chhatramani/nepal_legal_acts_corpus_english huggingface dataset:
Cooperatives Act, 2017

Chapter-14
Loan Recovery and Outstanding Dues

79. Loan Recovery: (1) If any member fails to comply with the loan agreement or conditions and undertakings made with the cooperative society, does not repay the principal, interest and penalty of the loan within the maturity of the deed, or if the loan amount is found to be misused without being used in the concerned work, the cooperative society may recover its principal, interest and penalty by auctioning the collateral kept by such member at the time of taking the loan or by making any other arrangement.

(2) If a member relinquishes any right over the collateral kept in the cooperative society in any manner, or if the value of such collateral decreases for any other reason, such debtor may be required to keep additional collateral security within a specified period.

(3) If the debtor fails to keep additional collateral under sub-section (2), or if the principal, interest and penalty amount cannot be recovered even from the collateral under sub-section (1) or (2), the principal, interest and penalty may also be recovered from other attachable property of such debtor.

(4) When recovering principal, interest and penalty under this section, after deducting the cost incurred and the amount of principal, interest and penalty recovered, the remaining amount shall be refunded to the concerned debtor.

(5) When a cooperative society auctions the collateral or other property of a debtor under this section, it shall send a letter to the concerned office for registration or entry and deletion of such collateral or property in the name of the auction purchaser in accordance with prevailing law, and the concerned office shall accordingly register or enter and delete and inform the concerned cooperative society thereof.

(6) If no one purchases the property kept as collateral under this section at auction, such property may be purchased by the concerned cooperative society itself.

(7) If purchased by itself under sub-section (6), it shall send a letter to the concerned office for registration or entry and deletion in the name of the concerned cooperative society, and upon receipt of such letter, the concerned office shall accordingly register or enter and delete.

(8) Other provisions relating to loan recovery shall be as prescribed. 80. Provision Relating to Blacklist: (1) The name of a person who takes a loan from a cooperative society and misuses the amount or does not repay the principal and interest of the loan within the maturity period may be published in a blacklist along with the details.

(2) Other provisions relating to publication of blacklist shall be as prescribed. 81.
Cooperatives Act, 2017

81. Credit Information Center: (1) A cooperative society engaged in the main business of savings and loans shall obtain membership of a credit information center established under prevailing law and exchange information on loan transactions.

(2) The credit information center under sub-section (1) shall also perform the following credit information functions in the case of cooperative societies:-

(a) To obtain information on loans provided by member cooperative societies in order to maintain objective purpose and appropriateness in the credit flow of member cooperative societies,

(b) To exchange the information obtained under clause (a) among member cooperative societies for the purpose mentioned in that clause,

(c) To take necessary action regarding blacklisting based on the information obtained under clause (b).

(3) A member cooperative society shall provide information on loan transactions exceeding ten lakh rupees to the credit information center.

(4) A member cooperative society shall mandatorily provide the name of a defaulter who fails to repay the loan on time to the credit information center every three months. 82. Debt Recovery Tribunal: (1) There shall be one Debt Recovery Tribunal for the cooperative sector.

(2) Provisions relating to the formation and operation of the Debt Recovery Tribunal shall be as prescribed. 83. Recovery of Outstanding Dues: If any person fails to pay the amount payable to a cooperative society and keeps it outstanding, the cooperative society may recover such amount along with interest from the property of such person as prescribed. 84. Letter to Freeze: (1) For the purposes of sections 79 and 83, a cooperative society may send a letter to the concerned agency to freeze the account or property of any person so that ownership transfer, name transfer or sale cannot be made.

(2) Upon receipt of a letter for freezing under sub-section (1), the concerned agency shall freeze such person's account or property so that ownership transfer, name transfer or sale cannot be made, in accordance with prevailing law. 85. Priority Right: If any person fails to pay a loan or any other liability payable to a cooperative society, after setting aside an amount for any claim of the Government of Nepal on such person's property, the cooperative society shall have a priority right over the remaining amount. 86. No Bar to Action: Any action taken by a cooperative society in relation to loan recovery against any person or cooperative society shall not be deemed to bar proceedings under this Act or prevailing law against such person or society for any offense. Chapter-15
Integration, Dissolution and Cancellation of Registration

87.
Cooperatives Act, 2017

Chapter-15
Integration, Dissolution and Cancellation of Registration

87. Provisions Relating to Integration and Division: (1) Subject to this Act, two or more cooperative societies may merge with each other for integration, or one cooperative society may be divided into two or more cooperative societies on the basis of geographical area of operation.

