Co-operative Act of Bhutan, 2001

Link to law: http://www.nationalcouncil.bt/assets/uploads/docs/acts/2014/Co-operative_Act_of_bhutan2001_Eng.pdf

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Co-operatives Acts of Bhutan,2001_English_

THE CO-OPERATIVE ACT OF BHUTAN, 2001

Royal Government of Bhutan

CONTENTS

CHAPTER I PRELIMINARY

1 Title, extent and commencement
2 Definition of Terms

CHAPTER II STATE POLICY ON VALUE AND PRINCIPLES OF CO-OPERATIVES

3 Declaration of State Policy
4 Values and principles of Co-operatives

CHAPTER III REGULATION OF CO-OPERARIVES

5 Regulatory agency and its powers
6 Management and decentralization

CHAPTER IV TYPES OF CO-OPERATIVES AND THEIT REQUIRE MENTS FOR

REGISTRATION
7 Types of co-operatives
8 Primary co-operatives
9 Federation of co-operatives
10 Union of co-operatives
11 Special types of co-operatives
12 Effects of Registration

CHAPTER V GOVERNANCE OF CO-OPERATIVES

13 Constitutional and By-paws
14 Liability of Directors, Official, Committee members and Manager
15 Termination of membership
16 Voting
17 Application of relevant management and social development principles and

practices

CHAPTER VI FINANCIAL MANAGEMENT OF CO-OPERATIVES

18 Capital and their sources
19 Liability of members
20 Share capital, interest and limitations to share capital holding
21 Investment of capital
22 Financial sustainability of co-operatives from membrs’ proceeds
23 Audit of co-operatives
24 Safety of records of co-operatives
25 Allocation and distribution of net surplus

CHAPTER VII MERGER, DISSOLUTION AND INSOLVENCY OF C O-OPERATIVES

26 Merger and consolidation of co-operatives
27 Dissolution and insolvency
28 Implementing rules

CHAPTER VIII ROLE OF GOVERNMENT IN PROMOTING THE EC ONOMIC AND

EDUCATIONAL DEVELOPMENT OF CO-OPERATIVES
29 Co-operative development strategy
30 Government-Co-operative sector partnership

CHAPTER IX MISCELLANEOUS PROVISIONS48

31 Use of the word co-operative
32 Interpretation and construction
33 Information campaign
34 Seperability

THE CO-OPERATIVES ACT OF BHUTAN, 2001

PREAMBLE

An Act to provide legal framework for the formation of Co-operatives, in order to
facilitate economic development.

CHAPTER I

Preliminary

Article 1: Title, commencement and Extent.

(1) This act shall be called “The Co-Operatives Act of Bhutan, 2001”.

(2) It shall come to force on 27th day, 6th month of the Female Iron Snake

Year coinciding with the 18th July of the Year 2001.

(3) It shall extend to the whole Kingdom of Bhutan.

Article 2: Definition of Terms

(1) Co-operative means an association of persons united voluntarily to meet
their common economic needs and aspirations through a jointly owned
and effectively governed enterprise.

(2) Primary co-operative means the first level of co-operative under this Act

whose main purpose is the provision of quality products and services to
satisfy the economic needs of members and their communities.

(3) Federation of co-operatives means the second level of co-operative under

this Act organized by primary cooperatives that operate in the same
industry or are selling similar products and services.

(4) Union of co-operatives means the national apex organization of all co-

operatives in the Kingdom of Bhutan.

(5) Special type of co-operatives means the co-operatives that are not
classified under the other types of co-operatives. In this Act these co-
operatives are the co-operative banks and insurance co-operatives.

(6) General assembly means the highest body within the co-operative
structure composed of qualified members.

(7) Board of directors means the policy-making body of the co-operative

whose members are elected by the General Assembly.

(8) Committees mean the committees of finance and audit, election and
training of co-operative.

(9) Values and principles of co-operatives values mean norms and beliefs on

self-reliance and self-management founded on the basis of voluntary
initiatives, equity and solidarity and also on the ethical values of honesty,
openness, and caring. Principles mean the guidelines by which values are
practiced.

