chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Cooperatives Act, 2017

Chapter 3
Objectives and Functions of Association or Union

24. Objective of Association or Union: The main objective of an association or union shall be to achieve the economic, social and cultural prosperity of its members, being area-based and member-centric. 25. Functions of Association or Union: An association or union shall perform the following functions:-
 (a) To observe and cause to observe the cooperative values, norms and principles,
 (b) To promote and cause to promote the interests of members and their business and market them,
 (c) To provide education, information and training to members and promote good governance in member associations or unions,
 (d) To enhance and cause to enhance mutual cooperation among associations or unions,
 (e) To determine standards, improve quality, and carry out works related to economic stability and risk management of production and services undertaken by associations or unions,
 (f) To implement internal control systems,
 (g) To conduct activities related to commercial promotion and development of the association or union,
 (h) To comply with directives of the Ministry, Registrar, Province, Local Level or Office,
 (i) To perform functions mentioned in the bye-laws. 26. Functions of National Cooperative Federation: The National Cooperative Federation shall perform the following functions for the promotion of member interests:-
 (a) To observe and cause to observe cooperative values, norms and principles,
 (b) To play a leadership role in promoting the interests of members,
 (c) To coordinate and cooperate with various bodies of the Government of Nepal for the promotion of the cooperative sector,
 (d) To conduct or cause to conduct commercial and market studies and research for the promotion of cooperative business,
 (e) To provide or cause to provide education, training and information,
 (f) To develop a market information system,
 (g) To enhance and cause to enhance mutual cooperation among associations and unions,
 (h) To enhance mutual cooperation, coordinate and expand relations in the international cooperative movement,
 (i) To promote good governance in the cooperative sector,
 (j) To perform functions mentioned in the bye-laws. Chapter 4
Bye-laws and Internal Procedure

27. Requirement to Make Bye-laws: (1) A cooperative society shall, subject to this Act and the rules, directives, standards and procedures made under this Act, make bye-laws for the conduct of its operations.
(2) The bye-laws pursuant to Sub-section (1) shall come into effect after being approved by the Registrar or the officer authorized by the Registrar.
(3) Notwithstanding anything written in Sub-section (2), before approving the bye-laws of a Cooperative Bank, the Registrar shall consult Nepal Rastra Bank. 28.
Cooperatives Act, 2017

28. Power to Make Internal Procedure: (1) A cooperative society may, subject to this Act and the rules, directives, standards, procedures and bye-laws made under this Act, make its internal procedure as required.
(2) The internal procedure pursuant to Sub-section (1) shall come into effect after being approved by the General Assembly of the concerned cooperative society. 29. Amendment to Bye-laws and Internal Procedure: (1) The bye-laws and internal procedure may be amended by a majority of the total number of members of the General Assembly of the cooperative society.
(2) The bye-laws amended pursuant to Sub-section (1) shall come into effect after being approved by the Registrar or the officer authorized by the Registrar. Chapter 5
Membership

30. Membership of Association: (1) The following Nepali citizens who have completed sixteen years of age may become members of an association:-
 (a) Those residing within the area of operation of the association,
 (b) Those who have purchased at least one share of the association,
 (c) Those who agree to abide by the conditions mentioned in the bye-laws of the association,
 (d) Those who agree to fulfill the responsibilities of the association,
 (e) Those who do not conduct business in competition with the business conducted by the association.
(2) Notwithstanding anything written elsewhere in this Act, bodies of the Government of Nepal, Provincial Governments, Local Levels, as well as cooperative schools and community schools, trusts, local clubs, non-profit organizations formed at the local level, production and service-based unions and organizations, and consumer groups within the area of operation of the association shall not be barred from becoming members of the association.
(3) Notwithstanding anything written elsewhere in this Section, a cooperative society shall not be barred from obtaining membership in a health cooperative society. 31.
Cooperatives Act, 2017

31. Application for Membership: (1) A person desirous of taking membership of an association shall submit an application to the committee of the association.
(2) Within thirty-five days from the date of application pursuant to Sub-section (1), the committee shall, subject to this Act and the rules and bye-laws made under this Act, decide to grant or refuse membership.
(3) When deciding pursuant to Sub-section (2), if the committee decides not to grant membership, it shall inform the applicant of the reasons within seven days.
(4) Within thirty days from the date of receiving information pursuant to Sub-section (3), the concerned person may lodge a complaint against such association with the officer authorized by the Registrar.
(5) If upon investigation of the complaint received pursuant to Sub-section (4), it appears that the applicant should be granted membership, the officer authorized by the Registrar may order the concerned association to grant membership to such applicant.
(6) If an order is made pursuant to Sub-section (5), the concerned association shall, within seven days of receiving such order, grant membership to the applicant and inform the officer authorized by the Registrar thereof. 32. Persons Ineligible for Membership: Amended by the Act to Amend Some Nepal Acts relating to Cooperative, 2081.(1) Notwithstanding anything written elsewhere in this Act, one person shall not be a member of more than one cooperative society of the same nature. Provided that a person who is a member of more than one cooperative society of the same nature at the time of commencement of this Sub-section shall, within one year from the date of commencement of this Sub-section, retain membership of only one such society.
(2) If, at the time of commencement of this Act, any artificial person, other than a body of the Government of Nepal or those mentioned in Sub-section (2) of Section 30, is a member of any association, its membership shall be terminated within five years. Provided that this Sub-section shall not apply to health and education cooperative societies registered prior to the commencement of this Act. 33.
Cooperatives Act, 2017

