Govt to fix multi-state cooperatives’ CEO age limit at 70

Prabhudatta Mishra | | Updated on: Jul 21, 2022

Draft of amendments ready; MSCS (Amendment) Bill, 2022 to be introduced in parliament

Provision for an election authority to conduct elections of Board of Directors in Multi State Cooperative Societies (MSCS), fixing a maximum age limit for the chief executives and a corpus to fund revival of sick societies are some of the provisions proposed in the MSCS (Amendment) Bill, 2022 slated to be introduced in current session of parliament.

“While it is necessary to bring about changes in the Multi State Cooperative Societies Act, 2022 to bring it in line with the 97 th Constitutional Amendment, it is also necessary to bring in necessary reforms related to elections, governance, recruitment, transparency and efficiency in these societies for the benefit of their members,” the Centre wrote to stakeholders seeking feedback on the proposed changes.

The letter, issued on July 8, had asked the stakeholders like leading societies as well as different cooperative unions to share their feedback by July 18 “failing which, it will be presumed that you have no comments to offer.”

Inaugurating a national conference in April on the proposed cooperation policy, Cooperation Minister Amit Shah had said that elections in cooperatives should be held in a democratic and transparent manner and suggested that a body on the lines of the Election Commission of India to conduct the polls.

Draft Bill provisions

The draft Bill has a provision to establish a Cooperative Election Authority comprising a chairman, a vice chairman and maximum three members. However, the Centre reserves power to remove the chairman and others. Also, the government will frame rules for the Authority, which some experts said could be an indirect control over these multi-state societies.

“Section 51 of the Act says: “There shall be a Chief Executive, by whatever designation called, of every multi-state cooperative society to be appointed by the board and he shall be a full-time employee of such multi-state cooperative society. It is silent on the age limit. So, the proposed amendment has fixed it at 70 years, though it has given flexibility to the Board to appoint someone above the limit with approval of 3/4 members (16 out of 21) of the Board. The person so appointed as CEO has to conform to fit and proper””criteria fixed by the Central Registrar.

The proposed amendment also says that the Board can have maximum 21 members, out of which one has to be from SC or ST community and two women. Besides, the Board can co-opt two expert Directors (outside 21) from different backgrounds such as banking, management or finance.

The Centre will create a Rehabilitation, Reconstruction and Development Fund to be maintained by it in which profit making MSCS (in last 3 financial years) will have to contribute ₹10 crore or 1 per cent profit, whichever is lower. The fund will be utilised for revival of sick MSCS and financial assistance. The draft Bill also has provision for non-voting shares to allow MSCS to raise capital.

Amid allegations of providing employment to their relatives, the proposed amendment Bill says no relative of a director can be employed in the same MSCS.

Meanwhile, the government informed Parliament that out of the 1,508 MSCS acorss the country, 81 are under liquidation proceedings.

Published on July 21, 2022
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