(10) Members mean the owners and patrons of the co-operative.

(11) Common needs and aspirations of members mean the primary and core

bases from which a co-operative may be organized, rgistered and
developed as an economic enterprise.

(12) Rule making through consultation means the power and responsibility

entrusted to the Ministry of Home affairs (MOHA) to implement this Act
by issuing implementation rules after consultation with stakeholders.

(13) Consolidation of co-operatives means the amalgamation of two or more

co-operatives into a single, new co-operative.

(14) Merger of co-operatives means the absorption of one or more existing co-
operatives by another co-operative.

(15) Insolvency of co-operatives means co-operatives fails to meet its

obligations to creditors and applies for remedies for the protection of
creditors and members based on existing laws.

(16) Dissolution of co-operatives means the process of winding up of the

affairs of the co-operative and the subsequent cancell tion of the
certificate of registration of the same co-operative.

(17) Natural persons mean the individuals who are members of primary co-

operatives.

(18) Juridical persons mean the registered co-operatives and entities referred
to in this Act.

(19) Share capital means a unit of capital contributed by a member th value

of which may by fixed at any figure by the co-operative but not less than
one Ngultrum (Nu.1.00).

CHAPTER II

State policy on, and Values and Principles of, Co-operatives

Article 3: Declaration of State policy.

It is the declared policy of the Royal Government of Bhutan (RGOB) to promote co-
operatives for the well being of members and communities. The RGOB shall facilities the
development of co-operatives as strong and sustainable pillar of the private sector that
will contribute to the economic development of the Bhutanese society, especially the
poor.

Towards this end, the RGOB shall create the legal environment, through this Act, for the
regulation of co-operatives on registration and monitori g, mediation and conciliation,
and the provision of legal services on research, education and information.
Complementary to regulation, government shall provide support for the economic
development of co-operatives.

The RGOB recognizes co-operatives as private enterpris s with economic purposes.
Thus, its support aims to help co-operatives realiz their purposes and to help strengthen
and sustain their capacity for self-reliance and self-management so that co-operatives will
grow to stand on their own as autonomous enterprises and as partners of government in
development. Mutual agreement shall be the basis of partnership between co-operatives
and government.

Article 4: Values and Principles of Co-operatives.

Co-operatives shall be promoted, organized and developed in harmony with the national
policy, based on the values of self-reliance and self-management, and to the service of
Tsa Wa Sum. These values are home grown, having evolved from the culture and
experience of Bhutan, and enriched and practiced along with the following universally
accepted principles of co-operatives:

(1) Voluntary and open membership.

Co-operatives are voluntary organizations, open to all persons who are able to use their
services and willing to accept the responsibilities of memberships, without any
discrimination.

(2) Effective member governance.

Co-operatives are voluntary organizations governed by their members, who actively
participate in setting their policies and making decisions. Men and women serving as
elected representatives are accountable to the membership. In primary co-operatives
members have equal voting rights (one member, one vt ), and co-operatives at other
levels are also governed based on mutual agreements.

(3) Member economic participation.

Members contribute equitably to the capital of their co-operatives. Surpluses shall be
allocated in accordance with Article 25 of this Act.

(4) Autonomy and independence.

Co-operatives are autonomous, self-reliant organizations governed by the members. If
they enter into agreements with other organizations, i cluding government, or raise
capital from external sources, they do so based mutually agreed upon terms that ensure
effectively governance by their members and maintain their c-operative autonomy.

(5) Education, training and information.

Co-operatives provide education and training for their members, elected representatives,
managers, and employees so they can contribute effectively to the development of their
co-operatives. They inform the general public-particularly young people and opinion
leaders-about the nature and benefits of cooperation.

(6) Cooperation among co-operatives.

Co-operatives serve their members most effectively and strengthen the co-operative
movement by working together through local, national, regional, and international
associations.

(7) Concern for the community.

Co-operatives work for the sustainable development of their communities through
policies approved by their members.