Provided that this Sub-section shall not apply to health and education cooperative societies registered prior to the commencement of this Act. 33. Eligible for Membership: (1) In the District Subject-wise Union under Section 4, subject-wise associations within the district may be members.
(2) In the District Cooperative Union under Section 5, associations and District Subject-wise Cooperative Unions within the district may be members.
(3) In the Provincial Subject-wise Cooperative Union under Section 6, subject-wise associations and District Subject-wise Unions within the province may be members.
(4) In the Provincial Cooperative Union under Section 7, associations, District Subject-wise Cooperative Unions, District Cooperative Unions and Provincial Subject-wise Cooperative Unions within the province may be members.
(5) In the Central Subject-wise Cooperative Union under Section 8, subject-wise associations, District Subject-wise Unions and Provincial Subject-wise Unions may be members.
(6) In the National Cooperative Federation under Section 10, District Subject-wise Unions, District Cooperative Unions, Provincial Subject-wise Unions, Provincial Cooperative Unions and Central Subject-wise Cooperative Unions may be members.
(7) In Cooperative Banks, only associations and unions may be members.
(8) The procedure for taking membership pursuant to this Section shall be as prescribed. 34. Termination of Membership: (1) The membership of a member shall terminate in the following circumstances:-
 (a) If the member resigns their membership,
 (b) If the member is absent from the annual general assembly for three consecutive times without notice,
 (c) If the member repeatedly violates provisions of this Act, rules made under this Act, or bye-laws that the member is required to observe,
 (d) In the case of a member of an association, if the eligibility under Section 30 ceases to exist.
(2) Notwithstanding anything written in Sub-section (1), if a member has any amount receivable from or payable to the cooperative society, their membership shall not terminate until such amount is settled, or until any loan taken by them, any payable liability, or any guarantee or surety given on behalf of another member is discharged.
(3) Notwithstanding anything written in this Section, no person shall be removed from membership after a decision to call a General Assembly has been made and until the General Assembly is concluded.
(4) Other provisions relating to termination of membership shall be as prescribed. 35. Inability to Receive Facilities: If a member fails to pay any liability payable to the cooperative society within the stipulated time, or repeatedly violates provisions of this Act, rules made under this Act, or bye-laws that the member is required to observe, such member shall not be entitled to receive facilities equal to those of other members. Chapter 6
General Assembly, Committee and Audit Supervision Committee

36.
Cooperatives Act, 2017

Chapter 6
General Assembly, Committee and Audit Supervision Committee

36. General Assembly: (1) The General Assembly shall be the supreme body of a cooperative society.
(2) All members of a cooperative society shall be members of the General Assembly.
(3) The General Assembly of a cooperative society shall be as follows:-
 (a) Initial General Assembly,
 (b) Annual General Assembly,
 (c) Special General Assembly. 37. Functions, Duties and Powers of Initial General Assembly: The functions, duties and powers of the Initial General Assembly shall be as follows:-
 (a) To take note of the activities and financial transactions up to the day preceding the Initial General Assembly,
 (b) To approve the annual program and budget for the current fiscal year,
 (c) To endorse the report and financial statements,
 (d) To elect the committee or Audit Supervision Committee as mentioned in the bye-laws,
 (e) To adopt the internal procedure,
 (f) To appoint an auditor and determine their remuneration,
 (g) To perform other functions as specified in the bye-laws. 38. Functions, Duties and Powers of Annual General Assembly: The functions, duties and powers of the Annual General Assembly shall be as follows:-
 (a) To approve the annual program and budget,
 (b) To endorse the annual audit report,
 (c) To elect and dissolve the committee or Audit Supervision Committee,
 (d) To remove a Director or the Coordinator or member of the Audit Supervision Committee from office,
 (e) To adopt the annual report of the committee or Audit Supervision Committee,
 (f) To adopt the bye-laws and internal procedure,
 (g) To appoint an auditor and determine their remuneration,
 (h) To decide on matters related to merger or dissolution of the association,
 (i) To specify facilities including remuneration,
 (j) To accept external liabilities,
 (k) To remit

