commencement of this Act shall be deemed to have been converted as the National Cooperatives Federation under this Act.
No Association may be formed: Notwithstanding anything contained in sections 4,5,6,7,8 and 10, no more than one district Sectoral cooperatives association or district cooperative association of the same nature; no more than one provincial Sectoral cooperatives association or provincial cooperative association of the same nature; or no more than one central cooperatives federation may be formed.
Formation of Cooperative Bank: (1) Organizations and Associations together may, with prior approval of the Nepal Rastra Bank, form Cooperative Bank with the objectives of accepting savings of Organization or Association, to disburse credits or to provide banking services to such Organization or Association.
(2) Notwithstanding anything contained in sub-Section (1), the national cooperatives bank that is in operation at the commencement of this Act shall be deemed to have been formed under this Act.
(3) Other provisions concerning formation of Cooperative Bank shall be as prescribed.
No Operation of Cooperative Organization without Registration: No one shall operate Cooperative Organization without getting it Registered.
Application to be submitted for Registration: (1) The Cooperative Organizations formed under this Act shall, for the purpose of registration, submit application in the prescribed format to the authority authorized by the Registrar in case of the Organization referred to in Section 3, District Sectoral Cooperatives Association referred to in Section 4 or District Cooperatives Association referred to in Section 5; and to the Registrar in case of Provincial Sectoral Cooperatives Association referred to in Section 6, Provincial Cooperatives Association referred to in Section 7, Central Sectoral Cooperatives Association referred to in 8, Special Cooperatives
Association referred to in Section 9, National Federation of Cooperatives referred to in Section 10 or Cooperative Bank referred to in Section 12. (2) The following documents shall have to be submitted along with the application referred to in sub-Section (1):- a) Proposed Byelaws of a Cooperative Organization; b) Report of the feasibility study of operation of the Cooperative Organization; c) Details as to the number of shares undertaken to subscribe by the members and amount of share; d) Other details as prescribed. (3) While submitting application for registration of a Cooperative Bank pursuant to sub-Section (1), prior approval of the Nepal Rastra Bank, in addition to the documents referred to in sub-Section (2), shall also be included.
(4) While registering a Cooperative Organization under this Act, the authority referred to in sub-Section (1) of Section 14 may prescribe any condition to be fulfilled by such Cooperative Organization. (5) In case any condition is prescribed pursuant to sub-Section (4), it shall be the duty of the concerned Cooperative Organization to comply with such condition. (6) Notwithstanding anything contained elsewhere in this Section, savings and credit Cooperative Organization shall be registered in case of a Municipal Corporation and sub-Municipal Corporation and in one Municipality or Rural Municipality according to the prescribed standards. (7) In case of specialized Organization referred to in Section 9, such organization may be registered without having duplication in the services to be provided by the District Sectoral Cooperatives Association or by the Central Sectoral Cooperatives Association.
Registration may be denied: (1) In case there is no condition referred to in sub-Section (1) of Section 15, in case the applicant rejects to amend to the Byelaws within the period of time when information has been given to amend the Byelaws under the same Section, in the Byelaws is not amended within thirty days from the date of providing such information or the Byelaws is not amended as stated in the information, the Registrar or the authority authorized by the Registrar may reject to Registrar such Cooperative Organization. (2) In case the registrar denies to Registrar the Cooperative Organization pursuant to sub-Section (1), the Registrar or the authority authorized by the Registrar shall have to give a notice thereof to the concerned applicant within three days specifying reasons thereof.
Cooperative Organization to be corporate entity: (1) Cooperative Organization shall be an autonomous corporate body having perpetual succession. (2) There shall be a separate seal for carrying out functions and activities of Cooperative Organization. (3) Cooperative Organization may, subject to this Act, acquire, utilize, sell or dispose of movable or immovable property as a person. (4) Cooperative Organization may sue a case as a person and it may be sued against in its name. (5) Cooperative Organization may conclude a contract as a person.
Working Area of Cooperative Organization: (1) The working areas of a Cooperative Organization at the time of registration shall be as follows:-
(a) In case of an Organization carrying out main transaction of savings and credits, one ward in case of Municipal Corporation or Sub-Municipal Corporation; (b) In case of an Organization carrying out the main transaction of savings and credits and in case of other Organization in a Municipality or Rural Municipality, in one Local Level only on the following basis as prescribed :- 1) Common bond executed for mutual practice of self-reliance among members; 2) Number of the members required for operating services in commercial manner; 3) Convenient place for having participatory democratic control of members in operation of the Organization. (2) Notwithstanding anything contained in sub-Section (1), after two years of registration and operation of commercial service by an Organization, it may extend its working areas as follows on the following bases:- a) Additional working areas required to increase number of members in the course of increment of commercial operation of the Organization; b) Creative measures are followed for maintaining direct control of members in the transaction of business of the organization; c) This is no contrary to the standards determined pursuant to sub-Section (6) of Section 15. (3) Notwithstanding anything contained in sub-Section (2), working areas may be extended on the grounds of nature of settlement of members, convenient place, local settings, and other specific commercial needs as topography prescribed. (4) Notwithstanding anything contained elsewhere in this Section, the working areas of an Organization may be extended to one local level or district or more than one districts or more than one province which requires wider working areas due to expansion of commercial areas such as hydropower project, education, linguistic, literary cultural, health services, communication, production, storage and processing special agro or forests products or increase of participation of members. (5) The working areas of the Organizations which are in operation at the commencement of this Act shall be deemed to have been maintained time of the under this Act. Provided that those organizations shall have to submit to the Registrar or the authority authorized by the Registrar business operation report till the date of commencement of this Act within one year from the commencement of this Act specifying the following details:-
(a) Condition of the spread of membership distribution in the existing working areas in terms of province, district, local level and ward; (b) Condition of commercial service operations according to current working areas in terms of province, district, local level and ward; (c) Other details as prescribed. (6) After submission of the business operations report pursuant to sub-Section (5), the Registrar or the authority authorized by the Registrar shall conduct necessary inquiry and may issue directive to the concerned Cooperative Organization to re-determine the working areas as follows:- a) To decrease the working areas by removing province, district, local level and ward which does not have extension of membership referred to in the distribution of clause (a) of sub-Section (5) or which have less number of members than the prescribed number or which does not have geographical continuity; b) To decrease the working areas by removing province, district, local level and ward where any commercial service is not being operated or commercial services is operated in less than the prescribed amount or proportion than the proscribed amount of the total transaction according to the statement referred to in clause (b) of sub-Section (5); c) To maintain appropriate working areas by decreasing province, district, local level and ward with a view to increase commercial efficiency of the organization to sustain the operational case of the Organization and to maintain participatory democratic control of members in the operation of the organization; d) To maintain appropriate working areas by removing the additional working areas of province, district, local level and ward in order facilitate the acquisition of membership of district or province Sectoral association or of the district or province Cooperative Organization easier for the commercial or promotional services. (7) In case the Registrar or the authority authorized by the Registrar gives directives pursuant to sub-Section (6), the Cooperative Organization shall have to amend to the Byelaws within one year and re-determine its working areas. (8) In case the concerned Cooperative Organization does not re-determine the working areas pursuant to sub-Section (7), the Registrar or the authority authorized by the Registrar shall re-determine the working areas of the Organization within a period of three months subject to sub-Section (2).
(9) In case a Cooperative Organization the working areas of which has been re-determined by the Registrar or the authority authorized by the Registrar pursuant to sub-Section (8) does not satisfy with the redetermination of the working areas, it may file an application for review to the Registrar in case the decision has been made by the authority authorized by the Registrar and to the ministry in case the decision is make by the Registrar within 35 days from the date of receipt of the information of the redetermination. (10) The Registrar or Ministry shall have to complete the review on the application received pursuant to in sub-Section (9) within sixty days. (11) Notwithstanding anything contained elsewhere in this Section, a Cooperative Organization may at any time bring amendment to the Byelaws to decrease the working areas on voluntary basis. (12) Other provisions relating to redetermination of working areas shall be as prescribed. (13) The process of expansion of working areas pursuant to sub-Sections (2) and (3) shall be as prescribed.
(2) The Cooperative Bank may operate its transaction or services only after obtaining license from the Nepal Rastra Bank. (3) Notwithstanding anything contained in the prevailing laws, the Organization or Association does not need to Registrar an organization separately in order to carry on transaction, business, industries, or project referred to in sub-Section (1). Provided that in case the prevailing law requires such permission, approval or license has to be obtained to carry on such transaction, business, industries, or project, such transaction, business, industries, or project shall be carried out only after obtaining the permission, approval or license, accordingly. (4) In case the Organization or Association obtains permission, approval or license from the agency or authority authorized according to the prevailing laws, it shall inform the Registrar or the authority authorized by the Registrar within fifteen days of the date of receipt of such permission, approval or license. (5) Two or more Organizations and Associations may, subject to this Act, carry on transaction, business, industries, or project for marketing of their product or service jointly or in partnership. (6) Other provisions relating to operation of transaction, business, industries, or project referred to in sub-Section (5) shall be as prescribed. (7) Notwithstanding anything contained in the prevailing laws, the Organization or Association may sell the product of the transaction, business, industries, or project to be operated pursuant to sub-Section (1) in the brand name of the Cooperative. Provided that in case the prevailing law requires that the approval of receiving such brand has to be obtained, such approval shall be obtained accordingly. (8) The process and bases of issuance of the certificate of origin of the goods to be produced by the Organization or Association shall be as prescribed. 22. Liabilities to be limited: (1) Liability of a member in terms of transaction of a Cooperative Organization shall be limited only up to the maximum limit of the shares he/she has subscribed or agreed to subscribe. (2) The name of a Cooperative Organization shall contain “cooperative” and it shall contain the word “limited” at the end. 23. Values, norms and principles of cooperative to be complied with: Values, norms and principles of cooperative shall be complied with while forming and operating a Cooperative Organization.