CHAPTER III

Regulation of Co-operatives

Article 5: Regulatory agency and its powers.

The Ministry of Home Affairs (MOHA) is mandated to implement this Act. It shall
discharged the following regulatory powers and respon ibilities:

(1) Register all co-operatives under this Act;

(2) Require all registered co-operatives to submit annul report including duly

audited financial statements;

(3) Monitor and evaluate co-operatives to ensure that tey abide with and sanction
those that have violated, this Act; their Constitution and By-laws and the policies
and rules of the MOHA;

(4) Provide legal services on training, information and dvice to co-operatives;

(5) Prescribe, after consolation with the co-operative sector, the implementing rules

of this Act, which shall include, but shall not be limited to, the following:

(a) Mediation and conciliation of co-operatives;
(b) Division, merger and consolidation of co-operatives; and
(c) Dissolution and insolvency of co-operatives;

Article 6: Management and decentralization.

The MOHA shall, when necessary, delegate the power f registration and monitoring of
co-operatives to Dzongkhag and prescribe the rule gov rning such delegation.

CHAPTER IV

Types of Co-operatives and their requirement for Registration

Article 7: Types of co-operatives.

The types of co-operatives that may be organized under this Act primary co-operatives,
federation of co-operatives, union of co-operatives, and special types of co-operatives.

Article 8: Primary co-operatives

Members and purposes.

Natural persons may organize and join primary co-operatives to realize the following
purposes:

(1) To provide or satisfy the common economic needs of members and communities

by engaging in any of the business activities in production,
processing/manufacturing, supply and marketing, and financing;

(2) To establish a strong, sustainable, human and physical resource base to ensure the

provision of quality and timely goods and services to members and communities;

(3) To promote the educational and economic advancement of members and
communities;

(4) To inculcate among members the discipline of thrift and savings and the

importance of capital and savings build-up for the financial sustainability of the
cooperative.

(5) To contribute to the development of agriculture, industry, and service sectors of

the local economy; and

(6) To perform other related purposes as prescribed in this Act.

Requirements for registration.

The following are the requirements for the registration of a primary co-operative.

(1) A minimum of fifteen natural persons who are Bhutanese citizens with a common
bond of interest in the area of operation of the cooperative;

(2) Three copies of duly accomplished Constitution and By-laws;

(3) Evidence that the proposed primary co-operative is organized based on a) the

members’ common needs or demand, and b) the economies of scale and
requirements of the market of its business under takings;

(4) Bond of accountable officer; and

(5) Proof of bank account.

Article 9: Federation of co-operatives:

Members and purposes.

Registered primary co-operatives from the same industry or selling the same products or
services may organized and join federation of co-operatives to realize the following
purposes:
(1) To contribute to the increase or expansion of the business capacity of member-

primaries through pooling of resources, wholesale or bulk purchase and
distribution, linking with sources of supply, and to ensure and expand markets;

(2) Protect member-primaries from competition in the industry;

(3) Provide support services to member-primaries on busines education and

counselling, installation of accounting, finance and administrative system, and
conduct of financial and management audit;

(4) Represent member-primaries in industry organizations and in government; and

(5) Perform other related responsibilities as prescribed n this Act.

Requirements for registration.

The following are the requirements for the registration of a federation of co-operative.

(1) A minimum of five registered primary co-operatives from the same industry or
are selling similar goods and services and are operating in the area of operation of
the proposed federation;

(2) Three copies of duly accomplished Constitution and By-laws;

(3) Evidence that the proposed federation of co-operative is organized based on the
members’ common needs or demand, and that it has the economies of scale and
markets for of its products and services;

(4) Bond of accountable officer; and

(5) Proof of bank account.

Article 10: Union of Co-operatives:

Members and purposes.

Registered federation and special types of co-operativ s may organize and join the union
of co-operatives for the following purposes:

(1) To represent the interest of co-operatives in the country;

(2) To be the social development arm of the co-operatives on education and training,

research and information, legal studies and advocacy, and social auditing of co-
operatives;

(3) To publish the Annual Report on the status and future challenges and direction of

co-operative development in Bhutan for the benefit o its member and the
government and for the information of co-operatives abroad; and

(4) To perform related powers and responsibilities as pre cribed in the Act.