(2) When integrating or dividing under sub

96. Power to Conduct Inquiry: (1) If at least five percent of the members of a cooperative submit a petition for an inquiry stating that the commercial operations of a cooperative are unsatisfactory, that activities are conducted against the interests of the members, or that actions are taken contrary to the objectives of the cooperative, the Registrar or an official authorized by the Registrar may conduct or cause to conduct an inquiry into such cooperative.

(2) It shall be the duty of the concerned committee to provide cooperation by making available the details or documents requested while conducting an inquiry pursuant to Sub-section (1).

(3) Information about the inquiry conducted pursuant to Sub-section (1) or (2) shall be given in writing to the concerned cooperative. 97. Special Provision Relating to Inspection and Monitoring of Institution or Association Conducting Savings and Credit Transactions: (1) An institution or association primarily dealing in savings and credit shall adopt a monitoring system as prescribed.

(2) The Registrar or an official authorized by the Registrar shall conduct inspection and monitoring based on the monitoring system as prescribed, of institutions or associations conducting savings and credit transactions.

(3) While conducting inspection and monitoring of an institution or association pursuant to Sub-section (2), the Registrar or an official authorized by the Registrar may, as necessary, seek assistance from other bodies including Nepal Rastra Bank.

(4) Other arrangements relating to the inspection and monitoring of an institution or association primarily dealing in savings and credit shall be as prescribed. 98. Ministry to Conduct Inspection and Monitoring: (1) If information is received from any source that no inspection of a cooperative has been conducted by the Registrar or an official authorized by the Registrar, or that such inspection has been ineffective, thereby adversely affecting the interests of the members, the Ministry may conduct inspection and monitoring of such cooperative and give necessary directives to the concerned cooperative.

(2) If a directive is given pursuant to Sub-section (1), it shall be the duty of the concerned cooperative to comply with such directive. 99.
Cooperatives Act, 2017

99. Association to Conduct Inspection and Monitoring: (1) An association shall conduct inspection and monitoring of the work and activities of its members as prescribed and submit the report thereof to the Department and the Office.

(2) The report pursuant to Sub-section (1) shall include the following details:-
(a) Details of the institution or association monitored and inspected,
(b) Status of compliance with this Act, and the rules and regulations made under this Act, in the institution or association,
(c) Status of services and facilities received by the members,
(d) Level of participation of members,
(e) Economic and financial condition of the institution or association and mobilization of funds,
(f) Other arrangements as prescribed.

(3) If, while monitoring pursuant to Sub-section (2), an association finds any defect in the work and activities of any institution or association under its jurisdiction, it may give suggestions or directives to the concerned institution or association to rectify such defect, and it shall be the duty of the concerned institution or association to comply with such suggestion or directive.

(4) If the suggestion or directive given pursuant to Sub-section (3) is not complied with, the association shall recommend action to the Registrar or an official authorized by the Registrar.

(5) Matters relating to suggestions or directives given pursuant to Sub-section (3) shall also be mentioned in the annual report of the association. 100.
Cooperatives Act, 2017

100. Annual Report Required to be Submitted: (1) The Registrar shall, within three months from the date of expiry of the fiscal year, submit an annual report relating to the inspection of cooperatives to the Ministry, and shall also make the inspection report of the Cooperative Bank available to Nepal Rastra Bank.

(2) The Office shall, within one month from the date of expiry of the fiscal year, submit an annual report of institutions or associations within its jurisdiction to the Registrar.

(3) The report pursuant to Sub-sections (1) and (2) shall include the following details:-
(a) Details of cooperatives in operation,
(b) Number of cooperatives monitored and details of their financial transactions,
(c) Status of compliance with cooperative principles, this Act, and the rules, regulations, and internal procedures made under this Act in cooperatives,
(d) Status of services and facilities received by the members of cooperatives,
(e) Proportion and level of member participation in the activities of cooperatives,
(f) Details as prescribed relating to the economic activities and financial condition of cooperatives,
(g) Status of the internal control system in cooperatives,
(h) Status of good governance and accountability in cooperatives,
(i) Details of funds in cooperatives,
(j) Necessary matters to assist in cooperative policy formulation,
(k) Details relating to the registration, cancellation, and dissolution of cooperatives,
(l) Details of transactions, businesses, industries, or projects operated by the institution or association pursuant to Section 21,
(m) Other details as prescribed. Amended by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.101. Membership in Deposit and Credit Guarantee Fund Required: A cooperative primarily dealing in savings and credit, pursuant to this Act, shall obtain membership as a safe member institution of the Deposit and Credit Guarantee Fund established in accordance with the prevailing law. 102. May Operate Mutual Security Service: (1) Notwithstanding anything written in the prevailing law, an institution may, in accordance with the terms and conditions of a scheme approved by the Insurance Board, operate a mutual security service up to a prescribed maximum limit and fee to provide partial compensation for loss caused to its members due to reasons specified in the scheme, such as crops or livestock.

