CO-OPERATIVE SOCIETIES ACT

CO-OPERATIVE SOCIETIES

CHAPTER 442

CO-OPERATIVE SOCIETIES ACT

To provide for the constitution, registration and control of co-operative

societies and for matters connected therewith or ancillary thereto.

16th April, 2002

1st July, 2002

1st January, 2003

ACT XXX of 2001 , as amended by Legal Notice 426 of 2007 ; Act V

of 2007 ; Legal Notice 346 of 2008 ; and Acts X of 2013 and XXI of

2020 .

PART I

P RELIMINARY

The short title of this Act is Co-operative Societies Act.

Amended by

L.N. 426 of 2007.

Article 26(1)

Application for Registration of a Co-operative Society

1. We, the undersigned .............................................................................................

(insert name, age, address and occupation of at least five persons, or of at least two

persons duly authorised in this behalf of each society (if the application is made by

societies) who desire to form a co-operative society under the Co-operative Societies

Act, and hereby apply for registration).

2. The

name

of

the

proposed

society

shall

be

.......................................................................... insert name proposed).

3. The registered office of the proposed society shall be at .....................………

(insert proposed address) and its postal address shall be ..................................................

4. Enclosed is a signed copy of the proposed statute, specifying the objects of the

society and a copy of the viability statement (if already requested by the Board), and a

copy of the feasibility study (prepared and signed by) ……..............................………...

5. The proposed statute was approved on .…......................… 20 ………..

6. The persons undersigned are now willing to become members and have made

the payments necessary for admission to membership as provided in the enclosed

statute.

7. Enclosed is also the additional information which may assist the Board in

considering this application.

8. We, the undersigned, are the founding members or the representatives thereof

and have consented to manage the affairs of the proposed society and otherwise

perform the functions of such committee in accordance with the Co-operative Societies

Act, until our successors are elected at the first general meeting held after registration

of the society.

……………………………

……………………………

Provisional President

Provisional Secretary

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Founding Members

Additional information about proposed society

1. Location of proposed society

Give location and approximate site of area in which the proposed society will provide

services to members (if other societies are to be members, give their names and

location) ......................................................................……………….....................……

2. Kind of co-operative society required

Describe briefly the main purpose for which the society is to be organised

3. Reasons

Give detailed reasons for forming the society

4. Source of membership support

Briefly describe the main occupation or employment, or residential area, or other bond

of association or occupation of the people expected to become members

5. Attitude towards community projects

Do the people referred to in item 4 work together in voluntary projects to benefit the

community or area in which they live, or the occupational, employment or other group

to which they belong?

6. Expected membership

(a) Number of persons ready to join now.

(b) Estimated number of persons expected to join within the first year of

operation

7. Management

If the society is registered, will the services of a competent manager (or secretary or

treasurer) be available? ......................................................…….……………………….

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(a) Name ...................................................…………………...……………..

(b) Experience and training ..........................................…………...………..

(c) Will he be able to keep or supervise the keeping of accurate books or

records?

8. Financial participation by members

(a) Will members provide share capital or other funds to start the society

and continue to give it financial support after operations commence?

(b) Value of each share .................... euro. Total expected to be paid on

shares and/or subscriptions when operations commence .....................

euro.

(c) Total paid-up membership fees expected when operations

commence…...… euro.

Total entrance fees to be paid when operations commence ......………

euro.

(d) From what source of income will members provide the capital required?

(e.g. salaries, wages, business, etc.) …..............................………………………

9. Educational meetings

Have educational meetings been held to discuss the proposed society, its operations and

its benefits to members if they support it?

(a) If so, how many? .......................……………...........…………………

(b) Average number of attendance .......………..............………………..

(c) Speakers………………………………………………………………..

10. Discussion on Statute

Have study and discussion groups been organised to involve and inform people who

wish to become members? ....…………………………………………………..

Has a model statute been discussed? If so, when, how, by whom and

with whose assistance? ..…………………......….........……………….

11. Office space

If office space, a building or equipment is required for the purposes of the society, how

will this be obtained and financed ?

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12. Planning and Technical Advice

Has advice been obtained on whether planning of the proposed society seems adequate

and whether it has reasonable prospects of success if the members give it their support?

................................................................................................…………………………..

If so, give the source of such advice ………………………...............………………

13. Consultation with an officer of the Board

Has an officer of the Board been consulted on the need for the proposed society and

necessary preparations for organisation?

(give details) ....................................................................................................................

Dated at…………………… the.......................... day of ……..……. 20 ...

Names and signatures of original prospective members

…………………………………………………..

…………………………………………………..

…………………………………………………..

In this Act, unless the context otherwise requires -

"abridged set of audited financial statements" means the

financial statements placed for public inspection in accordance

with articles 11 and 48 and prepared in accordance with Part V of

the Third Schedule;

''active member'' is a member of a society who has carried out a

minimum amount or value of transactions with the same society, as

may be defined in the statute of a society;

"allowance" means the remuneration paid to the President,

secretary or treasurer of a society in consideration of their

voluntary services rendered to the society on a regular part-time

basis;

"Apex organisation'' means an association registered under Part

X to facilitate the operations of all primary, secondary and tertiary

co-operative societies in Malta;

"Arbitration Centre" means the Malta Arbitration Centre

established under the Arbitration Act;

"Board" means the Co-operatives Board established under article

3, and includes any person exercising such powers of the Board as

may have been conferred upon him by the Board;

"Chairman" means the Chairman of the Board;

"commercial partnership" means a commercial partnership

registered under the Companies Act, or its equivalent under a

foreign law;

"delegate", in the case of a society which is itself a member of

another society, means the representative of the former, elected or

appointed to attend and vote at meetings of the latter society;

"dividend" means a share of the net surplus of a society divided

among the members in proportion to the paid up share capital held

by them in the society;

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"honorarium" means the remuneration given to some or all of the

members of the committee of management or supervisory board, if

any, in consideration of their services which would not otherwise

be remunerated;

"International Accounting Standards" means standards issued

from time to time by the International Accounting Standards

Committee of the International Federation of Accountants, as may

be made applicable from time to time in terms of the Accountancy

Professions Act;

"International Standards on Auditing" means the standards

approved by the Council of the International Federation of

Accountants, as amended from time to time;

" m a n a g e r " i s a n o ff i c e r a p p o i n t e d b y t h e c o m m i t t e e o f

management of a society to be responsible for the executive

running and administration of a society in line with the overall

policy established by the said committee of management;

"member" in relation to a registered society includes a person, a

commercial partnership, or society admitted to membership upon,

or after, the registration of the society;

"Minister" means the Minister responsible for matters relating to

co-operative societies;

"net surplus" means the remaining portion of the surplus after

adequate provision has been made for the Central Co-operative

Fund and the reserve fund;

"officer" includes the President, Vice-President, secretary,

assistant secretary, treasurer, assistant treasurer, member of

committee of management, and manager of a society and includes

also any employee or other person empowered under this Act, the

Regulations or the statute of the society to give directives in regard

to the business of a society or to supervise such business, but does

not include an auditor of a society or a member of a supervisory

board;

"officer of the Board" means a member of the staff of the office

of the Board or any other person duly authorized by the Board for a

specific purpose;

"patronage refund" has the same meaning as is assigned to it by

article 93;

"primary society" means a society in which a majority of

members are individual persons;

"registered" means registered under this Act;

"regulations" means regulations made under this Act;

"secondary society" means a society in which a majority of

members are themselves primary societies;

"society" means a co-operative society registered or

provisionally registered under this Act and includes a primary

society, a secondary society and a tertiary society;

''statute" means the registered statute of a society, including a

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registered amendment thereto;

"supervisory board" means the supervisory board elected by the

general meeting of members in accordance with and for the

purposes of articles 83 to 85 and other relevant provisions of this

Act;

"surplus" means the net income less expenditure immediately

before adequate provisions have been made for the Central Co-

operative Fund and the reserve fund;

"subsidiary company" means a commercial partnership in which

a society, referred to as the "parent society", holds the majority of

shares or equivalent capital, or the majority of the voting rights, or

the right to appoint more than half of the Board of Directors or

equivalent organ, or a combination of such factors giving the

society control;

"tertiary society" means a co-operative society in which a

majority of members are themselves primary and, or, secondary

societies.

PART II

C ONSTITUTION , F UNCTIONS , P OWERS AND C OMPOSITION OF THE

B OARD

Article 34(2)

The following is a non-exhaustive list of matters required to be included in the statute

of a Co-operative Society

1. The name of the society.

2. The place and postal address of its registered office.

3. The objects of the society.

4. The geographical area of operation of the society.

5. The purposes to which the society’s fund may be applied.

6. The value of each share, if the society is formed with share capital, or the

minimum amount of monthly subscriptions.

7. The qualifications for membership, the terms of admission of members, the

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entrance or affiliation fees, if any, payable, and the mode of admission.

8. The manner of raising share capital, if any, and other funds and the terms of

withdrawal or transfer of shares and, or, subscription capital.

9. The rights and obligations of members and the extent of the liability of members

for debts of the society.

10. The conditions in which a member may withdraw from membership, including

the procedure whereby the nominal value of the shares held by a withdrawing member

shall be redeemed.

11. The mode of summoning and conducting meetings, and the rights of voting.

12. The powers and duties of general meetings, committee of management, officers,

and supervisory board (where applicable).

13. The mode of election, appointment, suspension and removal of the committee of

management, the supervisory board (where applicable), and officers of the society.

14. The legal and judicial representation of the society, including the authorisation

of an officer or officers to sign documents and otherwise act on behalf of the society.

15. The method of constituting, operating and allocating the reserve fund and the

amount or method of fixing the amount to be contributed thereto.

16. The disposal of the annual net surplus.

17. The honoraria or allowances, if any, to be paid to officers of the society.

18. Restrictions of transactions with persons other than members, if any.

19. In the case of a society the objects of which include the creation of funds to be

lent to the members, additional rules in its statute with respect of the following matters

(a) the conditions on which loans may be made to members, including -

(i) the maximum rate of interest;

(ii) the maximum period allowed for the repayment of a loan;

(iii) the extension of the term and renewal of a loan;

(iv) the purposes for which a loan may be granted; and

(v) the security required for repayment.

(b) the consequences of default in payment of any sum due on account of

shares, subscriptions, deposits or loans and the consequence of failure

to use a loan for the purpose for which it was granted;

(c) the occupation or residence of persons who may become members; and

(d) the conditions on which loans and deposits may be received from

members and non-members and the extent to which the society may

borrow from members and non-members.