Requirements for registration.

The following are the requirements for the registration of the union of co-operatives.

(1) A minimum of five federations and special types of co-operatives;

(2) Three copies of duly accomplished Constitution and By-laws;

(3) Bond of accountable officer; and

(4) Proof of bank account.

Article 11: Special types of co-operatives.

The following enterprises that do not fall under Articles 8,9 and 10 above may be
organized as special types of co-operatives:

(1) Co-operative banks.

Co-operative bank may be organized to provide financial services to primary co-
operatives, federation of co-operatives and insurance co-operatives and to serve as the
financial arm of the co-operatives in the economy.

The Royal Monetary Authority (RMA), upon consultation with the MOHA and the Co-
operative Sector, shall issue and implement the rules governing the banking operations of
co-operative banks. A co-operative bank shall be regist red with the MOHA after the
issuance of the licensed to operate as a co-operativ bank by the RMA. A registered and
licensed co-operatives bank may offer all types of banking services needed by member-
cooperatives and may open a maximum of twenty person (20%) of its loan portfolio to
the general public.

(2) Insurance co-operative.

All types of registered co-operatives may join as in urance co-operative. The insurance
co-operative shall provide life and non-life insurance services to all members.
Membership shall also be open to socially oriented non-profit organizations (NPOs). At
lest fifteen registered cooperatives and NPOs may organize and register insurance co-
operative.

The Ministry of Finance, in consultation with the MOHA and the cooperative sector,
shall issue and implement the rules governing the operations of insurance co-operatives.
The issuance of a license to operate by the Ministry of Finance shall be prerequisite to the
registration of insurance co-operative with the MOHA.

Article 12: Effects of Registration.

A co-operative, upon registration under this Act, aquires a juridical personality from the
date the MOHA issues a certificate of registration under its official seal. The registered
co-operative, from the date of the issuance of the certificate of registration, shall
henceforth be protected by the laws of the state, and shall discharge its powers and
responsibilities in accordance with this Act.

A registered cooperative under this Act are conferred the following powers and
responsibilities:

(1) To adopt or amend its Constitution and By-laws;

(2) To use the word “co-operative” in its official name;

(3) To sue and be sued in its name;

(4) To engage in any lawful business transactions with and for the interest of

members and the communities in its area of operation;

(5) To enter into division, merger or consolidation, as provided in this Act;

(6) To join federation, in the case of primary co-operatives, and to join the union, in

the case of federations and special types of co-operativ s;

(7) To accept and receive grants, donations and assistance from foreign and domestic

sources, prior approval is required from the Ministry of Finance. Other
requirements include annual report and duly audited f nancial statements; and

(8) To exercise other related powers and responsibilities as granted by this Act or

necessary to carry its purposes as stated in its Con titution and By-laws.

CHAPTER V

Governance of Co-operatives

Article 13: Constitution and By-laws.

A co-operative registered under this act shall be governed by its constitution and by-laws.
A duly adopted constitution and by-laws must conform to this act, the rules of the
MOHA, and other related laws; co-operative values and principles; and accepted morals
of Bhutanese society. The governance of co-operativ shall aim at improving the quality
of life of members and communities.

Contents of a Constitution.

The constitution articulates the governance of co-operatives in terms of purposes and
objectives, relations with government and other parties, and the overall framework of
decision-making and management. The constitution includes the following provisions:

(1) The name (which must include the word “co-operative”) and the address of the

co-operative;

(2) The purpose of the co-operative and the common bondof interests of members;

(3) The type of co-operative, the scope of business and the area of operation;

(4) The overall system of governance: structural arrangement of responsibilities and

accountabilities, checks and balances, key elected officials, and reporting system;

(5) The names and postal addresses of member-incorporator;

(6) The list of names of members of the Board of Directors; and

(7) The amount of its share capital and the names and addresses of contributors.

