Review of Co-op Laws in Pakistan (1997)

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)

Part II - Review of Country Laws in Pakistan (1997)

Source: Co-operative Laws in Asia and the Pacific
by G.K. Sharma (pp.128-132)

After partition of India and creation of Pakistan in 1947
Pakistan continued to apply the Bombay/Sindh Co-operative
Societies Act of 1925 and continues in operation till date with a
number of amendments. In addition to this Act, Co-operative Farming
Act of 1976 has also been enacted for farming co-operatives, along
with other ordinances.

The law of 1925 has 73 articles divided in XI Chapters.

Chapter I : Preliminary
This chapter includes title, extent and definitions. The definitions
include definition of Resource Society, Producers Society, Consumers
Society, Housing Society and a General Society. Resource Society
has been defined as society formed with the object of obtaining
members credit, goods or service required by them. 

Chapter II : Registration
This chapter deals with appointment of Registrar and his officers,
registration of societies of limited and unlimited liability. The minimum
membership for a primary co-operative under article 7 is 10. However,
in case of Sindh province the minimum number has been raised to 30 by an amendment in 1977. 

The Chapter also deals with General Meeting, Special General Meeting
and amendment of bye-laws. There is no time limit prescribed in the law
for registration or refusal.

Chapter III : Rights and Liabilities of Members
Under article 17A a member has to declare his immovable property
for membership of agricultural credit society which can be attached
in case of default.

Under article 18 all types of co-operatives have to follow the principle
of one member one vote. Defaulters cannot stand for election.

Chapter IV : Duties of Societies
Under article 22 Annual Audit is to be arranged by the Registrar only.

Chapter V : Privileges of Societies
Under article 24 claims of the society will have priority to other claims
except dues of the Government as land revenue. Shares or interest of
a co-operative is not liable to attachment. 

Article 32 provides exemption from registration of instrument relating
to shares.

Under article 33 Federal Government of Pakistan may exempt
co-operatives from income-tax, stamp duty, registration and court fee
by notification. Similarly provincial government may also exempt
co-operatives from stamp duty, court fee and registration fee.

Under article 33 provincial governments may give loans or guarantee
interest on debentures issued by co-operatives.

Chapter VI : Property and Funds of Societies
Under article 34 from non-members loans and deposits can be
obtained only according to conditions laid by Registrar. 

Under article 36 consumers, producers and housing co-operatives can
deal with non-members according to their bye-laws.

Under article 38 dividend cannot be more than 10%. Under article 39
in case of Resource and Producers Society, Reserve Fund has to be
minimum 25% of net surplus and in case of other society it has to be
a minimum of 10%.

Article 40 also allows profit distribution to non- members in case of
consumers and producers society. Under article 42, 20% can be set
aside for charitable  purpose.

Chapter VII : Inspection of Affairs
Under article 43 Registrar is authorised to conduct enquiry and
inspection under article 44 and inform the findings to the society.

Chapter VIII : Liquidation and Arbitration
Under article 47 only Registrar can issue orders for liquidation and
appoint a liquidator for winding up process under the circumstances
detailed in article 47 which are the usual provisions available in other
British Model Laws. Under article 50A Registrar is empowered to fix
damages against any person or official who is found responsible for any
loss or damage caused to the society either after an enquiry, inspection,
audit or in the course of winding up regarding disposal of surplus assets.

Article 52 provides after all the liabilities including the paid up share
capital of a cancelled society have been met, the surplus assets shall not
be divided amongst its members but they shall be devoted to any object
or objects described in the bye-laws of the society and when no object is
so described to any object of public utility determined by the general
meeting of the society and approved by the Registrar or they may in
consultation with them either be assigned by the Registrar in whole or
in part to any or all of the following:
a.      an object of public utility of local or communal interest,
b. charitable purpose as defined in Section 2 of the Charitable
Endowments Act, 1890 (VI of 1890),
c. may be placed as deposit with the Provincial Co-operative
Institute as with the Provincial Cooperative Bank, until such
time as a new society with similar conditions is registered,
when with the consent of the Registrar such surplus may be
credited to the reserve fund of such new society. 

Article 54 provides the provision of arbitration by the Registrar in case
of disputes and explains detailed procedure with regard to arbitration

Chapter VIII- A : Distraint
This chapter prescribes detailed procedure for recovery of debt
outstanding by a co-operative including through attachment of
property and even sale of crop.

Chapter IX : Offences
The offences are usual provisions found in the British Model
Co-operative Laws. 

Chapter X : Appeals and Revisions
Appeal can be made within 60 days from the date of the receipt of
the order against it to provincial governments in the following cases:
Article 10      -       Registration 
Article 16      -       Amendment of bye-laws 
Article 45      -       Cost of Enquiry 
Articles 47,50  -       Winding up, powers of liquidation
Article 54      -       Arbitration 
Article 70      -       No suit or case against a co-operative can be filed
in the courts without giving a 60 days notice to the
Registrar in that regard. 
Article 71      -       Empowers provincial governments to make rules.

The multi-unit co-operative societies act 1942 which covers co-operatives
having objects in more than one province is also operative in Pakistan.
The act has in all six articles and deals basically with the following: 

i. Article 4 empowers Federal Government to appoint a central
registrar who is to exercise the powers under the Co-operative
Act 1925 applicable to Pakistan in case of multi-state
ii. Under article 5 co-operatives coming under the act have to furnish
such information as called for and non-furnishing the information
is an offence; and
iii. Article 6 empowers federal government to make rules to carry the
provisions of this act.