CO-OPERATIVE SOCIETIES LAW

Arrangement of Sections

1. Short title.

CHAPTER I

REGISTRATION

2. Appointments of Registrar, Deputy, Senior Assistant, and Assistant Registrars and powers of Commissioner of Cooperative Development and persons appointed to assist the Commissioner.

3. Societies which may be registered.

4. Conditions of registration.

5. Application for registration.

6. Registration.

7. Evidence of registration.

8. Amendment of the by-laws of a registered society.

9. Amalgamation, division, and transfer of assets and liabilities of registered societies.

10. Cancellation of registration certificates of registered societies in certain cases.

CHAPTER II

MEMBERS OF REGISTERED SOCIETIES AND THEIR RIGHTS AND LIABILITIES

11. Members not to exercise rights till due payments made.

11A. Mode of payment for the purchase of shares.

11B. Eligibility to vote.

11C. Disqualification.

11D. Disqualification for election as Chairman.

12. Associate members.

13. Contracts with society of members who are minors.

14. Contracts by officers of societies.

15. Votes of members.

16. Manner of exercising votes.

17. Restrictions on transfer of share or interest.

CHAPTER III

RIGHTS, OBLIGATION AND PRIVILEGES OF REGISTERED SOCIETIES

18. Address of a society.

19. Copy of Law, Rules, By-laws to be open to inspection.

CHAPTER IV

PRIVILEGES OF REGISTERED SOCIETIES

20. Societies to be bodies corporate.

21. Disposal of produce to or through society.

22. Compulsory sale of produce through a registered society in certain cases.

23. Persons selecting others to violate contracts.

24. Rights of registered society over crops, agricultural produce, cattle, implements, raw material and manufactured articles belonging to any member.

25. Charge and set-off in respect of shares or interest of members.

26. Shares, contributions and other interest not liable to attachment or sale.

27. Transfer of interest on death of member.

28. Deposits by or on behalf of minors.

29. Liability of past member and estate of deceased member for debts of society.

30. Register of members.

31. Proof of entries in books of society.

32. Deposits of securities as pledges by a society.

33. Right to acquire and sell property.

34. Compulsory acquisition of lands and buildings.

CHAPTER V

EXEMPTIONS FROM STAMP DUTY AND FEES

35. Exemption from stamp duty and fees.

CHAPTER VI

GENERAL PROVISIONS RELATING TO BY-LAWS

36. By-laws of a society to bind.

37. Power to make by-laws in restraint of trade.

38. Power to make by-laws for the imposition of fines on members.

CHAPTER VII

PROPERTY AND FUNDS OF REGISTERED SOCIETIES

39. Loans made by registered societies.

40. Deposits and loans received by registered societies.

41. Restrictions on other transactions with non-members.

42. Investment of societies funds.

43. Disposal of profit.

CHAPTER VIII

ACCOUNT BUDGET, AUDIT, INQUIRY AND INSPECTION OF A REGISTERED SOCIETY

43A. Accounts of society.

43B. Preparation of budgets.

44. Audit.

45. Communication of defects in audit to societies.

46. Inquiry and inspection.

47. Repealed.

CHAPTER IX

SUSPENSION OR INTERDICTION AND REMOVAL OF OFFICERS OF A REGISTERED SOCIETY AND DISSOLUTION OF THE COMMITTEE OF A REGISTERED SOCIETY

48. Dissolution of the committee of a society.

48A. Repealed.

CHAPTER X

DISSOLUTION OF A REGISTERED SOCIETY

49. Dissolution.

50. Cancellation of registration society.

51. Effect of cancellation of register.

52. Liquidation after cancellation of registration of society.

53. Liquidator's powers.

54. Power of Registrar to control liquidation.

55. Enforcement of order.

56. Limitation of the jurisdiction of the Civil Court.

57. Closure of liquidation.

CHAPTER XI

DISPUTES

58. Settlement of disputes.

59. Enforcement of a decision or award.

60. Registrar to decide certain other matters.

CHAPTER XIA

SPECIAL PROVISIONS APPLICABLE TO REGISTERED SOCIETIES OPERATING WITH STATE FUNDS

60A. Special conditions.