43.
Cooperatives Act, 2017

Functions, Duties and Powers of the Committee: In addition to the functions, duties and powers mentioned elsewhere in this Act, the functions, duties and powers of the committee shall be as follows:-

(a) To operate the cooperative society in accordance with the values, recognition and principles of cooperatives,

(b) To carry out or cause to be carried out financial and administrative functions,

(c) To call the initial general meeting, annual general meeting and special general meeting,

(d) To implement or cause to be implemented the decisions of the general meeting,

(e) To formulate policies, plans, budget and annual program of the cooperative society and submit them to the general meeting,

(f) To grant membership to the cooperative society and remove from membership,

(g) To carry out work relating to share transfer and refund,

(h) To take membership of the concerned federation,

(i) To prepare by-laws and internal procedures and submit them to the general meeting,

(j) To carry out or cause to be carried out necessary work for the promotion of the interests of the transaction and business of the cooperative society, remaining within the area of operation of the cooperative society,

(k) To carry out other functions as prescribed. 44. Not to Hold Office of Director: A director shall not be able to remain in office in any of the following circumstances:-

(a) If his/her resignation submitted is approved by the committee,

(b) If a decision to remove him/her from the directorship is made pursuant to sub-section (1) of section 45,

(c) If he/she is a director of another cooperative society,

(d) If he/she is an employee of the same or another cooperative society,

Provided that the matter mentioned in the proviso to sub-section (4) of section 41 shall be as provided therein.

(e) If he/she holds a position in the audit supervision committee of the same or another cooperative society,

(f) If his/her death occurs. 45.
Cooperatives Act, 2017

45. Power to Remove a Director from Office: (1) The general meeting may, by a majority decision, remove a director from the office of director of the committee in any of the following circumstances:-

(a) If he/she causes loss or damage to the concerned cooperative society by committing financial misappropriation,

(b) If he/she breaches the confidentiality of matters relating to the transaction of the concerned cooperative society in an unauthorized manner,

(c) If he/she conducts a transaction or business of a similar nature that competes with the transaction and business of the concerned cooperative society,

(d) If he/she does any act detrimental to the interests of the concerned cooperative society,

(e) If he/she becomes physically or mentally incapable of working,

(f) If any director lacks the qualifications mentioned in this Act, the rules or by-laws made under this Act.

(2) Before making a decision to remove a director from the office of the committee, such a director shall be given a reasonable opportunity to present a defense before the general meeting.

(3) If a director fails to present a defense within the period referred to in sub-section (2), or if the defense presented is not satisfactory, the general meeting may remove such a director from office.

(4) A member removed from the office of director pursuant to sub-section (3) shall not be eligible to be a candidate in the election of the committee for up to two terms.

(5) If a director is removed from office pursuant to sub-section (3), the general meeting shall elect another director for the remaining term to such office. 46. Not to be Involved in Decision-Making Process Involving Personal Interest: (1) A director shall not be involved in a decision-making process that involves his/her personal interest.

(2) A director shall not do or cause to be done any act in the cooperative society that benefits him/her personally.

(3) If a director does or causes to be done any act contrary to sub-section (1) or beyond his/her authority, such director shall be personally liable for such act, and if any loss or damage is caused to the cooperative society, members or any other person by such act, such loss or damage shall be recovered from him/her. 47.
Cooperatives Act, 2017

47. Dissolution of the Committee: (1) The general meeting may dissolve the committee in the following circumstances:-

(a) If the business of the cooperative society is put at risk due to the mala fide acts of the committee,

(b) If the cooperative society fails to pay the liabilities payable within the prescribed time,

(c) If the committee acts contrary to the objectives and functions mentioned in the by-laws,

(d) If the committee fails to fulfill its responsibilities,

(e) If the committee repeatedly violates the conditions mentioned in this Act or the rules made under this Act, or the directives given by the Registrar or an officer authorized by the Registrar.

(2) If the committee is dissolved pursuant to sub-section (1), the general meeting shall elect a new committee.

(3) If the committee fails to comply with the directives given by the Registrar or an officer authorized by the Registrar in accordance with this Act or the rules made under this Act, or based on the report submitted pursuant to sub-section (2) of section 40, the Registrar or the head of the office may, based on the seriousness of the matters seen during complaint or inspection, give the committee an opportunity to improve by granting a maximum period of six months, and if improvement is not made even within such period, such committee shall be dissolved.

(4) If the committee is dissolved pursuant to sub-section (3), an ad hoc committee as prescribed shall be constituted by the Registrar or the officer authorized by the Registrar, to hold the election of another committee within three months from the date of such dissolution and to conduct the daily affairs of the cooperative society until such election.

