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THE COOPERATIVE (AMENDMENT) ACT OF BHUTAN, 2009

SHORT TITLE

1. Be it enacted by Parliament in its second session

as follows:

2. This Amendment shall be called the

Cooperative (Amendment) Act of Bhutan, 2009;

and

3. It shall come into force on the ….day of the

…month of the….Year of the Bhutanese

calendar, corresponding to …., 2009.

4. Article 2, sub section (2) Definition of terms:

Primary Co-operatives means the first level of

co-operative under this Act formed either by

individual farmers, individual non farmers,

farmers’ groups, whose main purpose is the

provision of quality products and services to

satisfy the economic needs of the members and

their communities.

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5. Article 2, sub section (12) Definition of terms:

Rule –making through consultation means the

power and responsibility entrusted to the

Ministry of Agriculture (MOA) to implement

this Act by issuing implementing rules after

consultation with stakeholders.

6. Article 2, sub section (20) Definition of terms:

(20) Farmers group means a group of not less

than three members deriving economic benefits

from one or more economic enterprises related

to Renewable Natural Resource Sector.

7. Article 5 Regulatory agency and its power:

The Ministry of Agriculture (MOA) is mandated

to implement this Act. It shall discharge the

following regulatory powers and

responsibilities;

1. Register all co-operatives under this Act:

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2. Require all registered co-operatives to submit

annual report including duly audited

financial statements;

3. Monitor and evaluate co-operatives to ensure

that they abide with and sanction those that

have violated, this Act; their Constitution and

By-laws and the policies and rules of the

MOA;

4. Provide legal services on training,

information and advice to co-operatives;

5. Prescribe, after consultation with the co-

operative sector, the implementing rules of

this Act, which shall include, but shall but be

limited to the following:

a) Mediation and conciliation of co-

operatives;

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b) Division, merger and consolidation of co-

operatives; and

c) Dissolution and insolvency of co-

operatives.

8. Article 6 Management and Decentralization:

The Ministry of Agriculture (MOA) shall, when

necessary, delegate the power of registration and

monitoring of cooperatives to Dzongkhags and

prescribe the rules governing such delegation.

9. Article 11, sub section (1) Co-operative

banks:

Co-operative bank may be organized to provide

financial services to primary cooperatives,

federation of co-operatives and insurance co-

operatives and to serve as the financial arm of

the co-operatives in the economy. The Royal

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Monetary Authority (RMA), upon consultation

with the MOA and the Cooperative Sector, shall

issue and implement the rules governing the

banking operations of co-operative banks. A co-

operative bank shall be registered with the MOA

after the issuance of the licensed to operate as a

co-operative 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

10. Article 11, sub section (2) Insurance Co-

operative:

All types of registered co-operatives may join as

insurance co-operative. The insurance co-

operative shall provide life and non-life

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insurance services to all members. Membership

shall also be open to socially oriented non-profit

organizations (NPOs). At least fifteen registered

cooperatives and NPOs may organize and

register insurance cooperative. The Ministry of

Finance, in consultation with the MOA 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 MOA.

11. Article 12 Effects of Registration:

A co-operative, upon registration under this Act,

acquires a juridical personality from the date the

MOA issues a certificate of registration under its

official seal. The registered co-operative, from

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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.

12. 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 MOA, and other

related laws; co-operative values and principles;

and accepted morals of Bhutanese society. The

governance of co-operative shall aim at

improving the quality of life of members and

communities.

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13. Article 14 Liability of directors, officials,

committee members and manager:

Directors, officials and committee members,

who willfully 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 there from to the

co-operative, members and other persons.

The Ministry of Agriculture 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.

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14. 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 MOA.

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 consistsof 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.

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15. Article 28 Implementing rules:

The MOA shall prescribe rules for merger,

consolidation, dissolution and insolvency of co-

operatives after consultation with the co-

operative Sector.

16. Article 31 Use of word “Co-operative”:

Only enterprise registered under this Act shall

use the word “co-operative” in their names. Any

person or organization found violating this

provision shall be punished as per the rules

framed by the MOA.

17. Article 33 Information campaign:

The MOA shall conduct an information

campaign on the provision of this Act.

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THE COOPERATIVE (AMENDMENT) BILL OF BHUTAN, 2009

SHORT TITLE……………………………………………...…1

Article 2, sub section (2) Definition of terms:………………1

Article 2, sub section (12) Definition of terms:………….….2

Article 2, sub section (20) Definition of terms:…………..…2

Article 5 Regulatory agency and its power:……………………2

Article 6 Management and Decentralization:……………... .4

Article 11, sub section (1) Co-operative banks:………… ..4

Article 11, sub section (2) Insurance Co-operative:…………....5

Article 12 Effects of Registration:……………………………..6

Article 13 Constitution and by-laws:…………………………..7

Article 14 Liability of directors, officials, committee members and manager:…………………………………………………...8

Article 18 Capital and their sources:……………………...…9

Article 28 Implementing rules:……………………………….10

Article 31 Use of word “Co-operative”:………………...……10

Article 33 Information campaign:……………………….…10