Chapter-3
Objectives and Functions of Organization or Association
e) To provide or cause to be provided education, trainings, and information; f) To develop market information system; g) To promote or cause to be promoted mutual cooperation among Organizations and Associations; h) To promote mutual cooperation in international cooperatives movement and to coordinate and expand relations; i) To promote good governance in cooperative sector; j) To carry out such other functions as referred to in the Byelaws.
Chapter -4 Byelaws and Internal Procedures
Byelaws to be framed: (1) Cooperative Organization shall frame Byelaws for conducting its business subject to this Act, the Rules, Directives, Standards and Procedures framed under this Act. (2) The Byelaws referred to in sub-Section (1) shall come into force after approved by the Registrar or the officer authorized by him or her. (3) Notwithstanding anything contained in sub-Section (2), the Registrar shall obtain consultation of the Nepal Rastra Bank before approving Byelaws of the Cooperative Bank.
Internal Procedures may be framed: (1) Cooperative Organization may frame Byelaws as may be necessary for conducting its business subject to this Act, the Rules, Directives, Standards and Procedures framed under this Act. (2) The internal procedures referred to in sub-Section (1) shall come into force after it is approved by the General Meeting.
Amendment to Byelaws and Internal Procedures: (1) Byelaws and internal procedures may be amended by the majority of the total number of members of the General Meeting of the Cooperative Organization. (2) The amendment to the Byelaws referred to in sub-Section (1) shall come into force after the approval by the Registrar or the officer authorized by him or her.
Chapter-5 Membership
Membership of Organization: (1) The following Nepali citizens having completed the age of sixteen years may become members of an Organization:- a) Residing within the working area of the Organization; b) Having subscribed at least one share of the Organization; c) Having agreed to comply with the terms and conditions referred to in Byelaws of the Organization; d) Having agreed to bear responsibility of the Organization; e) Not having had transactions that is competitive with the transactions being carried out by the Organization. (2) Notwithstanding anything contained elsewhere in this Act, it shall hinder any agencies of Government of Nepal, Provincial Government, local level, cooperative and community schools, trusts, local clubs, non-profit making organizations Registered at local level, production-oriented or service-oriented organizations and associations, consumers groups to become a member of the Organization. (3) Notwithstanding anything contained elsewhere in this Section, shall not hinder Cooperative Organization to become a member of health Cooperative Organization.
Application to be submitted to acquire membership: (1) concerned person willing to obtain membership of the Organization shall submit application to the committee of the Organization. (2) The committee shall, within thirty five days from the date of submission of the application pursuant to sub-Section (1), have to take a decision whether or not to confer membership subject to this Act, Rules and Byelaws framed under this Act. (3) While taking a decision pursuant to sub-Section (2), in case the committee decides not to confer membership, it shall inform the applicant within seven days specifying the reason thereof. (4) The concerned person may file a complaint to the official authorized by the Registrar against such Organization within thirty days from the date of receipt of the information referred to in sub-Section (3). (5) The official authorized by the Registrar may, if it finds appropriate to confer the membership following an inquiry on the complaint received pursuant to sub-Section (5), order the concerned Organization to confer the membership. (6) In case of receipt of the order pursuant to sub-Section (5), the concerned Organization shall confer membership to the applicant within seven days of the date of receipt of such as order and inform the same to the official authorized by the registrar.
b) In case a member is absent in the annual General Meeting for a consecutive three times without a notice; c) In case a member frequently violates the provisions it has to comply with according to this Act, Rules or Byelaws framed under this Act. d) In case of a member, who has not qualifications referred to in Section 30.
(2) Notwithstanding anything contained in sub-Section (1), in case any member has any amount received from, or to be repaid to, a Cooperative Organization, the membership shall not be terminated until such an amount is settled; or if such a member has obtained any credit or has any liability to be met or has guaranteed on behalf of any other member, the membership shall not be terminated until such liability is absolved.
(3) Notwithstanding anything contained in this Section, no one shall be removed from the membership after the decision is taken to hold General Meeting and until the General Meeting is held.
(4) Other matters as to the termination of membership shall be as prescribed.
Chapter -6 General Meeting, Board of Directors and Account Supervision Committee:
General Meeting: (1) There shall be a General Meeting as the supreme body of a Cooperative Organization. (2) All members of a Cooperative Organization shall be the members of the General Meeting. (3) General Meeting of a Cooperative Organization shall be as follows:- a) Preliminary General Meeting; b) Annual General Meeting; c) Extraordinary General Meeting.
Functions, Duties and Powers of Preliminary General Meeting: Functions, duties and powers of the preliminary General Meeting shall be as follows:-
a) To get information of actions taken and financial transactions made until the day preceding to the holding of the preliminary General Meeting; b) To approve annual program and budget for the current fiscal year; c) To approve reports and financial statements; d) To elect Committee and Accounts Supervision Committee as specified in the Byelaws; e) To adopt internal procedures; f) To appoint Auditor and determine his or her remuneration; g) To carry out such other functions as referred to in the Byelaws.
Functions, Duties and Powers of Annual General Meeting: Functions, duties and powers of the General Meeting shall be as follows:- a) To approve annual program and budget; b) To approve annual audit report; c) To elect and dissolve the Board of Directors and Accounts Supervision Committee; d) To remove from the office of a director, convener or member of the Accounts Supervision Committee; e) To adopt the annual report of the Board of Directors or of the Accounts Supervision Committee; f) To adopt Byelaws and internal procedures; g) To appoint Auditor and determine his or her remuneration; h) To take a decision as to unification or dissolution of the Organization; i) To determine incentive including remuneration; j) To accept external liabilities; k) To write off liability of a member; l) To issue necessary directives to the Board of Directors; m) To carry out such other functions as referred to in the Byelaws.
Meeting General Meeting: (1) The Board shall call a preliminary General Meeting within three months from the date of registration of the Cooperative Organization.
(2) The Board shall call Annual General Meeting within six months from the completion of each fiscal year. (3) The Board shall call an Extraordinary General Meeting in any of the following circumstances:- a) On the recommendation of the Accounts Supervision Committee pursuant to clause (g) of sub-Section (1) of Section 49; b) In case the Board approves the resolution moved by any Director to call extraordinary General Meeting; c) In case the Board decides to call an Extraordinary General Meeting for any particular business; d) In case fifteen percent of the members submits application to the Board to call an Extraordinary General Meeting showing reasons thereof; e) In case Registrar or authority authorized by the Registrar directs pursuant to sub-Section (1) of Section 40; f) In case Registrar or authority authorized by the Registrar orders pursuant to sub-Section (2) of Section 42.
or the matter identified in the course of inspection and report thereof shall be submitted to the Registrar or authority authorized by the Registrar.
(3) In case the Board fails to call the General Meeting within the period referred to in sub-Section (1) and (2), the authority authorized by the Registrar in case of the organization, District Sectoral Cooperative Association and District Cooperative Association; and the Registrar in case of Provincial Sectoral Cooperative Association, provincial cooperative Association, Specialized Cooperative Association, Central Sectoral Cooperative Association, National Cooperatives Federation and Cooperative Bank, may call such a General Meeting.
(4) The quorum for the General Meeting of a Cooperative Organization shall be at least fifty one percent of the number of the then existed members.
Provided that in case the quorum could not be constituted in the General Meeting called for the first time, the General Meeting shall be called again within seven days and if one third of the members along with majority of the members of the Board of Directors are present in the General Meeting called again, the quorum for the General Meeting shall be deemed to be constituted.
(5) While convening the General Meeting by a Cooperative Organization having two thousand or more members, the General Meeting may be convened on the same agenda in a local body or a ward thereof on the basis of prescribed number by sending the members of the Board of Directors, representatives may be selected to certify the decisions of the General Meeting and the General Meeting may take final decisions in the presence of such representatives.
(2) The Board referred to in sub-Section (1) shall, to the extent possible, ensure the presence of least thirty three percent women members.
(3) No more than one person of the same family may become a candidate and be elected at the same tenure as a director and a member of the Accounts Committee.
(4) No director of any Cooperative Organization can become an employee or a director of any other Cooperative Organization, except the Cooperative Organization in which he/she is a director.