20. In the case of a secondary society or tertiary society or the Apex organisation,

the method of representation of members at general meetings, the removal of delegates

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and the manner of voting of delegates.

21. If deemed appropriate, rules distinguishing between active members and non-

active members in relation to the qualification for membership of the society and any

other matters related thereto.

22. Rules in respect of any other matter incidental to the management of the

society’s business.

23. If deemed appropriate, rules with respect to the referral of disputes to the

Arbitration Centre.

24. The maximum rate that the society may pay to its members by way of dividend.

25. If deemed appropriate, the provision of proxy rights.

26. If deemed appropriate, the provision of holding general meetings through

suitable electronic or other means.

27. The maximum amount that a society may borrow, including bank overdrafts.

28. A procedure for the expulsion of members.

29. If deemed appropriate, the provision for including the possibility of having

commercial partnerships as members.

30. The manner for convening the annual general meeting.

31. The number of members composing the committee of management.

32. Restrictions on members in relation to membership in other societies having the

same or similar objects or in relation to activities carried out in competition with those

of the society.

33. Rules on the transmission of shares causa mortis.

34. Rules concerning the majority of votes required for amendments to the statute,

conversions, amalgamations or dissolution of the society.

35. Rules on the receipt, expenditure and investment of monies and the acquisition

and disposal of assets by the society.

36. If deemed appropriate, the provision for requiring a second general meeting to

confirm a resolution for the dissolution of the society.

37. If deemed appropriate, the provision for the distribution of any part of the net

surplus of a society among its members in the form of bonus certificates or bonus

shares.

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(1) There shall be a Board, which shall be known as the

Co-operatives Board, whose functions shall be -

(a) to register, monitor and exercise supervision over co-

operative societies and to ensure compliance with the

provisions of this Act;

(b) to support and assist the establishment of co-operative

societies in all sections of the economy and society;

(c) to furnish information regarding co-operative

principles, practices and management.

(2) The Board may, subject to the provisions of this Act and to

any general or special directions of the Minister, delegate any of its

functions under this Act.

(3) The Board shall be a statutory body having a distinct legal

personality and, subject to the provisions of this Act, shall be

capable of entering into contracts, of suing and being sued, and

doing all such things and entering into all such transactions as are

incidental or conducive to the exercise of its functions under this

Act.

The Board, when exercising its functions under article 17,

shall respect and apply the principles of good administrative

behaviour laid down in article 3 of the Administrative Justice Act.

Amended by

L.N. 426 of 2007.

FORM AND CONTENT OF INDIVIDUAL ACCOUNTS

PART I - GENERAL RULES AND FORMATS

General rules

1. (1)

Subject to the following provisions of this Schedule -

(a) every balance sheet of a society shall show the items listed in the

balance sheet format set out immediately following paragraph 13 of this

Schedule: and

(b) every income and expenditure account of a society shall show the items

listed in the income and expenditure account format set out immediately

following the balance sheet format,

in either case in the order and under the headings and subheadings given in the format

adopted. For this purpose the words in brackets against the headings, the subheadings

and the items are explanatory and do not have to be reproduced in the individual

accounts.

(2) Sub-paragraph (1) is not to be read as requiring any item, or the heading or

subheading for any item, to be distinguished by any letter or number assigned thereto

in the format adopted.

2. (1) Where, in accordance with paragraph 1, a society’s balance sheet or

income and expenditure account for any accounting period has been prepared by

reference to one of the formats set out herein, the committee of management of the

society shall adopt the same format in preparing the financial statements for

subsequent accounting periods of the society unless, in their opinion, there are

special reasons for a change.

(2) Particulars of any change in the format adopted in preparing a society’s

balance sheet or income and expenditure account in accordance with paragraph 1

shall be disclosed, and the reasons for the change shall be explained, in the notes to

the accounts drawn up when the new format is first adopted.

3. (1) Any item required in accordance with paragraph 1 to be shown in a

society’s balance sheet or income and expenditure account may be shown in greater

detail than required by the format adopted.

(2) A society’s balance sheet or income and expenditure account may include an

item representing or covering the amount of any asset or liability, income or

expenditure not otherwise covered by any of the items listed in the format adopted,

but the following shall not be treated as assets in a society’s balance sheet -

(a) expenses of and commission on any issue of shares; and

(b) costs of research.

Any additional items as aforesaid shall be included under either an existing

heading or subheading or under a new heading or subheading as appropriate.

(3)

The layout, nomenclature and terminology of items in the balance sheet and

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income and expenditure account that are preceded by Arabic numerals shall be

adapted where the special nature of an undertaking so requires.

(4) Items to which Arabic numbers are assigned in any of the formats set out

herein may be combined in a society's individual accounts for any accounting period

if either -

(a) their individual amounts are not material to assessing the state of affairs

or surplus or loss of the society for that accounting period; or

(b) the combination facilitates that assessment,

but where the provisions of sub-paragraph (b) apply, the individual amounts of any

items so combined shall be disclosed in the notes to the accounts.

(5) Save where there is a corresponding item for the preceding accounting

period, a balance sheet or income and expenditure account item for which there is no

amount shall not be shown. In such case, the heading or subheading in respect of that

item shall also not be shown if that item is the only one under such heading of

subheading.

4. (1) In respect of every item shown in a society’s balance sheet or income

and expenditure account or in the notes to the accounts, there shall also be shown the

corresponding amount for the accounting period immediately preceding that to

which the individual accounts relate.

(2) Where that corresponding amount is not comparable with the amount to be

shown for the item in question in respect of the accounting period to which the

individual accounts relate, the former amount shall be adjusted and particulars of the

adjustment and the reasons for it shall be disclosed in the notes to the accounts. Such

adjustments shall be made in accordance with generally accepted accounting

principles and practice.

5. Save as otherwise provided in this Schedule, or as may be permitted by

generally accepted accounting principles and practice, any set-off between asset and

liability items, or between income and expenditure items, shall be prohibited.

6. (1) In determining whether particular assets are to be shown as fixed assets

or current assets reference shall be made to the purpose for which they are intended.

(2) Fixed assets shall comprise those assets which are intended to be held on a

continuing basis in connection with the undertaking’s activities.

(3) Where an asset or liability relates to more than one layout item, its

relationship to the other item or items shall be disclosed either under the item where

it appears or in the notes to the accounts, if such disclosure is essential to the

comprehension of the individual accounts.

(4) Shares in secondary and tertiary undertakings may be shown only under the

items prescribed for that purpose.

7. (1) "Provisions for liabilities or charges" are intended to cover losses or

debts the nature of which is clearly defined and which at the date of the balance

sheet are either likely to be incurred, or certain to be incurred but uncertain as to

amount or as to the date on which they will arise.

(2) "Provisions for liabilities or charges" may not be used to adjust the values of

assets.

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8. (1) "Secondary and tertiary societies" shall have the meaning assigned to it

by the Act.

(2) "Turnover" shall comprise the amounts derived from the sale of products

and the provision of services falling within the society’s ordinary activities, after

deduction of sales rebates and taxes directly linked to the turnover.

9. (1) Income and charges that arise otherwise than in the course of the

society’s ordinary activities shall be shown under "Extraordinary Income" and

"Extraordinary Charges".

(2) Unless the income and charges referred to in sub-paragraph (1) hereof are

immaterial for the assessment of the results, explanations of their amount and nature

shall be given in the notes to the accounts. The same shall apply to income and

charges relating to another accounting period.

10. (1) Every income and expenditure account of a society shall show the

amount of the society’s surplus or loss on ordinary activities before taxation.

(2) Taxes on the surplus or loss on ordinary activities and taxes on the

extraordinary surplus or loss may be shown in total as one item in the income and

expenditure account before "Other Taxes not shown under the above items". In such

a case "Surplus or Loss on Ordinary Activities after Taxation" shall be omitted from

the income and expenditure account layouts prescribed in this Schedule.

(3) Where this derogation is applied there shall be disclosed in the notes to the

accounts the extent to which the taxes on the surplus or loss affect the surplus or loss

on ordinary activities and the extraordinary surplus or loss.

11. Every surplus and loss account of a society shall show separately as

additional items

(a) any amount set aside or proposed to be set aside to, or withdrawn or

proposed to be withdrawn from, reserves; and

(b) the aggregate amounts of -

(i) any dividends paid; and

(ii) any dividends proposed.

12. (1) The provisions of this Schedule shall be interpreted by reference to the

application of generally accepted accounting principles and practice to give a true

and fair view within the meaning of this Act.

(2) Amounts which in the particular context of any provision of this Schedule

are not material may be disregarded for the purposes of that provision.

Required formats for accounts

13. References in this Schedule to the items listed in any of the formats set out

below are to those items read together with any of the notes in the formats which

apply to any of those items, and the requirement imposed by paragraph 1 to show the

items listed in any such format in the order adopted in the format is subject to any

provision in those notes for alternative positions for any particular items.