60B. Suspension or interdiction and removal of officer.

60C. Nomination of members.

CHAPTER XII

RULES

61. Rules.

CHAPTER XIII

DEBTS DUE TO GOVERNMENT

62. Recovery of sums due to government.

CHAPTER XIV

MISCELLANEOUS

63. Special power of Minister to exempt any society from requirements as to registration.

64. Special power of Minister to exempt societies from provisions of this Law.

65. Restriction of use of word "Co-operative”.

66. Registrar may order repayment or restoration of money or other property due to a society.

66A. Declaration of assets and liabilities.

67. Liability of officers for breach of trust.

67A. Who may conduct prosecutions.

68. Registrar may require bank to produce any information.

69. Companies Ordinance and Trade Unions ordinance not to apply.

70. Omitted.

71. Assets relating to deposits insured under Monetary Law Act not to be utilised except for meeting liabilities relating to such deposits.

72. Penalty for non-compliance with this Law.

72A. Protection for action of Registrar.

73. Omitted.

74. Omitted.

75. Interpretation.

5 of 1972.

37 of 1974,

12 of 1978,

11 of 1980,

32 of 1983,

11 of 1992.

A LAW to provide for the development of Co-operative Societies and to consolidate and amend the law relating to the constitution and administration of Co-operative Societies and to provide for matters connected therewith and incidental thereto.

[Am by s 2 of Act 11 of 1992.]

[Date of Commencement: 11th October, 1972]

1. Short title.

This Law may be cited as the Co-operative Societies Law.

CHAPTER I

REGISTRATION

2. Appointments of Registrar, Deputy, Senior Assistant, and Assistant Registrars and powers of Commissioner of Co-operative Development and persons appointed to assist the Commissioner.

(1) There may be appointed a Registrar of Co-operative Societies for Sri Lanka or any portion thereof and such number of Deputy, Senior Assistant, or Assistant, Registrars as may be necessary.

(2) The Minister may, by general or special Order, confer on any Deputy, Senior Assistant or Assistant Registrar all or any of the powers of a Registrar under this Law or under any rules made there under.

(3) The person appointed to be, or to act for the time being as, the Commissioner of Co-operative Development shall have and may exercise the same powers as are vested in the Registrar of Co-operative Societies by this Law and by any rules made or deemed to be made thereunder.

(4) Each of the persons appointed to assist the Commissioner of Co-operative Development shall have and may exercise such of the powers of the Registrar under this Law and under any rules made or deemed to be made thereunder as may be specified by the Minister in any general or special Order made under this section.

3. Societies which may be registered.

Subject to the provisions hereinafter of the principal enactment contained—

(a) a society which has as its object the provision, in accordance with co-operative principles, of specified services contributing to the economic social, educational and cultural welfare of its members;

(b) a society consisting of registered societies as its members established with the object of facilitating the operation of societies referred to paragraph (a),

may be registered under this Law with or without limited liability:

Provided that the liability of a society of which a member is a registered society, shall be limited.

[S 3 subs by s 3 of Act 11 of 1992.]

4. Conditions of registration.

(1) No society shall be registered under this Law—

(a) it consists only of members, it does not consist of at least ten persons, who are over eighteen years of age or reside or are employed, owns immovable property within the area of operation of the society and who is capable of utilising the services rendered by the society; or

(b) it consists only of registered societies, it does not have at least three members;

(c) it has not obtained a report or recommendation from such person or institution as is presented to the effect that—

(i) the activities it proposes to engage in engage economically feasible,

(ii) its proposed by laws are not inconsistent with the provisions of this Law or and rules made thereunder;

(d) the proposed by-laws have not been adoptee at a general meeting duly summoned for the purpose;

(e) its proposed by-laws do not contain provision that at least two members of the Committee of the society shall be persons who are between the ages of eighteen and thirty-five;

(f) all the members signing the application for registration have not completed the payment in respect of their membership: or

(g) such society has failed to furnish all information as may be required by the Registrar for the purpose of registration.