(5) All expenses incurred in holding the election of another committee pursuant to this section shall be borne by the concerned cooperative society.

(6) Notwithstanding anything contained elsewhere in this section, the Registrar shall consult the Nepal Rastra Bank before dissolving the committee of a cooperative bank, and shall act in accordance with the advice given by the Nepal Rastra Bank in this regard. 48. Formation of Audit Supervision Committee: (1) In a cooperative society, the general meeting shall form an audit supervision committee, comprising one coordinator and two members who possess the prescribed qualifications, through election, to strengthen the internal control system.

(2) More than one person from the same family shall not be eligible to be candidates for or be elected to the positions of director or coordinator or member of the audit supervision committee of the same cooperative society at the same time. 49.
Cooperatives Act, 2017

49. Functions, Duties and Powers of the Audit Supervision Committee: (1) The functions, duties and powers of the audit supervision committee shall be as follows:-

(a) To conduct or cause to be conducted internal audit of the cooperative society every quarter,

(b) To follow or cause to be followed the basic principles of auditing while conducting internal audit,

(c) To inspect and evaluate or cause to be inspected and evaluated financial and economic transactions,

(d) To conduct regular supervision of the work and activities of the committee and provide necessary suggestions to the committee,

(e) To monitor whether the directives, decisions of the general meeting and decisions of the committee have been implemented,

(f) To submit the audit report and the annual report on the supervision of the work and activities of the committee to the general meeting,

(g) If the interests of any cooperative society are adversely affected due to non-implementation of suggestions given repeatedly, or if there is widespread misappropriation or irregularity of the cash or kind property of such society, or if the society is about to fall into serious financial crisis, to recommend to the committee to call a special general meeting stating the reason thereof,

(h) To recommend three names to the board of directors for the appointment of an internal auditor, if necessary.

(2) The coordinator or member of the audit supervision committee shall not participate in the financial and daily administrative work of the cooperative society. Chapter-7
Mobilization of Savings and Loans

50. Transaction of Savings and Loans to be Member-Centric: (1) A cooperative society may accept savings only from its members, mobilize them, and provide loans only to members.

(2) Notwithstanding anything contained in sub-section (1), a thematic or multi-purpose cooperative society, other than a society registered with the main objective of transacting savings and loans, shall not transact savings and loans as its main business. Provided that, if any such society was registered as a multi-purpose or thematic society before the commencement of this Act and was conducting savings and loan transactions as its main business, such societies may, within three years, conduct the main business mentioned at the time of registration in such a way that savings and loans are not the main business.

(3) In loans provided by a cooperative society to its members, service charges and renewal charges shall be as determined by the procedure of the concerned society, unless otherwise specified by the Registrar.

(4) The difference between the interest rates on savings and loans shall not exceed six percent.

(5) Interest payable on loans provided by a cooperative society shall not be capitalized into the principal amount and interest levied on that basis.
Cooperatives Act, 2017

Amended by the Some Nepal Acts Amendment Act, 2075.(6) A cooperative society shall not use savings amounts for purchasing immovable property, infrastructure construction, investment in business, purchase of shares of firms, companies or any other bank, or for any other purpose, except for investing in loans among members, purchasing bonds issued by the Government of Nepal, or purchasing shares of a cooperative bank or a Small Farmers Microfinance Institution.

(7) A cooperative society may collect savings up to fifteen times its primary capital fund.

(8) A society or federation shall not make loan investments to a member who is not among the members at the time of registration until a period of three months has elapsed from the date of obtaining membership. 51. Power to Prescribe Reference Interest Rate: (1) The Registrar may, on the recommendation of the committee as follows, prescribe a reference interest rate for savings and loans for the purposes of cooperative societies and the maximum limit of transactions under sub-section (4) of section 41:-

(a) Registrar - Coordinator
(b) Representative, Ministry - Member
(c) Representative, Ministry of Finance - Member
(d) Representative, Nepal Rastra Bank - Member
(e) Representative, National Cooperative Development Board - Member
(f) President of the National Cooperative Federation or a director representative designated by him/her - Member
(g) Representative, National Cooperative Bank - Member
(h) President of the Federation or one director designated by him/her and two persons from central thematic federations designated by the Federation - Member
(i) Deputy Registrar, Cooperative Department - Member Secretary

(2) The reference interest rate prescribed pursuant to sub-section (1) shall serve as a guiding interest rate for cooperative societies.

(3) The basis and procedure for determining the reference interest rate shall be as prescribed. Amended by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2081.52. Limit of Individual Savings and Loans: (1) The limit of an individual member's savings in a cooperative society may be up to ten percent of the primary capital fund of the concerned cooperative society.

(2) A member of a cooperative society shall not be provided with a loan amount exceeding fifteen percent of the primary capital fund.

