Cooperatives Rules, 1993
In exercise of the power conferred by Section 48 of the 1992 Cooperative Act, HMG has framed
the following rules.
1. Short Title and commencement
(1) These rules may be called the Cooperatives Rules, 1993.
(2) These rules shall come into force at once
2. Definitions
(1) Act means the 1992 Cooperative Act.
(2) Manager means the Manager of a society or union.
3. Registration of society or union
An application in the form indicated in Schedule 1 must be submitted to the Registrar for the
registration of a society or union under Section 4 of the Act.
4. Priority for registration
In case several applications for the registration of a union are received, priority shall be given to
the application which is duly registered first.
5. Certificate of registration
While issuing the certificate of registration to a Society or Union under Section 5 of the Act, the
Registrar shall do so in the form indicated in Schedule-2.
6. Termination of membership
(1) The membership of a Society or Union shall terminate in the following circumstances:
(a) In case the resignation submitted to the Board in writing by the member is accepted.
(b) In case (the concerned member) no longer possess the qualifications for membership
prescribed in the bye-rules.
(c) In case the Society or Union is dissolved
Provided that no member who has yet to repay the loan obtained by him from the Society or
Union, or any other amount due to the Society or Union, and the member who has provided
surety or guarantee on his behalf, may resign from the membership of such Society or Union.
(2) In case any person whose membership has terminated under sub-rule (1) again desires to
acquire the membership of the Society or Union, he may apply to the concerned Society or
Union only after 1 year from the date if termination of his membership.
7. Shares to be returned
1
In case the membership of any members is terminated under Rule 6, the maount invested by him
in the Society or Union through the purchase of shares shall be returned to him in the manner
prescribed in the bye-rules.
8. Transfer of shares
1. In the event of death of any member, the shares registered in his name and the rights
accruing to him from the Society or Union shall be transferred in the name of the heir
nominate, if any, by him under Rule 9, and, in the absence of such heir, in the name of
the heir determined according to current law.
Provided that in case such heir lacks the qualifications required for membership
prescribed in the bye-rules, an application may be filed within 6 months from the date of
the member to have (the shares and other rights) transferred in the name of any other heir
who is qualified for acquiring membership. In case such an application is received (the
share and other rights) shall be transferred in the name of such heir.
2. In case the heir of a deceased member does not want to have the right of the deceased
member transferred in his name under Sub-rule (1), the amount of the shares to which he
is entitled shall be returned to him.
3. Notwithstanding anything contained in Sub rule (1) & (2), if the heir of a deceased
member is a minor or a person who has lost his mental balance, the amount of the shares
due to the deceased member shall be returned to the guradian of such heir in the presence
of at least 2 witness.
9. Nomination of heirs
1) Heirs shall be nominated by preparing a document to that effect in the presence of at least
two witnesses. Such document must have been signed by the member nominating the heir
and the witnesses.
2) In case any member who nominates his heir under sub rule (1), has not subscribed to
more than one share, he may nominate only one heir.
3) In case any has nominated several heirs subject to sub-rule (2), the proportion of the share
and the rights to be transferred to each such person must be mentioned in the concerned
document.
10. Preliminary GM
1) Every Society or Union must convene its preliminary GM within 3 months from the date
of its registration.
2
2) In case the preliminary GM is not convened according to sub-rule (1), the Registrar, or a
person nominated by him, may convene such meeting within 35 days from the date of
expiry of the time-limit prescribed in sub-rule (1) in case any member applies to him for
convening such meeting or even if no such application is received.
3) Quorum for conducting the preliminary GM shall be deemed to have been qualified in
case it is attended by 50 % of the total membership of the Society or Union.
4) Preliminary GM shall discharge the following functions:
a) Elect the chairman of the meeting
b) Acquire information regarding the accounts of the functions and activities of the
Society or Union until the previous day
c) Hold discussions on the preliminary reports submitted to the meeting, and issue
instructions
d) Elect the board as prescribe in the bye-rules
11. Annual GM
1) Every Society or Union must convene its annual GM within 6 months from the date of
expiry of every financial year.