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BALANCE SHEET FORMAT

Called Up issued share capital not paid (may be shown in either of the two

positions herein)

Formation Expenses (may be shown as the first item under "Intangible Assets")

Fixed Assets

Intangible Assets

1. Development costs

2. Concessions, patents, licences, trade marks and similar rights and assets

(if these were acquired for valuable consideration and are not to be

shown under goodwill or these were created by the society itself)

3. Goodwill (only to the extent that this was acquired for valuable

consideration)

4. Payments on account

Tangible Assets

1. Land and buildings (including all rights on immovables)

2. Plant and machinery

3. Other fixtures, fittings, tools and equipment

4. Payments on account and tangible assets in the course of construction

Financial Assets

1. Loans to members

2. Shares in secondary societies

3. Loans to secondary societies

4. Shares in tertiary societies

5. Loans to tertiary societies

6. Shares in subsidiary undertakings

7. Loans to subsidiary undertakings

8. Shares in associated undertakings

9. Loans to associated undertakings

10. Other investments other than loans

11. Other loans

Current Assets

Stocks

Raw materials and consumables

2. Work in progress

3. Finished goods and goods for resale

4. Payments on account

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Debtors (The amount falling due after more than one year shall be shown

separately for each item included under debtors)

Trade debtors

2. Amounts owed by members

3. Amounts owed by secondary societies

4. Amounts owed by tertiary societies

5. Amounts owed by subsidiary undertakings

6. Amounts owed by associated undertakings

7. Other debtors

8. Called up issued share capital not paid (may be shown in either of the

two positions herein)

9. Prepayments and accrued income (may be shown in either of the two

positions herein)

Investments

1. Shares in secondary societies

2. Shares in tertiary societies

3. Shares in subsidiary undertakings

4. Shares in associated undertakings

5. Other investments

Cash at Bank and in Hand

Prepayments and Accrued Income (may be shown in either of the two positions

Creditors: Amounts falling due within One Year

1. Bank loans and overdrafts

2. Payments received on account (payments received on account of orders

shall be shown here in so far as they are not shown as deductions from

stocks)

3. Trade creditors

4. Bills of exchange payable

5. Amounts owed to members

6. Amounts owed to secondary societies

7. Amounts owed to tertiary societies

8. Amounts owed to subsidiary undertakings

9. Amounts owed to associated undertakings

10. Amounts owed to the Central Co-operative Fund

11. Other creditors including taxation and social security (the amounts for

creditors in respect of taxation and social security shall be shown

separately from the amount for other creditors)

12. Accruals and deferred income

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Net Current Assets/Liabilities (in determining the amount to be shown for this

item any amounts shown under "prepayments and accrued income" shall be taken into

account wherever shown)

Total Assets less Current Liabilities

Creditors: Amounts falling due after more than one year

1. Bank loans and overdrafts

2. Payments received on account (payments received on account of orders

shall be shown here in so far as they are not shown as deductions from

stocks)

3. Trade creditors

4. Bills of exchange payable

5. Amounts owed to members

6. Amounts owed to secondary societies

7. Amounts owed to tertiary societies

8. Amounts owed to subsidiary undertakings

9. Amounts owed to associated undertakings

10. Other creditors including taxation and social security (the amounts for

creditors in respect of taxation and social security shall be shown

separately from the amount for other creditors)

11. Accruals and deferred income

Provisions for Liabilities and Charges

1. Pensions and similar obligations

2. Taxation, including deferred taxation

3. Other provisions

Capital and Reserves

Called Up Issued Share Capital (in addition, the amount of the issued share

capital and the amount of the called up issued share capital which has been paid up

shall be shown separately in the notes to the accounts)

Reserve Fund

Share Premium Account

Revaluation Reserve

Other Reserves

1. Capital redemption reserve

2. Reserves provided for by the statute

3. Other reserves

Accumulated Surplus and Deficit Account

CO-OPERATIVE SOCIETIES

INCOME AND EXPENDITURE ACCOUNT FORMAT

1. Turnover

2. Cost of sales (after taking into account any necessary provisions for

depreciation or diminution in the value of assets)

3. Gross surplus or loss

4. Distribution costs (after taking into account any necessary provisions for

depreciation or diminution in the value of assets)

5. Administrative expenses (after taking into account any necessary provisions for

depreciation or diminution in the value of assets)

6. Other operating income

7. Income from shares in secondary societies

8. Income from shares in tertiary societies

9. Income from shares in subsidiary undertakings

10. Income from shares in associated undertakings

11. Income from other financial fixed assets (income, including interest, derived

from members, secondary and/or tertiary and/or subsidiary and/or associated

undertakings shall be shown separately from income derived from other sources)

12. Other interest receivable and similar income (interest and similar income

derived from members, secondary and/or tertiary and/or subsidiary and/or associated

undertakings shall be shown separately from that derived from other sources)

13. Amounts written off in respect of financial fixed assets and investments held as

current assets

14. Interest payable and similar charges (the amount payable to members,

secondary and/or tertiary and/or subsidiary and/or associated undertakings shall be

shown separately)

15. Tax on surplus or loss on ordinary activities

16. Surplus or loss on ordinary activities after taxation

17. Extraordinary income

18. Extraordinary charges

19. Extraordinary surplus or loss

20. Tax on extraordinary surplus or loss

21. Other taxes not shown under the above items

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22. Surplus or loss

23. Contribution to the Central Co-operative Fund

24. Provision to the Reserve Fund

25. Net surplus or loss

26. Provision to any reserve fund provided by statute

27. Provision for any purpose allowed by the Act or provided by statute

28. Dividend

29. Patronage refund

30. Bonus certificate or bonus share issue

31. Income and expenditure account balance for the accounting period

PART II - ACCOUNTING PRINCIPLES AND RULES

Accounting principles

14. Items shown in the individual accounts shall be valued in accordance with

the following general principles -

(a) the society must be presumed to be carrying on its business as a going

concern;

(b) the methods of valuation must be applied consistently from one

accounting period to another;

(c) valuation must be made on a prudent basis, and in particular

(i) only surplus realised at the balance sheet date may be included in

the income and expenditure account,

(ii) account shall be taken of all foreseeable liabilities and potential

losses arising in the course of the accounting period concerned or

of a previous one, even if such liabilities or losses become

apparent only between the date of the balance sheet and the date

on which it is drawn up,

(iii) account must be taken of all depreciation whether the result of the

accounting period is a loss or a surplus;

(d) account must be taken of income and charges relating to the accounting

period, irrespective of the date of receipt or payment of such income or

charges;

(e) the components of asset and liability items must be valued separately;

(f) the opening balance sheet for each accounting period must correspond

to the closing balance sheet for the preceding accounting period.

Historical cost accounting rules

15. (1) Formation expenses shown as assets in the balance sheet shall be

written off within a maximum period of five years.

CO-OPERATIVE SOCIETIES

(2) The amounts entered under "Formation Expenses" shall be explained in the

notes to the accounts.

16. (1) In the case of any fixed asset which has a limited useful economic life,

the amount of -

(a) its purchase price or production cost; or

(b) where it is estimated that any such asset will have a residual value at the

end of the period of its useful economic life, its purchase price or

production cost less that estimated residual value,

shall be reduced by provisions for depreciation calculated to write off that amount

systematically over the period of the asset’s useful economic life. Such provisions shall

be charged in the income and expenditure account.

(2) The purchase price of an asset shall be determined by adding to the actual

(3) The production cost of an asset shall be determined by adding to the

purchase price of the raw materials and consumables used the amount of the costs

incurred by the society which are directly attributable to the production of that asset.

(4) In addition to the costs specified in sub-paragraph (3) of this paragraph there

may be included in the production cost of an asset -

(a) a reasonable proportion of the costs incurred by the society which are

only indirectly attributable to the production of that asset, but only to

the extent that they relate to the period of production; and

(b) interest on capital borrowed to finance the production of that asset, to

the extent that it relates to the period of production. The inclusion of

such interest and the amount thereof shall be disclosed in the notes to

the accounts.

(5) Fixed asset investments shall be accounted for in accordance with the

following rules

(a) such investments shall be included in the society’s individual accounts

by using the cost method;

(b) the cost method referred to in sub-paragraph (a) is a method of

accounting whereby the investment is recorded at cost. The income and

expenditure account reflects income from the investment only to the

extent that distributions are received or are receivable by the investor

from accumulated net surplus of the investment arising subsequent to

the date of acquisition;

17. (1) Where a financial fixed asset has diminished in value, provision for

diminution in value may be made in respect of it and the amount to be included in

respect of it may be reduced accordingly. Any such provisions shall be charged in

the profit and loss account and if not shown separately in the profit and loss account,

shall be disclosed (either separately or in aggregate) in the notes to the accounts.

(2) Provision for diminution in value shall be made in respect of any fixed asset

which has diminished in value if the reduction in its value is expected to be

permanent (whether its economic life is limited or not), and the amount to be

included in respect of it shall be reduced accordingly. Any such provision shall be

charged in the income and expenditure account and, if not shown separately in the

income and expenditure account, shall be disclosed (either separately or in

CO-OPERATIVE SOCIETIES

aggregate) in the notes to the accounts.

(3) Where the reasons for which any provision was made in accordance with

sub-paragraph (1) or (2) have ceased to apply to any extent, that provision shall be

written back to the extent that it is no longer necessary. Any amounts written back in

accordance with this sub-paragraph which are not shown separately in the income

and expenditure account shall be disclosed (either separately or in aggregate) in the

notes to the accounts.

18. (1) Notwithstanding that an item in respect of "development costs" is

included under "fixed assets" in the balance sheet formats contained in this

Schedule, an amount may only be included in a society’s balance sheet in respect of

development costs in special circumstances.

(2) If any amount is included in the society’s balance sheet in respect of

development costs the following information shall be given in the notes to the

accounts

(a) the period over which the amount of those costs originally capitalised is

being or is to be written off; and

(b) the reasons for capitalising the development costs in question.

19. (1) Where goodwill is treated as an asset the following provisions of this

paragraph shall apply.

(2) Subject to sub-paragraphs (3) and (4), the amount of the consideration for

any goodwill acquired by a society shall be reduced by provisions for amortisation

calculated to write off that amount systematically over a period chosen by the

committee of management of the society.

(3) The period chosen shall not exceed the useful economic life of the goodwill

in question.

(4) In any case where any goodwill acquired by a society is shown or included

as an asset in the society’s balance sheet the period chosen for writing off the

consideration for that goodwill and the reasons for choosing that period shall be

disclosed in the notes to the accounts.

20. (1) Subject to the following paragraph, assets which fall to be included -

(a) amongst the fixed assets of a society under the item "tangible assets"; or

(b) amongst the current assets of a society under the item "raw materials

and consumables",

may be included at a fixed quantity and value.

(2) Sub-paragraph (1) applies to assets of a kind which are constantly being

replaced, where -

(a) their overall value is not material to assessing the society’s state of

affairs; and

(b) their quantity, value and composition are not subject to material

variation.

21. (1) Subject to sub-paragraphs (2) and (3), the amount to be included in

respect of any current asset shall, insofar as it is applicable, be its purchase price or

production cost.

CO-OPERATIVE SOCIETIES

(2) If the net realisable value of any current asset is lower than its purchase

the net realisable value.

(3) Where the reasons for which any provision for diminution in value made in

accordance with sub-paragraph (2) have ceased to apply to any extent, that provision

shall be written back to the extent that it is no longer necessary.

22. The method of determination of purchase price and the method of

determination of production cost given in paragraph 16 of this Schedule shall apply

for the purposes of paragraph 21 of this Schedule. Furthermore, distribution costs

may not be included in production costs.

23. (1) Subject to the qualification mentioned in sub-paragraph (3), the

purchase price or production cost of -

(a) any assets which fall to be included under any item shown in a society’s

balance sheet under the subheading "stocks"; and

(b) any assets which are fungible assets (including investments),

shall be determined by the application of one of the methods mentioned in sub-

paragraph (2) in relation to any such assets of the same class.