Contents of By-laws.

The by-laws amplifies the constitution and prescribes in details the internal organization
and management of the co-operative. It includes the following provisions:

(1) Membership: kinds, qualifications, duties and responsibilities, and termination;

(2) General Assembly: powers and Composition and quorum, voting system,

Meetings, agenda and minutes of meeting;

(3) Board of Directors and Committees: powers and respon ibilities, composition
and qualifications of members and officials; meetings, agenda and minutes of
meetings;

(4) Privileges of co-operatives;

(5) System of mediation and conciliation of disputes betwe n members;

(6) Resource management: capital, property, and funds; accounting and auditing,

allocation and distribution of net savings;

(7) Other provisions: mode of amendment or revision; commencement;

General Assembly.

Every registered c-operative shall have General Assembly as the highest legislative body
and composed of all qualified members. The powers and responsibilities of the General
Assembly prescribed in the constitution and By-laws. Regular general assembly shall be
held in accordance with the By-laws. Unless prescribed in the by-laws, a quorum of a
regular or special general assembly shall be simple majority or fifty-one (51%) of all
qualified members.

Board of Directors.

Every registered co-operative shall have a Board of Directors as the policy making body.
The powers, duties and accountabilities of the Board and officials shall be prescribed in
the constitution and By-laws.

The Board shall be composed of a minimum of five and maximum of fifteen members
who are elected directly by the General Assembly. It shall elect from its members the
following officials who shall serve for one year and will be eligible for re-election: a
chairman, a vice chairman, a secretary and a treasur.

Regular Board meeting shall be held monthly. Special bo rd meetings may be called by
the chairman or by majority of its members. Unless prescribed in the By-laws, a quorum
of a regular or special meetings shall be simple majority or 51% of the members of the
board of Directors.

The Board may appoint a manager and staff depending on the volume of business and
financial capacity of the co-operative.

Committee.

Every registered co-operative shall have a finance and audit committee and election
committee with three members each who are elected dir ctly by the General Assembly
and to serve for a term of two consecutive years with re-election.

Co-operatives engaged in the business of loans shall include a credit committee with
three members who are elected directly by the General Assembly and shall serve for a
term of two consecutive years with re-election. Co-operative engaged in the supply and
marketing of goods shall include, as part of the functions of the audit committee, the
functions of inventory of goods.

An education and training committee shall be established by the Board of Directors,
chaired by the vice-chairperson of the Board. The Board shall appoint qualified members
from the co-operative.

The functions and responsibilities of these committee shall be prescribed in the
constitution and By-laws.

Article 14: Liability of directors, officials, committee members and manager.

Directors, officials and committee members, who wilfully and knowingly vote for or
assent to patently unlawful acts or who are guilty of gross negligence or bad faith or
acquire any personal or pecuniary interest in conflict with their duty shall be liable jointly
and individually for all the damages resulting therefrom to the co-operative, members and
other persons.

The MOHA together with the co-operative Sector shall issue the code of conduct of,
including the penalties for violations by, directors, officials, committee members and
managers of co-operatives.

Article 15: Termination of membership

A member may be terminated on any of the following reasons;

(1) Withdrawal of membership by giving thirty days notice to the board of Directors;

(2) Death or insanity, in the case of natural person, and insolvency or dissolution, in

the case of juridical persons; and

(3) Removal by majority vote of the board of directors for any of the following

reasons:

(a) failure of the member to patronize the co-operative for a period of time
fixed by the board of directors;

(b) failure of member to comply with his obligations;

(c) violation of the constitution and by-laws and the policies of the Board of

directors; and

(d) committed acts or omission injurious or prejudicial to the interest or

welfare of the co-operative.

Article 16: Voting.

In primary co-operatives, members are entitled to one vote. In the other forms of co-
operatives, the voting shall be done based on their by-laws.

Article 17: Application of relevant management and social development
principles and practices.

Effective governance of co-operatives does not rely onl on their legal bases, values and
principles of co-operatives and morals of the Bhutanese society as mentioned under
Article 4. Co-operatives must be pragmatic and must adapt to relevant changes under the
initiatives of the Board and committee members and the managers.