Provided that it shall not hinder a Director of a Cooperative Organization having the annual turnover of less than twenty million rupees to work as an employee in the same cooperative Organization In case any Director of a Cooperative Organization having the annual turnover of more than twenty million rupees is also working as an employee, such a Director shall give up the position of employee within four years from the date of commencement of this Act and manage for
another employee. The committee referred to in Section 51 shall specify the maximum ceiling of amount having regard to the existing conditions of market and the rate of inflation. (5) A person may become a Director of only one Cooperative Organization at a time. (6) Notwithstanding anything contained in sub-Section (4) and (5), in case any person has become a director in more than one Cooperative Organization or an employee in the same or another Cooperative Organization, he/she shall have to be a director of only one Cooperative Organization or an employee, as the case may be within one year from the commencement of this Act. (7) The term of the office of the Board shall be as follows:- (a) Four years in case of Organization or Association or Federation; (b) Four years in case of Cooperative Bank. (8) Other provisions relating to meetings of the Board shall be as prescribed. 42. Election of Board: (1) The Board shall have to conduct the election of another Board before the expiry of its term of the office. (2) In case information is received that the election of the Board is not held pursuant to sub-Section (1), Registrar or authority authorized by the Registrar may order the concerned Board to complete the election within six months from the date of receipt of such information. (3) In case the Registrar or authority authorized by the Registrar issues the order pursuant to sub-Section (2), the concerned Board shall hold the election within the time stipulated in such an order and inform the Registrar or authority authorized by the Registrar about the same. (4) In case the election is not held as referred to in sub-Section (3), the Registrar or authority authorized by the Registrar shall carry out entire actions relating to election of the Board having involved representative of the higher association if any of such Organization in which it is a member. (5) It shall be the duty of the concerned Organization and the Board to render assistance in the election referred to in sub-Section (4). (6) Entire costs to be incurred in cause of conducting the election referred to in sub-Section (4) shall be borne by the concerned Cooperative Organization. (7) The Board shall carry out its functions as provided for in the Byelaws, until the next election of the Board is held under this Section.
Functions, duties and powers of Board: In addition to the functions, duties and powers referred to elsewhere in this Act, the functions, duties and powers of the Board shall be as follows:- a) To operate the Cooperative Organization according to norms, values and principles of Cooperatives; b) To carry out or cause to be carried out financial and administrative functions; c) To call preliminary General Meeting, annual General Meeting, extraordinary General Meeting; d) To implement or cause to be implemented the resolutions of the General Meeting; e) To prepare policies, plans, budget and annual programs of the Cooperative Organization and to submit them to the General Meeting; f) To grant membership of the Cooperative Organization and to remove from membership; g) To carry out functions relating to share transfer and withdrawal; h) To acquire membership of the concerned Association; i) To frame Byelaws and internal procedures and to submit them in the General Meeting; j) To carry out or cause to be carried out necessary functions for promotion of transactions and commercial interests subject to the working areas of the Cooperative Organization; k) To carry out such hold other functions as prescribed.
Directors not to continue to hold the office: A Director shall not continue to hold the office in any of the following circumstances:- a) In case the resignation tendered by him or her is accepted by the Board; b) In case a decision is taken to remove him or her from the office of Director pursuant to sub-Section (1) of Section 45; c) In case he/she is director of another Cooperative Organization as well; d) In case he/she is an incumbent employee in the same Organization or another organization; Provided that in case of the circumstance referred to in proviso to sub-Section (4) of Section 41, it shall be as stated there.
e) In case he/she is a member of the Accounts Supervision Committee in the same Organization or another organization; f) In case he/she dies.
(2) Before adopting a resolution to remove any director is removed from the office, such a director shall be provided with reasonable opportunity to defend himself or herself at the General Meeting.
(3) In case any director fails to submit his or her defense within the period referred to in sub-Section (2), or in case his or her defense is not satisfactory, the General Meeting may remove him or her from the office thereafter.
(4) The member removed from the director pursuant to sub-Section (3) shall not be eligible to become a candidate for a period of two terms of the office.
(5) In case any director is removed from the office pursuant to sub-Section (3), the General Meeting may elect another person as the director for the remaining term of the office.
(2) No Director shall carry out or cause to be carried out any act of Cooperative Organization that renders benefits only to him or her.
(3) In case any director carries out or cause to carry out any act in contravention of sub-Section (1) or beyond his or her working areas, such a director shall be
personally liable for such act and in case such an act renders loss or damage to Cooperative Organization, to a member or any other person, such loss or damage shall be recovered from him or her.
(2) More than one member of the same family shall not stand as candidate or get elected at the same tenure as a director or convener or member of the Accounts Supervision Committee of the same Cooperative Organization.
a) To conduct or cause to be conducted internal auditing of the Cooperative Organization in every quarter; b) To comply with or cause to be complied with the basic principles of auditing while conducting internal auditing; c) To inspect and evaluate and cause to be inspected or evaluated financial transactions; d) To have regular supervision of the actions and activities of the Board and to provide necessary suggestions to the Board; e) To monitor whether or not directives issued or decisions made by the General Meeting and decision of the Board have been implemented; f) To submit to the General Meeting accounts report and annual report on supervision of the functions of the Board; g) To recommend the Board to call meeting of the extraordinary General Meeting showing the reasons thereof that adverse impact is caused in the interests of any Cooperative Organization due to non-compliance of the recommendations made by it frequently; that there have been embezzlement or massive misuse of cash or kind assets of such organization or in case the organization is likely to undergo serious financial crises. h) To make recommendation of names of three persons to be appointed as internal auditor, if required.
(2) The convener and members of the Accounts Supervision Committee shall not be involved in daily and administrative functions of the Cooperative Organization.
Chapter-7 Mobilization of Savings and Credits
Transaction of Savings and Credits to be made concentrating on Member: (1) A Cooperative Organization may accept savings only from its members, to mobilize such savings and disperse credits only to the members. (2) Notwithstanding anything contained in sub-Section (1), no sectoral or multi-purpose Organization, other than the Organization Registered with the main objective of making transactions of savings and credit, shall be allowed to make savings and credit transaction as the main transaction. Provided that in case any sectoral or multi-purpose Organization has been carrying out the main objective of making transactions of savings and credit at the commencement of this Act, such an organization shall, within a period of three years, make provisions of not carrying out the transaction of savings and credits as the main transaction and to have the main transaction of the matter which was stated at the time of registration of the Organization. (3) Except otherwise specified by the Registrar, service charge and renewal fee on credits disbursed by Cooperative Organization to members shall be as stated in the procedures of the concerned Organization. (4) The difference of the rate of interests on savings and on credits (spread) shall not be more than six percent. (5) The interest to be charged on credit disbursed by a Cooperative Organization shall not be charged having capitalized the interest in the main credit amount. (6) A Cooperative Organization shall not use the savings amount in the purchase of immovable assets, infrastructure construction, investment in transactions, in firms and company or in share of any bank (other than Cooperative Bank) or in any other purpose except in credit investment among members, in the bonds issued by Government of Nepal, Treasury Bills issued by the Nepal Rastra Bank. (7) A Cooperative Organization may collect deposits as much as fifteen times of the primary capital. (8) An Organization or Association may not make credit investment to members, other than the members who are listed at the time of registration, until a period of three months is completed after acquiring the membership.
Reference Interests Rate may be determined: The Registrar may, on the recommendation of the following committee, determine the reference interests rate, and the upper ceiling of transaction referred to in sub-Section (4) of Section 41, for the purpose of Cooperative Organization in the context of savings and credit:-
(a) Registrar -Convener
(b) Representative, Ministry -Member (c) Representative, Ministry of Finance -Member (d) Representative, Nepal Rastra Bank -Member (e) Representative, National Cooperative Development Board -Member (f) Chairperson, National Federation of Cooperatives or Director Representative designated by him or her -Member (g) Representative, National Cooperatives Bank -Member (h) Chairperson of Federation or a director designated by him or her and two persons from central Sectoral associations -Member (i) Deputy-Registrar, Department of Cooperative -Member-Secretary
(2) The reference interests rate determined pursuant to sub-Section (1) shall be the directive interest rate for Cooperative Organization. (3) The bases and procedures for determination of the reference interest rate shall be as specified in the Byelaws of the concerned Organization.
Chapter- 8 Provisions concerning Cooperative Bank
(3) The Cooperative Bank may increase its capital with the prior approval of the Nepal Rastra Bank having adopted a resolution by the General Meeting to that effect. (4) The Cooperative Bank shall have to increase its capital according to directions given by the Nepal Rastra Bank from time to time.
n) To carry out other banking transactions having obtained a license from the Nepal Rastra Bank.
Prohibition on Disbursing Credit: No Cooperative Bank may disburse credit against the collateral or security of its own shares.
No Distribution of Dividend: No Cooperative Bank may declare or distribute dividend without meeting the preliminary expenses, loss incurred in the last year, capital fund, risk bearing fund and reserve fund.
Prohibition of Purchase of Goods with Commercial Objectives: A Cooperative Bank shall not purchase goods or immovable assets with the purpose of carrying out trade or business, except the goods or immovable assets required for it or for carrying out transactions under this Act and in the situation referred to in sub-Section (6) of Section 79.
Books and Accounts: (1) A Cooperative Bank shall have to maintain books and accounts according to the format approved by the Nepal Rastra Bank showing the actual status of its transactions.
(2) The books and accounts referred to in sub-Section (1) shall contain actual status of the Cooperative Bank, investment it has made, credits disbursed and recovered and borrowed and other financial statement, detail statement of income and expenditures and statement of assets and liabilities.
a) In case it is found from auditing report of the Cooperative Bank or inspection report of the bank that it fails to comply with the directives issued by the Nepal Rastra Bank from time to time;
b) In case it commits any act against interests of members and incurs loss to members;
c) In case operation of Cooperative Bank is not efficient and effective thereby loss is caused to the Cooperative Bank.
(2) Before the Board of the Cooperative Bank is to be suspended pursuant to sub-Section (1), the Cooperative Bank shall be provided with an opportunity of seven days to defend itself.
(3) Upon an opportunity to defend is given pursuant to sub-Section (2), in case the Cooperative Bank fails to submit the defense or the defense so submitted does not seem to be satisfactory, the Nepal Rastra Bank shall suspend the Board
of the concerned bank and take the management on its own or causes the management to be taken over by any other agency.