(2) The minimum standards and other arrangements for operating a mutual security service pursuant to Sub-section (1) shall be as prescribed. 103.
Cooperatives Act, 2017

103. Stabilization Fund: (1) For the protection of savings and credit subject matter institutions from potential risks in their operation, such institutions may together establish a Stabilization Fund.

(2) The Fund pursuant to Sub-section (1) may consist of contributions from willing cooperatives, cooperatives that are members of the Central Cooperative Association for Savings and Credit, the National Cooperative Federation, the National Cooperative Bank, the National Cooperative Development Board, Nepal Rastra Bank, the Ministry, other bodies of the Government of Nepal, and international cooperative associations.

(3) The Stabilization Fund shall be located at the Central Association for Savings and Credit.

(4) For the operation of the Stabilization Fund, there shall be an Operations Committee as prescribed, including representatives of the Central Association for Savings and Credit, the National Cooperative Bank, the National Cooperative Federation, the National Cooperative Development Board, Nepal Rastra Bank, the Ministry, the Ministry of Finance, and the Department.

(5) An institution participating in the Stabilization Fund may deposit an amount as prescribed from its annual savings, after setting aside the amount for the reserve fund pursuant to Section 68.

(6) The amount of the Stabilization Fund shall be kept by opening an account in a prescribed bank.

(7) The Stabilization Fund may be used for the following purposes:-
(a) To provide loans to participating institutions to maintain liquidity and to rescue problematic cooperatives,
(b) To bear the expenses of the management committee formed pursuant to Section 105 in the event a participating institution becomes problematic,
(c) To use for the revival including payment of liabilities of a participating institution if, upon it becoming problematic, the Federation takes over the responsibility of operating such institution pursuant to clause (d) of Section 114,
(d) To bear the expenses of the Stabilization Fund Operations Committee and to use for other prescribed works.

(8) Other arrangements relating to the operation of the Stabilization Fund shall be as prescribed. Chapter 17A

National Cooperative Regulatory Authority

Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.103A. Establishment of Authority: (1) A National Cooperative Regulatory Authority is established to regulate cooperatives primarily dealing in savings and credit within the jurisdiction of the Federation, Province, and Local Level.

(2) The central office of the Authority shall be located in the Kathmandu Valley.

(3) The Authority shall liaise with the Government of Nepal through the Ministry.

(4) The Government of Nepal may give necessary directives relating to the work and activities of the Authority.

(5) The Authority shall submit its annual report to the Government of Nepal.

(6) The report pursuant to Sub-section (5) shall be submitted by the Government of Nepal to the concerned committee of the Federal Parliament. 103B.
Cooperatives Act, 2017

103B. Authority to be an Autonomous and Corporate Body: (1) The Authority shall be an autonomous, self-governing, and corporate body with perpetual succession, and it shall have a legal personality.

(2) As a legal person, the Authority shall exercise rights, perform duties, and fulfill liabilities in accordance with the prevailing law. 103C. Formation of Authority: (1) The Authority shall be formed as follows:-
(a) A person appointed by the Government of Nepal from among individuals who have obtained at least a master's degree in economics, commerce, management, accounting, law, or cooperatives and who have worked in a gazetted special class or equivalent post of the Government of Nepal or have at least fifteen years of work experience in international or national level banks or financial institutions or cooperatives - Chairperson
(b) Executive Director of Nepal Rastra Bank - Member
(c) Joint Secretary of the Ministry looking after the cooperative sector - Member
(d) An expert appointed by the Government of Nepal who has obtained at least a master's degree in economics, commerce, management, accounting, law, or cooperatives and has at least ten years of work experience in international or national level banks or financial institutions or cooperatives - Member
(e) A Chartered Accountant appointed by the Government of Nepal from among Chartered Accountants having at least ten years of work experience - Member

(2) The senior employee of the Authority shall act as the Secretary of the Authority.