CHAPTER VI

Financial Management of Co-operatives

Article 18: Capital and their sources.

The capitalization and accounting of resources of registered co-operatives shall be
governed by this Act and the rules issued by the MOHA. Registered co-operatives may
derive their capital from the sources that include, but not limiting to, the following:

(1) Members’ share capital;

(2) Loans and borrowings including deposits;

(3) Revolving capital which consist of the deferred payments of patronage refunds or

interest of share capital; and

(4) Subsidies, donations, legacies, grants, aids and such other assistance from any

local or foreign institutions whether public or private but with prior approval from
the Ministry of Finance.

Article 19: Liability of members

A member shall be liable to the debts of the co-operative to the extent of his contribution
to the share capital of the co-operative.

Article 20: Share capital, Interest and limitations to share capital holding.

It is the responsibility of every member to contribute share capital for the operations of
the co-operative. The co-operative shall issue share ce tificates as proof of the amount
contributed by the member.

The share capital of member shall earn interest based on the constitution and By-laws.

To ensure wider ownership of members of the co-operative through share capital, no
member other than the co-operative itself shall own r hold more than ten per cent (10%)
of the total share capital of the co-operative.

Article 21: Investment of capital.

For the interest of members, a co-operative may invest in any capital of the following:

(1) In shares or debentures or securities of any other co-operative;

(2) In any reputable bank in the country or any company list under the Bhutan Stock

Exchange;

(3) In securities issued or guaranteed by the government;

(4) In real estate primarily for the use of the co-operative or its members; or

(5) In any other manner authorized in the constitutional a d by-laws or approved by

the General Assembly.

Article 22: Financial sustainability of co-operatives from members; proceeds.

The General assembly may authorize its Board of Directors to pursue schemes and
prescribe the policies that would increase or improve the capacity of the co-operative on
financial sustainability. Such schemes should generate funds from proceeds of members
from their capital and products and shall be managed as revolving funds.

The schemes may include the deferring of payment of patronage refunds and interest on
capital, and the deduction of a percentage from the proceeds of products sold or per unit
of product handled.

Article 23: Audit of co-operatives.

All registered co-operatives under this Act shall be subject to annual audits by qualified
auditors as certified by the Royal Audit Authority (RAA). The audit guidelines shall be
prescribed by the RAA after consultation with the Co-operative sector.

The auditor shall submit his report of audit to theaudit committee of the subject co-
operative. After thorough review, the audit committee shall submit the audit report, with
its comments or observation to the board of Directors. The Board of directors shall
present the audit report to the general assembly.

Article 24: Safety of records of co-operatives.

All registered co-operatives shall maintain official records required by this Act, which
includes directory of members, official receipts, duly audited financial statements, annual
reports, and minutes of meetings of the General Assembly, board of Directors and
committees. The Board of directors shall prescribe th policies required for the
maintenance of record.

Article 25: Allocation and distribution of net surplus.

The net surplus of a co-operative shall not be construed as a profit but as a excess of
payment made by a member from his/her business tranactions with the co-operative.
At the end of the accounting period, the net surplus shall be allocated in the following
order of distribution:

(1) Reserve fund of a minimum of thirty percent (30%);

(2) Co-operative education and training fund (CETF) of ten percent (10%);

(3) An optimal fund of not more than ten percent (10%);

(4) Interest on capital and patronage refund of the remaining balance after deducting

items (1), (2) and (3) in this article.

Reserve fund.

This is a buffer fund of the co-operative to cover for its financial limitations that are
brought about by economic or business dislocations such as price fluctuations or
inflation or brought about by fortuitous events such as earthquakes and fires and to
meet net losses in its business operations.

Its purposes are to protect or restore the stability of business operations and to build
confidence among members and the community. Any sum recovered on items
previously charged to the reserved fund shall be credited to such fund.

