RULES, 1927

 14th July, 1926


   Whereas certain rules, which it was proposed to make under Section 71 the Cooperative Societies Act, 1925, (Act VII of 1925) were published in Government Notification in the Revenue Department No.5978/24,

            And whereas the objections and suggestions received with reference to the said rules have been considered by the Government of the Province.

            Now, therefore, the Government of the Province in exercise of the powers conferred by Section 71 of the Cooperative Societies Act, 1925 (Act Cooperative Societies Rules, 1927 VII of 1925), and in pleased to make the following rules:-


            1.          Short title.  

            (1)        These rules may be called the Cooperative Societies Rules, 1927. 

            (2)        Definitions. In these rules, unless there is anything repugnant to the subject or context,

                         (i)        The expression “the Act” means the Cooperative Societies Act, 1925

                         (ii)       “Section” means a section of Act,

                        (iii)      Words and expressions defined in the Act shall have the meanings assigned to them in the Act.  


            2.          Application for Registration.  

            (1)        Every application for the registration of a society under sub section (1) of Section 9 shall be in the form of Schedule “A” hereto annexed. 

            (2)       In addition to the copy of the bye-laws which is required to accompany the application for registration under subsection (3) of Section 9 two other copies of the proposed bye laws of the society shall be forwarded therewith.

            (3)        In case where one of the members of the society to be registered is a registered society a member of the Managing Committee of such registered society shall be authorized by such Committee by resolution to sign the application for registration and the bye laws on its behalf and a copy of such resolution shall be appended to the application.  


            3.         Decision of Registrar to be communicated in case of refusal to register. If the Registrar refuses to register the society or its bye laws under Section 10, he shall communicate to the applicants his reasons for so doing.


            4.         Matters in respect of which a society shall or may make bye laws.

            (1)        The matters in respect of which every society shall make bye laws are the following:

a.         The name and address of the society and its branches, the tribe, classes caste or occupation of its members if the membership is proposed to be s restricted, and the area for which it is to be registered;

b.         The object of the society, the purposes to which its funds are applicable, the terms of admission of members, and their rights and liabilities, the consequences of default in payment of any sum due by a member and in the case of credit societies the conditions on which loans may be granted, and the rate of interest and the system of calculation of interest and the maximum number of members that may be admitted; and  the case of non credit societies the mode of conducting business purchase, sale, stock taking, and other like matters.

c.         The mode of holding meetings and subject to the provisions of rules 5 and 6 the manner of making altering and abrogating bye laws.

d.         The mode of appointments and removal of members of the committee and the officers, if any, and the duties and powers of the committee and officers;

                   e.         The manner in which capital may be raised;

f.          The mode of custody and of investment of funds and subject to rules  14, 17, 18 and 19 the mode of keeping of accounts; and

                   g.         The distribution of its profits.

            (2)        Every society may make bye laws in respect of any other matters incidental to the management of its business.


            5.         Bye-laws. When a society has been registered, the bye laws submitted under sub section (3) of Section 9 shall, subject to any modification approved by the Registrar, and adopted at a general meeting, having a quorum, by majority of not less than two thirds of the members present at such meeting, become the bye laws of the societies. 


            6.         Amendment of Bye Laws. Bye laws may be made, altered or abrogated by a resolution passed at a general meeting of the society provided that

            (1)       Due notice of any proposal to make, alter or abrogate the bye laws give in accordance with the bye laws.

            (2)        The resolution is passed by not less than two thirds of the members present at the general meeting at which a quorum shall be present or, at an adjourned general meeting (at which if a quorum is not present members present shall form a quorum) and a copy of the resolution is forwarded to the Registrar writhing a period of three months from the date of meeting. A copy of  the proposed amendments signed by the officers of the society shall be attached to the copy of the resolution; and

            (3)        The making, alteration or abrogation of the bye laws is approved and registered by the Registrar.


            6-A.     Special general meeting at the instance of the Registrar.

Notwithstanding anything contained in the rules or bye laws of a society as to the manner or summoning a General Meeting and a notice to be given, for the said purpose, any person authorized in this behalf by the  Registrar may call a special general meeting for which a requisition has been made by the Registrar under sub section (2) of Section 13 is such manner and at such time and place as the Registrar may direct. A special general meeting so convened shall have powers to transact all business which can be transacted at the annual general meeting under the bye laws framed by the society and such other business is specially mentioned in requisition made by the Registrar.  


             7.         Loans and deposits.  

Every  society with unlimited liability shall, from time to time fix in a general meeting the maximum liability which it may incur in loans and in deposits from non members. The maximum so fixed shall be subject to the sanction of the Registrar who may at any time reduce, it for reasons to be communicated by him to the society in writing and may prescribe a period not being less than four months within which the society shall comply with his orders. No such society shall receive any loan or deposit from a non member which will make its liability to non members exceed the limit sanctioned by the Registrar.