2) In case the annual GM is not convened according to sub-rule (1), the Registrar, or a
person nominated by him, may convene such meeting within 35 days from the date of
expiry or the time-limit prescribed in sub-rule(1) in case any member applies to him for
convening such meeting or even if no such application is received.
3) The quorum for an annual GM shall be 25 % of the total membership, or 13 members,
whichever is higher, in case of a Society, and 50 % of the total membership, in case of a
Union.
4) Notwithstanding anything contained in Sub rule (3), in case it becomes necessary to
convene another meeting because of lack of quorum in the first meeting, a fresh notice of
such meeting must be issued at least 7 days in advance. The quorum for the reconvened
meeting whichever is higher, in case of Society, and 40 % of the total membership, in
case of a Union.
5) The annual GM shall be presided over by the Chairman of the Board, and, in his absence
by a person chosen by the members present at the meeting from among themselves.
6) All issue to be discussed in the annual GM must be presented in the form of resolutions.
Decision on such resolutions shall be taken on the basis of a majority of the attending
members. In the event of a tie, the Chairman shall execise his casting vote.
3
12. Extraordinary GM
1. The Board may convene extraordinary GM of the Society or Union by adopting the
worker procedures prescribed in the bye-rules in the following circumstances:
a) In case the auditor deems it necessary in the course of auditing the accounts and
records of the Society or Union to convene an extraordinary GM, and requests the
Board in writing for the same, explicitly mentioning the reasons thereof, or
b) In case the Accounts Committee mentioned in Section 17 of the Act, or any sub-
committee formed under Section 19 of the Act, deems it necessary to convene an
extraordinary GM for any special purpose and requests the Board in writing for
the same, explicitly mentioning the reasons thereof, or
c) In case a resolution submitted by any director to the Board pointing out the need
for convening an extraordinary GM by explicitly mentioning the reasons therof is
passed by the Board, or
d) In case at least 10 % of the total membership, or 10 members, whichever is higher
in the case of a Society, and 20 % of the total membership, in case of a Union,
submit an application for convening an extraordinary GM by indiacting the
reasons thereof.
2. The quorum for an convene extraordinary GM shall be 15 % of the total membership, or
11 %, whichever is higher, in case of a Society, and 40 % of the total membership in the
case of a Society.
3. Extraordinary GMs shall be presided be presided over by the Chairman of the Board, and,
in his absence, by a person chosen by the members present at the meeting from among
themselves.
4. All issue to be presented before extraordinary GMs shall be presented in the form of
resolutions. Decision on such resolutions shall be taken on the basis of a majority of the
members present at the meeting. In the event of a tie, the Chairman shall execise his
casting vote.
13. Representation
Subject to the conditions prescribed in the bye-rules, the Board shall nominate a representative
from among the members so as to represent the Society or Union in another Society or Union.
14. Particulars to be mentioned
The Societies or Unions shall frame bye-rukes on the basis of the particulars mentioned in
Schedule-3.
4
15. Apppointment of Registrar
1. NG shall appoint the Registrar of the Cooperatives Department to function as Registrar.
While doing so, the equivalent class in the civil Service shall also be mentioned.
2. The remuneration of the Registrar to be appointed under sub-rule (1) shall be equal to an
employee of the equivalent class in the Civil Service of NG.
16. Functions and Duties of the Registrar
The functions and duties of the Regsitrar shall be as follows:
a) To register societies or unions after conducting necessary investigations into applications
for the purpose, and issue certificates of registration.
b) To approve the bye-rules framed by societies or union for operating their business subject
to the Act and the Rules.
c) To have the Board of Directors of societies or unions elected
d) To amalgamate or divide societies or unions
e) To inspect societies or unions from time to time
f) To coordinate the operation of administrative functions of societies or unions in order to
promote their activities, and inspect or make arrangements for inspecting their accounts
and records.
17. Funds of Societies or Unions
1. Every Society or Union shall have a separate fund of its own, which shall comprise the
following amounts:
2. The amounts deposited in the fund mentioned in Sub-rule (1) shall be spent for purposes
mentioned in the bye-rules.
3. The societies or Union must obtain the approval of NG before obtaining loans or grants
from foreign governments and international institutions or organisations.
