Multi-state Cooperative societies
Contributed by: Neha Kujur
Email id: Neha@simplybiz.in
Introduction Multi-State Cooperative Societies
Multi-State Cooperatives are societies that have operations in more than one state. It is governed by Entry 44 of List I of the Union List of the Seventh Schedule to the Constitution. Such Multi State Cooperative Societies are registered under the Multi-State Co-operative Societies Act 2002 and Multi-state Co-operative Rules 2002, and their regulation lies with the Central Registrar. The advantage of registering under the MSCS Act is similar to the benefits acquired by registering a company. A registered multi-state cooperative society has the privileges of limited liability, separate legal identity, and the ability of members to transfer their membership.
Cooperative Principles:
- Voluntary and open membership: Cooperatives are voluntary organizations, open to all persons without any discrimination.
- Democratic Member Control: Multi-State Cooperatives are democratic organizations controlled by their members. They actively participate in setting its policies and decision making.
- Member’s Economic Participation: There is an equal contribution by each member. A large part of the profit arising out of the activities is distributed among the members.
- Autonomy and Independence: A Multi-State Cooperative Society is a self-help organization controlled by its members. They ensure cooperative autonomy while entering into any agreements with the external sources including the Government.
- Education, Training and Information: Multi-State Cooperatives provide education and training to their members for an effective contribution for the development of the society.
- Concern for community: While focusing on the needs of their members, multi-state cooperatives work for the sustainable development of communities through various policies.
Benefits of a Multi-State Cooperative Society:
- Similar to a Body Corporate: A Multi-State Cooperative Society has all the benefits of a Body Corporate. It registers under its own name, have perpetual succession and power to acquire, sell, dispose off both movable and immovable property, enter into contracts, sue and can get sued, etc.
- Limited Liability: A Multi-State Cooperative Society enjoys the benefit of limited liability.
- Amalgamation and division: A Multi-State Cooperative Society may
- transfer its assets and liabilities in whole or in part to any other Multi-State Cooperative Society or Cooperative Society;
- divide itself into two or more Multi-State Cooperative Societies;
- divide itself into two or more Cooperative Societies.
- Voting rights of members: Every member of a Multi-State Cooperative society shall have one vote in the affairs of the society.
- Transfer of interest of a member: On the death of a member, a Multi-State Cooperative Society may transfer the share or interest of the deceased member to the nominee of such member.
A Birds eye view of Multi-State Cooperative Societies Act, 2002
The highlights of the Act are as follows:
| Basis | Particulars |
| Extent | The act extends to whole of India |
| Bye-laws | These are the rules and regulations which govern the internal working of the Multi-State Cooperative Society. The bye-laws and any amendments thereto, has to be duly registered. The bye-laws must provide for the social and economic betterment of its members through self-help and mutual aid in accordance with the cooperative principles. |
| Board | Means the Board of Directors or the governing body of a multi-state cooperative society by whatever name called, to which the direction and control of the management of the affairs of the society is entrusted. Every multi-state cooperative society shall have a Board of Directors. The Board of the society must consist of such number of Directors as may be specified in the bye-laws, but the maximum number of Directors shall not exceed 21 (twenty one). |
| Central Registrar | means the Central Registrar of Cooperative Societies, entrusted with the registration and granting other approvals in case of a cooperative society |
| Cooperative Year | Means the year ending on the 31st day of March. |
| General Body | Means all the members of the society |
| Main objectives | to serve the interests of members in more than one state |
| General Body | Means all the members of the Society |
Members:
A member means a person joining a multi-state cooperative society. The following persons can become a member of a multi-state cooperative society:
1. an individual, competent to enter into a contract under section 11 of the Indian Contract Act, 1872;
2. any multi-state cooperative society or any cooperative society;
3. the Central Government;
4. a State Government;
5. The National Cooperative Development Corporation established under the National Cooperative Development Corporation Act, 1962;
6. any other corporation owned or controlled by the Government;
7. Any Government Company such class or classes or persons or association of persons as may be permitted by the Central Registrar having regard to the nature and activities of a multi-state cooperative society.
Register of members:
A multi-state cooperative society shall maintain a register of list of members. The register shall include basic details of the members including the date of its admission and cessation.
Meetings:
Meeting of the Annual General Body: Every multi-state cooperative Society shall, within 6 months from the closure of the financial year, call the annual general meeting of the General Body.
Meetings of the Board: The Board of Directors of a multi-state cooperative shall meet at least once in every quarter. The frequency and the venue can be specified in the bye-laws.
Disposal of net profits:
| Sl. No. | Particulars | Amount of Net Profit |
| 1. | Transfer to reserve fund | Minimum of 25% |
| 2. | Cooperative Education Fund | 1% |
| 3. | Transfer to reserve funds for unforeseen losses | Minimum of 10% |
The balance of the net profits may be utilized for all or any of the following purposes:
- Payment of dividend to members
- Contribution to special funds
- Donations to any purpose connected to development of cooperative movement or charitable purpose to an amount not exceeding 5%.
- Payment of ex gratia amount to employees.
Registers and Compliances:
The registers and other compliances change according to the type and nature of a cooperative society. Some of the common compliances and maintenance for statutory records and registers of a cooperative society are as under:
- Register of members
- Register of loans
- Drafting of Notice of Meetings
- Maintaining Registers of Members
- Preparing of Minutes of Meetings
- Reporting of Governing Body structure to Registrar of Societies
- Preparation of Books of Accounts of Company
- Preparation & Filing of Income Tax Return
- Assessment & Payment of Advance Tax
- Assessment & Filing TDS Return
- Filing of Monthly/Quarterly GST Return (if applicable)
- Filing of Annual GST Return (if applicable)
| Sl. No. | Particulars | Extent of Deduction allowed |
| 1. | A Cooperative society engaged in (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of agricultural produce grown by its members, or (iv) the purchase of agricultural implements, seeds, livestock, or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, or (vi) the collective disposal of the labor of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members |
The whole of amount of profits and gains |
| 2. | A Cooperative Society primarily engaged in the supply of milk, oilseeds, fruits, or vegetables raised or grown by its members to
a. a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or b. the Government or a local authority; or c. a Government Company |
The whole of amount of profits and gains |
| 3. | a co-operative society engaged in activities other than those specified above in points 1 and 2: a. Being a consumer’s cooperative society b. Any other society |
Maximum of ₹ 1,00,000/- Maximum of ₹ 50,000/- |
| 4. | any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society | Whole of such income |
| 5. | any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities | Whole of such income |
Investments of Funds:
A multi-state cooperative society may invest or deposit its funds-
- in a cooperative bank, state cooperative bank, cooperative land development bank or central cooperative bank; or
- in any of the securities specified in section 20 of the Indian Trust Act, 1882 (2 of 1882); or
- in the shares or securities of any other multi-state cooperative society or any cooperative society; or
- in the shares, securities or assets of a subsidiary institution or any other institution; or
- with any other bank; or
- in such other mode as may be provided in the bye-laws.
Conclusion:
Recognizing the widespread popularity and success of cooperative societies, the government introduced multi-state cooperative society as a more advanced alternative to cooperative society. operating across multiple states and offering a broader geographical reach and increased scale, multi-state cooperative societies further amplify the benefits enjoyed by their members, making them a preferred choice for those seeking collective prosperity and ethical business practices in today’s dynamic socio-economic landscape. It offers expanded opportunities for collaboration and growth with the notion of mutual benefit and collective interest, aiming for financial gains such as improved pricing, access to government assistance, tax advantages, enhanced products, and services, among others.
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