            8.          Restrictions on borrowing by societies with limited liability.  

No society with limited liability shall incur liabilities from persons who are not members exceeding in total fifteen times the total amount of its paid up share capital accumulated reserve fund, and building, funds minus accumulated loss, In calculating the total amount of liabilities for the purposes of this rule, in the case of an agricultural sale society purchase and sale society or a multipurpose sale society, specified by the Registrar by general or special order in that behalf a sum equal to the amounts borrowed by such society from a banking society for giving advances on the security of agricultural produce shall be deducted from the amount of actual liabilities of such society and in the case of the Provincial Cooperative Bank Ltd. A sum equal to the face value of the gilt-edged securities owned by the Bank up to an amount of the paid up share capital of the Bank shall be deducted from the amount of actual liabilities of the Bank.


  8-A.     The provisions of  rule 8 shall apply to land mortgage societies and District Industrial Associations registered under the Cooperative Societies Act, 1927, with the modification that for the word “fifteen time” occurring herein the words “twenty times” shall be substituted.


            9.                 Share not to be hypothecated to the society. 

The shares of a society shall not be hypothecated to that society by its members as a security for a loan.


            9A.      Value of share of member. If a member resigns his membership of society or dies the sum representing the value of interest in the capital of the society to be paid to him or his nominee; heir or legal representative, shall be ascertained as under:

            (i)        In the case of society with unlimited liability, it shall be the actual amount received by the society in respect of such share or interest;

            (ii)        In the case of a society with limited liability, it shall be the amount arrived at by a valuation based on the financial position of the society as shown in the last audited balance sheet proceeding the registration or death of such member, provided that it shall not exceed the actual amount received by the society in respect of each share or interest.  


            10.        Deposits with agricultural credit societies.

Agricultural credit societies shall not accept deposits which are not fixed for a period of at least two months, except savings deposits in such societies as have made in their bye laws provisions for the encouragement of thrift among their members by the opening of saving account.


            11.        Loans on surety ship of non member.

No society shall make any loan to a member on a bond secured by the surety ship of a non member; provided that the registrar may, for special reasons exempt any society by name from the operation of this rule.  


            12.        Writing off of losses. 

Losses may be written off against the reserve fund of any society, and the case of limited liability societies if the losses exceed the reserve fund, the balance remaining may be written off against the share capital of the society;

Provided that:

            (i)         No losses shall be written off without the sanction of a general meeting;

            (ii)        Before any such losses are so written off the society, if it is affiliated and indebted to a Central Bank, shall obtain the approval of the Central Bank in writing which approval shall be given after consultation with the Assistant Registrar, and shall be countersigned by him. If the society is not so affiliated, or if the society is so affiliated, and is not indebted to the Central Bank, it shall first obtain the approval of the Assistant Registrar in writing and;

            (iii)       If the society itself is a Central Bank the approval of the Provincial Cooperative Bank, given in consultation  with and countersigned by the Registrar shall first be obtained;

            Provided further that the Assistant Registrar or the Registrar as the case may be may while according or countersigning the approval impose such conditions as to the restoration of part or whole of the amount written off to the reserve fund from out of future profits, as he deems fit.  


            13.             Interblending. 

For the purposes of sub section (1) of Section 34 a loan means and includes a deposit made by one society with another society.


            14.       Accounts, returns and documents. 

            (1)        Every credit society shall keep the following accounts and books , viz.

a.                  A register of members including persons nominated under section 27;

                   b.                  A register of shares and debentures (where capital is raised by shares or debentures;

c.                  A share transfer register (where capital is raised by shares of debenture;)

d.                  Cash account

                   e.                  Members loan account.

                   f.                   Deposit Account.

                   g.                  Loan register.

                   h.                  Interest account.

                   i.                   Expense account.

                   j.                   Bank account.

                   k.                  Minute Book, recording the proceedings of general meetings;

                   l.                   Minute book, recording the proceedings of the committee.

                   m.                 Register of member’s credit worthiness;

                   n.                  Such other accounts and books as may from time to time be prescribed by the Registrar.  

            Provided that the Registrar may exempt any society or class of societies from the operation of clause (m) mentioned above.

            (2)        Societies other than credit societies shall keep the accounts and books mentioned in clauses (a), (b), (k) and (i) of sub rule (1) and such other accounts and books as may be approved or form time to time required by the Registrar.

            (3)       The Registrar may, by order in writing direct any society to get any or all the accounts and books required to be kept by it under sub rule (1) and (2) written up to such date in such form and within such time as he may describe.

           (4)        The accounts and books by a society shall be kept in such place and by such person as the Registrar may direct.  