(2)

The methods referred to in sub-paragraph (1) are -

(a) the method known as "first in, first out" (FIFO);

(b) the weighted average price method; and

(c) any other method similar to any of the methods mentioned above.

(3) The method actually chosen for the purposes of this paragraph shall be the

one which appears to the committee of management to be appropriate in the

circumstances of the society.

(4)

Where in the case of any society -

(a) the purchase price or production cost of assets falling to be included

under any item shown in the society’s balance sheet has been

determined by the application of any method permitted by this

paragraph; and

(b) the amount shown in respect of that item differs materially from the

relevant alternative amount given in sub-paragraph (5),

the amount of that difference shall be disclosed in the notes to the accounts.

(5) Subject to sub-paragraph (6), for the purposes of sub-paragraph (4)(b), the

relevant alternative amount, in relation to any item shown in a society’s balance

sheet, is the amount which would have been shown in respect of that item if assets of

any class included under that item at an amount determined by any method permitted

by this paragraph had instead been included at their replacement cost as at the

balance sheet date.

(6) The relevant alternative amount may be determined by reference to the most

recent actual purchase price or production cost before the balance sheet date of

assets of any class included under the item in question instead of by reference to

their replacement cost as at that date, but only if the former appears to the committee

of management of the society to constitute the more appropriate standard of

comparison in the case of assets of that class.

CO-OPERATIVE SOCIETIES

(7) For the purpose of this paragraph, assets of any description shall be regarded

as fungible if assets of that description are substantially indistinguishable one from

another.

24. (1) Where the amount repayable on any debt owed by a society is greater

than the value of the consideration received in the transaction giving rise to the debt,

the amount of the difference may be treated as an asset.

(2)

Where any amount as referred to in sub-paragraph (1) is treated as an asset -

(a) it shall be written off by reasonable amounts each year;

(b) it shall be completely written off before repayment of the debt; and

(c) if the current amount is not shown as a separate item in the society’s

balance sheet it shall be disclosed in the notes to the accounts.

25. (1) Provisions for liabilities and charges may not exceed in amount the

sums which are reasonably necessary.

(2) Particulars shall be given of each provision included in the item "other

provisions" in the society’s balance sheet in any case where the amount of that

provision is material.

Alternative accounting rules

26. (1) Subject to paragraphs 28, 29 and 30 of this Schedule, the amounts to be

included in respect of assets of any description mentioned in paragraph 27 of this

Schedule shall be determined on any basis mentioned in that paragraph.

(2) References in paragraphs 27 to 30 of this Schedule to "the depreciation

rules" are to the rules embodied in paragraphs 16, 17, 18, 20, 21 and 24 of this

Schedule.

27. (1) Tangible fixed assets may be included at a market value determined as

at the date of their last valuation.

(2) Investments of any description falling to be included under either of the

balance sheet formats contained in Part I of this Schedule may be included either -

(a) at a market value determined as at the date of their last valuation; or

(b) at a value determined on any basis which appears to the committee of

management to be appropriate in the circumstances of the society,

but in the latter case particulars of the method of valuation, etc., adopted and of the

reasons for adopting it shall be disclosed in the notes to the accounts.

(3) Notwithstanding any other provision of this Schedule, investments in which

investment companies have invested their funds shall be valued on the basis of their

market value determined as at the balance sheet date.

28. (1) Where the value of any asset of a society is determined on the basis

mentioned in paragraph 27 of this Schedule that value shall be the starting point for

determining the amount to be included in respect of that asset in the society’s

individual accounts, instead of its purchase price or production cost or any value

previously so determined for that asset; and the depreciation rules shall apply

accordingly in relation to any such asset with the substitution for any reference to its

purchase price or production cost by a reference to the value most recently

CO-OPERATIVE SOCIETIES

determined for that asset on any basis mentioned in paragraph 27 of this Schedule.

(2) The amount of any provision for depreciation required in the case of any

fixed asset as it applies by virtue of sub-paragraph (1) is referred to in sub-paragraph

(3) as the adjusted amount, and the amount of any provision which would be

required in respect of that asset according to the historical cost accounting rules is

referred to as the historical cost amount.

(3) Where sub-paragraph (1) applies in the case of any fixed asset, the amount

of any provision for depreciation in respect of that asset -

(a) included in any item shown in the income and expenditure account in

respect of amounts written off against the assets of the description in

question; or

(b) taken into account in stating any item so shown which is required by the

explanatory notes in the income and expenditure account format

contained in Part I of this Schedule to be stated after taking into account

any necessary provisions for depreciation or diminution in the value of

assets included under it,

may be the historical cost amount instead of the adjusted amount, provided that the

amount of any difference between the two is accounted for in the income and

expenditure account and disclosed separately therein or in the notes to the accounts.

29. (1) This paragraph applies where the amounts to be included in respect of

assets covered by any items shown in a society’s individual accounts have been

determined on any basis mentioned in paragraph 27 of this Schedule.

(2) The items affected and the basis of a valuation adopted in determining the

amounts of the assets in question in the case of each of such items shall be disclosed

in the notes to the accounts.

(3)

In the case of each balance sheet item which is affected -

(a) the comparable amounts determined according to the historical cost

accounting rules; or

(b) the differences between those amounts and the corresponding amounts

actually shown in the balance sheet in respect of that item,

shall be shown separately in the balance sheet or in the notes to the accounts.

(4) In sub-paragraph (3), references in relation to any item to the comparable

amounts determined as mentioned thereto are references to -

(a) the aggregate amount which would be required to be shown in respect of

that item if the amounts to be included in respect of all the assets

covered by that item were determined according to the historical cost

accounting rules; and

(b) the aggregate amount of the cumulative provisions for depreciation or

diminution in value which would be permitted or required in

determining those amounts according to those rules.

30. (1) With respect to any determination of the value of an asset of a society

on any basis mentioned in paragraph 27 of this Schedule the amount of any surplus

or loss arising from that determination shall be credited or, as the case may be,

debited to a separate reserve to be called "the revaluation reserve", after allowing,

where appropriate, for any provisions for depreciation or diminution in value made

CO-OPERATIVE SOCIETIES

otherwise than by reference to the value so determined and for any adjustments of

any such provisions made in the light of that determination.

(2) The amount of the revaluation reserve shall be shown in the society’s

balance sheet under a separate subheading in the position given for the item

"revaluation reserve" in Format 1 or 2 of the balance sheet formats contained in this

Schedule, but need not be shown under that name.

(3) The revaluation reserve shall be reduced to the extent that the amounts

standing to the credit of the reserve are in the opinion of the committee of

management of the society no longer necessary for the purpose of the accounting

policies adopted by the society; but an amount may only be transferred from that

reserve to the income and expenditure account if -

(a) the amount in question was previously charged to that account; or

(b) it represents realised surplus.

(4) Any amounts transferred from the revaluation reserve to the income and

expenditure account in accordance with the provisions of sub-paragraph (3) shall be

shown separately in the income and expenditure account.

(5) Notwithstanding the provisions of sub-paragraph (3) the balance standing to

the credit of the revaluation reserve may be capitalised in whole or in part at any

time.

(6) The treatment for taxation purpose of amounts credited or debited to the

revaluation reserve shall be disclosed in the notes to the accounts.

PART III - THE NOTES TO THE ACCOUNTS

31. Any information required in the case of any society by the provisions of this

paragraph shall, if not given in the balance sheet or the income and expenditure

account, be given by way of the notes to the accounts. The information in respect of

the following matters shall be provided as a minimum -

(a) The valuation methods applied to the various items in the individual

accounts, and the methods employed in calculating the provisions for

depreciation and diminution in value. For items included in the

individual accounts which are or were originally expressed in foreign

currency, the bases of translation used to express them in local currency

shall be disclosed.

(b) The number and the nominal value of the shares subscribed during the

accounting period within the limits of the authorised capital.

(c) The name, registered office and the type of each of the societies and/or

partnerships, of which the society is a member, with unlimited liability;

provided that this information may be omitted if it is not material.

(d) Information in respect of each item which is or would but for paragraph

3(4)(b) of this Schedule be shown under the general item "fixed assets"

in the society’s balance sheet, relating to -

(i) the amount of the purchase price or production cost, leaving out

therefrom the depreciation or diminution in value in respect of

that item, as at the date of the beginning of the accounting period

and as at the balance sheet date respectively;

(ii) the effect on any amount shown in the balance sheet in respect of

that item of -

-

any revision of the amount in respect of any assets

CO-OPERATIVE SOCIETIES

included under that item made during that period,

-

acquisitions during that period of any assets,

-

disposals during that period of any assets, and

-

any transfers of assets of the society to and from that item

during that period.

(e) In respect of each item within indent (d) of this paragraph -

(i) the cumulative amount of provisions for depreciation or

diminution in the value of assets included under that item as at

each date mentioned in indent (d)(i) of this paragraph;

(ii) the amount of any such provisions made in respect of the

accounting period;

(iii) the amount of any adjustments made in respect of any such

provisions during the period in consequence of the disposal of any

assets; and

(iv) the amount of any other adjustments made in respect of any such

provisions during the period.

(f) The information required to be disclosed by virtue of indents (d) and (e)

of this paragraph shall also be provided in the case of "Formation

Expenses" where this item is shown separately from "Fixed Assets" in

the balance sheet.

(g) Amounts owed by the society and becoming due and payable after more

than five years as well as the society’s entire debts covered by valuable

security furnished by the society with an indication of the nature and

form of the security. This information shall be disclosed separately for

each creditor’s item, as provided for in the formats described in Part I of

this Schedule.

(h) The total amount of any financial commitments that are not included in

the balance sheet, in so far as this information is of assistance in

assessing the financial position. Any commitments concerning pensions

and group undertakings shall be disclosed separately.

(i) The turnover within the meaning of paragraph 8 of this Schedule,

broken down by categories of activity and into geographical market in

so far as, taking account of the manner in which the sale of products and

the provision of services falling within the society’s ordinary activities

are organised, these categories and markets differ substantially from one

another.

(j) The average number of persons employed during the accounting period,

broken down by categories and, if they are not disclosed separately in

the income and expenditure account, the staff costs relating to the

accounting period broken down as otherwise required by Formats 2 and

4 of the income and expenditure account.