(4) Notwithstanding anything contained elsewhere in this Section, while taking over the management by the Nepal Rastra Bank on its own or by any other agency, a representative of the Department shall also be involved.
(2) Before giving the advice referred to in sub-Section (1), the Nepal Rastra Bank shall have to provide such a Cooperative Bank an opportunity of 15 days to defend itself.
(3) In case of receipt of advice to revoke the registration pursuant to sub-Section (1), the Registrar shall de Registrar the Cooperative Bank and appoint liquidator pursuant to Section 89.
(2) Notwithstanding anything contained in sub-Section (1), there shall be no hindrance to provide the books and accounts and statements of financial transactions for any of the following purposes:-
a) To court in the course of hearing of a case or any other legal proceedings; b) To auditor in the course of auditing of accounts; c) To the concerned official in the course of inspection; d) To the person or authority having authority to ask for the details according to the prevailing laws; e) To its own members.
Chapter-9 Mobilization of Financial resources
(2) Notwithstanding anything contained in sub-Section (1), no Cooperative Organization shall sell the shares that are more than twenty percent of its total share capital to a single member. Provided that this restriction shall not be applicable to an organization or body under the full or partial ownership of the Government of Nepal. (3) Notwithstanding anything contained in sub-Section (1), Cooperative Organization may sell shares to an organization or agency under the full or partial ownership or control of the Government of Nepal, in addition to its share members. (4) The face value of per share of a Cooperative Organization shall be one hundred rupees. (5) The share capital of a Cooperative Organization shall be as stated in the Byelaws. (6) No Cooperative Organization shall be allowed to sell or purchase shares in open market. (7) Share of a member, which is the principle capital of a Cooperative Organization, shall not be sold by auction for any debt or liability other than the debt or liability of the same Cooperative Bank.
Provisions concerning Withdrawal of Amount and Operation of Accounts: (1) In case any member desires to get back the money withdrawing from the membership of Cooperative Organization, his or her liabilities, if any, has to be paid and his or her remaining amount shall be refunded within three months of the date of such payment of liabilities. (2) In case any member demands to withdraw the savings he/she has deposited in a Cooperative Organization, his or her liabilities, if any, is deducted and the remaining amount shall be refunded to him or her. (3) A Cooperative Organization may operate all types of savings accounts.
Loans or Grants may be obtained: (1) A Cooperative Organization may borrow loan or accept grant from any native or foreign bank or institution or from any other agency or work in collaboration. (2) Notwithstanding anything contained in sub-Section (1), before availing loan or grant from a foreign bank or agency, approval of the Ministry of Finance shall be obtained on the recommendation of the Ministry.
Security of Government of Nepal may be obtained: (1) In case a Cooperative Organization requires security against a loan to be borrowed from a foreign bank or agency, it may for that purpose, request the Ministry of Finance through the Ministry.
(2) In case of receipt of a request pursuant to sub-Section (1), the Ministry of Finance may provide a security for such loan. (3) While providing a security pursuant to sub-Section (2), the Ministry of Finance may prescribe necessary conditions.
Chapter – 10 Fund of Cooperative Organization
Find of a Cooperative Organization: (1) The following amount shall be deposited in the fund of a Cooperative Organization :- a) Amount received from sale of shares; b) Amount received as savings; c) Amount received as loan; d) Amount of grant received from Government of Nepal; e) Grant or assistance received from a foreign government or an international organization; f) Amount accrued from commercial activities; g) Membership entry fee. (2) Approval of the Ministry of Finance shall be obtained before obtaining the amount referred to in clause (e) of sub-Section (1).
Reserve Fund: (1) There shall be a reserve fund in a Cooperative Organization. (2) The fund referred to in sub-Section (1) shall have the following amount:- a) At least twenty five percent of the net savings of a fiscal year; b) Capital grant amount provided by any organization, association or agency; c) Amount received from the fixed assets; d) Amount received from any other sources. (3) The Amount of the fund referred to in sub-Section (1) shall be indivisible.
Secured Capital Redemption Fund: (1) There shall be a secured capital redemption repayment fund in a Cooperative Organization. (2) At least twenty five percent of the amount remaining after segregating the amount referred to in clause (a) of sub-Section (2) of Section 68 in the reserve fund shall annually be deposited in the fund referred to in sub-Section (1).
(3) The amount referred to in sub-Section (1) shall be made available to the concerned member based on the annual turnover of the member as prescribed.
(2) For the promotion of cooperative enterprises, zero point two five percent of the amount allocating after segregating the amount referred to in clause (a) of sub-Section (2) of Section 68 in the reserve fund shall annually be deposited in the fund referred to in sub-Section (1).
(3) The fund referred to in sub-Section (1) shall be at the Ministry of Cooperatives and Poverty Alleviation.
(4) Operating procedures of the Fund shall be as prescribed.
(5) The Ministry may make available the amount as prescribed in proportion to the amount deposited in the fund referred to in sub-Section (1).
(6) Amount shall be made available as prescribed from the fund referred to in sub-Section (1) to the National Federation of Cooperatives; the concerned Central Sectoral Cooperatives Association; Provincial Sectoral Cooperatives Association; Provincial Cooperatives Association; District Sectoral Cooperatives Association and District Cooperatives Association.
(7) For the purpose of distribution of the amount deposited in the Fund referred to in sub-Section (1), there shall be a committee under the convenorship of the Minister of the concerned Ministry and comprising of the co-chair of the National Cooperatives Development Board, Secretary of the Ministry, Joint Secretary of the Ministry of Finance, chair of the National Cooperatives Federation, Chair of the Central Credits and Savings Association and the Registrar as the members.
(8) Out of the amount received pursuant to sub-Section (6), at least Seventy five percent of the amount shall be expended in infrastructure of cooperative business and the remaining amount shall be expended in activities such as promotion of enterprises, education, information and trainings, market promotion, monitoring of Organization and Association.
(9) The concerned Association shall separately maintain record of the amount received pursuant to sub-Section (6) and get it audited according to the prevailing laws and statement thereof shall be made public as prescribed.
(10) Details as to the expenses incurred and achievements made from the amount received pursuant to sub-Section (6) shall be submitted to the National Cooperatives Development Board.
(11) In case the amount received pursuant to sub-Section (6) is found to have misused or used in other activity, the Registrar or the authority authorized by the Registrar shall recover such amount and prohibit making the amount of the fund available.
Chapter- 11 Records and Information
Records to be maintained: (1) A Cooperative Organization shall have to securely maintain updated records of minutes of General Meeting, Board, Accounts Supervision Committee and of functions carried out by them. (2) A Cooperative Organization shall have to maintain records of accounts of all carried business out by it and other necessary records as prescribed.
Details to be made available: (1) A Cooperative Organization shall make available within the prescribed time a Report every year along with the following details to the Registrar or the authority authorized by the Registrar:- a) Quarterly of transaction and annual reports and auditing report; b) Annual programs, policies and plans; c) Policies and plans relating to net savings; d) Name of directors and list of remaining term of office; e) Information relating to holding of General Meeting; f) Number of shareholder members and share capital; g) Amount of credit borrowed by director or member and due to be repaid; h) Other details as specified by the Registrar or the authority authorized by the Registrar.
(2) The Cooperative Bank shall submit the report referred to in sub-Section (1) to the Nepal Rastra Bank as well within the prescribed time.
Chapter – 12 Accounts and Auditing
Accounts of Transactions: The account of transactions of a Cooperative Organization shall be based on double entry book keeping system and it shall be maintained according to the accounting standards submitted by the body authorized by the prevailing laws and other terms and conditions to be complied with this Act showing the actual status of all transactions.
Auditing: (1) A Cooperative Organization shall get its accounts of each fiscal year audited within three months from the expiry of the fiscal year by an auditor licensed according to the prevailing laws. (2) In case any Cooperative Organization is found not to have audited within the period referred to in sub-Section (1), the Registrar or the authority authorized by the Registrar may cause the auditing of such Cooperative Organization by a licensed auditor. (3) The amount including remuneration to be paid to the auditor shall be borne by the concerned Cooperative Organization. (4) The audit report of the auditing conducted pursuant to sub-Section (1) or (2) shall be submitted to the General Meeting for approval. (5) In case the auditing report submitted to in the General Meeting pursuant to sub-Section (4) could not be approved by the General Meeting, the General Meeting may appoint another auditor subject to Section 76. (6) The Cooperative Bank shall submit the auditing report to the Nepal Rastra Bank as well after completion of the auditing.
Appointment of an Auditor: (1) The General Meeting shall appoint one auditor from amongst the auditors licensed according to the prevailing laws for carrying out auditing of a Cooperative Organization. (2) The remuneration and facilities of the auditor appointed pursuant to sub-Section (1) shall be as determined by the General Meeting. (3) While appointing the auditor pursuant to sub-Section (1), the same person, firm or company shall not be appointed for more than a consecutive period of three years.
Ineligibility for Appointing Auditor: None of the following persons shall be appointed, or retained in if appointed, as an auditor:- a) Director of a Cooperative Organization; b) Member of the concerned Cooperative Organization; c) An advisor or employee being appointed with regular payment of remuneration from the Cooperative Organization; d) One who has not completed a period of three years after having been convicted of an offence relating to auditing; e) One who has not been declared bankrupt; f) One who has not completed a period of five years after having been convicted of the offence of corruption, cheating, or any other offence involving moral turpitude; g) A Persons, firm or company referred to in sub-Section (3) of Section 76; h) A person having conflict of interests with the concerned Organization or Association.