(3) The limit of an individual's savings pursuant to sub-section (1) may be modified by the Authority as necessary by setting standards. Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2081.52A. Source to be Disclosed: (1) When a member deposits a savings amount exceeding ten lakh rupees in a cooperative society, the source of such amount must be mandatorily disclosed.

(2) A cooperative society shall not accept savings amount for which the member has not disclosed the source pursuant to sub-section (1).
Cooperatives Act, 2017

Chapter-8
Provisions Relating to Cooperative Bank

53. Capital: (1) The capital of a cooperative bank must consist only of ordinary shares.

(2) The minimum capital of a cooperative bank shall be as prescribed by the Nepal Rastra Bank.

(3) A cooperative bank may increase its capital by passing a proposal from the general meeting with prior approval of the Nepal Rastra Bank.

(4) A cooperative bank shall increase its capital in accordance with the directives given by the Nepal Rastra Bank from time to time. 54. Functions of Cooperative Bank: Subject to this Act, the rules, by-laws made under this Act, and other prevailing laws, a cooperative bank may perform the following functions among its member institutions or federations:-

(a) To provide credit as fixed and working capital, in the prescribed proportion, to institutions or federations for activities including agriculture, industry, service, trade, energy, tourism,

(b) To accept savings from members and make payments of such savings,

(c) To make joint investments for the development and promotion of the cooperative sector, focusing on members, by entering into agreements with federations, institutions, or agencies of the Government of Nepal or provincial government, or local levels,

(d) To issue letters of guarantee on behalf of member institutions or federations, to take securities or movable or immovable property as collateral for such letters of guarantee, or to take personal guarantees with the consent of a third party,

(e) To take institutional loans as needed,

(f) To collect interest on loans, debentures, etc.,

(g) To inspect, supervise and monitor whether the credit provided by it has been utilized properly,

(h) To buy and sell bonds issued by the Government of Nepal or treasury bills issued by the Nepal Rastra Bank,

(i) To exchange information between institutions or federations and their associated members,

(j) To take savings, make payments, transfer money through electronic devices or means,

(k) To take or give loans or refinancing as needed,

(l) To disburse amounts received from internationally recognized organizations relating to cooperatives, donor agencies, banks, etc. for project promotion as development finance or credit, or to manage such resources,

(m) To conduct or cause to be conducted studies, research, surveys relating to project establishment, operation and evaluation,

(n) To conduct other banking transactions after obtaining a license from the Nepal Rastra Bank. 55. Prohibition on Lending: A cooperative bank shall not provide loans against the collateral or guarantee of its own shares. 56. Not to Distribute Dividends: A cooperative bank shall not declare or distribute dividends until initial expenses, losses of previous years, capital fund, risk-bearing fund and reserve fund are fulfilled. 57.
Cooperatives Act, 2017

Prohibition on Lending: A cooperative bank shall not provide loans against the collateral or guarantee of its own shares. 56. Not to Distribute Dividends: A cooperative bank shall not declare or distribute dividends until initial expenses, losses of previous years, capital fund, risk-bearing fund and reserve fund are fulfilled. 57. Not to Purchase Goods for Commercial Purpose: A cooperative bank shall not purchase goods or immovable property for the purpose of trade, except for the work it is permitted to do under this Act and goods or immovable property necessary for its own use, and except in the situation under sub-section (6) of section 79. 58. Accounts and Records: (1) A cooperative bank shall maintain accounts and records in a format approved by the Nepal Rastra Bank, showing the true state of its transactions.

(2) The accounts and records pursuant to sub-section (1) shall clearly mention the true financial position of the cooperative bank, the investments made, loans taken and given, detailed particulars of income and expenditure of other financial transactions, and details of assets and liabilities. 59. Management may be Taken Over by Nepal Rastra Bank: (1) The Nepal Rastra Bank may, in any of the following circumstances, suspend the committee of a cooperative bank, after informing the Department, and manage or cause to manage such bank by itself or through any other agency:-

(a) If directives given from time to time by the Nepal Rastra Bank based on the audit report or inspection report of the cooperative bank are not complied with,

(b) If any act is done against the interest of members, causing loss or damage to members,

(c) If the cooperative bank is not operated efficiently and effectively, causing loss or damage to such bank.

(2) Before suspending the committee of a cooperative bank pursuant to sub-section (1), the cooperative bank shall be given an opportunity of at least seven days to present a defense.

(3) If upon giving the opportunity for defense under sub-section (2), no defense is presented, or the presented defense is not found satisfactory, the Nepal Rastra Bank may suspend the committee of the concerned bank and manage or cause to manage the affairs of that bank by itself or through any other agency.