(k) The difference between the tax charged for the accounting period and

for earlier accounting periods and the amount of tax payable in respect

of those periods, provided that this difference is material for purposes of

future taxation. This amount may also be disclosed in the balance sheet

as a cumulative amount under a separate item with an appropriate

heading.

(l) (i) The aggregate amount of the emoluments granted in respect of the

accounting period to the members of the committee of management of a

CO-OPERATIVE SOCIETIES

society for their services as members of the committee of management

of that society or for their services as members of the committee of

management of any of its secondary, tertiary, subsidiary, or associated

undertakings, while acting as directors/members of the committee of

management of that undertaking; and

(ii) The aggregate amount of any other emoluments granted in respect

of the accounting period to the members of the committee of

management of a society for their services in connection with the

management of the affairs of the society or any of its secondary, tertiary,

subsidiary, or associated undertakings, while acting as directors/

members of the committee of management of that undertaking; and

shown separately from the aggregate amount of emoluments referred to

in item (i) above; and

(iii) The fact that the society has, during the accounting period,

purchased or maintained a provision for any of its officers and, or, the

auditor of such society, exempting them or indemnifying them, or any of

them, as the case may be, against any liability which, by virtue of any

law, would in the absence of such provision have been attached to them,

as the case may be, in respect of any negligence, default or breach of

duty, and the aggregate amount of premiums paid in respect thereof.

In this indent, emoluments shall include the remuneration for the

services of the members of the committee of management referred to

herein and all fees, percentages, gifts, compensation for loss of office

and other similar payments; as well as any commitments arising or

entered into in respect of retirement pensions, superannuation

allowances, gratuities or other similar commitments in favour of former

members of the committee of management of the society referred to

herein.

The commitments arising or entered into in respect of retirement

pensions, superannuation allowances, gratuities or other similar

commitments in favour of former members of the committee of

management of the society shall be shown separately from the other

emoluments.

(m) The amount of advances and credits granted to members of the

committee of management of a society with indications of the interest

rates, main conditions and any amounts repaid; as well as commitments

entered into on their behalf by way of guarantees of any kind. The said

commitments shall be shown separately.

(n) The name and registered office of the undertaking which draws up the

consolidated accounts of the largest body of undertakings of which the

society forms part as a subsidiary undertaking.

(o) The name and the registered office of the undertaking which draws up

the consolidated accounts of the smallest body of undertakings of which

the society forms part as a subsidiary undertaking; and

(p) Where the parent companies referred to in indents (q) and (r) of this

paragraph are not registered in Malta, the place where copies of the

consolidated accounts referred to in these indents may be obtained,

provided that they are available to the public.

32. (1) If at the end of its accounting period, the society has one or more

secondary, tertiary, subsidiary, or associated undertakings or participating interests

CO-OPERATIVE SOCIETIES

in other undertakings, the following information shall, where applicable, be given

with respect to each such undertaking -

(a) the kind, name and registered or principal office of each undertaking;

(b) in relation to the shares of each class of each undertaking held by the

society, the identity of each class and the proportion of the nominal

value of the issued shares of that class represented by the shares held as

at the end of the undertaking’s relevant accounting period; and

(c) the aggregate amount of the capital and reserves of each undertaking as

at the end of its relevant accounting period, and its surplus or loss for

that period.

(2)

For the purposes of sub-paragraph (1), the relevant accounting period is -

(a) if the accounting period of the undertaking ends with that of the society

giving the information in its notes to the accounts, that accounting

period; and

(b) if not, the undertaking’s accounting period ending last before the end of

the accounting period of the society giving that information.

(3) The provisions of sub-paragraph (1) are subject to the exceptions and other

provisions contained in paragraphs 33 and 34 of this Schedule.

33. (1) Information otherwise required by paragraph 32(1) of this Schedule

need not be given if it is not material.

(2) References in this paragraph and in paragraph 32 of this Schedule to shares

of undertakings shall include references to beneficial interests in undertakings where

the capital of such undertakings is not divided into shares.

34. (1) The information referred to in indent (l) of paragraph 31 and in

paragraphs 32 and 33 of this Schedule may be omitted when it appears to the

committee of management that their nature is such that they would be seriously

prejudicial to any of the undertakings affected by these provisions and the Board

agrees that the information need not be disclosed.

(2) Where any information is omitted from the notes to the accounts by virtue of

the provisions of sub-paragraph (1), that fact shall be disclosed in the notes to the

accounts.

35. (1) Particulars shall be given in the notes to the accounts of any charge on

the assets of the society to secure the liabilities of any other person including, where

practicable, the amount secured.

(2) The following information shall be given with respect to any other

contingent liability not provided for other than where the possibility of a loss is

judged by the committee of management of the society to be remote -

(a) the amount or estimated amount of that liability;

(b) its legal nature; and

(c) whether any valuable security has been provided by the society in

connection with that liability and, if so, what valuable security has been

so provided.

(3)

There shall be stated, where practicable -

(a) the aggregate amount or estimated amount of contracts for capital

expenditure, so far as not provided for; and

CO-OPERATIVE SOCIETIES

(b) the aggregate amount or estimated amount of capital expenditure

authorised by the committee of management which has not been

contracted for.

(4) Commitments within any of the preceding sub-paragraphs of this paragraph

undertaken on behalf of or for the benefit of a group undertaking shall be stated

separately from the other commitments within that sub-paragraph.

36. (1) Where any amount is transferred -

(a) to or from any reserves; or

(b) to any provision for liabilities or charges; or

(c) from any provision for liabilities and charges otherwise than for the

purpose for which the provision was established,

and the reserves or provisions are shown as separate items in the society’s balance sheet

or in the notes to the accounts, the information mentioned in sub-paragraph (2) shall be

given in respect of the aggregate of reserves or provisions included in the same item.

(2)

That information to which reference is made in sub-paragraph (1) is -

(a) the amount of the reserves or provisions as at the date of the beginning

of the accounting period and as at the balance sheet date respectively;

(b) any amounts transferred to or from the reserves or provisions during

that period; and

(c) the source and application respectively of any amounts so transferred.

PART IV - TRANSITIONAL ARRANGEMENT

37. (1) If, when individual accounts are drawn up in accordance with the

provisions of this Schedule for the first time, the purchase price or production cost of

a fixed asset cannot be determined without undue expense or delay, the net book

amount at the beginning of the accounting period may be treated as the purchase

(2) Any application of the provisions of sub-paragraph (1) shall be disclosed in

the notes to the accounts.

PART V - ABRIDGED FINANCIAL STATEMENTS - RULES AND FORMAT

(1)

Societies which, on their balance sheet date, do not exceed the limits of two of

the three following criteria

balance sheet total: two million and five hundred and sixty-two

thousand and three hundred and ten euro and seventy-four cents

(2,562,310.74);

turnover: five million and one hundred and twenty-four thousand and

six hundred and twenty-one euro and forty-eight cents (5,124,621.48);

average number of employees during the accounting period: fifty;

shall in this Act be designated as small societies and may, for the purposes of this Act,

draw up an abridged set of audited financial statements as specified in paragraphs (2)

and (3) of this Part for public inspection.

CO-OPERATIVE SOCIETIES

(2)

For the purposes of this Part, the word "abridged" -

(a) when used therein in relation to a balance sheet, shall mean an

abbreviated version of the balance sheet, showing only those items to

which a letter or Roman number is assigned in the balance sheet format

shown under Part I of this Schedule, immediately following paragraph

13, under the heading "Balance Sheet Format"; but such version shall,

in all other respects, correspond to the full balance sheet;

(b) when used therein in relation to an income and expenditure account,

shall mean the full income and expenditure account with the exception

that items 1, 2, 3 and 6 in the income and expenditure format shown

under Part I of this Schedule, immediately following paragraph 13,

under the heading "Income and Expenditure Format", can be combined

as one item under the heading "gross surplus or loss".

(3) Societies referred to in paragraph (1) of this Part may draw up abridged

notes to the accounts, omitting the disclosures prescribed by indents (g) to (l) of

paragraph 31 of Part III of this Schedule. The notes to the accounts shall however

disclose the information specified in indent (g) of the said paragraph 31 in total for

all the items concerned.

(1) The Board shall consist of a Chairman and of not less

than two and not more than six other members. The members of the

Board, including the Chairman, shall be appointed by the Minister

from among persons who, in his opinion, have experience of, and

shown competence in, matters relating to co-operatives,

CO-OPERATIVE SOCIETIES

agriculture, industry, organisation of workers, trade, finance or

administration.

(2) Each member of the Board shall be appointed for a period

of not less than two years and not exceeding five years, shall hold

and vacate office in accordance with the provisions of this Act and

with the terms of his appointment, and shall on termination of

appointment be eligible for re-appointment

Provided that a member of the Board may at any time, by

notice in writing to the Minister, resign his office.

(3) No person shall be appointed or shall remain a member of the

Board if that person is an officer or member of any society or the Apex

organization.

(4) When the office of the Chairman of the Board is vacant or

the Chairman is absent from Malta or on vacation, or is

incapacitated from performing the functions of his office, the

Minister may appoint any other person, whether a member of the

Board or otherwise, to act as Chairman during such vacancy,

absence, vacation or incapacity; and the person so appointed shall

exercise all the rights and functions of the Chairman of the Board

for the duration of such appointment.

(5) A member of the Board may be removed from office by the

Minister if in the opinion of the Minister such member is guilty of

serious misconduct in the performance of his duties or is incapable

of carrying out his duties, or is absent from the meetings of the

Board, without reasonable cause, for such number of meetings as

the Minister may consider excessive.

(6)

The Minister shall also appoint a Secretary to the Board.

(7) A member of the Board shall be paid such remuneration as

the Minister may, with the concurrence of the Minister responsible

for finance, from time to time determine.

The judicial and legal representation of the Board shall

vest in the Chairman

Provided that the Board may appoint any one or more of

the other members, or of the officers or employees of the Board, or

any person performing duties for the Board, to appear in the name

and on behalf of the Board in any judicial proceedings, and in any

act, contract, instrument or other transaction whatsoever.

(1) There shall be an office of the Board which shall be

managed and staffed in accordance with the provisions of this Act.

(2) Subject to the provisions of this Act and to any directives

of the Board, the management and conduct of the office of the

Board and the administrative control of its staff, shall be the

responsibility of the Chairman.

(3) The staff of the office of the Board shall consist of such

officers and employees of the Board, or of such employees in the

service of the Government as may be detailed for duty with the

Board, or of both such officers and employees.

