Review of Co-op Laws in Bangladesh (1997)

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This document has been made available in electronic format
by the International Co-operative Alliance (ICA)
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Part II - Review of Country Laws - Bangladesh (1997)

Source: Co-operative Laws in Asia and the Pacific
by G.K. Sharma (pp.52-59)

Bangladesh 
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Since the partition of India in 1947 Bangladesh remained part
Of Pakistan till 1972 when it became an independent country. 

As co-operative was a provincial subject in India the state of Bengal
enacted the co-operative societies act of 1940 replacing the Co-operative
Societies Act of 1912 followed by Co-operative Societies Rules in 1942.
This act and rules under it continued to be operative in Bangladesh with
some amendments from time to time till 1984 when the Co-operative
Societies Ordinance 1984 was issued on December 31, 1984 and new
rules under it framed on January 20, 1987 which are operative presently. 

The 1940  act had 140 articles divided in 15 chapters. The new ordinance
also have the same numbers of 140 articles and 15 chapters. The salient
features of the ordinance are summarised below: 

Chapter I: Preliminary 
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This chapter deals with the applicability of the act and definitions of
various terms in the law. One definition worth noticing is of central
societies in which the maximum number of members has been stated
as ten.

Chapter II : Registration 
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This chapter runs from articles 6 to 13. Article 8 defines societies
Which could be registered as a society which has its object the
promotion of the common interest of its members in accordance with
co-operative principles or a society established with the object of
facilitating the operation of such a society. But the cooperative
principles are nowhere defined or mentioned in the law or rules
under it. 

Article 10 (3) provides that application must be disposed of within
90 days and in case of refusal to register the Registrar must inform
the reasons in writing for not registering within 30 days of the
decision. 

Article 13 gives powers to the Registrar and financing bank to
give direction for amendments which are binding on the co-operatives. 

Chapter III: State and Management of Co-operative Societies
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While article 15 states that the final authority of a co-operative is
in General Body certain limitations have been imposed on the
General Body under article 17 as under : A general meeting or a
special general meeting of a co-operative society, the managing
committee of which has been dissolved under section 22 and a
managing committee has been appointed under section 23, shall not be competent : 

a. to elect, subject to the provision of section 23 (2) members
        of the managing committee or any other officer for managing
        the affairs of the society;

b.      to disapprove or modify the budget as prepared by the managing
        committee and approved by the Registrar; or 

c.      to do anything which, in the opinion of the Registrar, is likely
        to create any impediment in the way of smooth functioning of
        the appointed managing committee in any manner whatsoever. 

Further under article 18 (4) if the election is not held in time,
the managing committee shall cease to operate and the functions
are to be taken over by the Registrar till he arranges to have fresh
election. The tenure of the elected managing committee is 2 years
under article 18(3).

Under article 19 a member who has been continuously elected for
3 term (six years) will not be entitled to stand for election till a 
period of two years has expired. 

Under article 21 government has been authorised under certain
circumstances to depute government servants to manage affairs
of a co-operative. 

Further under article 22 Registrar can convene a special General
Meeting to elect new managing committee if it is found that the
committee is not functioning properly during the course of audit,
or inspection or enquiry. Further if the society has 50% or more
government shares, loans or investment he can dissolve the
committee after giving an opportunity to explain. Similarly he can
also disqualify all or any of the members for re-election for 3 years
after giving the reasons and seeking explanations.

Under article 28 Government/Registrar is authorised to nominate
one third members of the managing committee where government
holds 50% or more of shares or advanced loan or funds or
guarantee.

Chapter IV : Duties and Obligations of Co-operative Societies 
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The chapter deals with securing borrowings, deposits, lending terms
of issue of debentures against government guarantee and appointment
of trustee for the purpose.

Chapter V : Privileges of Co-operative Societies
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This chapter deals with liabilities of the co-operatives and
certain exemptions from Registration fee and other
obligations/duties.

Chapter VI : Property and Funds of Co-operatives
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The chapter deals with funds of a co-operative which provides along
with: 

Article 55 (2) creation of reserve fund - minimum 15% of
net profit 

Article 57 (a) education fund not less than 5% 

Article 57 (b) Charitable purpose not more than 10% of
the balance after creating other funds under the Act. 

Chapter VII 
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The chapter deals with privileges, liabilities and obligation of members
for unlimited as also for limited liability co-operatives as also transfer
and disposal of shares.

Chapter VIII
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This chapter deals with Audit, Inspection and enquiry by the Registrar.
One interesting feature under this chapter is article 81 which authorises
the government to appoint an authority to supervise a co-operative in
which three-fourths members shall be elected and one fourth to be
nominated. Co-operative is liable  to pay such fees to the authority as
may be prescribed. 

Chapter IX 
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This chapter deals arbitration procedure for disputes between the
co-operative and its members and between cooperatives in articles 86-89. 

Chapter X : Winding up and Dissolution 
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This chapter deals in articles 90 to 95 the procedure for bringing
co-operative under liquidation and liquidation procedure. 

Chapter XI 
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This chapter in articles 96-121 provides special provisions for
co-operative land mortgage banks, central societies and national
societies. The chapter basically covers financing and recovery of
loans on mortgage property and procedure to be followed with
regard to disposal of the mortgage property.

Chapter XII : Enforcement of Obligations and Recovery of Sums Due
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This chapter deals with regard to enforcement of the orders of Registrar
 for actions arising under the ordinance as also powers to impose
penalties for certain defaults and offences under the provisions of
the ordinance. 

Chapter XIII : Jurisdiction and Appeals 
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Article 132 provides indemnity to the Registrar and his subordinate for
any action taken in good faith. Further article 133 bars the jurisdiction
of civil courts in certain matters between the Registrar and co-operatives.
Third schedule provides provisions of appeals against orders under various
articles. 

Chapters XIV and XV
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These chapters deal with penalties and offences provided in the fourth 
schedule under article 135 and empowers to the government to make
rules to carry out purposes of the ordinance.

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