(4) Notwithstanding anything contained elsewhere in this section, while managing or causing to manage the cooperative bank by itself, the Nepal Rastra Bank shall also include a representative of the Department. 60.
Cooperatives Act, 2017

60. Cancellation of Registration: (1) If a cooperative bank appears unable to pay the loans and external liabilities payable by it, the Nepal Rastra Bank may advise the Registrar to cancel such bank.

(2) Before providing advice under sub-section (1), the Nepal Rastra Bank shall give such cooperative bank an opportunity of defense of at least fifteen days.

(3) If advice to cancel registration is received under sub-section (1), the Registrar shall cancel the registration and appoint a liquidator pursuant to section 89. 61. Confidentiality to be Maintained: (1) The confidentiality of accounts, details of financial transactions and records relating to the transactions of a cooperative bank shall be maintained.

(2) Notwithstanding anything contained in sub-section (1), there shall be no bar to providing books, accounts, details of accounts and records relating to the bank's transactions for the following purposes:-

(a) To a court in the course of a case or other legal proceedings,

(b) To an auditor in the course of an audit,

(c) To the concerned official in the course of inspection,

(d) To a person or official authorized to demand details in accordance with prevailing law,

(e) To its members. 62. Liquid Assets to be Maintained: A cooperative bank shall maintain liquid assets as prescribed by the Nepal Rastra Bank. Chapter-9
Mobilization of Financial Resources

63. Provisions Relating to Sale and Refund of Shares: (1) A cooperative society may sell shares to its members.

(2) Notwithstanding anything contained in sub-section (1), a cooperative society shall not sell shares to a single member exceeding twenty percent of its total share capital. Provided that this restriction shall not apply in the case of an institution or agency fully or partially owned or controlled by the Government of Nepal.

(3) Notwithstanding anything contained in sub-section (1), a cooperative bank may sell its shares not only to members but also to institutions or agencies fully or partially owned or controlled by the Government of Nepal.

(4) The face value of a share of a cooperative society shall be one hundred rupees per share.

(5) The share capital of a cooperative society shall be as mentioned in the by-laws.

(6) A cooperative society shall not sell shares in the open market.

(7) The shares of any member, which are the principal capital of the cooperative society, shall not be auctioned to satisfy any loan or liability other than the loan or liability of that same cooperative society. 64.
Cooperatives Act, 2017

64. Provisions Relating to Refund of Amount and Operation of Accounts: (1) If any member wishes to resign from the membership of the cooperative society and take back the amount, any liability of his/her, if any, having been paid, the remaining amount shall be refunded to him/her within three months from the date of payment of such liability as prescribed.

(2) If any member requests the refund of savings deposited in the cooperative society, any liability of his/her, if any, shall be deducted, and the remaining amount shall be refunded to him/her as prescribed.

(3) Cooperative societies may operate all types of savings accounts. 65. Power to Take Loans or Grants: (1) A cooperative society may take loans or grants from domestic or foreign banks or institutions, federations or other agencies, or work in partnership.

(2) Notwithstanding anything contained in sub-section (1), before taking loans or grants from a foreign bank or agency, approval of the Ministry of Finance shall be obtained on the recommendation of the Ministry. 66. May Obtain Guarantee of the Government of Nepal: (1) If a cooperative society needs to obtain a guarantee for loans taken from foreign banks or agencies, it may request the Ministry of Finance through the Ministry for that purpose.

(2) Upon request under sub-section (1), the Ministry of Finance may provide a guarantee for such loan.

(3) While providing a guarantee under sub-section (2), the Ministry of Finance may prescribe necessary conditions. Chapter-10
Fund of Cooperative Society

67. Fund of Cooperative Society: (1) The fund of a cooperative society shall consist of the following amounts:-

(a) Amount received from the sale of shares,

(b) Amount received in the form of savings,

(c) Amount received in the form of loans,

(d) Grant amount received from the Government of Nepal,

(e) Amount of grant or assistance received from foreign governments or international organizations,

(f) Amount earned from business activities,

(g) Membership admission fee.

(2) Approval of the Ministry of Finance shall be obtained before receiving the amount referred to in clause (e) of sub-section (1). 68. Reserve Fund: (1) There shall be a reserve fund in a cooperative society.

(2) The fund under sub-section (1) shall consist of the following amounts:-

(a) At least twenty-five percent of the net savings amount of the fiscal year,

(b) Capital grant amount provided by any institution, federation or agency,

(c) Amount received from the sale of fixed assets,

(d) Amount received from other sources.

(3) The amount of the fund under sub-section (1) shall be indivisible. 68.
Cooperatives Act, 2017

68. Protected Capital Refund Fund: (1) There shall be a protected capital refund fund in a cooperative society.

(2) After setting aside the amount referred to in clause (a) of sub-section (2) of section 68 into the reserve fund, at least twenty-five percent of the remaining amount shall be deposited annually into the fund under sub-section (1).