(4)

The terms and conditions of employment of any officers or

CO-OPERATIVE SOCIETIES

employees of the Board shall be comparable with those of

employees in the service of the Government and shall be

established by the Board with the concurrence of the Minister.

(1) The Board may act notwithstanding any vacancy

among its members

Provided that the Board shall not act if the office of

Chairman is vacant and an acting chairman is not appointed.

(2) The quorum at all meetings of the Board shall be not less

than half the number of members.

(3) A decision of the Board shall be reached by a majority of

the votes of the members present and voting. The Chairman or

other person chairing the meeting shall have an original vote and,

in the case of an equality of votes, a second or casting vote.

(4) Every document purporting to be an instrument made or

issued by the Board and which is signed by the Chairman on behalf

of the Board may be received in evidence and shall, until the

contrary is proved, be deemed to be an instrument made or issued

by the Board.

(5) Any member of the Board who is directly or indirectly

interested, otherwise than as a member of the Board, in any

contract or agreement made or proposed to be made by the Board,

or in any other matter or interest being raised or discussed by the

Board, shall disclose the nature of his interest at the first meeting of

the Board.

(6) Any disclosure made under subarticle (5) shall be recorded

in the minutes of the Board and the member who has made such

disclosure shall withdraw from the meeting while the contract or

agreement or any other matter or interest is discussed or decided

upon by the Board.

(7) Subject to the provisions of this Act, the members of the

Board, including the Chairman, and the officers and employees

engaged at the office of the Board, and any other person authorised

to act for or on behalf of the Board shall, at all times, treat any

information on societies obtained during the course of their duties

as confidential.

(8) A person who acts in violation of the provisions of

subarticle (7) shall be guilty of an offence and shall be liable, on

conviction, to a fine (multa) not exceeding four thousand and six

hundred and fifty-eight euro and seventy-five cents (4,658.75).

(9) Subject to the provisions of this Act, the Board shall

regulate its own procedure.

(1) The Minister may, in relation to matters that appear to

affect the public interest, from time to time give to the Board

directions in writing of a general character on the policy to be

followed by the Board in carrying out its functions under this Act;

and the Board shall, as soon as practicable, give effect to all such

directions.

(2) The Board shall afford to the Minister every facility for

obtaining and verifying information connected with the activities of

CO-OPERATIVE SOCIETIES

the Board, in order to enable the Minister to properly exercise his

functions under this Act.

(1) The expenses of the Board shall be borne out of such

funds as may be voted by the House of Representatives.

(2) The Board shall as soon as practicable, but not later than

three months after the end of each financial year, submit to the

Minister a statement of accounts duly audited by the Auditor

General and a report of its activities in respect of the previous

financial year, and shall forward a copy of any such statement and

report to the Minister and to the Minister responsible for finance.

The Board shall keep or cause to be kept at its office a

Register of Co-operative Societies. The Board shall also keep such

other registers, statistics or documentation on societies as it may

deem appropriate from time to time

Provided that for public purposes, only the information

mentioned in article 12 may be made available by the Board.

(1) All entries in the Register of Co-operative Societies

shall be signed by the Chairman of the Board.

(2) Every alteration, correction or erasure in the Register of

Co-operative Societies shall be made in such manner as to show the

entry altered, corrected or erased and shall be initialled by the

Chairman.

The Register of Co-operative Societies, as well as the

registered statute of every society with any registered amendments

thereto, and the audited financial statements of societies submitted

to the Board in accordance with article 48(1), shall be open to

inspection by the public during such time and against payment of

such fees as the Minister shall from time to time prescribe by

regulations made under this Act.

The Board may, on its own motion, if it deems that there

are reasonable or sufficient grounds to do so, and shall, on the

application of at least one-tenth of the members of a society, or on

the application of not less than one-third of the members of the

committee of management of a society, or of a majority of the

members of the supervisory board of a society, if any, hold an

inquiry into the working or financial condition of a society; and all

officers, employees and members of the society shall produce such

books, accounts, cash, papers and securities of the society and shall

furnish such information in regard to the affairs of the society as

the Board or the person conducting the inquiry may require.

(1) If any inquiry made under this Act discloses any

irregularities or mismanagement in the working of a society, the

Board shall bring such irregularities or mismanagement to the

notice of the society and, if the society is affiliated to a secondary

society or tertiary society or Apex organisation, also to the notice

of that other society or Apex organisation, and the Board may issue

a dissolution order as provided in article 100.

(2) Without prejudice to the provisions of subarticle (1) of this

article, the Board may make an order directing such society or any

officer to take such action as may be specified in the order within

CO-OPERATIVE SOCIETIES

the time mentioned therein in order to remedy the defects,

irregularities or acts of mismanagement disclosed in the inquiry.

(1) Where an inquiry is held under article 13, the Board

may make an award apportioning the costs of the inquiry, or such

part thereof as it may think fit, between the society, the members,

the officers or past officers of the society.

(2) Any costs due to the Board under subarticle (1) shall be

recoverable as a civil debt in like manner as if it were included as

an executive title under article 252 of the Code of Organization and

Civil Procedure.

Without prejudice to any other power under this Act, the

Board shall have the power to -

(a) prescribe any form to be used for any purpose under

this Act;

(b) send a representative to attend general and extraordinary

meetings of a society upon the invitation of such society.

The Minister may make regulations authorising the Board

to impose administrative fines or sanctions on any society or

officer thereof, or an auditor of a society, in the event of any breach

of the provisions of this Act or of any regulations issued

thereunder, or of an order lawfully issued by the Board by virtue of

its powers under this Act

Provided that -

(i)

any administrative penalty provided for by

regulations made under this article shall only be

imposed after the society or the person is

notified in writing of such breach or such order

and is given a period of twenty days from the

date of such notification to make written

representations to the Board, and this

notwithstanding, the Board concludes that the

society or the person is in breach of the

provisions of this Act or of any regulation issued

thereunder or of an order lawfully issued by the

Board by virtue of its powers under this Act;

(ii) any administrative fine provided for by

regulations made under this article shall not

exceed the amount of two thousand and three

hundred and twenty-nine euro and thirty-seven

cents (2,329.37) for each breach and twenty-

three euro and twenty-nine cents (23.29) for

each day during which failure to observe the

provisions of this Act or of any regulation made

thereunder persists;

(iii) administrative fines stipulated in paragraph (ii)

of this proviso may be increased by regulation

up to a maximum of twenty-three thousand and

two hundred and ninety-three euro and seventy-

three cents (23,293.73) and one thousand and

one hundred and sixty-four euro and sixty-nine

CO-OPERATIVE SOCIETIES

cents (1, 164.69) for each day during which any

contravention persists, respectively;

(iv)

regulations made under this article may

prescribe that any such administrative penalty or

sanction shall be payable to the Board as a civil

debt constituting an executive title for the

purposes of Title VII of Part I of Book Second of

the Code of Organization and Civil Procedure as

if the payment of the amount of the fine had

been ordered by a judgement of a court of civil

jurisdiction;

(v)

such regulations may also prescribe any right of

appeal from decisions of the Board to impose an

administrative sanction to the Administrative

Review Tribunal established in terms of article 5

of the Administrative Justice Act, and the

provision of this Act shall apply to such an

appeal.

(1) No person other than a society shall trade or carry on

business or otherwise operate in any field under any name or title

of which the word "Co-operative", "Coop", or any other

abbreviation or derivative thereof, is a part, without the written

authorisation of the Board.

(2) Every person who acts in contravention of the provisions

of subarticle (1) shall be guilty of an offence and shall, on

conviction, be liable to a fine (multa) not exceeding four hundred

and sixty-five euro and eighty-seven cents (465.87) and in the case

of a continuing offence to a further fine (multa) not exceeding

twenty-three euro and twenty-nine cents (23.29) for each day on

which the offence continues.

(1) Where, in the course of an audit of a society held

under the provisions of article 45, or in the course of an inquiry

into the affairs of a society held under article 13, or in the course of

the winding up of a society, it appears that any person who has

taken part in the organisation or management of such society or any

past or present officer of the society has misapplied or retained or

become liable or accountable for any money or property of such

society or has been guilty of abuse of authority or breach of trust in

relation to such society, the Board may, on its own motion, or on a

request of the liquidator or any creditor or contributor, inquire or

cause an inquiry to be held into the conduct of such person.

(2) On the conclusion of any such inquiry, the Board may

make an order requiring the person who was the subject of such

inquiry to repay or restore the money or property, or any part

thereof, with interest at such rate, not being higher than the then

prevailing commercial rate, as the Board thinks just, or to

contribute such sum to the assets of such society by way of

compensation as the Board may deem appropriate to make good for

the misapplication, dishonesty, financial irregularity or breach of

trust resulting from the inquiry.

(3)

Any order made under subarticle (2) shall be enforceable

CO-OPERATIVE SOCIETIES

by the Civil Court or by the Court of Magistrates (Malta) or the

Court of Magistrates (Gozo) in its superior jurisdiction, as if it

were a judgement of that Court. Such enforcement, and any

appropriate precaution or executive warrant or other form of

execution, shall be effected on application made by the Board.

(4) The provisions of this article shall apply even where the act

is one for which the offender may be criminally responsible.

(1) If the Board is satisfied, after due inquiry carried out

or caused to be carried out by it, that the committee of management

of any society is not performing its duties properly, it may by order

published in the Gazette -

(a) suspend or restrict all or any of the activities of the

society, for such period as it shall in the order specify;

or

(b) remove the committee of management of the society

and order that the affairs of the society be managed

and administered by a committee of not less than two

persons and a manager, all appointed by it, for a period

not exceeding one year, which may be extended by the

Board for a further period of one year, and whose

allowances and salary shall be payable out of the funds

of the society.

(2) The powers conferred by subarticle (1) shall not be

exercisable before a reasonable opportunity is given to the

committee of management to show cause why action under that

article should not be taken and before due consideration is given to

the objections of the committee of management.

(3) The persons appointed under subarticle (1)(b) shall, prior

to the date on which their appointment ceases to have effect, inform

the members of the society of the reasons leading to the exercise of

the powers under this article, and arrange for the election of a new

committee of management in accordance with the statute of the

society.

(4) Subject to the general direction and control of the Board,

any person appointed under subarticle (1)(b) to assume the

functions of the committee of management of any society shall

have all the powers and duties of a duly constituted committee of

management of a society.