(2) The auditor shall inform in writing the Cooperative Organization stating that he/she is not ineligible pursuant to sub-Section (1) before getting appointed.
(3) In case any auditor is rendered ineligible to audit the account of any Cooperative Organization before expiry of his or her term of office is over or there arises a situation due to which he/she could not continue to remain as the auditor, he/she shall forthwith stop the works he/she is carrying on and information of the same shall be furnished to the Cooperative Organization in writing.
(4) The audit carried out by the auditor appointed in contravention of this Section shall not be valid.
Chapter – 13 Exemptions, Facilities and Discounts
b) No income stamp ticket fees or registration fee shall be charged to the Cooperative Organization while it procures necessary land or other immovable assets for its office building or service center construction; Provided that –
(2) Notwithstanding anything contained in the prevailing laws, no income tax shall be levied on the amount allocated for the reserve fund pursuant to clause (a) of sub-Section (2) of Section 68 by a Cooperative Organization, the amount deposited in the secured capital redemption fund pursuant to sub-Section (2) of Section 69 and the amount deposited in the cooperatives promotion fund pursuant to sub-Section (2) of Section 70. Provided that it shall be according to laws on the tax liabilities of members who receives amount from the secured capital redemption fund.
(3) Government of Nepal may, by a notification in the Nepal gazette, grant exemption according to the prevailing laws on the custom duty or value added tax levied on machinery, industrial and agricultural inputs, equipment, spare parts, raw materials and means of transport to be imported by a Cooperative Organization for its purpose.
(4) Government of Nepal may, having published a notification in the Nepal gazette, grant whole or partial exemption according to the prevailing laws on the excise duty or value added tax levied on goods produced by a Cooperative Organization for its purpose.
(5) Government of Nepal may, having published a notification in the Nepal gazette, grant exemption according to the prevailing laws on the export tax on the goods produced by a Cooperative Organization and may provide a cash grant of export as that being given to an industry according to the prevailing laws.
(6) In addition to the exemptions referred to in this Section, the Cooperative Organization carrying out industrial enterprises shall be provided with the exemption, facilities and protection according to the prevailing laws which an industry
is being provided with and the Cooperative Organization carrying out construction and operation of infrastructure structures, or carrying out special industries, enterprises, or services shall be provided with those facilities as are being provided to such industry, enterprise and service.
(7) Government of Nepal, Provincial Government or Local Level may grant partial or full exemption in any type of tax to be imposed according to the prevailing law or make available special financial facilities or technical support, for promotion of cooperative farming by deprived rural women, persons with disability, freed kamaiyas, freed haliyas, landless farmers, unemployed laborers, dalits and minority communities of marginalized groups or self-employment enterprises based on labor or skills of members.
(8) In case laborers desires to bring into cooperative any sick public or private industry and to operate it again on their ownership, Government of Nepal may, considering the nature of the industry, provide grant for seed capital, loan or transfer of the ownership with discounted loan or provide tax exemption in transfer of private ownership, or provide guarantee or other appropriate assistance.
(9) Government of Nepal may, by a notification in the Nepal gazette, provide the facilities of whole or partial exemption of the excise duty or value added tax to be levied on the share participation, infrastructure development, land or land acquisition, payment of compensation for land acquired and production of goods by large scale commercial projects of cooperative industrial village, marketplace development and so on which operate in special federal form.
(10) The procedures as to acquisition of exemption, facilities and discounts under this Section shall be as prescribed.
Chapter-14 Recovery of Debt and Due Amount
(2) In case a member who has mortgaged a collateral in a Cooperative Organization transfers the title of such a collateral to anyone in any manner or the value of such
a collateral decreases for any reason, such borrower may be asked for additional a collateral having given a certain time frame.
(3) In case the borrower does not submit additional collateral pursuant to sub-Section (2) or the principal, interests and penal interests could not be recovered even from the collateral security mortgaged pursuant to sub-Section (1) or (2), the principal, interests and penal interests may be recovered from other assets belonging to such a borrower.
(4) The amount remaining after recovery of the principal, interests and penal interests or the expenses incurred while making the recovery of the principal, interests and penal interests shall be refunded to the concerned borrower.
(5) While selling by auction of collateral security or any other assets of a borrower by a Cooperative Organization under this Section, it shall write to the concerned Land Revenue Office to transfer the title of such collateral security, by registration or writing off the name of the earlier owner, in the name of the person accepting the auction according to the prevailing law and the concerned Office shall also have to carry out registration or the writing off the title and inform the same to the concerned Cooperative Organization.
(6) In case the assets of collateral mortgaged in auction under this Section is not accepted by anyone, the concerned Cooperative Organization may itself accept such assets.
(7) In case the Cooperative Organization itself accepts the collateral pursuant to sub-Section (6), it shall write to the concerned Land Revenue Office to transfer the title of such a collateral by registration or writing off the name of the earlier owner and the concerned Office shall also have to carry out the registration or the writing off accordingly.
(8) Other matters as to the recovery of credits shall be as prescribed.
(2) Other provisions concerning publication of the blacklist shall be as prescribed.
(2) Other matters as to the Credit Information Center shall be as prescribed.
Chapter- 15 Amalgamation, Dissolution and Revocation of Registration
(7) In case of revocation of registration of a Cooperative Organization pursuant to sub-Section (2) or (3), a registration certificate of such a Cooperative Organization, Cooperative Association or Cooperative Bank shall be deemed to have been, ipso facto be void. (8) Nothing stated in this Section shall be deemed to have prejudiced the provisions relating to deregistration of the Cooperative Bank.
Appointment of a Liquidator: (1) In case of revocation of a Cooperative Organization pursuant to Section 88, the Registrar or the authority authorized by the Registrar shall appoint a liquidator. (2) Notwithstanding anything contained sub-Section (1), the Registrar may appoint the authority authorized by the Registrar or an employee as liquidator in case of a Cooperative Organization having the assets of prescribed ceiling.
Provisions concerning Liquidation: (1) The functions, duties and powers and remuneration of the liquidator of the Cooperative Organization the registration of which has been revoked under this Act and other provisions as to liquidation shall be as prescribed. (2) In case of appointment of liquidator pursuant to sub-Section (2) of Section 89, entire expenses of the liquidator shall be borne by Government of Nepal.
Utilization of Assets after Liquidation: The utilization of assets of any Cooperative Organization remaining after payment of all liabilities upon the liquidation shall be as prescribed.
Chapter- 16 Registrar
Registrar: The Ministry shall designate an officer working in the capacity of a first class officer or equivalent rank of the Civil Service as the Registrar of the Department.
Functions, duties and powers: In addition to the functions, duties and powers referred to elsewhere in this Act, other functions, duties and powers of the Registrar shall be as prescribed.
Delegation of Authority: The Registrar may delegate some of the authorities vested in him or her under this Act or Rules framed under this Act to any officer subordinate to him or her as may be necessary.
Chapter – 17
Inspection and Monitoring
Inspection and Checking of Accounts: (1) The Registrar or the authority authorized by the Registrar may at any time inspect or cause to be inspected a Cooperative Organization and check or cause to be checked its accounts. (2) The Nepal Rastra Bank may at anytime inspect or check or cause to be inspected or checked accounts financial transaction of a Cooperative Bank or of a Cooperative Organization which carries out financial transaction of an amount or exceeding a ceiling. (3) For purpose of sub-Section (2), the Nepal Rastra Bank may conduct inspection or supervision having deputed any officer or expert and asking for necessary information and statements from the Cooperative Bank. (4) While inspecting or checking accounts pursuant to sub-Section (1) or (2), the concerned Cooperative Organization shall make available the information or statement required by the Nepal Rastra Bank, the Registrar or the authority authorized by the Registrar. (5) While inspecting or checking accounts pursuant to sub-Section (1) or (2), in case it is found that functioning of any Cooperative Organization is not consistent with this Act, Rules, Directives, Standards, or procedures framed under this Act, the Nepal Rastra Bank or the Registrar or the authority authorized by the Registrar may give necessary directives to the concerned Cooperative Organization and it shall be the duty of the concerned Cooperative Organization to comply with such directives. (6) While carrying out inspection and supervision of the Cooperative Bank under this Section, the Nepal Rastra Bank may exercise its power under the prevailing laws. (7) The Nepal Rastra Bank shall make available to the Department the information received upon inspection and supervision of the Cooperative Bank. (8) The Cooperative Bank shall submit to the Nepal Rastra Bank the financial statements and other necessary statistics within the time and in the format as specified by the Nepal Rastra Bank.
Investigation may be conducted: (1) In case at least five percent members of a Cooperative Organization submit an application stating that the commercial transaction of the Cooperative Organization is not satisfactory, act is committed against interests of a member or against the objectives of the Cooperative Organization, the Registrar or the authority authorized by the Registrar may conduct or cause to be conducted an investigation of the Cooperative Organization.
