Section 48 of The Multi-State Co-operative Societies Act, 2002
- (1)Where the Central Government or a State Government has subscribed to the share capital of a multi-State co-operative society, the Central Government or the State Government, as the case may be, or any person authorised by the Central Government or the State Government shall have right to nominate on the board such number of persons as its members on the following basis, namely:--
- (a)where the total amount of issued equity share capital held by the Central Government or the State Government is less than twenty six per cent. of the total issued equity share capital, one member of the board;
- (b)where the total amount of issued equity share capital held by the Central Government or the State Government is twenty-six per cent. or more but less than fifty-one per cent. of the total issued equity share capital, two members of the board;
- (c)where the total amount of issued equity share capital held by the Central Government or the State Government is fifty-one per cent. or more of the total issued share capital, three members of the board: Provided that the number of such nominated persons shall not exceed one third of the total number of members of the board: Provided further that where the Central Government or a State Government has guaranteed the repayment of principal and payment of interest on debentures issued by a multi-State co-operative society or has guaranteed the repayment of principal and payment of interest on loans and advances to a multiState co-operative society or has given any assistance by way of grants or otherwise to a multi-State cooperative society, the Central Government or the State Government in this behalf, as the case may be, or any person authorised by the Central Government, shall have the right to nominate person on the board of such a society in the manner as may be prescribed.
- (2)A person nominated under this section shall hold office during the pleasure of the Government by which he has been so nominated.
Summary
- The Central Government or a State Government has the right to nominate representatives to the board if they have subscribed to the society's share capital.
- The number of nominees is determined by the percentage of issued equity share capital held by the government.
- If the government holding is less than twenty-six per cent, they can nominate one member of the board.
- If the government holding is twenty-six per cent or more but less than fifty-one per cent, they can nominate two members of the board.
- If the government holding is fifty-one per cent or more, they can nominate three members of the board.
- The total number of nominated board members cannot exceed one-third of the total board membership.
- Nominated board members serve at the pleasure of the nominating government.
- Governments also have nomination rights if they have guaranteed debentures, loans, or provided financial assistance to the society.
Practical examples
FAQ
1. How many board members can the government nominate under Section 48 of the Multi-State Co-operative Societies Act, 2002 if it holds forty percent of the equity share capital?
Under Section 48 of the Multi-State Co-operative Societies Act, 2002, the government can nominate two members to the board because forty percent falls in the range of twenty-six percent or more but less than fifty-one percent.
2. What is the maximum limit on government nominees on the board under Section 48 of the Multi-State Co-operative Societies Act, 2002?
Under Section 48 of the Multi-State Co-operative Societies Act, 2002, the total number of nominated persons must not exceed one-third of the total number of members of the board.
3. Can a government nominee be removed by the co-operative's board under Section 48 of the co-operative law?
No, under Section 48 of the Multi-State Co-operative Societies Act, 2002, a nominated person holds office during the pleasure of the Government that nominated them, and only that Government can recall or replace them.
4. What financial assistance besides equity holding triggers government nomination rights under Section 48 of the Multi-State Co-operative Societies Act, 2002?
Under Section 48 of the Multi-State Co-operative Societies Act, 2002, nomination rights are triggered if the government has guaranteed the repayment of principal and interest on debentures, or loans and advances, or has given assistance by way of grants or otherwise.
Test yourself
Q1.Under Section 48 of the Multi-State Co-operative Societies Act, 2002, how many board members can be nominated if the Central or State Government holds exactly thirty percent of the issued equity share capital?
Q2.Under Section 48 of the Multi-State Co-operative Societies Act, 2002, what is the absolute cap on the proportion of nominated members on the board?
Q3.Under Section 48 of the Multi-State Co-operative Societies Act, 2002, how long does a nominated government representative hold office on the board of a multi-state co-operative society?
Q4.Under Section 48 of the Multi-State Co-operative Societies Act, 2002, if the Central Government holds ten percent of the equity share capital, but has guaranteed the repayment of a major loan taken by the society, what is its nomination right?