[S 4(1) subs by s 4(1) of Act 11 of 1992.]

(2) Where for the purposes of this section any question arises as to whether the conditions specified in the preceding provisions have been satisfied that question shall be decided by the Registrar whose decision shall be final.

[S 4(2) am by s 4(2) of Act 11 of 1992.]

(3) The word "Limited” shall be the last word in, or the equivalent of that word in Sinhala or Tamil shall form part of, the name of every society with limited liability registered under this Law.

5. Application for registration.

(1) For the purposes of registration an application shall be made to the Registrar in such Form as may be prescribed.

[S 5(1) am by s 5(1) of Act 11 of 1992.]

(2) The application shall be signed—

(a) in the case of a society of which no member is a registered society, by at least ten persons qualified in accordance with the requirements of section 4(1)(a); and

[S 5(1)(a) am by s 5(2) of Act 11 of 1992.]

(b) in the case of a society of which a member is a registered society, by a person duly authorised by every such society, and, where all the members of the society are not registered societies, by ten other members, or, when there are less than ten other members, by all of them.

[S 5(1)(b) am by s 5(2) of Act 11 of 1992.]

(3) The application shall be accompanied by—

(a) two copies of the proposed by-laws;

(b) a feasibility report pertaining to the economic activities which the society proposes to engage in;

(c) certified copies of minutes of the general meeting at which the resolution to register the society was passed and the by-laws adopted together with details of attendance;

(d) a certificate by the committee of the society confirming the payment of membership fees by the members signing the application and the fact that such moneys are in the custody of such committee.

[S 5(3) subs by s 5(3) of Act 11 of 1992.]

6. Registration.

If the Registrar is satisfied that a society has complied with the provisions of this Law and the rules, that the activity in which the society proposes to engage is economically feasible, and that its proposed by-laws are not contrary to this Law or to the rules, he may, if he thinks fit, register the society and its by-laws. An appeal in accordance with such rules as may be made in that behalf shall lie to the Minister against the refusal of the Registrar to register any society.

7. Evidence of registration.

(1) A certificate of registration signed by the Registrar shall be conclusive evidence that the society therein mentioned is duly registered, unless it is proved that the registration of the society has been cancelled.

[S 7 re-numbered as 7(1) by s 6(1) of Act 11 of 1992.]

(2) The Registrar shall upon registering a society under section 6 issue to such society a certificate of registration.

[S 7(2) ins by s 6(2) of Act 11 of 1992.]

8. Amendment of the by-laws of a registered society.

(1) Any registered society may, subject to this Law and the rules made thereunder, amend its by-laws, including the by-law which declares the name of the society.

(2) No amendment of the by-laws of a registered society shall be valid until that amendment has been registered under this Law for which purpose two copies of the amendment shall be forwarded to the Registrar.

(2A) No amendment of a by-law of a registered society shall be registered unless such amendment is accompanied by a report referred to in section 4(1)(c)(ii).

[S 8(2A) ins by s 7 of Act 11 of 1992.]

(3) If the Registrar is satisfied that any amendment of the by-laws is not contrary to this Law or to the rules, he may, if he thinks fit, register the amendment. An appeal in accordance with such rules as may be made in that behalf shall lie to the Minister against the refusal of the Registrar to register any amendment of any by-law.

(4) An amendment which changes the name; of a society shall not affect any right or obligations of the society or of any of its members or past members, and any legal proceedings pending may be continued by or against the society under its new name.

(5) Where the Registrar registers an amendment of the by-laws of a registered society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence of the fact that the amendment has been duly registered.

(6) In this section "amendment” includes the making of a new by-law and the variation or rescission of a by-law.

9. Amalgamation, division, and transfer of assets and liabilities of registered societies.

(1) A registered society may, with the previous approval of the Registrar and by a resolution passed by a two-third majority of the members or delegates eligible to be present and vote at a general meeting of the society—

(a) transfer its assets and liabilities in whole or in part to any other registered society; or

(b) divide itself into two or more societies.

[S 9(1) am by s 8(1) of Act 11 of 1992.]