(2) It shall be the duty of the concerned Board to make available statement or documents while conducting inspection pursuant to sub-Section (1). (3) Information of the investigation conducted pursuant to sub-Section (1) or (2) shall be made available to the concerned Cooperative Organization in writing. 97. Special Provisions concerning Inspection and Monitoring of Organization or Association carrying out transactions of savings and credits: (1) The Organization or Association having savings and credits as the main transaction shall follow the monitoring system as prescribed. (2) The Registrar or the authority authorized by the Registrar shall carry out inspection and monitoring of Organization or Association having savings and credits as the main transaction based on the prescribed monitoring system. (3) While carrying out inspection and monitoring of Organization or Association pursuant to sub-Section (2), Registrar or the authority authorized by the Registrar may obtain assistance of the Nepal Rastra Bank and other agencies. (4) Other matters as to inspection and monitoring of Organization or Association having savings and credits as the main transaction shall be as prescribed. 98. Ministry to conduct Inspection and Monitoring: (1) The Ministry may, in case it comes to know from any source that adverse effect is caused on the interests of members because of non-inspection of any Cooperative Organization by the Registrar or the authority authorized by the Registrar or because of inspection was ineffective, carry out inspection and supervision of such a Cooperative Organization and issue necessary directives to the concerned Cooperative Organization. (2) In case any directive referred to in sub-Section (1) is issued, it shall be the duty of the concerned Cooperative Organization to comply with such directive. 99. Association to conduct Inspection and Monitoring: (1) The Association shall carry out inspection and monitoring of its members as prescribed and report thereof shall be given to the Department and office. (2) The report referred to in sub-Section (1) shall contain the following particulars:- a) Details of the Organization or Association having the inspection and supervision carried out; b) Status of compliance of this Act, or Rules and Byelaws framed under this Act in the Organization or Association; c) Condition of services and benefits being received by members; d) Level of participation of members;
e) Economic and financial condition of the Organization or Association and mobilization of fund; f) Other matters as prescribed.
(3) The Association may, while conducting monitoring under subsection 2, if it finds any defaults in regard to activities of any organization or association, give suggestion or issue direction to correct such defaults, and it shall be the duty of the Association or Organization, as the case may be, to comply with much suggestions or directing.
(4) If the suggestions or directives given or issued under section (3), are not complied with a (4), recommendation shall be made to the Registrar or the authority authorized by the Registrar for the actions.
(5) Matters concerning suggestions or directives given or issued pursuant to sub section (3), shall also be mentioned in the annual report of the Association.
(2) The office shall, within one month from the date of completion of a fiscal year, submit to the Registrar the annual report of Organization or Association within its business area.
(3) The report referred to in sub-Sections (1) and (2) shall include the following particulars:- a) Details of Cooperative Organizations in operation; b) Number of the Cooperative Organizations monitored and details of financial transactions; c) Status of compliance of cooperatives principle and of this Act and the Rules, Byelaws and internal procedures framed under this Act in the Cooperative Organizations; d) Condition of services and benefits being received by the members of the Cooperative Organizations; e) Participation ratio level of members in activities of the Cooperative Organizations; f) Details on the economic activities and financial condition of the Cooperative Organizations as prescribed; g) Condition of internal control in the Cooperative Organizations;
h) Condition of good governance and accountability in Cooperative Organizations; i) Details of funds in the Cooperative Organizations; j) Necessary matters to be helpful in policy making of cooperatives; k) Details as to registration, liquidation and dissolution of the cooperative organization; l) Details of transactions made, and businesses, industries or projects run by Organization or Association pursuant to Section 21; m) Other details as prescribed.
Cooperative Savings and Credits Security Fund: (1) Notwithstanding anything contained in the prevailing Nepal laws, Government of Nepal may establish a Cooperative Savings and Credits Security Fund for guarantee of savings to be mobilized to be provided credits by Provincial government and local level in collaboration with cooperative organizations. (2) Matters relating to operation of Cooperative Savings and Credits Guarantee Fund shall be as prescribed.
Mutual Security Services may be conducted: (1) Notwithstanding anything contained in the prevailing Nepal laws, Organization may, subject to the conditions to the policy approved by the Beema Samiti (Insurance Board), operate mutual Security services of pre-determined maximum limit and fees to meet certain portion of loss incurred to crops and livestock of its members according to relevant policies. (2) Provisions relating to minimum standards required for the Organization to operate mutual security services and other arrangement relating thereto shall be as prescribed.
Stabilization Fund: (1) Savings and Credits Sectoral Organizations may together desirous a stabilization fund to protect themselves from the probable risks of their operational losses. (2) The fund referred to in sub-Section (1) may have the contribution of desirous Cooperative Organizations, Cooperative Organizations which are members of Savings and Credits Sectoral Central Organization, National Cooperatives Federation, National Cooperatives Bank, National Cooperatives Development Board, Nepal Rastra Bank, Ministry, other agencies of Government of Nepal and international cooperative associations. (3) The Stabilization Fund shall be located at Savings and Credits Sectoral Central Organization.
Chapter -18 Problematic Organizations or Associations
b) Failure to fulfill the financial liabilities to be fulfilled by the Organization or Association or inability to bear the liabilities to be borne or occurrence of a situation of inability to make payment; c) Failure to refund the savings of members according to the agreed terms and conditions; d) Operation of the Organization or Association against this Act or the Rules and Byelaws framed under this Act; e) Emergence of a situation of probable insolvency of the Organization or Association or facing significantly serious financial crisis; f) In case at least twenty five members of an Organization or Association submitted an application to the Registrar stating that the Organization or Association did not refund the savings amount of members within the time set to refund and it has been found from investigation that any of the circumstance situations referred to in clauses (a) to (e) has seen occurred.
(2) In case the recommendation referred to in sub-Section (1) is received, the Ministry may declare such an Organization or Association as problematic Organization or Association;
(3) Notwithstanding anything contained elsewhere in this Section, in case a Commission formed by Government of Nepal according to the prevailing laws recommends to declare any Organization or Association as problematic Organization or Association or if such a Commission has declared any Organization or Association as a problematic or based on the number of complaints filed in such a Commission and on rationality, the Ministry may declare such a Organization or Association as a problematic Organization or Association.
(2) The Management Committee referred to in sub-Section (1) shall comprise the following members:-
(3) The term of the office of the chairperson and members of the Management Committee shall be of two years from the date of appointment and Government of Nepal may extend the term of office not exceeding another two years.
(4) Notwithstanding anything contained in sub-Section (3), in case work performance of the chairperson and a member of the Management Committee is not satisfactory, Government of Nepal may remove him or her from the office at any time.
(5) Before removing the chairperson or a member of the Management Committee pursuant to sub-Section (3), a reasonable opportunity shall be given to him or her to defend himself or herself.
(6) Government of Nepal shall fulfill the office of the Management Committee that has fallen vacant pursuant to sub-Section (4) subject to sub-Section (2).
(7) Procedures of meeting of the Management Committee shall be as determined by the Committee on its own.
a) To exercise all powers which the General Meeting, Board and Accounts Supervision Committee of the problematic Organization or Association may exercise under this Act, or Rules and Byelaws framed under this Act; b) To get presence in the Management Committee of the members of the problematic Organization or Association, his or her family members, relatives, employees of the problematic Organization or Association, other Organization or Association or companies associated with the problematic Organization or Association, employees of such companies, other persons or organizations having relevant information or having transactions in collusion or the persons which the Management Committee deems appropriate, to inquire with them, record their statements require to submit relevant documents; c) To collect accurate information of assets and liabilities of the problematic Organization or Association and to collect, study, analyze and evaluate the statistics relating to them; d) To take custody of assets of the problematic Organization or Association; e) To take into control of complete management including decisions and records of functioning of the problematic Organization or Association; f) To recover the debts, due amount or other amount to be recovered by the problematic Organization or Association having followed the procedures of this Act or Rules or Byelaws framed under this Act; g) To sell by auction the assets under mortgage of the problematic Organization or Association having followed the procedures of this Act or Rules or Byelaws framed under this Act; h) To sell, use and manage the assets of the problematic Organization or Association; i) To prepare records of savings and shares amounts of depositors and members of the problematic Organization or Association; j) To repay of return the savings of the members and depositors; k) To exercise all powers conferred on the Liquidator by this Act or Rules or Byelaws framed under this Act for management of assets of the problematic Organization or Association and to pay the liabilities; l) In case it is found that director or employee of the problematic Organization or Association or his or her family member has used whole or part of savings of depositors in any other company, or organization or in any enterprise or business, to seize the assets so used and assets accrued from it
and to sell by auction such assets and to take other necessary actions of recovery for payment to depositors; m) To legally defend on behalf of the problematic Organization or Association; n) To seize the assets of the Organization or Association kept in the name of a director or employee of the problematic Organization or Association or his or her family member or in the name of any other person; or the movable or immovable assets purchased from the assets of the Organization or Association and to sell by auction such assets and to take other necessary actions of recovery for payment to depositors.
Inventory to be prepared: For the purpose of Section 106, the Management Committee shall prepare an inventory as follows:- a) Name list of the members, depositors, borrowers of the problematic Organization or Association and of the persons or organizations to which the Organization or Association has to make payments; b) Inventory of immovable assets including apartments in the name of the problematic Organization or Association or having investment of the Organization or Association; c) Details of cash deposited in banks gold, silver owned and share investment in the names of members and employees of the problematic Organization or Association, or in name of their family members; d) Record of land and buildings mortgaged by the problematic Organization or Association for obtaining loans; e) Record of all movable or immovable assets of the problematic Organization or Association located in Nepal or in any place in abroad.
Provisions concerning Payment of Liabilities: (1) The Management Committee shall set the following order of priority for payment of liabilities of the problematic Organization or Association:- a) Payment of savings to members according to the terms and conditions set at the time of depositing the amount; b) Payment of government dues or claims on the assets of such an Organization or Association or assets referred to in clause (l) of Section 106; c) Payment of persons paying advance amount to the problematic Organization or Association for apartment or land;
d) Payment of amount to the creditors of the problematic Organization or Association.