4. All amounts accruing to the Society or Union under Sub-rule (1) shall be deposited in an
account opened in the name of the Society or Union in any bank within the Kingdom of
Nepal.
5. The acocunt of the fund mentioned in Sub-rule (1) shall be operated through the joint
signatures of a Director designated by the Board of Directors and the Manager.
18. Share may be sold
(1) the societies or unions may sell shares to the following agensies also under sub section (1) of
Section 23 of the Act.
5
a) NG or the agencies or institutions owned by NG
b) Financial institutions conducting financial transactions with cooperative societies or
unions
19. Allotment of surplus
1. The balance left in the net surplus of a Society or Union in any year after crediting the
amount mentioned in Section 27 (1) of the Act to the Reserve Fund may be utulised to
establish the following funds:
a) Share Dividend Fund
b) Protected Fund
c) Employees bonus Fund
d) Coopeartive Education fund
e) Loss Reimbursement Fund
2. Limits of the amounts to be credited to the funds establsihed under sub-rule (1) shall be
as prescribed by the Board from time to time.
3. The amounts credited to the funds established under sub-rule (1) must be deposited in
separate accounts, and such funds shall be operated in the manner prescribed by the
Board.
20. Reserve fund
Arrangements relating to the operation and utilization of the reserve fund shall be as prescribed
in the bye-rules.
21. Records to be maintained
1) Every Society or Union must maintain the following records on a current basis in order to
conduct its business.
a) Membership register as indicated in Schedule-4.
b) Separate books relating to the proceedings of the preliminary GM, GMs, and
extraordinary meetings of General Assembly, as well as those of the Board, the
Accounts Committee and sub-committees.
c) Cash book
d) A register which shows the transactions, if any, conducted by the Society or
Union with any individual or other Society or Union.
e) Share Register
f) Stock Register
g) Loan transaction register
h) Irregularities and scrutiny account
i) Personal accounts
j) Separate accounts of income, expenditure, assets and liabilities
6
k) Other records and accounts prescribed by the Board of Directors from time to
time
2) Every Society or Union must submit to the Registrar, or the authority prescribed by him,
the particulars of its income and expenditure, production ccost and position in the form
indicated in Schedule-5.
22. Power to demand information from banks or other agencies
The Registrar may, if he so deems necessary, demand information in respect to the following
matters from the bank or any other agency with which a Society or Union conducts transactions:
a) Any information relating to transactions
b) Copies of the accounts and records of the Society or Union kept by the bank or other
agency.
c) Cheques endorsed by the Society or Union or those issued in such a way as to be
deposited in the name of the Society or Union.
d) Bills, receipts, etc. relating to economic transactions.
23. Inspection
1) The Registrar, or the authority empowered by him, may inspect any document and
records of the Society or Union. It shall be the duty of the directors, members or
employees of the Society or Union to allow such inspection.
2) After completing inspection under sub-section (1), the concerned authority must submit
an inspection report along with his suggestions in the fprm indicated in Schedule – 6.
3) It shall be the duty of the Registrar to have the errors mentioned in the inspection report
rectified.
24. Report to be submitted
Every Society or Union must submit a report on matters mentioned in Section 34 of the Act to
the Registrar, or the authority prescribed by him, within 3 months from the date of expiry of each
financial year.
25. Working procedures relating to auction sales
1) While realising arrears or payments due to the society or Union under Sec. 39 of the Act
by auctioning the property of the person from whom they are to be realised, the Society
or Union itself, or the Registrar on the recommendation of the Society or Union, shall
adopt the following procedures:
a) A notice must be sent in the name of the person who is identified as the person
who has to pay such arrears, directing him to pay up the arrears, or furnish
evidence of payment, if he has already paid such amount, within 35 days,
excluding the time required for the journey. In case such a notice is sent in this
manner, and the concerned person fails to pay the outstanding amount or furnish
7
evidence of payment thereof within the prescribed time limit, a notice of auction
sale shall be issued in his name.
b) If the lands and buildings pledged as collateral have not been frozen through the
Land Tax Office, it shall be requested to do so and evidencce thereof shall be
kept.