(3) The amount under sub-section (1) shall be made available to the concerned member based on the annual transaction as prescribed. 70. Cooperative Promotion Fund: (1) There shall be a cooperative promotion fund in a cooperative society.

(2) For the promotion of cooperative business, after setting aside the amount referred to in clause (a) of sub-section (2) of section 68 into the reserve fund, an amount equal to zero point five percent of the remaining amount shall be deposited annually into the fund under sub-section (1).

(3) The fund under sub-section (1) shall remain with the Ministry of Cooperatives and Poverty Alleviation.

(4) The method of operation of the fund shall be as prescribed.

(5) The Ministry may provide an amount as prescribed in proportion to the amount deposited in the fund under sub-section (1).

(6) From the amount kept in the fund under sub-section (1), the prescribed amount shall be made available to the National Cooperative Federation, the concerned thematic central cooperative federation, the provincial cooperative federation, the provincial thematic cooperative federation, the district cooperative federation, and the concerned district thematic cooperative federation.

(7) For the distribution of the amount kept in the fund under sub-section (1), there shall be a committee chaired by the Minister of the concerned Ministry, with the Co-Chairperson of the National Cooperative Development Board, the Secretary of the Ministry, the Joint Secretary of the Ministry of Finance, the President of the Cooperative Federation, the President of the Central Savings and Loan Cooperative Federation, and the Registrar as members.

(8) Out of the amount received pursuant to sub-section (6), at least seventy-five percent shall be invested in the infrastructure of cooperative business, and the remaining amount shall be spent on activities including business promotion, education, information and training, market promotion, and monitoring of institutions or federations.

(9) The concerned federation shall maintain separate records of the amount received pursuant to sub-section (6), have it audited in accordance with prevailing law, and make the details public as prescribed.

(10) Details of expenditure and achievements of the amount receivable pursuant to sub-section (6) shall be submitted to the National Cooperative Development Board.

(11) If the amount under sub-section (6) is found to be misused or used for other purposes, the Registrar or an officer authorized by the Registrar may recover such amount and prohibit the provision of the fund amount.
Cooperatives Act, 2017

71. Provisions Relating to Other Funds: (1) In addition to the funds mentioned in sections 67, 68, 69 and 70, there may be other funds in a cooperative society as prescribed.

(2) The amount of the fund under sub-section (1) may be used for purposes including distribution of share dividends, in accordance with the objectives of the fund, as prescribed in the by-laws. Provided that the amount of share dividend for one year shall not exceed fifteen percent of the share capital. Amended by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2081.

(3) Based on the total assets and other transaction liabilities of a cooperative bank, there shall also be other funds in that bank as prescribed by the Nepal Rastra Bank. Chapter-11
Records and Information

72. Records to be Maintained: (1) A cooperative society shall maintain updated and secure records of the decisions and proceedings of the general meeting, committee and audit supervision committee.

(2) A cooperative society shall maintain secure records of accounts of all transactions made by it and other necessary records as prescribed. 73. Details to be Provided: (1) A cooperative society shall submit a report including the following details to the Registrar or an officer authorized by the Registrar every year within the prescribed time:-

(a) Quarterly and annual reports of transactions and audit report,

(b) Annual program, policies and plans,

(c) Policy and plan relating to net savings,

(d) List of directors and remaining term,

(e) Information relating to the meeting of the general meeting,

(f) Number of share members and share capital,

(g) Amount of loan outstanding taken by directors or members,

(h) Other details prescribed by the Registrar or an officer authorized by the Registrar from time to time. Added by the Act to Amend Some Acts Relating to Prevention of Money Laundering and Promotion of Business Environment, 2080.(1A) A cooperative society shall enter the report required to be submitted under sub-section (1) into the integrated management information system of the Department.

(2) A cooperative bank shall also submit the report under sub-section (1) to the Nepal Rastra Bank within the prescribed period. Chapter-12
Accounts and Audit

74. Accounts of Transactions: The accounts of transactions of a cooperative society shall be maintained based on the double-entry bookkeeping system, clearly showing the true state of transactions, in accordance with the accounting standards implemented by an authorized agency under prevailing law and other conditions and provisions to be complied with under this Act. 75.
Cooperatives Act, 2017

75. Audit: (1) A cooperative society shall have the accounts of each fiscal year audited by an auditor licensed in accordance with prevailing law, within three months from the date of expiry of that fiscal year.

(2) If any cooperative society is found not to have got its accounts audited within the period under sub-section (1), the Registrar or an officer authorized by the Registrar may have the accounts of such cooperative society audited by a licensed auditor.

(3) When having the accounts audited under sub-section (2), the amount including the remuneration payable to the auditor shall be borne by the concerned cooperative society.