(3) If the post of Chairperson of the Authority becomes vacant for any reason, the Government of Nepal shall designate an officer of the gazetted special class of the Government of Nepal to work in the post of Chairperson. 103D.
Cooperatives Act, 2017

103E. Appointment of Chairperson and Expert Member of Authority: (1) For the selection and recommendation of suitable persons to the Government of Nepal for the appointment of the Chairperson and Member of the Authority, a recommendation committee shall be formed as follows:-
(a) Chairperson of the Public Service Commission or a member of that Commission designated by him/her - Coordinator
(b) One person designated by the Ministry from among former Finance Secretaries of the Government of Nepal - Member
(c) One expert designated by the Ministry from among persons having at least fifteen years of work experience in the economic and financial, legal or cooperative sectors - Member

(2) The recommendation committee pursuant to Sub-section (1) shall, by publishing a notice in a national daily newspaper allowing a period of fifteen days, invite applications from Nepali citizens possessing the following qualifications:-
(a) Meeting the qualifications as per Section 103C,
(b) Having no disqualification as per Section 103D,
(c) Not having completed sixty years of age.

(3) Within the period mentioned in the notice pursuant to Sub-section (2), interested persons meeting the qualifications shall submit an application to the recommendation committee along with the following documents:-
(a) Copy of Nepali citizenship certificate,
(b) Copy of documents evidencing minimum educational qualification and experience,
(c) Self-declaration.

(4) A person submitting an application pursuant to Sub-section (3) shall also submit, together with such application, a sealed business plan related to cooperative union/institution regulation, prepared not exceeding five thousand words, in a separate envelope.

(5) The recommendation committee pursuant to Sub-section (1) shall recommend, based on criteria set by the committee, up to a maximum of three names for each post to the Government of Nepal for appointment to the post of Chairperson and Member.

(6) The Government of Nepal shall appoint the Chairperson and Member from among the persons recommended pursuant to Sub-section (5).

(7) The term of office of the Chairperson and Member shall be four years, and he/she may be reappointed for one further term.

(8) Notwithstanding anything written in Sub-section (7), if the Chairperson and Member do not fulfill their official duties and responsibilities, the Government of Nepal may remove him/her from office at any time. Provided that before such removal, he/she shall be given a reasonable opportunity to submit a defense. 103F.
Cooperatives Act, 2017

Provided that before such removal, he/she shall be given a reasonable opportunity to submit a defense. 103F. Vacancy of Post of Chairperson and Member of Authority: The post of Chairperson or Member of the Authority shall be deemed vacant under any of the following circumstances:-
(a) If his/her resignation submitted to the Government of Nepal from his/her post is accepted,
(b) If he/she does not possess or no longer possesses the qualification pursuant to clauses (a), (d) or (e) of Sub-section (1) of Section 103C, or if he/she incurs or has a disqualification pursuant to Section 103D,
(c) If his/her term of office expires pursuant to Sub-section (7) of Section 103E,
(d) If he/she is removed from office by the Government of Nepal pursuant to Sub-section (8) of Section 103E,
(e) If he/she dies. 103G. Meeting of Authority: (1) A meeting of the Authority shall be held at least once a month.
(2) The meeting of the Authority shall be held on a date, time, and place specified by the Chairperson, and in case the post of Chairperson is vacant, by the senior member. Explanation: For the purpose of this Section, "senior member" means the member who is earlier in the order of appointment.
(3) The Secretary shall make available to all members the agenda for discussion in the meeting at least twenty-four hours before the meeting.
(4) The meeting of the Authority shall be chaired by the Chairperson, and in his/her absence, by the senior member among those present.
(5) If three members are present at a meeting of the Authority, the quorum for the meeting shall be deemed to be complete.
(6) The opinion of the majority shall prevail in a meeting of the Authority, and in case of a tie, the person chairing the meeting shall cast the deciding vote.
(7) The Authority may invite experts on related subjects as needed to its meetings.
(8) For the purpose of recording the decisions of the Authority, a separate register shall be maintained, and each decision shall be recorded in that register, and all members present at the meeting shall sign that register.
(9) Other procedures relating to the meeting of the Authority shall be as determined by the Authority itself. 103H.
Cooperatives Act, 2017

