Multi State Cooperative Society are cooperative societies that can conduct business in numerous states and are registered with the Central Registrar rather than the state registrar. Cooperatives are a state concern, although many societies, such as those for sugar and milk, banks, milk unions and so on, have members and operations that span multiple states. To administer such cooperatives, the Multi State Cooperative Society (MSCS) Act of 2002 was enacted to give a clear understanding of what is Multi State Cooperative Society?
It is an Act to consolidate and revise the law relating to co-operative societies with purposes that are not confined to one state and that serve the interests of individuals in more than one state. Its purpose is to promote the purposeful development and working of members that rely on self-improvement and shared guidance. The Act also allows organisations to further their financial and social development. This blog will explain what Multi State Cooperative Society and its multiple dimensions in India.
Types of Cooperative Societies
Cooperative societies include a range of organisational structures that serve various purposes. The following are the distinct types of cooperative societies that are helpful in answering what is Multi State Cooperative Society:
1. Producer Cooperative Society
A producer cooperative society is formed by individuals or businesses engaged in production activities. Members pool their resources to collectively produce, process and distribute goods or services. This type of cooperative enables members to enhance their bargaining power, share resources and achieve economies of scale.
2. Consumers Cooperative Society
Consumers cooperative societies are established to fulfil the common needs and demands of their members. Individuals join together to purchase goods and services at bulk rates, thereby obtaining quality products at lower prices. This form of cooperation empowers consumers to secure better deals in the market.
3. Cooperative Housing Society
Cooperative housing societies are designed to address housing needs. Members collaborate to develop residential properties and manage common facilities. By pooling financial resources and expertise, members can create affordable housing solutions while sharing responsibilities for maintenance and administration.
4. Cooperative Farming Society
In a cooperative farming society, agricultural workers or farmers unite to collectively address challenges related to agricultural production, resource management and marketing. By sharing agricultural equipment, knowledge and resources, members can optimise their yields and economic outcomes.
5. Cooperative Marketing Society
Cooperative marketing societies are established by producers to collectively market and sell their products. By eliminating middlemen and engaging in joint marketing efforts, members can secure better prices for their goods and access wider markets, thus boosting their profitability.
Benefits of Registering a Multi State Cooperative Society
In understanding what is Multi State Cooperative Society, it is essential to know what advantages come when registering a Multi State Cooperative Society, as outlined under Chapter VI of the MSCS Act. These benefits are as follows:
1. Charging and Set-Off Privileges of Multi State Cooperative Society:
A registered Multi State Cooperatives Society has the authority to charge and set-off amounts related to offers, commitments or interest from its members. This enables the society to manage financial transactions efficiently.
2. Non-Liability of Share Contribution or Interest as Debt:
The share contributions or interests held by members of the cooperative society are not treated as debts that need to be repaid to the society. This provision helps promote a cooperative spirit among members and encourages their active participation.
3. Evidence of Membership and Joining Date:
The registered or listed members of a Multi State Cooperative Society, along with the shares they hold, are considered prima facie evidence of the following:
- The date on which an individual entered the register or list to become a member.
- The date on which an individual officially became a member of the society.
4. Exemption from Mandatory Registration of Instruments:
Cooperative societies enjoy an exemption from the mandatory requirement of registering certain instruments. This exemption simplifies administrative processes and reduces unnecessary regulatory burdens.
5. Allowance from Compensation:
The MSCS Act provides for allowances from compensation, which can be beneficial in specific cases. This provision assists cooperative societies in managing situations where compensation might be required.
6. Government Support Encouragement:
The Act encourages governments to provide support to cooperative societies. This recognition of the societal and economic contributions of cooperatives encourages the government to facilitate their growth and development.
Procedure for Multi State Cooperative Society Registration
For better understanding of what is Multi State Cooperative Society, Section 5 of the MSCS Act outlines the registration process for a Multi State Cooperative Society. This provision states that a Multi State cooperative can only be registered under this act if its principal goal is to serve members in more than one state and its bye-laws are meant to benefit all members on a social and economic level.
This registration is facilitated through a society that adheres to cooperative principles, emphasising self-help and mutual aid. Additionally, Section 6 of the MSCS Act 2002 outlines the application process for registration, which must be submitted to the Central Registrar in the prescribed form with necessary details.