            15.       By whom copies of documents or entries my be certified. 

For the purpose of Section 31 copies of documents or entries in the books of a society may be certified by any officer of the society


            16.       Inspection of Documents.

Any member of the public shall be permitted on payment of a fee of 1 rupee for each inspection, to inspect for any lawful purpose any public document (exclusive of public documents privileged under articles 6, 7, 12 and 14 of Qanun-e-Shahadat Order 1984 filled in the office of Registrar.  


             17.      Registrar may require statement and returns to be furnished

The Registrar and may required any society to submit any statement and any periodical return of receipts and disbursements on such dates and in such form as he may prescribe. Every housing society shall submit a property register to the Registrar on such dates and in such form as he may prescribe. 


             18.      Periodical financial statement to be furnished. 

All registered societies classified by the Registrar as Central Bank or as Urban Banks shall submit to that officer a quarterly finance statement in the form prescribed by the Government for the quarters and ending 30th June respectively. 


             19.       Annual Balance Sheet. 

      (1)  On or before 15th September of each year, the Committee of every society shall publish an annual balance sheet showing (a) the profit and loss (b) the receipt and expenditure of the previous financial year and (c) the assets and liabilities as they stood on June 30th. The balance sheet shall be in such form as the Registrar may prescribe or any society or class of society of societies. This balance sheet shall be open to the inspection of any member during office hours at the September 30th to the Registrar and to the Auditor appointed by the Registrar for the audit of that society. 

      (2)  In case of Taluka Development Association the financial year will being from 1st April, and close on 31st day of March.  


             20.       Transfer of interest

The name and address of  every person nominated under section 27 an any revocation or under rule 14, sub rule (1) clause (a). 


             21.       Nomination of persons

A member may, be writing under his hand deposited with the society during his life time or by a statement signed by the member made in any book kept by the society nominate any person to whom under section 27 his share or interest in the society or so much thereof as may be specified in such nomination shall be paid or transferred on his death.  


             22.      Distribution of profits

In calculating the profit of a society for the year all accrued interest which is overdue shall be deducted form the gross profits of the year before the net profits are arrived at. All accrued interest, that has been so deducted from the profit of the year and is actually recovered during the subsequent year.  


             23.       Distribution of bonus. 

No registered society shall distribute any bonus or shares beyond or shares beyond declared under section 38.  


             24.       Payment of dividend by consumer’s producers or housing society.

No society shall pay its shares holders a dividend exceeding 6/4 per cent in any year on the paid up hare capital standing on the name of each shareholder. If a society is unable to pay a dividend of 6/4 per cent in a year, it may make good the deficit by paying the difference out of profits in future years.  


             25.       Distribution of balance of profits. 

Any distribution of the remaining balance of profits under section 40 and after the distribution of dividend under section 38 shall be in accordance with bye laws of the society regarding such distribution. It shall be in proportion to the wages earned by each member in the case of producer's society, and to the amount of goods purchased by each member, or, where it is so provided in the by laws, by each member or customer, in the case of consumer society. It shall also e in proportion to the amount of rent paid by each member in the case of a Housing Society and in the case of a resource society may be in proportion to the goods obtained or sold through the society by each member, or to the loans borrowed from, and the deposits made with, the society by each member.


          26.      Restrictions on distribution of funds by way of bonus dividend or otherwise. 

Without the sanction of the Registrar, no part of the funds of a registered society shall be divided, by way of bonus or dividend or otherwise, amongst its members in any year unless the entire expenditure incurred by such society has been debited in the annual profit and loss account before the net profit has been calculated.

Provided that any loss or portion of loss on account of bad debts written off during the year may not be debited if it be deducted from any bad debt or with the sanction of the Registrar from the Reserve fund.  


             27.        Investment of funds.  

With the previous sanction of the Registrar any society may invest its funds or a portion thereof (a) in the shares of the State Bank of Pakistan constituted under the State Bank of Pakistan Order, 1948 (b) in the purchase or leasing of land or building and (c) in the construction of buildings, provided that the purchase of such land or the construction of such buildings, is likely to be advantageous to the society in the conduct of its business.


            28.         Reserve fund.

The reserve fund of any registered society may be utilized in the business of the society, or be invest or deposited in any of the ways mentioned in clauses (a), (b), (c) and (d) of section 37. The Registrar may, for reasons to be communicated in writing by him to the society, by general or special order direct that the latter course be adopted. In the case of a society constituted with the object of cooperative housing on a co-partnership tenancy basis the reserve fund may be utilized for expenditure on the maintenance, repair and renewal of the buildings of the society.  


            29.         The Levy of audit fees.  

Registrar may, with the previous sanction of the Provincial Government, levy audit fees on all societies provided that in the case of an agricultural cooperative credit society, the audit fees so levied shall not exceed 5/8 per cent calculated on the working capital of the society as it stood at the close of the last preceding cooperative year. The Registrar shall employ the proceed of such audit fees in maintaining a staff to audit the accounts of society. Such audit fees shall be recoverable under section 65. 


            30.         [Deleted].  

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