103I. Functions, Duties, and Powers of Chairperson of Authority: The functions, duties, and powers of the Chairperson of the Authority shall be as follows:-
(a) To chair the meetings of the Authority,
(b) To act as the administrative chief of the Authority,
(c) To monitor, supervise, and evaluate the overall work and activities of the Authority and give necessary directives to the concerned parties,
(d) To perform other functions as prescribed. 103J. Division of Work of Members of Authority: The division of work of the members of the Authority shall be as determined by the Authority. 103K. Service, Terms and Facilities of Chairperson and Expert Member of Authority: (1) The Chairperson and Expert Member of the Authority shall be full-time office-bearers of the Authority.
(2) The remuneration, facilities, and terms of service of the Chairperson and Expert Member of the Authority shall be as prescribed by the Government of Nepal, Cabinet. 103L. Oath Required: Before assuming office, the Chairperson and Member of the Authority shall take an oath of office and secrecy before the line Minister, in the format according to the prevailing law relating to oaths. 103M. Fund of Authority: (1) There shall be a separate fund of the Authority.
(2) The fund pursuant to Sub-section (1) shall consist of the following amounts:-
(a) Amounts received from the Government of Nepal,
(b) Amounts received from any foreign government or international organization,
(c) Amounts received from other sources.
(3) Prior approval of the Ministry of Finance of the Government of Nepal shall be obtained before receiving the amounts referred to in clause (b) of Sub-section (2).
(4) The amount of the Authority's Fund shall be deposited by opening an account in a "A" class commercial bank licensed under the prevailing law relating to banks and financial institutions.
(5) The operation of the Authority's Fund and account shall be as prescribed. 103N. Audit of Authority's Fund: (1) The accounts of income and expenditure of the Authority shall be maintained in accordance with the accounting system adopted by the Government of Nepal.
(2) The final audit of the accounts of income and expenditure of the Authority shall be conducted by the Auditor General. 103O.
Cooperatives Act, 2017

103O. Misuse of Regulatory Opportunity Prohibited: (1) The Chairperson, Member, employees of the Authority, auditors auditing cooperatives, or any person, firm, or company contracted to work with the Authority shall not, in their official capacity or while performing work on behalf of the Authority, provide any confidential information that comes to their knowledge to any other person or institution, except in circumstances where such information is required to be provided by law.
(2) The office-bearers pursuant to Sub-section (1) shall not use or cause to use any confidential information that comes to their knowledge while performing work in their official capacity for the benefit, facility, concession, or advantage of themselves or any member of their family.
(3) The Chairperson, Member, employees of the Authority, auditors listed by the Authority, or any person, firm, or company contracted to work with the Authority shall not, in their official capacity or while doing any work on behalf of the Authority, allow any kind of benefit, facility, concession, or advantage to themselves, their family, or anyone else.
(4) If anyone does any act contrary to this Section, he/she shall be deemed to have not acted in accordance with official duties and shall be subject to action under the prevailing law. 103P. Professional Conduct to be Observed: The Chairperson, Members, and employees of the Authority shall observe professional conduct as prescribed during their tenure in office and even after leaving office. 103Q. Provisions Relating to Employees: (1) For the operation of the Authority, there shall be employees in the Authority in a number approved by the Government of Nepal.
(2) The appointment, remuneration, terms of service, and facilities of the employees of the Authority shall be as prescribed.
(3) Until the Authority has its own employees pursuant to Sub-section (1), employees working in any body or office of the Government of Nepal, or Nepal Rastra Bank, or a bank or financial institution with majority ownership of the Government of Nepal may be deployed on deputation by the concerned body in coordination with the Ministry, with salary and allowances payable by the Authority itself.
(4) The Authority may appoint expert, technical, and assistant level employees on contract as necessary to perform its functions.
(5) The Authority shall obtain prior approval from the Ministry of Finance of the Government of Nepal before undertaking any act that would increase the financial liability of the Government of Nepal. Chapter 18

Problematic Institution or Association

104.
Cooperatives Act, 2017

Chapter 18

Problematic Institution or Association

104. Institution or Association May be Declared Problematic: (1) If, from an inspection or audit conducted pursuant to this Act, any of the following conditions are found to exist in an institution or association, the Registrar shall recommend to the Ministry to declare such institution or association as a problematic institution or association:-
(a) Having done any act contrary to the interests of members,
(b) Having failed to fulfill financial obligations required to be fulfilled by the institution or association, or being unable or in a state unable to pay liabilities that must be paid,
(c) Having failed to refund the savings of members according to the prescribed terms,
(d) Having operated the institution or association contrary to this Act, rules, and regulations made under this Act,
(e) The institution or association being in a state of possible insolvency or suffering from significantly severe economic difficulty,
(f) If at least Amended by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.ten percent of the members of an institution or association have submitted a petition to the Registrar stating that the institution or association has not refunded the savings amount of members within the period required for refund, and upon inquiry, any condition from clause (a) to (e) is found to exist. Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.(1A) If, upon inquiry based on a complaint received by the Authority or during inspection, the conditions mentioned in Sub-section (1) are found to exist in a cooperative primarily dealing in savings and credit, the Authority shall recommend to the Ministry to declare such institution as a problematic institution.

(2) Amended by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.Upon receiving a recommendation pursuant to Sub-section (1) or (1A), the Ministry may declare such institution or association as a problematic institution or association.

