Part II - Review of Co-op Laws in Tonga (1997)

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

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

Source: Co-operative Laws in Asia and the Pacific
by G.K. Sharma (pp.177-180)

The kingdom of Tonga located on the dateline in the Pacific had
the beginning of co-operatives along with the act to provide for the
formation of co-operative societies and to regulate their operations
in November 1973. The same law continues to be in operation till
date. The law has 67 articles divided into 9 parts. The important
provisions are: 

Part I : Preliminary 
This chapter basically deals with definitions. In the definition "patronage
Rebate" has been defined as "Bonus and means a share of the profits of
a registered society divided among its members in proportion to the
volume of business done with the society by them from which the
profits of the society were derived".

Dividend has been defined as "dividend means a share of profits
of a registered society divided among its members in proportion to
the share capital held by them." 

Part II : Registration
About registration under article 5 "a society which has as its object
the promotion of the economic interests of its members in accordance
with the co-operative principles, or a society established with the object
of facilitating the operations of such a society may be registered under
this act with or without liability as the Registrar may decide."

However under article 7 (3) "no school society shall be registered with
the consent of the Minister, acting after consultation with the Minister
charged with the responsibility of Education". 

Under article 8 while there is no time limit prescribed for the period
of registration by the registrar in case of refusal an appeal can be made
to Minister within 30 days of refusal.

Part III : Duties and Privileges
Article 14 makes obligatory on a member of the society whose object
is the disposal of produce to dispose of whole or part of the produce
 through society either as provided in the bye-laws or as contracted
and in case of default can be made to pay liquidated damages. 

In this part provisions for amendments, amalgamation and division
are provided. Another important provision under article 24 states
procedure for allowing conversion of a company into a co-operative.

Part IV : Rights and Liabilities of Members
While dealing with membership in case of a school society the minimum
age is 6 years (article 25) voting in case of primary is one member one
vote and in case of secondary society it could be as per the bye-laws
(article 28). 

Part V : Property and Funds
Under article 34 loans can be advanced only to members. However to
an another co-operative loan can be advanced with the approval of
the Registrar. 

Deposit and investment can be made only in the Treasury Saving Bank,
banks approved by the Registrar, another co-operative or mode approved
by Registrar (article 37).

Article 38 deals with disposal of profits in which 25% has to be in the
Reserve Fund.

Parts VI-VII : Audit, Inspection and Enquiry and Dissolution
The responsibility of audit is of the Registrar under article 39. The
registrar also has the power of inspection and conduct enquiry
under article 41. 

Based on the findings of inspection or enquiry the registrar is authorised
to dissolve the managing committee and nominate a committee for a
maximum period of 4 years after hearing objections by the managing
committee/general body.  The registrar can also dissolve the society
under article 43.

However, an important provision is that the liquidation takes place
after cancellation. Under article 46 cancellation is not done after
finalisation of liquidation proceeding as in most countries. Under
article 50(3) any surplus after liquidation proceeding are completed is
not to be divided among the members and will be devoted to any
object or objects described in the bye-laws of the society whose
registration has been cancelled and where no object is so prescribed
shall be deposited by the Registrar in a Bank or with a registered
society under such time another society operating in the same area
have been registered when such surplus shall be transferred to such
new society for the purpose of forming a reserve fund under the rules.

However, in case no society is registered within 3 years, the surplus can
be used by the Registrar for any co-operative purpose at his discretion.

Part VIII : Surcharge and Attachment
The Registrar under article 51 has been empowered to order repayment
or restoration of money or any property due to a society at his own
motion or in the case of audit, inspection, enquiry or winding up it
appears that it is due to the society.

Part IX : Disputes
Article 54 provides reference to Registrar for arbitration in case
dispute arises between co-operative and its members or an officer
of any other co-operative.

Part X : Rules
Article  56 (2) provides from A to Z (26) issues/matters on which rules
can be made under this act. 

Part XI : Miscellaneous
Along with other usual provisions one important provision under
article 63, registrar is empowered to fine up to forty pang with cost
and imprisonment not more than three months in case of any fraud
or misappropriation. 

Under article 65  the Minister can nominate members in the managing
committee of a national and secondary society not exceeding one third,
if the society has received financial assistance  as provided in this article
or if he considers so in the interest of national economy. 

The nominated member can ask for withholding any decision of the
committee till it is referred to the minister and his approval has been