c) Thenotice of auction sale of any movable or immovable property pledged as
collateral shall explicitly mention the particulars of the collateral and the amounts
of the principal, interest and compensation payable by the concerned person. It
shall also be mentioned that the amount of principal, interest and compensation
shall be realised through an auction sale within 15 days, if the collateral is a
movable property, from the date of publication of the notice. The notice shall be
affixed in the Local Village Development Committee or Municipality (Office)
and in public places, and laso published in any one local or national newspaper or
magazine.
d) The process of auction sale must be started at the time when the office opens and
ended 1 hour before the time of closing the office. If the day prescribed for
auction sale happens to be a holiday, it shall be carried out the next day at the
same time and place.
e) While selling any property through the process if auction, the reserve price of the
concerned movable or immovable property as fixed in consultation with the local
people shall be fixed abd bidding started from that amount. The sale of property
through auction shall be approved in the name of the person who makes the
highest bid from among the bidders.
f) The bidder shall be made to sign a form as prescribed in the bye-rules, explicitly
mentioning his bid.
2) Auction sale under sub-rule (1) shall be made with the representatives of the Distrcits
administration office, the Land Tax Office, a government office, if any, locatednear the
site of the auction sale, and the Local Village Development committee or Municipality as
witnesses, and after having them sign a memorandum thereof.
3) In case no representative of any of the officers mentioned in sub-rule (2) is deputed even
after being requested in to do so, the auction sale shall be made with attending
representatives as well as the representatives of the Local Village Development
committee or Municipality as witnesses.
4) The person whose movable or immovable property is to be auctioned in order to realise
the arrears due from him must be sent a notice explicitly mentioning the time and place of
aution sale and requesting him to be present on the occasion.
8
Provided that the failure if the concerned person to be present on the occasion shall not be
deemed to have obstructed the process of auction sale.
26. Power to postpone auction sale
If it is deemed necessary to postpone any auction sale due to any appropriate reason even after
the publication of a notice of such sale, the Society or Union or the Registrar who has published
such notice may do so for some time.
27. Amounts not received may be received from other assets
1) In case the principal, interst and compensation is not fully realised from the proceeds of
the auction sale of the property pledged as collateral, the outstanding amount shall be
recovered by auctioning within a year the other property owned by the concerned
person anywhere inside the State of Nepal by adopting the procedure laid down in Rule
25.
2) In case of a loan obtained by a tenant, the entire amount of the principal, interest and
compensation shall be realised by auctioning the crops he has cultivated.
3) While making an auction sale under sub-rule (1) and (2), the balance left after fully
realised the principal, interest and compensation until the day of auction sale must be
handed over to the concerned person.
28. Collection of payments from successful bidders
1) On the completion of the process of auction sale, 10 % for the amount quoted by the
successful bidder shall be collected from him in the form of a deposit the same day. The
balance, that is, 90 % must be paid within 7 days from the date of successful bidding. He
must also be made to sign a bond to the effect tha thte deposit may be forfeited if he fails
to pay the amount within that time-limit.
2) In case the cucessful bidder fails to pay 10 % of the amount quoted by him the same day,
the second highest bidder shall be declared as the successful bidder.
3) In case successful bidder pays the entire amount quoted by him under this Rule, the
Society or Union must write to the concerned office for the registration or transfer of
property in his name according to current law.
29. Society or union to have the ownership of assets which fail to be sold by auction
In case no one bids at the auction sale of any asset which needs to be auctioned under Rule 25 &
27, the concerned government offices shall register or transfer the aset in their records in
accordance with the information received from the Socieity or Union.
30. Expenses to be realised
9
While realsising its arrears by auctioning the assets of the person from whom such arrears are to
be realsied, the Society or Union shall also realise the espenses incurred for the auction sale in
addition to the principal, interest and compensation.
31. Writing off
Loans or any other amount to be realised by the Society or Union may be written off through the
decision of a two-thirds majority of the members present at the annual GM.
32. Regularization of irregularities
The irregualr amounts of the Society or Union must be regularised within the financial year that
immediately follows its audit. In cse the irregualr amounts are not regualrised within that period,
such amounts must be realised from the concerned employee as arrears of payment by adopting
the pwrking procedure laid down in Rule 25.