(3) Notwithstanding anything written elsewhere in this Section, if a commission formed by the Government of Nepal pursuant to the prevailing law recommends declaring an institution or association as a problematic institution or association, or identifies it as problematic, or based on the number of complaints received by such commission, their merit, etc., the Ministry may declare such institution or association as a problematic institution or association. 105.
Cooperatives Act, 2017

105. Formation of Management Committee: (1) In the event an institution or association is declared as a problematic institution or association under this Act, the Government of Nepal shall form a Management Committee to carry out functions relating to asset management and liability payment of such problematic institution or association.

(2) The Management Committee pursuant to Sub-section (1) shall consist of a Chairperson and members as follows:-
(a) A person appointed by the Government of Nepal from among persons who have served as a judge of a High Court or who have worked in the distinguished class of the Nepal Judicial Service or equivalent post - Chairperson
(b) One person nominated by the Government of Nepal from among persons who have worked at least in the gazetted first class of the civil service or equivalent post - Member
(c) One director representative designated by the National Cooperative Federation - Member
(d) Two persons nominated by the Government of Nepal from among experts in the cooperative sector - Member
(e) One person nominated by the Government of Nepal from among persons who are at least at the ninth level or equivalent post in a bank or financial institution, or are a Chartered Accountant and have worked in the supervision sector of a bank or financial institution for at least three years - Member
(f) A gazetted second class officer designated by the Government of Nepal - Member-Secretary

(3) The term of office of the Chairperson and members of the Management Committee shall be a maximum of two years from the date of appointment, and the Government of Nepal may extend their term by a maximum of two more years as necessary.

(4) Notwithstanding anything written in Sub-section (3), if the performance of the Chairperson or member of the Management Committee is not satisfactory, the Government of Nepal may remove him/her from office at any time.

(5) Before removing the Chairperson or member of the Management Committee pursuant to Sub-section (4), he/she shall be given a reasonable opportunity to submit a defense.

(6) Any post of the Management Committee that falls vacant pursuant to Sub-section (4) shall be filled by the Government of Nepal subject to Sub-section (2).

(7) The procedure relating to meetings of the Management Committee shall be as determined by the Committee itself. 106.
Cooperatives Act, 2017

Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.106A. May Form Expert Team: (1) The Management Committee may form an expert team to obtain necessary services for the purpose of managing the assets and liabilities of the problematic cooperative pursuant to Section 106.
(2) The formation procedure of the expert team pursuant to Sub-section (1) and the functions, duties, and powers of such expert team shall be as specified by the Management Committee at the time of forming the team.
(3) While forming an expert team pursuant to Sub-sections (1) and (2), a separate team shall be formed for each problematic cooperative. 107. Inventory Preparation: For the purpose of Section 106, the Management Committee shall prepare an inventory as follows:-
(a) An inventory of the names of members, depositors, debtors, or persons or institutions to whom the problematic institution or association has to make payments,
(b) An inventory of immovable property, including apartments, owned or invested in by the problematic institution or association,
(c) An inventory of cash, gold, silver, and share investments held in bank and financial institution accounts in the name of members of the committee, employees, or their family members or related persons of the problematic institution or association,
(d) An inventory of land, buildings, and properties pledged as collateral for loans taken by the problematic institution or association,
(e) An inventory of movable and immovable property of the problematic institution or association located anywhere within the country or abroad. 108. Provision Relating to Payment of Liabilities: (1) The Management Committee shall establish the following priority for paying the liabilities of the problematic institution or association:-
(a) Payment of savings to members according to the terms specified at the time of deposit,
(b) Payment of outstanding government dues or claims against the estate of such institution or association or the property pursuant to clause (l) of Section 106, if any,
(c) Payment to persons who paid amounts in advance for apartments or land to the problematic institution or association,
(d) Payment of amounts to creditors of the problematic institution or association.

(2) If the assets of the problematic institution or association are insufficient to pay all its liabilities under this Section, the Management Committee may, while refunding members' savings and paying other liabilities, do so on a pro-rata basis. While refunding members' savings in such manner, small depositors as specified by the Management Committee shall be given priority. Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.108A.
Cooperatives Act, 2017

