Disposal of net profits

§58

Summary

1[(1) the net profit of the Co-operative Society in a co-operative year shall be computed after deducting the following from its gross profit in that year- (a) interest that is overdue ; (b) managerial expenses ; (c) contributions to the provident fund or gratuity fund of the employees ; (d) interest on loans and deposits ; (e) audit fee ; (f) working expenses which include repairs rents, taxes and depreciation of property ; (g) contribution to the fund created for writing off unadjusted bad debts and losses ; Provided that a co-operative society may add to the net profit of a year, the interest which accrued in the previous year but which was recovered in the year.]1 (1-A) A co-operative society shall distribute the nit profits of a year as computed under sub-section (1), including the nit profits brought forward from the previous years in the following manner- (a) an amount not less than twenty-five percent shall be transferred to a fund called the reserved fund ; (b) not less than such amount as may be prescribed, shall be credited to a co-operative education fund to be established in the manner prescribed, and this shall be applicable to such co-operative societies also which incur loss in the year ; 2[Provided that the provisions of this clause shall not apply to a Primary Agriculture Credit Co-operative Society, a Central Co-operative Bank or the Apex Bank.] (c) an amount that may be prescribed, shall be credited to the research and development fund created in the apex society of the concerned class of co-operative societies and which shall be maintained for the purpose of research and development in the prescribed manner ;] 3[(d) an amount not exceeding twenty percent as may be prescribed shall be transferred to a fund called the Equity Redemption Fund to be established and utilized in the manner prescribed by such co-operative society which has the subscription of the State Government in its share capitals ; Provided that the aggregate amount transferred by a co-operative society to such fund shall not exceed the amount subscribed by the State Government in the share capital of that co-operative society.] (2) Subject to such conditions as may be prescribed, the balance of the net profits may be utilized for all or any of the following purposes, namely- (a) payment of dividend to members on their paid-up share capital at a rate 4[not exceeding twenty percent] ; (b) payment of bonus to members on the amount or volume of business done by them with the society to the extent and in the manner specified in the rules or the bye-laws ; (c) constitution of, or contribution to 5[ X X X ] building fund, rural improvement fund or any other fund as may be specified in the rules or the bye-laws ; (d) donation of amount not exceeding 5 percent for any charitable purpose as defined in section 2 of Charitable Endowments Act, 1890. 6[Provided that no amount shall be donated to any organization, established for any chartable purpose, which has an object, whether directly or indirectly, to further the interest of any political party or a religious faith.] 7(e) [ X X X ] 7(f) [ X X X ] (3) Subject to the provisions of any rules made in this behalf, the registrar may on the request of a co-operative society, exempt the society from contributing towards any of the funds or lower the percentage of contribution to such funds as mentioned in sub-section (1) and (2) or enhance the percentage of dividend mentioned in clause (a) of sub-section (2).

1[(1) the net profit of the Co-operative Society in a co-operative year shall be computed after deducting the following from its gross profit in that year- (a) interest that is overdue ; (b) managerial expenses ; (c) contributions to the provident fund or gratuity fund of the employees ; (d) interest on loans and deposits ; (e) audit fee ; (f) working expenses which include repairs rents, taxes and depreciation of property ; (g) contribution to the fund created for writing off unadjusted bad debts and losses ; Provided that a co-operative society may add to the net profit of a year, the interest which accrued in the previous year but which was recovered in the year.]1 (1-A) A co-operative society shall distribute the nit profits of a year as computed under sub-section (1), including the nit profits brought forward from the previous years in the following manner- (a) an amount not less than twenty-five percent shall be transferred to a fund called the reserved fund ; (b) not less than such amount as may be prescribed, shall be credited to a co-operative education fund to be established in the manner prescribed, and this shall be applicable to such co-operative societies also which incur loss in the year ; 2[Provided that the provisions of this clause shall not apply to a Primary Agriculture Credit Co-operative Society, a Central Co-operative Bank or the Apex Bank.] (c) an amount that may be prescribed, shall be credited to the research and development fund created in the apex society of the concerned class of co-operative societies and which shall be maintained for the purpose of research and development in the prescribed manner ;] 3[(d) an amount not exceeding twenty percent as may be prescribed shall be transferred to a fund called the Equity Redemption Fund to be established and utilized in the manner prescribed by such co-operative society which has the subscription of the State Government in its share capitals ; Provided that the aggregate amount transferred by a co-operative society to such fund shall not exceed the amount subscribed by the State Government in the share capital of that co-operative society.] (2) Subject to such conditions as may be prescribed, the balance of the net profits may be utilized for all or any of the following purposes, namely- (a) payment of dividend to members on their paid-up share capital at a rate 4[not exceeding twenty percent] ; (b) payment of bonus to members on the amount or volume of business done by them with the society to the extent and in the manner specified in the rules or the bye-laws ; (c) constitution of, or contribution to 5[ X X X ] building fund, rural improvement fund or any other fund as may be specified in the rules or the bye-laws ; (d) donation of amount not exceeding 5 percent for any charitable purpose as defined in section 2 of Charitable Endowments Act, 1890. 6[Provided that no amount shall be donated to any organization, established for any chartable purpose, which has an object, whether directly or indirectly, to further the interest of any political party or a religious faith.] 7(e) [ X X X ] 7(f) [ X X X ] (3) Subject to the provisions of any rules made in this behalf, the registrar may on the request of a co-operative society, exempt the society from contributing towards any of the funds or lower the percentage of contribution to such funds as mentioned in sub-section (1) and (2) or enhance the percentage of dividend mentioned in clause (a) of sub-section (2).

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