(2) In case assets of the problematic Organization or Association is not sufficient to pay all liabilities of such a problematic Organization or Association under this Section, the Management Committee may refund the savings of and make payment of liabilities to the members on a pro rata basis. While refunding savings of members in such a manner, the Management Committee shall accord priority to small depositors as prescribed.
Authority may be delegated: The Management Committee may, while managing assets of the problematic Organization or Association, delegate some of its authority to the Chairperson or member of the Management Committee or to a government officer to use and exercise.
To be borne from Assets of Organization or Association: In case the expenses to be incurred in the course of managing assets of the problematic Organization or Association cannot be met for the time being from the assets of such an Organization or Association, Government of Nepal may make available amount for that purpose.
Authority to be suspended ipso facto: (1) The authority of the Board, manager and employees of the problematic Organization or Association shall, ipso facto, be suspended from the date of formation of the Management Committee under this Act.
(2) Notwithstanding anything contained in sub-Section (1), the Management Committee may for the purpose of management of assets and payment of liabilities, release the suspension and engage the members, manager and employees of the problematic Organization or Association for carrying out functions relating to management of assets and payment of liabilities of such Organization or Association.
(3) In case the Management Committee deputes in work pursuant to sub-Section (2), it shall be the duty of the concerned person to bear the responsibility according.
Notice to be given for submission of liabilities: Once the Management Committee begins its works, it shall publish public notice in a national level daily newspaper to the members, depositors, and creditors of the problematic Organization or Association specifying a time limit of at least fifteen days to submit claims of the amount to be repaid to them.
Audit Report to be prepared: The Management Committee shall, within six months from the date of commencement of works by it, prepare audit report of the problematic Organization or Association and the report shall be made public.
Remedial Actions may be taken: The Management Committee may in case there are reasons and bases that the problematic Organization or Association could operate again based on the audit report prepared under this Act, carry out the following remedial actions:- a) To order the Board to carry on management or functions and transactions; b) To ask to carry on management or functions and transactions having formed an interim committee from amongst shareholding members of the concerned Organization or Association; c) To dissolve the Board and call a General Meeting of such Organization or Association and to cause to form a new Board for carrying on management or functions and transactions; d) In case the Central Sectoral Cooperative Organization in which the concerned Organization or Association is a member or the National Cooperatives Federation submits a credible action plan for resuming the operations of the problematic Organization or Association, to entrust such responsibility to with the as terms and conditions prescribed; e) To take other reformatory and remedial measures which the Management Committee deems appropriate.
Management Committee may write to take actions: (1) The Management Committee may, in the course of carrying out functions relating to assets management or paying liabilities of the problematic Organization or Association, write to the concerned agency to taken actions as follows:- a) To freeze the transactions, accounts or other movable or immovable assets of a member of the Board or employee or his or her family member; b) Not to issue passport to a member of the Board, manager or employees or to suspend such passports if issued; c) To include the names of the members or persons not paying back the loans of the problematic Organization or Association in the blacklist. (2) In case the writing referred to in sub-Section (1) is received, the concerned agency shall carry out accordingly and inform the Management Committee about it.
Recommendation may be made: (1) The Management Committee may recommend to take departmental actions or other actions against any official or employee who does not cooperate in, or obstructs the course of, functions of management of assets or payment of liabilities of the problematic Organization or Association. (2) In case a recommendation referred to in sub-Section (1) is received, the concerned authority shall take departmental or other actions according to the prevailing laws. (3) While carry out the functions of management of assets or payment of liabilities of the problematic Organization or Association, in case the Management Committee has reasonable ground to believe that offences referred to in Section 122 have been committed, it may write to the agency having authority to conduct investigation and bring prosecution according to the prevailing laws.
Report to be submitted: The Management Committee shall, within one month of completion of the performance of management of assets or payment of liabilities of the problematic Organization or Association, submit report to the Ministry stating the following details:- a) Refund of members' amount of savings; b) Liabilities paid; c) Details of the remaining assets and liabilities; d) Recommendations relating to policies to be adopted by Government of Nepal with regard to operation of an Organization or Association; e) Other details as deemed appropriate by the Management Committee.
Terms and conditions of services of chairperson and members of Management Committee: (1) The chairperson and members of Management Committee shall be the whole timer officials. (2) Remuneration and other benefits of the chairperson and members of Management Committee shall be as specified by Government of Nepal. (3) No chairperson and members of Management Committee shall disclose to an unauthorized person any information he/she comes to know in the course of carrying out official business
Cooperation may be sought: (1) The Management Committee may seek cooperation of other agencies as may be necessary in the course of carrying out its Functions, duties and powers. (2) It shall be the duty of all concerned to extend cooperation as sought by the Management Committee.
(3) While carrying out functions of management of assets or payment of liabilities of the problematic Organization or Association, the Management Committee may move its activities in coordination with other concerned agencies.
Expert Service may be sought: (1) The Management Committee may procure services of technicians or experts of the concerned subjects as may be necessary. (2) The Management Committee may, for procuring technical or expert services, provide remuneration and facilities having fulfilled the procedures under the prevailing laws relating to public procurement.
Provisions concerning Employees of Management Committee: The Ministry shall make available necessary human and physical resources for the secretariat of the Management Committee.
Chapter 19 Offences, Punishment, Fines and Appeal
h) If a Cooperative Organization makes investment in violation of this Act or Rules or Byelaws framed under this Act or raises money with that objective; i) If one avails or provides credits having formed false enterprises; j) If credit is availed or disbursed with unnaturally excessive valuation of collateral; k) If credit is availed or disbursed with unnaturally high assessment of project costs on the basis of false statement; l) If credit is availed or disbursed again with the already mortgaged collateral security given to any person or Cooperative Organization without duly re-leasing it or if the credit is borrowed or disbursed exceeding the value of the collateral; m) If the credit availed from a Cooperative Organization for one purpose is abused or caused to be abused by using it for any other purpose; n) If any matter written on any document or account or ledger of Cooperative Organization is removed or deleted or tempered by any means or thereby distorting the meaning or sense or writing something otherwise or in case separate account is maintained thereby causing benefit or loss to oneself or to any other person, or forgery is committed for causing loss to anyone by misleading others with representing the untrue or non-existent facts to be true or existent or by getting a document signed with an alteration in the date, number or particular or causing to be committed the same; o) If a valuator of assets valuates any movable or immovable assets, while valuating it for collateral security or auction of the collateral or for any other purpose, with excessively high valuation or less or false valuation thereby causing loss to the Cooperative Organization or causes to be committed the same; p) In case any act is committed with the malafide intention of causing loss to a Cooperative Organization or causing illicit benefit or loss to anyone by getting something to be done or forbearing to do, by doing or not doing favor to anyone, by giving or accepting any amount, by purchasing or selling any goods, services without price or with less price or by giving or accepting donation or gift or souvenir, by preparing false document or false translation; q) In case of carrying out or causing to be carried out auditing of any Cooperative Organization with intention to causing loss to the Cooperative Organization or members or depositors or preparing or causing to be prepared false auditing report thereof.
Saving of actions taken in good faith: (1) No official or employee of the Ministry, Department or a cooperative Organization or Association shall be individually or collectively liable for any act done in good faith according to Rules, Byelaws or Directives framed under this Act. (2) Notwithstanding contained sub-Section (1), no act done without fulfilling procedures and with malafide intention shall be saved.
Punishment: Whoever commits any of the offences referred to in Section 122 shall be liable to the following punishments:- a) For commission of the offences referred to in clauses (a), (c), (m) and (q), an imprisonment up to one year and a fine up to one hundred thousand rupees; b) For commission of the offence referred to in clause (l), an imprisonment up to two years and a fine up to two hundred thousand rupees; c) For commission of the offence referred to in clause (b), fine equal to the claimed amount and an imprisonment up to three years; d) For commission of the offences referred to in clauses (d), (e), (f) and (g) (h), (i), (j), (k), (o) and (p); the claimed amount shall be recovered and equal amount shall be fined and following amount of imprisonment shall be imposed:-
(2) Whoever attempts or abets or assists to commit any offence referred to in Section 122 shall be liable to half of the punishment which the offender in the first degree is liable to.
(3) In case any Organization or Association abets or assists to commit any offence referred to in Section 122, the chief executive or official or the person working in the capacity of an executive shall be liable to the punishment according to this Act.
(2) In case anyone is found, from the content referred to sub-Section (1), to have committed any of the following acts, the Registrar or the authority authorized by
the Registrar may impose a fine up to three hundred thousand rupees to that person upon the nature and gravity of the act so committed:- a) In case of non-compliance of any directive issued or standards prescribed according to this Act or Rules framed under this Act; b) In case of not providing of any statement, document, report, notice or information to be provided according to this Act or Rules framed under this Act; c) In case officials of the Board or Accounts Supervision Committee are changed haphazardly without holding election according to this Act; d) In case any Cooperative Organization fails to comply with the terms and conditions specified pursuant to sub-Section (4) of Section 15; e) In case of commission of any other act in contravention of this Act or Rules framed under this Act.
(3) Before imposing the fine pursuant to sub-Sections (1) or (2), the Registrar or the authority authorized by the Registrar shall give a time of at least 15 days to the concerned person or Cooperative Organization to defend the case.
(4) The power to impose the fines pursuant to sub-Section (1) and (2) shall be exercised District Cooperative Association; and by the Registrar in case of the Province Sectoral Cooperative Association, Provincial Cooperative Association, Specialized Cooperative Association, Central Sectoral Cooperative Association, National Cooperatives Federation and Cooperative Bank and by the authority authorized by the Registrar in case of an Organization, District Sectoral Cooperative Association.