PART III

F ORMATION AND R EGISTRATION OF S OCIETIES

(1) A society is an autonomous association of persons

united voluntarily to meet their economic, social and cultural needs

and aspirations, including employment, through a jointly-owned

and democratically-controlled enterprise, in accordance with co-

operative principles, and which, subject to the provisions of this

Act, may be registered by the Board as a co-operative society under

this Act.

(2)

For the purposes of subarticle (1), co-operative principles

are

CO-OPERATIVE SOCIETIES

First principle - Voluntary and open membership

Co-operatives are voluntary organisations. open to all

persons who are able to use their services and willing

to accept their responsibilities of membership, without

gender, social, racial, political or religious

discrimination.

Second principle - Democratic member control

Co-operatives are democratic organisations controlled

by their members, who actively participate in setting

their policies and taking decisions. Men and women

serving as elected representatives are accountable to

the members. In primary co-operatives, members have

equal voting rights - each member having one vote

only. Co-operatives at other levels are also organised

in a democratic manner.

Third principle - Member economic participation

Members contribute equitably to, and democratically

control, the capital of their co-operative. At least part

of that capital is usually the common property of the

co-operative. Members usually receive limited

compensation, if any, on capital subscribed as a

condition of membership. Members allocate surpluses

for any or all of the following purposes: developing

their co-operative, possibly by setting up reserves, at

least part of which would be indivisible; benefitting

members in proportion to their transactions with the

co-operative; and supporting other activities approved

by the members.

Fourth principle - Autonomy and independence

Co-operatives are autonomous, self-help organisations

controlled by their members. If they enter into

agreements with other organisations, including the

Government, or raise capital from external sources,

they do so on terms that ensure democratic control by

their members and maintain their co-operative

autonomy.

Fifth principle - Education, training and information

Co-operatives provide education and training for their

members, elected representatives, managers and

employees so that they may contribute effectively to

the development of their co-operatives. They inform

the general public - particularly young people and

opinion leaders - about the nature and benefits of co-

operation.

Sixth principle - Co-operation among co-operatives

Co-operatives serve their members most effectively

and strengthen the co-operative movement by working

together through local, national, regional and

international structures.

Seventh principle - Concern for the community

CO-OPERATIVE SOCIETIES

Co-operatives work for the sustainable development of

their communities through policies approved by their

members.

(3) The principles stated in subarticle (2) shall not be directly

enforceable in any court or tribunal, but shall be adhered to in the

interpretation and implementation of this Act and of any

regulations made thereunder.

(1) Persons wishing to form a society may request an

officer of the Board to assist them in the formation of the proposed

(2)

A society shall be registered under this Act

(a) where the proposed society is a primary society, if the

founding members consist of at least five persons

qualifying for membership in a primary society in

accordance with article 53

Provided that, in the case of primary societies

where the number of founding members is more than

five, the founding members shall duly elect at least

three individuals from amongst themselves to sit on

the committee of management of the proposed society;

(b) where the proposed society is a secondary society, if

the founding members consist of at least two primary

societies;

(c) where the proposed society is a tertiary society, if the

founding members consist of at least two societies, of

which at least one is a secondary society

Provided that, in the case of secondary or tertiary societies,

the founding members shall duly elect at least three individuals,

who shall be suitably representative of the founding members, to be

the first committee of management of the society.

(3) It shall be lawful for a parent society to have a subsidiary

company, provided the following conditions are fulfilled

(a) the objects of the subsidiary company serve to fulfil,

promote, complement or advance the objects of the

parent society;

(b) adequate measures are in place to ensure that the

members of the parent society are kept adequately

informed of the operations and performance of the

subsidiary company; and

(c) adequate measures are in place to ensure that the

powers of the parent society with respect to the

subsidiary company are exercised, having due regard

to the wishes of the parent society.

The founding members of a society, or their duly elected

representatives, shall -

(a) determine the type of society to be formed and draw up

its objects;

(b) assess the probable membership and expected volume

CO-OPERATIVE SOCIETIES

of business;

(c)

undertake a feasibility study into the economic and

practical aspects of the activities to be carried out by

the proposed society;

(d)

prepare, on the basis of the study referred to in

paragraph (c), and in such form as the Board may

require, a viability statement for submission to that

Board;

(e)

compile a list of prospective members and a record of

the probable capital contributions in the form of

shares;

(f)

organise educational meetings to discuss the proposed

society, its operations and its benefits to members;

(g)

prepare an appropriate statute for the proposed society;

and

(h)

undertake such other functions as may be necessary for

the purpose of submitting an application for the

registration of the proposed society.

(1) No society shall be registered by a name which in the

opinion of the Board is undesirable or offensive or which may

create confusion with other commercial or other undertakings.

(2)

Every society shall have -

(a) the word "co-operative" or the abbreviation ''co-op'' as

part of its name; and

(b) the word "limited" or the abbreviation ''ltd.'' at the end

of its name.

When the Board has registered a society in accordance with

the provisions of this Act, the founding members or their duly

elected representatives as stipulated in article 22, will be deemed to

have all the powers and duties of a committee of management as

provided in article 74.

(1) Every application for registration shall be submitted to

the Board in the form set out in the First Schedule. Such an

application shall be signed -

(a) in the case of a primary society, by at least five

persons, all of whom qualify for membership of a

primary society and are prospective members of the

society;

(b) in the case of a secondary society, by individuals duly

authorised in that behalf by not less than two societies

qualifying for membership of a secondary society and

which are prospective members of the society; and

(c) in the case of a tertiary society, by individuals duly

authorised in that behalf by not less than two societies

qualifying for membership of a tertiary society and

which are prospective members of the society.

(2)

The application shall be accompanied by -

CO-OPERATIVE SOCIETIES

(a) one copy of the statute, signed by all prospective

members;

(b) one copy of the feasibility study as is referred to in

article 23(c), and which is carried out by a person who,

in the opinion of the Board, is competent for the

purpose.

(1) The Board may require the applicants to furnish it with

such information with reference to the society regarding

(a) the economic or other need for the formation of the

society;

(b) the educational and advisory work pertaining to co-

operative principles and practices already being

carried out among the applicants for registration and

prospective members;

(c) the availability of sufficient capital, in accordance

with regulations as may be prescribed under this

article, for the commencement of operations;

(d) the availability of officers, including professional

management, capable of directing and managing the

affairs of the society and of keeping such records and

accounts for the society as the Board may require; and

(e) such other additional information as the Board deems

fit.

(2) The Board, having received an application for registration

of a co-operative society in conformity with the requirements of

this Act, and having been satisfied that the proposed society does

not require to submit further information relating to its possible

registration, may -

(a) reject an application, specifying the reasons for such a

decision and communicating these reasons to the

proposers; or

(b) provisionally register the proposed society under

article 28; or

(c) fully register the proposed society under article 29.

(3) In exercising its powers under this article, the Board shall

take into account all the circumstances of the case, including the

ability of the proposed founding members to carry the project

through, the proposed objectives of the society and the proposed

mode of operation.

(1) Subject to article 29(3) and to the provisions of this

Act, where the Board is satisfied that a proposed society should not

be registered under this Act at the time of the application for

registration, it may, if it is of the opinion that steps can and will be

taken with diligence by the persons by whom or on whose behalf

the application for registration is made to comply with all the

conditions for registration, provisionally register the proposed

society for a period not exceeding eighteen months, and subject to

its compliance with such terms and conditions, as the Board may

determine.

CO-OPERATIVE SOCIETIES

(2) A society which has been provisionally registered shall,

subject to the provisions of this article and to any terms and

conditions that may be imposed by the Board under subarticle (1),

be entitled to operate as a registered society, and while so entitled

to operate shall have the status and powers of a registered society.

(3) A society which is provisionally registered under this

article shall cause the fact that it is provisionally registered to be

stated in legible letters in all bills, letterheads, notices,

advertisements and other official publications of the society and

particularly on a signboard placed in a conspicuous position outside

every premises in which it operates.

(4) The Board may at any time cancel the provisional

registration of a society by a notice in writing addressed to the

society and such cancellation shall operate as a refusal to register

the society, and the society shall from the date of service of the

notice cease to be a registered society.

(5) Where a society ceases to be a registered society under

subarticle (4), the Board may appoint a competent person to be the

liquidator of the society in terms of article 100(4); but the validity

of any transaction entered into by or with the society while it was

provisionally registered shall not be affected thereby.

(6) If, at any time during the period of provisional registration,

the Board is satisfied that the society complies with all

requirements and conditions for registration, it may register the

society under article 29, and thereupon such society shall be

deemed to have been so registered on the date of its provisional

registration, and the foregoing provisions of this article shall cease

to apply to such society.

(7) Subject to the provisions of the Interpretation Act

regarding the liability of members of an association for

contraventions, where a society contravenes any of the provisions

of subarticle (3), it shall be guilty of an offence and shall be liable,

on conviction, to a fine (multa) not exceeding one hundred and

sixteen euro and forty-seven cents (116.47), and in the case of a

continuing offence to a further fine (multa) not exceeding twenty-

three euro and twenty-nine cents (23.29) for every day during

which the offence continues.

(1) Where the Board is satisfied that a society has

complied with the provisions of this Act, that its proposed statute in

no way contravenes those provisions, that the proposed co-

operative is likely to be viable and that the proposed management

of the co-operative is appropriate, it shall register the society and

its statute.

(2) Upon the full registration or provisional registration of a

society, the Board shall issue an appropriate certificate of

registration and shall cause the fact of registration to be published

in the Gazette.

(3) Societies set up in accordance with co-operative schemes

developed by Government for public employees shall be registered

in a separate register, clearly identified for this purpose. In such

cases the duration for any provisional registration shall be

CO-OPERATIVE SOCIETIES

established by the Board.

A certificate of registration signed on behalf of the Board

shall be conclusive evidence that the society therein mentioned is

duly registered or provisionally registered, unless it is proved that

the registration or provisional registration of the society has been

cancelled or has terminated.

PART IV

O RGANISATION AND D UTIES OF S OCIETIES

A society, on registration, shall be known by the name

under which it is registered and shall be a body corporate, having

power to hold movable and immovable property, to enter into

contracts, to sue and be sued, and to do all things necessary for the

purposes for which it is constituted.

An act of a society or of a committee of management or of

an officer of the society shall not be deemed to be invalid as against

third parties by reason only of the existence of some defect in the

constitution of the society or of the committee of management or in

the appointment or election of an officer or on the ground that such

officer was not qualified to be so appointed.