The reserve fund cannot be divided among members in case the co-operative is
dissolved. Instead, the fund, upon the dissolution of the co-operative, the general
assembly may decide to distribute in the following manner: a) establish a trust fund
for the federation where it belongs and to the union, and/or b) donate to the
communities covered by the area of operation of the co-operative.

Co-operative education and training fund (CETF).

Of the total amount allocated to this fund, the co-operative shall utilize fifty percent
(50%) for its own education and training program that should aim to inform the
members of the policies and programs of the co-operativ . It shall also be used for the
specialized and advanced trainings of the staff, board and committee members. The
other fifty percent (50%) shall be remitted to the union of co-operatives.

Optional fund.

This fund may be created by the general assembly to raise funds to acquire properties
and to contribute to the economic and educational advancement of communities.

Interest on capital and patronage refund.

The remaining balance of the net surplus shall be made available to members as
interest on their capital and as refund for their patronage of the products and services.

CHAPTER VII

Merger, dissolution and insolvency of Co-operatives

Article 26: Merger and consolidation of co-operatives.

Two or more co-operatives may merge with and be absorbed by another co-operative that
shall continue the purpose of the merged co-operatives.

Two or more co-operatives may consolidate into a new, single co-operative.

Merger or consolidation shall be pursued as a strategy of co-operatives to increase
resources and expand or diversify operations for the common economic and educational
interest of members and community.

Article 27: Dissolution and insolvency.

Voluntary dissolution

If the dissolution of a co-operative does not prejudice the rights of nay creditor having a
claim against it, the dissolution may be effected by a two-thirds vote of the General
Assembly called for that purpose.

When the dissolution of a co-operative may prejudice the rights of any creditor, the
petition for dissolution shall be endorsed by a two- hirds vote of the General Assembly
called for that purpose and filed with the MOHA that shall effect the decision.

Involuntary dissolution

A co-operative may be dissolved by order of a court after due hearing on the grounds of
(1) violation of any laws, rules, or provisions of the constitution and by-laws; or (2)
insolvency.

Dissolution

The certificate of registration of a co-operative may be suspended or revoked in a court of
law through legal process.

Insolvency

In case a co-operative is unable to fulfil its obligat ons to creditors due to insolvency,
such co-operative may apply for remedies as it deems fir under the Bankruptcy and
related Acts.

Article 28: Implementing rules.

The MOHA shall prescribe rules for merger, consolidation, dissolution and insolvency of
co-operatives after consultation with the co-operative Sector.

CHAPTER VIII

Role of Government in Promoting the Economic and Educational Development of
Co-operatives

Article 29: Co-operative development strategy.

The Cabinet, after consultation with the Co-operative Sector and other stakeholders, shall
issue the strategy that will articulate the goals and priorities of the RGOB on its support
to co-operative development as part of every Five-Year Plan.

Consequently, all concerned government agencies shall craft and implement their
respective five-year support programs to co-operative development in accordance with
the strategy issued by the Cabinet. The cabinet shall i sue the guidelines to govern the
participation of government agencies including the mechanisms for inter-agency
coordination.

Planning Commission shall provide technical support t the Cabinet in drafting the co-
operative development strategy and in the monitoring and evaluation of the
implementation of approved co-operative plans and programs for all concerned agencies.

Article 30: Government Co-operative sector partnership.

The government and the co-operative sector and other stakeholders shall enter into
partnership, based on mutual respect and understanding, for more effective and
coordination planning, implementation and review of c -operative development plans
and programs.

CHAPTER IX

Miscellaneous Provisions

Article 31: Use of the word “co-operative”

Only enterprise registered under this Act shall useth word “co-operative” in their
names. Any person or organization found violating this provision shall be punished as per
the rules framed by the MOHA.

Article 32: Interpretation and construction.

In case of doubt as to the meaning of any provision of this Act or the rules issued thereof,
the same shall be resolved liberally in favour of the co-operatives and their members.

Article 33: Information campaign.

The MOHA shall conduct an information campaign on the provision of this Act.

Article 34: Separability.

If a part of this Act is declared unconstitutional, the rest of the provisions shall remain in
force and effect.

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