33. Functions, Duties amd powers of liquidator
1) The functions, duties and powers of the Liquidators appointed under Sec. 42 of the Act
shall be as follows:
a) To realise the amounts due from the dissolved Society or Union from its assets or
those of incumbent or former members, or deceased members, by adopting the
procedures laid down in rules 25 & 27 in order to fully repay the amounts due fro
the dissolved Society or Union.
b) In case any creditor has any amount due from the dissolved Society or Union, and
in case the matter is not recorded in the accounts and records of the Society or
Union, to send a notice to the concerned creditor directing him to claim the
amount within a specified time-limit, or to claim that the concerned amount not to
be disbursed until the claim is proved
c) To decide which of the creditors should be given priority if any such issue arises
d) To issue necessary instructions in regard to assembling and alloting the assets of
the Society or Union in course of its dissolution.
e) In case any claim has been made by or against the Society or Union, to effect
compromise between the two parties with the prior approval of the Registrar.
f) To convene a meeting of the members if so deemed necessary for the purpose of
dissolution
g) To take charge of the accounts and records, documents and assets of the Society
or Union.
h) To sell assets of the Society or Union.
i) To allot the assets of the Society or Union after the approval of the Registrar to
the scheme relating to such allocation is obtained.
2) If the liquidator so deems necessary while exercsing the powers under sub-rule (1), he
may summon and interrogate the concerned parties, witnesses and any employees if the
10
Society or Union on order to obtain necessary information in respect to the formation,
functions and duties and assets of the Union or Society, or other matters.
34. Power to control dissolution
The Registrar may review the functions performed by the Liquidator in exercise of the power
conferred on him under Rule 33, and also act as follows:
a) To cancel or alter the orders issued by the Liquidator in violation of the directives, or
issue fresh orders according to need
b) To have the accounts and records, documents and assets or the Society or Union
presented before him
c) To prescibe a limit deemed appropraite by him on the powers oof the Liquidator unser
Rule 33.
d) To obtain a report on the accounts and records inspected by the Liquidator.
e) To confer the power to allocate the assets of the Society or Union.
f) To issue necessary directives in regard to the remuneration and allowances to be paid to
the Liquidator, and
g) To remove the Liquidator from the post.
35. Completion of liquidation proceedings
1) The Fund of the Society or Union which is dissolved because of the cancellation of its
registration under Sec. 11 of the Act may be utilised for incurring expenses for the
following purposes in the following priority:
a) To pay the expenses incurred in the task of liquidation,
b) To pay salaries and allowances to the employees,
c) To repay loans,
d) To settle other outstanding payments,
e) To refund the share capital,
f) To distribute dividends at a rate not exceeding 8 % of the sahre capital per year
for period during which dividends have not been distributed
2) In case any creditor of the concerned Society or Union does not collect the amount
allocated to him under the scheme of allocation even after completion of the liquidation
proceedings, he may make a claim from the fund of the Society or Union for the amount
due to him within 3 months from the date of completion of liquidation proceedings. No
action shall be taken on a claim made after the expiry of usch time-limit.
3) In case there is a surplus in the fund of the Society or Union even after meeting the
expenses required for the purposes mentioned in sub-rule (1), it may be handed over in
the following priority as per the directives of the Registrar.
a) To any other Society or Union located nearby whose nature of work is a similar to
that of the dissolved Society or Union and which is capable of provising services
in its working area.
11
b) To a higher level union with similar nature of work of which the concerned
Society or Union is a member.
c) To the National coopeartive society
4) Notwithstanding anything contained in Sub rule (3), NG may, on the recommendations of
the Registrar, hand over the surplus left in the fund of such Society or Union under sub-
rule (1) to any other agency contributing to the coopeartive movement.
36. Power to make alternations in Schedule
NG, may, if it so deems necessary, make necessary changes or alterations in the Schedules by
notifications in the Nepal Rajpatra.
37. Repeal
The 1986 Cooperative (Sajha) Societies Rules have been repealed.
12