(2) Any two or more registered societies may, with the previous approval of the Registrar and by a resolution passed by a two-thirds majority of the members or delegates eligible to be present and vote at a general meeting of each such society, amalgamate themselves and form a new society.

[S 9(2) am by s 8(2) of Act 11 of 1992.]

(3) —

(a) The resolution of a registered society under subsection (1) or subsection (2) shall contain all particulars of the transfer, division or amalgamation, as the case may be.

[S 9(3) re-numbered as s 9(3)(a) by s 8(3)(a) of Act 11 of 1992.]

(b) No approval shall be given by the Registrar to any society to transfer its assets and liabilities to any other registered society, to divide itself into two or more so cities or to amalgamate with another registered society if—

(i) a report of recommendation has not been obtained from a person or institution as is prescribed, regarding the economic feasibility of the proposed transfer, division or amalgamation;

(ii) a report stating that the by-laws of the societies into which the registered society has been divided or amalgamated, as the case may be, are not inconsistent with the provisions of the law or any rule made thereunder has not been obtained from an institution or designated person as for the purposes of section 4.

[S 9(3)(b) ins by s 8(3)(b) of Act 11 of 1992.]

(4) Where a registered society has passed any such resolution, it shall give notice thereof in writing to all its members and creditors and, notwithstanding any by laws or contract to the contrary, any member or creditor shall, during the period of one month of the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be.

(5) Any member or creditor who does not exercise his option within the period specified in subsection (4) shall be deemed to have assented to the proposals contained in the resolution.

(6) Where a resolution passed by a registered society under this section involves the transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance.

10. Cancellation of registration certificates of registered societies in certain cases.

(1) Where the whole of the assets and liabilities of a registered society are transferred to another registered society in accordance with the provisions of section 9, the registration of the first mentioned society certain cases shall stand cancelled and that society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(2) When two or more registered societies are amalgamated into a new society in accordance with the provisions of section 9, the registration of each of the amalgamating societies shall stand cancelled on the registration of the new society and each such society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

(3) Where a registered society divides itself into two or more societies in accordance with the provisions of section 9, the registration of that society shall stand cancelled on the registration of the new societies, and that society shall be deemed to have been dissolved and shall cease to exist as a corporate body.

CHAPTER II

MEMBERS OF REGISTERED SOCIETIES AND THEIR RIGHTS AND LIABILITIES

11. Members not to exercise rights till due payments made.

(1) No member of a registered society shall exercise the rights of a member unless or until he has made such payment to the society in respect of membership or acquired such interest in the society as may be prescribed by the rules or by-laws.

(1A) Where the liability of members of a society is limited, no member other than a registered society shall hold such portion of the share capital of the society, subject to a maximum of one-fifth as may be prescribed by the rules.

[S 11(1A) ins by s 9(1) of Act 11 of 1992.]

(2) Where a member of a registered society has not made such payment to the society or acquired such interest in the society as is referred to in subsection (1), it shall be lawful for the society, from any sum of money due from the society to such member in respect of the purchase of any scheduled agricultural product as an agent of the Paddy Marketing Board, to deduct any sum of money due to the society from such member in respect of such payment or such interest as is referred to in subsection (1).

[S 11(2) am by s 9(2) of Act 11 of 1992.]

11A. Mode of payment for the purchase of shares.

A member may commence payment for the purchase of any share with an initial payment of rupees ten and, shall increase payment of such installment to rupees one hundred within one year from the date of such initial payment. The minimum value may be increased as desired red. The total value of a share may be paid in a single installment:

Provided however that a member that not enjoy the right to vote or the right to hold office until the expiry of one year from the date of enrolment;

Provided further, that the provisions of this section shall not apply to and in respect of persons who have applied to the Registrar for registration of a society under the provisions of sections 4(1)(a) and (b) and 3(1) and (2).

[S 11A ins by s 10 of Act 11 of 1992.]

11B. Eligibility to vote.

A member shall be entitled to volt at any meeting of a registered society and be elected to any office in such society only after obtaining full membership.

[S 11B ins by s 10 of Act 11 of 1992.]

11C. Disqualification.