Required Documents for Establishing a Multi State Cooperative Society
When comprehending what Multi State Cooperative Society and its registration, certain essential documents need to be prepared and submitted. These documents facilitate the registration process and ensure compliance with legal requirements. The following are the necessary documents:
1. Proposed Bye-Laws:
Four copies of the proposed Bye-Laws, outlining the rules and regulations that will govern the cooperative society, must be signed and submitted.
2. List of Share Capital Contributors:
A comprehensive list of individuals or entities contributing to the share capital of the cooperative society. This list should include details of the contributors and the amount of capital each contributor is providing.
3. Bank Certificate:
A certificate issued by a bank indicating the credit balance in the cooperative society’s account. This serves as evidence of the society’s financial position.
4. Scheme Demonstrating Financial Viability:
A scheme that outlines the financial feasibility of the proposed cooperative society. This scheme should emphasise how the society’s operations will be economically viable and contribute to the social and economic development of its members.
5. Resolution of Chief Promoter:
A resolution passed by the chief promoter of the cooperative society. This resolution should include the name and address of the chief promoter, who plays a key role in the society’s establishment.
6. Authorisation Resolution:
A resolution authorising an individual to prepare and finalise the Bye-Laws on behalf of the cooperative society. This resolution empowers a designated person to undertake this important task.
These documents collectively provide a comprehensive overview of the cooperative society’s objectives, structure, financial status and leadership. They demonstrate the society’s commitment to cooperative principles and its potential to contribute to the welfare of its members.
Steps for Registration Process
The following steps outline the process for registering a Cooperative Society which is necessary to understand what is Multi State Cooperative Society:
1. Formation of a Group of Individuals:
A minimum of 10 individuals who are interested in forming a cooperative society is required.
2. Selection of Provisional Committee and Chief Promoter:
From among the interested individuals, a Provisional Committee and a Chief Promoter must be elected. These individuals will play key roles in the initial stages of society formation.
3. Unique Society Name:
The selected name for the cooperative society must be unique and distinct from existing organisations.
4. Application for Name Reservation:
An application needs to be submitted to the relevant authority for name reservation. This involves requesting authorisation for the chosen name and ensuring its availability for use.
5. Collection of Entrance Fees and Share Capital:
The potential members of the society need to contribute entrance fees and share capital as per the society’s requirements.
6. Opening of Bank Account:
A bank account must be opened in the name of the proposed society.
7. Deposition of Registration Fees:
The registration fees must be deposited with the RBI and a receipt Challan should be obtained as proof of payment.
8. Submission of Application to Registrar:
An application for society registration must be submitted to the society registration in the concerned Municipal Division. This application should include all the required documents and details as per the regulations.
Upon completion of these steps and successful review of the application by the Registrar, the Multi State cooperative society will be officially registered and authorised to operate in accordance with the MSCS Act and cooperative principles.
Acceptance of Registration Application
The acceptance of a registration application for a cooperative society follows a specific timeline and procedure as outlined in relevant laws. The same has been mentioned below:
1. The Registrar’s Decision:
The Registrar responsible for processing the cooperative society’s registration application has a stipulated time frame of 4 months to evaluate and decide on the application.
2. Deemed Acceptance:
If the Registrar does not reach a decision on the registration application within the designated 4-month period, the application is automatically considered as accepted for registration. This provision ensures that undue delays in processing applications do not hinder the establishment of cooperative societies.
3. Issuance of Registration Certificate:
Following the acceptance of the registration application, a formal registration certificate is issued to the cooperative society. This certificate serves as legal documentation confirming the society’s registration status and its compliance with the relevant laws and regulations.
Final Thoughts
The establishment of a Multi State Cooperative Society offers numerous benefits and opportunities for collective growth and development. The provisions outlined in the MSCS Act highlight the advantages that come with registration. From the ability to charge and set-off financial commitments to the non-liability of shared contributions as debts, the legal recognition of such societies promotes a cooperative spirit among members. The Act’s provisions also simplify administrative processes by exempting certain instruments from mandatory registration and providing allowances for compensation. Therefore, a clear understanding of what a Multi State Cooperative Society is necessary to fully comprehend the advantages and processes associated with the Society.
Furthermore, the Act encourages government support for these societies, recognising their societal and economic contributions. An essential aspect is the time-bound nature of application processing, whereby a 4-month period is designated for decision-making by the Registrar. If not decided within this timeframe, the application is considered accepted. Ultimately, the Act’s provisions aim to encourage cooperation, empower members and contribute to the complete development of Multi State cooperative societies.
For more information on what is multi state cooperative society in India, connect with our team of professionals at StartupFino.