While refunding members' savings in such manner, small depositors as specified by the Management Committee shall be given priority. Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.108A. Special Provision Relating to Refund of Savings Amount: (1) Notwithstanding anything written elsewhere in the prevailing law, savings up to five hundred thousand rupees deposited by a member of a cooperative or a cooperative declared problematic pursuant to Section 104 shall be paid out on a first priority basis.
(2) In the case of savings exceeding five hundred thousand rupees deposited by a member, if the concerned institution is not in a position to make a lump sum payment, arrangements shall be made for proportional payment of the member's savings amount by formulating standards.
(3) For the purpose of refunding savings amounts under this Section, the cooperative or the management committee pursuant to Section 105 may sell the assets or the collateral security taken while granting loans of such institution.
(4) Before selling the collateral security taken while granting loans pursuant to Sub-section (3), the concerned debtor shall be given time to repay the loan of the cooperative, and if the loan is not repaid within that period, such collateral security shall be sold by auction. If an amount higher than the amount payable by the debtor is obtained while selling such collateral security, after deducting the debtor's dues, the remaining amount shall be refunded to such debtor.
(5) The cooperative may realize the amount receivable in lieu of providing houses, land, or other machinery, tools, or equipment on lease or rent, and such amount may be used for the purpose of refunding savings amounts to member depositors.
(6) If the savings amount of member depositors cannot be refunded by selling the property or collateral security due to the property or collateral security of the cooperative being attached in a court or any other body due to a lawsuit filed under this Act or for any other reason, and if it is certain that the savings amount of member depositors can be refunded by selling such property or collateral security, the cooperative or the management committee pursuant to Section 105 may request the concerned court or body for the release of the attachment.
(7) If a request pursuant to Sub-section (6) is made, the concerned court or body shall release the attachment of such property or collateral security if it is not required to remain attached for any other reason.
(8) For the purpose of refunding the savings amount of depositors at risk under this Section, the savings amount of member depositors shall be refunded by formulating standards and a time-bound refund action plan. 109.
Cooperatives Act, 2017

109. May Delegate Powers: While managing the assets of the problematic institution or association, the Management Committee may delegate its powers to be exercised and performed by the Chairperson, member, or any government employee of the Management Committee. Amended by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.110. Expenses to be Borne from Assets of Institution or Association: All expenses incurred in the course of managing the assets of the problematic institution or association shall be borne from the assets of such institution or association. 111. Powers Automatically Suspended: (1) From the date of formation of the Management Committee under this Act, the powers of the committee, manager, and employees of the problematic institution or association shall be automatically suspended after the Management Committee commences its work.
(2) Notwithstanding anything written in Sub-section (1), for the purpose of carrying out functions relating to asset management and liability payment of the problematic institution or association, the Management Committee may revoke the suspension of members of the committee, manager, and employees of such institution or association and deploy them to work.
(3) If deployed to work by the Management Committee pursuant to Sub-section (2), it shall be the duty of the concerned person to fulfill the responsibilities accordingly. 112. Notice Required for Submitting Claims: After the Management Committee commences its work, a public notice shall be published in a national level daily newspaper allowing a period of at least fifteen days for members, depositors, and creditors of the problematic institution or association to submit their claims for amounts receivable. Added by the Act to Amend Some Nepal Acts Relating to Cooperatives, 2024.112A. Claim Required to be Submitted: After the notice is published pursuant to Section 112, members, depositors, creditors, and investors, including banks and financial institutions, of the problematic cooperative shall submit their claims for amounts receivable. 113. Audit Report Required to be Prepared: The Management Committee shall, within six months from the date of commencement of its work, audit such problematic institution or association, prepare a report thereof, and make it public. 114.
Cooperatives Act, 2017

113. Audit Report Required to be Prepared: The Management Committee shall, within six months from the date of commencement of its work, audit such problematic institution or association, prepare a report thereof, and make it public. 114. May Undertake Remedial Actions: If, based on the audit report made under this Act, there are grounds and reasons that the problematic institution or association can be revived, the Management Committee may undertake the following remedial actions:-
(a) Order the committee to carry out management or operations,
(b) Form an interim committee from among the share members of the concerned institution or association and cause it to carry out management or operations,
(c) Dissolve the

(ḍha) Committing forgery with the intent to gain an advantage for oneself or another or to cause loss or detriment by erasing or omitting any matter written in any document or account of a cooperative society in any manner and rewriting it so as to produce a different meaning, or maintaining separate and distinct records, or, without the intent to cause loss or detriment to another, making a false statement about something that did not occur or stating that it did occur, or altering the date, amount, or content and making or causing to be made a document by signing, sealing, or having it signed or sealed, thereby committing or causing fraud;

(ṇa) If an appraiser, while valuing movable or immovable property kept as collateral for a loan for auction sale or other purposes, makes an overvaluation, undervaluation, or incorrect valuation, thereby causing or causing to be caused loss or detriment to the cooperative society;

(ta) If any person, with the intent to cause loss or detriment to a cooperative society, performs or causes to be performed any act, such as making or not making someone work, showing or causing to show consideration, taking or giving any kind of money, taking or giving any goods, articles or services without price or at a low price, taking or giving donations, charity, gifts or subscriptions, preparing or causing to be prepared false documents, translating or causing to be translated, or doing any act with mala fide intent to cause unlawful gain or loss;