(4) The audit report made by the auditor under sub-section (1) or (2) shall be submitted to the general meeting for approval.

(5) If the audit report submitted under sub-section (4) cannot be approved by the general meeting, the general meeting shall, subject to section 76, appoint another auditor for re-audit.

(6) After completing its audit, a cooperative bank shall also submit the report to the Nepal Rastra Bank. 76. Appointment of Auditor: (1) The general meeting shall appoint one auditor from among the auditors licensed in accordance with prevailing law to perform the audit work of the cooperative society.

(2) The remuneration and facilities of the auditor appointed under sub-section (1) shall be as determined by the general meeting.

(3) When appointing an auditor under sub-section (1), the same person, firm or company shall not be appointed for more than three consecutive fiscal years. 77.
Cooperatives Act, 2017

77. Persons Not Eligible to be Appointed as Auditor: (1) The following persons shall not be eligible to be appointed as auditor, and if already appointed, shall not remain in that position:-

(a) A director of the cooperative society,

(b) A member of the concerned cooperative society,

(c) A consultant or employee appointed on a regular salary of the cooperative society,

(d) A person who has not served a period of three years after being punished for an audit-related offense,

(e) An insolvent person,

(f) A person who has not served five years after being punished for corruption, fraud, or other criminal offenses involving moral turpitude,

(g) A person, firm or company referred to in sub-section (3) of section 76,

(h) A person whose interest conflicts with that of the concerned cooperative society or federation.

(2) An auditor shall, before being appointed, inform the cooperative society in writing that he/she is not disqualified under sub-section (1).

(3) If any auditor becomes disqualified to audit a cooperative society before the expiry of his/her term, or if a situation arises where he/she cannot remain in the position of auditor of the cooperative society, he/she shall immediately stop the audit work to be done or being done and inform the cooperative society in writing of that fact.

(4) An audit conducted by an auditor appointed contrary to this section shall not be valid. Chapter-13
Exemptions, Facilities and Concessions

78. Exemptions, Facilities and Concessions: (1) Notwithstanding anything contained in prevailing law, a cooperative society shall receive exemptions, facilities and concessions as follows:-

(a) A cooperative society shall not be required to register or cause to be registered any deed relating to transactions, excluding immovable property.

(b) When a cooperative society purchases immovable property including land required for the construction of its office and service center building, income tax stamp duty or registration fee shall not be charged.
Cooperatives Act, 2017

Provided that, in relation to the tax liability of a member on the amount received from the protected capital refund fund, it shall be as per prevailing law.

(3) The Government of Nepal may, by publishing a notice in the Nepal Gazette, exempt, as per prevailing law, customs duty or value added tax on machinery, industrial and agricultural equipment, tools, spare parts, raw materials and transport means imported by a cooperative society for its own use.

(4) The Government of Nepal may, by publishing a notice in the Nepal Gazette, exempt partially or fully, as per prevailing law, excise duty or value added tax on goods produced by a cooperative society.

(5) The Government of Nepal may, by publishing a notice in the Nepal Gazette, exempt export duty on goods produced by a cooperative society when exported, and provide export cash subsidy as per prevailing law similar to that provided to industries.

(6) In addition to the exemptions mentioned in this section, a cooperative society engaged in industrial business shall receive, as per prevailing law, the same facilities for the construction and operation of infrastructure, or a cooperative society operating a special industry, business or service shall receive the same exemptions, facilities and protection as such industry, business or service receives.

(7) The Government of Nepal, provincial government or local level may, to promote cooperative farming or self-employment industries based on the labor or skill of members of marginalized groups including impoverished rural women, persons with disabilities, freed Kamaiyas, freed Haliyas, landless farmers, unemployed persons, laborers and Dalits and minority indigenous communities, provide partial or full exemption from any tax leviable as per prevailing law, and provide special financial facilities and technical support including seed capital, cost participation subsidy, concessional loans.

(8) If sick public or private industries are to be cooperatized and re-operated by the workers under their own ownership, the Government of Nepal may, considering the nature of the industry, transfer ownership by providing seed capital, subsidy, loans or concessional loans in an appropriate proportion, or provide incentives by providing tax exemption, guarantee or appropriate assistance in the transfer of private ownership.

(9) The Government of Nepal may, by publishing a notice in the Nepal Gazette, provide facilities including share participation, infrastructure construction, land or land acquisition and payment of compensation amount, partial or full exemption from excise duty or value added tax on production, to large cooperative business projects including cooperative industrial estates, marketplaces operating under the framework of specialized federations.

(10) The procedure relating to obtaining exemptions, facilities and concessions under this section shall be as prescribed. Chapter-14
Loan Recovery and Outstanding Dues

79.