No person who is a Member of Parliament, Provincial Council, Municipal Council, Urban Council or Pradeshiya Sabha shall be eligible to be elected to or continue in office as a member of the committee of a registered Co-operative Society.

[S 11C ins by s 10 of Act 11 of 1992.]

11D. Disqualification for election as Chairman.

A person shall be disqualified from being elected as a Chairman of a registered Society, the membership of which consists of registered societies, if he is on the date of his election, the Chairman of any other registered society, the objects of which are not similar to the objects of the first-mentioned society, the membership of which consisted of registered societies.

[S 11D ins by s 10 of Act 11 of 1992.]

12. Associate members.

(1) A registered society may admit as any associate member any individual who enters into a contract for the transaction of business with the by-laws of the society.

[S 12(1) am by s 11of Act 11 of 1992.]

(2) An associate member shall not be entitled to any share, in any form whatsoever, in the assets or profits of the society, or any vote in the conduct of the affairs of the society.

(3) As provided in this section, an associate member shall have such privileges and rights of a member and be subject to such liabilities of a member, as may be specified in the by-laws of the society.

13. Contracts with society of members who are minors.

The minority or non-age of any person duly admitted as a member of any registered society shall not debar that person from executing any instrument or giving any acquaintance necessary to be executed or given under this Law or the rules made thereunder, and shall not be a ground for invalidating or avoiding any contract entered into by any such person with the society; and any such contract entered into by any such person with the society, whether as principal or as surety, shall be enforceable at law by or against such person notwithstanding his minority or non-age.

14. Contracts by officers of societies.

The subsequent discovery, of any defect in the appointment of, or of any disqualification for election of, any officer of a registered society shall not be a ground for invalidating or avoiding any contract entered into by such officer on behalf of such society.

15. Votes of members.

No member of any primary society shall have more than one vote in the conduct of the affairs of the society:

Provided that in the case of an equality of votes the chairman shall have a casting vote.

16. Manner of exercising votes.

(1) No member of any primary society shall at any meeting of the society exercise his vote except in person:

Provided, however, that voting through delegates at any meeting of the society may be allowed where it is so provided under the by-laws of the society.

(2) A registered society which is a member of any other registered society may appoint any one of its members for the purpose of voting in the conduct of the affairs of such other registered society.

17. Restrictions on transfer of share or interest.

(1) The transfer of the share or other interest of a member or past member or deceased member in the capital of a registered society shall be subject to such conditions as to maximum holding as may be prescribed by this Law or by the rules.

(2) In the case of a society registered with unlimited liability, a member shall not transfer any share held by him or his interest in the capital of the society or any part thereof, unless—

(a) he has held such share or interest for not less than one year; and

(b) the transfer is made to the society, or to a member of the society, or to a person whose application for membership has been accepted by the committee.

CHAPTER III

RIGHTS, OBLIGATION AND PRIVILEGES OF REGISTERED SOCIETIES

[Subs by s 12 of Act 11 of 1992.]

18. Address of a society.

Every registered society shall have address, registered in accordance with the rules, to which all notices and communications may be sent, and shall within seven days of any change of that address notify the Registrar of such change.

19. Copy of Law, Rules, By-laws to be open to inspection.

Every registered society shall keep a copy of this Law and of the rules and of its by-laws and a list of its members open to inspection, free of charge, at all reasonable times at the registered address of the society.

CHAPTER IV

PRIVILEGES OF REGISTERED SOCIETIES

20. Societies to be bodies corporate.

The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings, and to do all things necessary for the purpose of its constitution.

21. Disposal of produce to or through society.

(1) A registered society which has as one of its objects the disposal of any article which is the produce of agriculture or animal husbandry or any other industry, may provide in its by-laws or may contract with its members—

(a) that every such member who produces any such article, shall dispose of the whole or of any specified amount, proportion or description thereof to or through the society, and

(b) that any member who is proved or adjudged, in such manner as may be prescribed by rules, to be guilty of a breach of the by-laws or contract, shall pay to the society as liquidated damages a sum ascertained or assessed in such manner as may be prescribed by rules, or by its by-laws.

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