(tha) If any person conducts or causes to be conducted an audit, or prepares or causes to be prepared a false audit report, in a manner that causes loss or detriment to any cooperative society or its member or depositor or any of them. 123.
Cooperatives Act, 2017

124. Punishment: (1) If any person commits an offence under Section 122, the punishment shall be as follows:-

(a) For an offence under clauses (ka), (ga), (ṅa) and (tha), imprisonment for a term up to one year and a fine of up to one hundred thousand rupees,

(b) For an offence under clause (ṭha), imprisonment for a term up to two years and a fine of up to two hundred thousand rupees,

(c) For an offence under clause (kha), a fine equivalent to the amount of loss caused and imprisonment for a term up to three years,

(d) For an offence under clauses (gha), (ṅa), (cha), (chha), (ja), (jha), (ña), (ṭa), (ṇa) and (ta), in addition to recovering the loss caused, a fine according to the loss and imprisonment as follows:-

(1) If the loss is up to ten lakh rupees, imprisonment for a term up to one year,

(2) If the loss is more than ten lakh rupees up to fifty lakh rupees, imprisonment for a term of two years to three years,

(3) If the loss is more than fifty lakh rupees up to one crore rupees, imprisonment for a term of three years to four years,

(4) If the loss is more than one crore rupees up to ten crore rupees, imprisonment for a term of four years to six years,

(5) If the loss is more than ten crore rupees up to one arba rupees, imprisonment for a term of six years to eight years,

(6) If the loss is more than one arba rupees, irrespective of any amount, imprisonment for a term of eight years to ten years,

(ḍa) For an offence under clause (ḍha), imprisonment for a term up to ten years.

(2) A person who attempts to commit an offence under Section 122 or renders assistance in committing such an offence shall be liable to half the punishment prescribed for the principal offender.

(3) If an entity or association that commits an offence under Section 122 or renders assistance in committing such an offence is a body or organization, the chief executive or office bearer or person acting in an executive capacity of such body or organization shall be liable to the punishment under this Act. 125.
Cooperatives Act, 2017

125. Fine: (1) If, upon a complaint filed under Section 132, or during the inspection, monitoring, or audit of accounts of a cooperative society, or from any other source, any person is found to have committed any of the following acts, the Registrar or an officer authorized by the Registrar shall, based on the nature and gravity of such act, impose a fine of up to five lakh rupees on the person committing such act:-

(a) If interest is charged from a member contrary to this Act or the rules made under this Act,

(b) If the difference between the interest rates of savings and loans provided by the cooperative society is maintained at more than six percent,

(c) If the interest on loans provided by the cooperative society is capitalized into the principal loan amount and interest is charged on that basis,

(d) If a loan is provided to any member exceeding the prescribed percentage of the capital fund,

(e) If a loan is invested in a member, other than those who were members at the time of registration of the society, before the expiry of a period of three months from obtaining membership,

(f) If savings are collected in an amount exceeding fifteen times the primary capital fund,

(g) If share dividend is distributed exceeding eighteen percent of the share capital,

(h) If the cooperative society conducts business outside its area of operation or conducts business with non-members,

(i) If the cooperative society grants membership to an artificial person contrary to this Act.

(2) If, from the matters mentioned in sub-section (1), any person is found to have committed any of the following acts, the Registrar or an officer authorized by the Registrar may, based on the nature and gravity of such act, impose a fine of up to three lakh rupees on the person committing such act:-

(a) If any directive or prescribed standard given under this Act or rules made under this Act is not complied with,

(b) If any details, document, report, notice, or information required to be furnished under this Act or rules made under this Act is not furnished,

(c) If office bearers of the committee and audit supervision committee are arbitrarily changed without holding elections as per this Act,

(d) If any cooperative society fails to comply with the prescribed conditions under sub-section (4) of Section 15,

(e) If any other act is done contrary to this Act or the rules made under this Act.

(3) Before imposing a fine under sub-section (1) or (2), the Registrar or an officer authorized by the Registrar shall give the concerned person or cooperative society a period of at least fifteen days to present a defense.

(4) The power to impose a fine under sub-section (1) or (2) shall be exercised, in the case of Provincial Subject Cooperative Unions, Provincial Cooperative Unions, Central Subject Cooperative Unions, Specialized Cooperative Unions, National Cooperative Federation, and Cooperative Bank, by the Registrar, and in the case of District Subject Cooperative Unions and District Cooperative Unions, by an officer authorized by the Registrar.