(2) In case the recommendation received pursuant to sub-Section (1), the concerned agency shall have to freeze transactions, assets and bank accounts of such a Cooperative Organization and inform to the Registrar or the authority authorized by the Registrar.
Nepal Rastra Bank may punish: (1) Notwithstanding anything contained elsewhere in this Act, the Nepal Rastra Bank may punish as follows on a Cooperative Bank that violate the terms and conditions specified at the time of granting of a by the Nepal Rastra Bank or orders issued from time to time or directives issued in the course of inspection, supervision or regulation:- a) To issue a warning or admonition in writing; b) To cause the Board of Directors to execute a bond for carrying out reformative actions; c) To issue order in writing to end frequent violations, to refrain from it and to begin reformative actions; d) To impose full or partial restriction on carrying out transactions; e) To suspend or revoke license of the Cooperative Bank. (2) In case a director or employee of a Cooperative Bank violates orders, directives issued by the Nepal Rastra Bank or terms of the license; fails to submit document, statement, statistics or record demanded at the time of inspection and supervision; within the specified time or commits any act against interests of the depositors or members, the Nepal Rastra Bank may impose the following punishment on such a director or an employee:- a) To issue a warning or admonition in writing; b) To suspend him or her; c) To impose a fine not exceeding five hundred thousand rupees; d) To order the Board to suspend the payment of entire benefits such as salary, allowances; e) To order the Board to remove from the office if such a person is a director and to take departmental actions if such a person is an employee according to the Byelaws relating to terms and conditions of service. (3) While imposing the fine under this Section, he/she shall be provided with reasonable opportunity to defend himself or herself.
To refer for investigation: In case the Ministry, Nepal Rastra Bank, the Registrar or the authority authorized by the Registrar comes to know, in the course of exercising the functions, duties and powers under thus Act, that anyone has committed an offence referred to in Section 122, it may write to the concerned agency to carry on investigation according to this Act with regard to such an offence.
Government of Nepal to be a plaintiff: Government of Nepal shall be a plaintiff in a case involving an offence punishable pursuant to Section 124 and such a case shall be deemed to have been enlisted in Annex -1 of the State a cases Act, 1993.
Authority to adjudicate a case: Judicial proceedings and adjudication of a case involving an offence punishable pursuant to Section 124 shall be held by the concerned district court.
Statutory Limitation to file a complaint: (1) The person who comes to know that an offence punishable pursuant to Section 124 has been committed or going to be committed shall file a complaint within ninety days of coming of such information. (2) A person who comes to know that an offence to be fined pursuant to Section 124 has been committed shall have file a complaint to the Registrar or the authority authorized by the Registrar within ninety days of coming of such information.
Appeal may be filed: (1) A person who is not satisfied with the decision of denial to Registrar Cooperative Organization pursuant to Section 16 or of revocation of registration of Cooperative Organization pursuant to Section 88 may, within thirty five days from the date of getting information of the decision, file an appeal to the Registrar in case the decision has been made by the authority authorized by the Registrar and to the Secretary of the Ministry in case the decision has been made by the Registrar. (2) The person who is not satisfied with the decision of fine referred to in Section 125, and of the punishment imposed pursuant to clauses (d) and (e) of sub-Section (1) of Section 128 and clauses (c) and (d) and (e) of sub-Section (2) of the same Section, he/she may file an appeal as follows within thirty five days from the date of getting information of the decision:- a) To the concerned district court in case the decision has been made by the authority authorized by the Registrar; b) To the concerned High Court in case the decision has been made by the Registrar.
Due Amount to be recovered: In case any amount of fine or any other due amount to be paid by any person under this Chapter is due, such an amount of fine or amount shall be recovered from him or her as government due.
Chapter – 20 Miscellaneous Provisions
Special Provisions concerning operation of Association: (1) Notwithstanding anything contained elsewhere in this Act, buildings, land and similar type of other immovable property of organizations such as Sajha Yatayat, Sajha Prakashan, Sajha Swastha Sewa, Sajha Bhandar, Sajha Sewa which are under the ownership or control of Government of Nepal, Provincial government or local level and having fifty five percent of share ownership of Government of Nepal at the commencement of this Act shall not be sold, mortgaged and leased for a period of more than five years without approval of Government of Nepal. (2) Government of Nepal, Provincial government or local level shall accord priority for management of services to be rendered by the organizations referred to in sub-Section (1) and collaboration may also be worked out by providing financial assistance to such organizations. (3) Notwithstanding anything contained elsewhere in this Act, other provisions as to operation and management of the organizations referred to in sub-Section (1) shall be as prescribed.
Exercise of Voting Rights: (1) Whatsoever number of shares of a Cooperative Organization has been subscribed by any member, he/she may exercise the voting right in the operation of functions of the concerned Cooperative Organization based on one member, one vote principle. (2) Notwithstanding anything contained in sub-Section (1), in case of an Association, more than one representatives may be sent as prescribed for the purpose of taking part in General Meeting and provisions concerning sending of the representatives shall be as prescribed. (3) Notwithstanding anything contained in sub-Section (2), no more than one member may be elected from one Organization or Association in the Board of Accounts Supervision Committee of the concerned Association.
Social Audits may cause to be conducted: (1) A Cooperative Organization may, for the purpose of attaining the objectives referred to in its Byelaws, conduct social audit on the decisions made and functions carried out by the Board, services received by members and level of satisfaction, positive impact made on economic, social, cultural and environmental aspects of standard of life of the members and other aspects. (2) The Board shall submit in the General Meeting the report of the social audit conducted pursuant to sub-Section (1) for the purpose of discussions.
(3) The General Meeting shall, after having discussions on the report of the social audit submitted pursuant to sub-Section (2), gives necessary directives to the Board.
(4) The concerned Cooperative Organization shall submit one copy of the report of the social audit prepared under this Section to the Registrar or the authority authorized by him or her and in case of a Cooperative Bank, one copy of such a report shall also be submitted to the Nepal Rastra Bank.
(2) Other provisions as to cooperative education including accreditation of cooperatives institutions running academic programs of cooperatives shall be as prescribed.
Explanation: For the purpose of this Section, "social functions" means education, health, environment protection, humanitarian assistance, promotion of cooperatives and so on.
(2) Procedures for operating inter-cooperatives transactions shall be as prescribed.
Provided that no tax shall be levied to the Cooperative Organizations operating financial services in Rural Municipality area.
Contract not to be concluded: Cooperative Organization shall not award a contract of the Cooperative Organization to any of its directors, chairperson or member of Accounts Supervision Committee, or employee of the Cooperative Organization.
Settlement of Disputes: In case of any dispute arising out of between Cooperative Organizations, a Disputes Resolution Committee may be formed as prescribed for settlement of such a dispute.
Encouragement may be given: The person, Cooperative Organization or other agency making significant contribution in promotion of cooperative sector may be encouraged as prescribed.
Departmental actions may be taken: The employee who exercises the authority granted under this Act or Rules framed under this Act with malafide intention, departmental actions against him or her shall be taken according to the prevailing laws.
Recovery to be made as government due: In case a grant from government or service or facility received by a Cooperative Organization is found to be misused, it shall be recovered as a government due.
Prevailing laws relating to companies not to apply: In case of a Cooperative Organization registered under this Act, the prevailing laws relating to companies shall not apply.
No Hindrance to take actions according to prevailing laws: Nothing contained stated in this Act shall be deemed to have hindered to file a case against a person in court according to the prevailing laws.
Power to frame Rules: Government of Nepal may frame necessary Rules for implementation of this Act.
Interim Arrangements: (1) Notwithstanding anything contained elsewhere in this Act, until the laws of the province or local level are made, provisions may be made in such a manner so that entire functions as to registration and regulation of Cooperative Organizations having their services within the local level may be carried out by the concerned local level, and registration and regulation of Cooperative Organizations having their services extended beyond one local level and up to the province level may be carried out by the concerned province as decided by the concerned provincial assembly and with decisions made by the concerned Village Assembly or Municipal Assembly as the case may be.
(2) While performing the business pursuant to sub-Section (1), all authority to be exercised by the Registrar under this Act shall be exercised by the authority specified by the Executive of the local level in case of the local level, and by the authority specified by the concerned ministry of the province in case of the Provincial Government level and the authority of the Ministry shall be exercised by the Executive of the Local level in case of the local level and by the concerned ministry in case of the province level, as the case may be.
(3) Regulation of all levels of Cooperative Organizations shall be carried out under this Act. Until provisions are made pursuant to sub-Section (1) and (2),
Standards, Directives or Procedures may be framed and submit: (1) The Ministry may, subject to this Act and Rules framed under this Act, may frame standards, directives, or procedures as may be necessary for maintaining well-order and effectiveness functions such as registration, operation, inspection, and monitoring of the cooperative organization. (2) While making the standards pursuant to sub-Section (1), separate standards may be made for Organization and Association carrying out savings and credits as the main transactions based on internationally recognized standards adopted for security of savings of members and institutional sustainability. (3) While framing the standards pursuant to sub-Sections (1) and (2), advices of the Nepal Rastra Bank or other concerned agencies may be sought.
Repeal and Saving: (1) The Cooperatives Act, 1992 is hereby repealed. (2) Actions taken under the Cooperatives Act, 1992 shall be deemed to have been carried out under this Act.