(1) Societies may form secondary societies, tertiary

societies and subsidiary companies.

(2) The object of secondary societies and tertiary societies

shall be to facilitate, co-ordinate, promote and enhance the joint

operations of those societies which are their members.

(1) The statute of a society, including any amendment

thereto, shall be duly registered by the Board.

(2) The statute of a society shall provide for the matters listed

in the Second Schedule.

(1) Any society may, subject to the provisions of this Act,

amend its statute.

(2) An amendment which changes the name of the society shall

not affect any right or obligation of the society or any of its

members or past members, and any legal proceedings

pending may be continued by or against the society under its new

name.

(3) An amendment to the statute of a society shall not have

effect until it has been registered by the Board.

(4) An amendment to the statute shall not be valid and shall

therefore not be registered by the Board unless -

(a) a resolution to amend the statute has been passed by

not less than three-fourths, or such other higher

majority as may be stipulated in the statute, of the

members present and voting at a general meeting duly

convened for that purpose; and

(b) not less than fifteen days’ notice of the proposed

amendment and of the meeting has been given to the

members.

CO-OPERATIVE SOCIETIES

(5) A copy of any amendment to the statute of a society, duly

passed as aforesaid, shall be signed by the President or Vice-

President and any other member of the committee of management

of a society, and shall be submitted to the Board for registration,

together with a copy of the revised and updated statute as amended

by the said society.

(6) The Board shall register an amendment to the statute if it is

satisfied that the amendment in no way contravenes any of the

provisions of this Act.

(7) If the Board refuses to register an amendment to a statute,

it shall inform the society of its decision in writing together with

the reasons for its refusal.

(8) Where the Board registers an amendment to the statute of a

society, it shall publish in the Gazette a notice that such statute has

been so amended.

(1) The statute of a society, including any amendments

thereof shall, once registered, bind the society and the members

thereof to the same extent as if they were signed by each member.

(2) A member of a society shall not, without his consent in

writing having been first obtained, be bound by any amendment of

the society’s statute registered after he became a member, if and so

far as that amendment requires him to take or to subscribe for more

shares than the number held by him at the date of registration of the

amendment, or to pay upon the shares so held any sum exceeding

the amount unpaid upon them at that date, or in any other way

increases the liability of that member to contribute to the share or

loan capital of the society.

(3) Any dispute that may arise, concerning any of the matters

referred to in article 109, shall, if included in the statute of a

society, or if agreed between the parties involved in the dispute, be

referred to arbitration by an arbitrator appointed by the Chairman

of the Malta Arbitration Centre, in which case, the society’s

members shall abide by the awards of the arbitrator. Membership of

a society shall automatically imply a tacit agreement, on the part of

the member, to submission to arbitration as aforesaid.

(1) Every society shall have an address registered in

accordance with this Act to which all notices and communications

shall be sent.

(2) A change of address shall be notified to the Board. The

Board shall cause the new address to be registered as the registered

address of the society and to be published in the Gazette.

(1) Every society shall maintain a register of members,

and a register of shares held by each member.

(2) The register of members and of shares shall be prima facie

evidence of any of the following particulars entered therein

(a) the date at which the name of any person was entered

in such register as a member;

(b) the date at which any such person ceased to be a

member; and

CO-OPERATIVE SOCIETIES

(c) the number of shares held by a member.

(1) Every society shall, at the registered address of the

society, keep open to inspection to its own members, free of charge,

at all reasonable times a duly updated copy of its statute, a copy of

this Act and a list of its members.

(2) At the end of December of each year, or at earlier intervals

as the Board may require from time to time, every society shall

send an updated list of its members to the Board. Such lists shall be

open for inspection to the public at the office of the Board.

(1) Notwithstanding the provisions of any other law, a

society whose principal activity consists in the sale or purchase or

the provision of any goods and, or, services, may provide in its

statute, or may otherwise contract with its members, that

(a) every such member who produces such goods or

provides such services shall dispose of, or otherwise

arrange for the disposal of, the whole or any specified

amount or proportion, of such goods or services to or

through the society in conformity with any agreement

entered into or arrangement made between the society

and any third party;

(b) every such member shall purchase from the society the

material required by the member for the purpose or in

connection with the production of such goods or the

provision of such services, in whole or in any specified

amount or proportion thereof, from the society

Provided that such rules and obligations shall be directly

related, necessary and proportionate to the formation and proper

functioning of the society and that the compatibility of such rules

and obligations with the provisions of the Competition Act shall, in

every event, be assessed together with and within the context of the

economic conditions prevailing in the relevant market in particular

the market power of the society concerned.

(2) The statute, or contract, as the case may be, may also

provide for reasonable and proportionate penalties or other

consequences to be incurred by a member of a society who acts in

violation of the provision referred to in subarticle (1).

The statute of a society may provide for the imposition of

pecuniary penalties on its members for any infringement of the

rules thereof, but no such pecuniary penalty shall be imposed upon

any member until written notice of the intention to impose the same

and the reason therefor has been served on him and he has had an

opportunity of being heard or otherwise of showing cause why the

pecuniary penalty should not be imposed.

CO-OPERATIVE SOCIETIES

(1) Without prejudice to any other law to the contrary,

where a society has supplied t o any member any m aterial,

equipment, funds or services directly related to the activities

carried out by the society, the society shall have a special privilege

over such material, equipment, funds or goods produced therewith

or therefrom or by virtue of such funds or services; such privilege

shall rank concurrently with the privilege mentioned in article 2009

of the Civil Code

Provided that nothing herein contained shall affect the

rights of any bona fide purchaser or transferee.

(2) A society shall have a special privilege upon the share or

other interest in the capital and on the deposits of a member or past

member or deceased member and upon any dividend, patronage

refund, or other sum payable to a member or past member or to the

estate of a deceased member in respect of any debt due to the

society from such member or past member or estate, and may set

off any such debt against any sum credited or payable to a member

or past member or estate of a deceased member as aforesaid. Such

privilege shall rank concurrently with the privilege mentioned in

article 2009(a) of the Civil Code.

On the death of a member, a society may transfer the share

or other interest of the deceased member to the person entitled to

such share or interest according to law or pay to such person a sum

representing the nominal value of such member’s share or interest

as ascertained in accordance with the society’s statute

Provided that where the heir of a deceased member, or in

the event of more than one heir, then one of such heirs as may be

appointed by them, is eligible for membership of the society, then

such heir shall have the right to request and obtain membership in

the society and shall be registered accordingly in his own name.

(1) A copy of any entry in a book of a society regularly

kept in the course of business, shall, if duly certified as provided in

subarticle (2), be prima facie evidence in any legal proceedings,

civil or criminal, of the existence of such entry and of the matters,

transactions and accounts therein recorded in every case where, and

to the same extent as, the original entry itself is admissible.

(2) The copy of an entry in the book of a society shall be

certified by a declaration in writing at the foot of such copy stating

that it is a true copy of such entry and that the book containing the

entry is still in the custody of the society; such declaration shall be

dated and signed by the President and the secretary of the society.

(3) No officer of any society shall, in any legal proceedings to

which the society or the liquidator of the society is not a party, be

compelled to produce any of the society’s books, the contents of

which can be proved in accordance with subarticle (1) or to appear

as witness to prove any matters, transactions or accounts therein

recorded, unless the court for special reasons so directs.

(1) The financial statements of every society shall be

audited at least once in every year by an auditor or auditors

appointed at each general meeting at which audited financial

CO-OPERATIVE SOCIETIES

statements are presented. Such auditors shall hold office from the

conclusion of that general meeting until the next general meeting at

which audited financial statements are presented. The audit fee

shall be approved at the general meeting.

(2) For the purposes of this Act, an auditor means a person

who is an individual who holds a warrant to act as auditor issued

under the Accountancy Profession Act, or is a partnership of

auditors duly registered under the said Act.

(3) Every society shall appoint, and cause to have at all times

appointed, a person qualified and authorised as aforesaid to be the

auditor of the society. The first auditor of a society may be

appointed by the committee of management of the society at the

first opportunity and definitely before the first general meeting of

the society at which annual accounts are presented, and the auditor

so appointed shall hold office until the conclusion of that meeting.

(4) The committee of management shall, at any time before the

general meeting of a society at which the annual accounts are

presented, fill a casual vacancy in the office of auditor

Provided that the society in general meeting may fill such a

casual vacancy itself.

(5) If no auditors are appointed or re-appointed by the

committee of management or by the general meeting of a society as

required by the foregoing provisions of this article, then the Board

may, on an application made by any member of the society, appoint

an auditor to fill the vacancy.

A person shall be disqualified from appointment as auditor

or from holding the office of auditor of a society if, in the case of

an individual, he has at any time during the previous three years

been -

(a) an officer, member or employee of the society; or

(b) a member, employer or employee of an officer of the

society; or

(c) a member or employee of an employee of the society;

or

(d) related by consanguinity or affinity in the direct line,

or, up to the third degree, in the collateral line, to any

officer of the society.

(1) The auditors of a society shall -

(a) have a right of access at all times to the society’s

accounting records, accounts and vouchers;

(b) require from the society’s officers such information

and explanations as they think necessary for the

performance of their duties as auditors;

(c) receive all notes of, and other communications relating

to, any general meeting which a member of the society

is entitled to receive;

(d) attend any general meeting of the society; and

(e) be heard at any general meeting which they attend on

CO-OPERATIVE SOCIETIES

any part of the business of the meeting which concerns

them as auditors.

(2) An officer of a society who, knowingly or recklessly,

makes to the society’s auditors a statement, whether written or oral,

which conveys or purports to convey any information or

explanations which the auditors require, or are entitled to require,

as auditors of the society, which is misleading, false or deceptive in

a material particular, shall be guilty of an offence under this Act.

(3) A secondary or tertiary society, and the auditors of such a

society, and the auditors of any subsidiaries of any society, shall

give t o the auditors of any of their member societies such

information and explanations as they may reasonably require for

the purpose of their duties as auditors of that society.

(1) A society shall, as soon as practicable but not later

than five months after the close of each financial year, submit to the

Board

(a) one certified true copy of the audited financial

statements of the society as laid down in Parts I to IV

of the Third Schedule, together with the audit report

for that period prepared in accordance with article 49;

(b) one certified true copy of audited financial statements

for public inspection, as laid down in Part V of the

Third Schedule, together with the audit report for that

period prepared in accordance with article 49 and

stating whether in the auditor’s opinion the society is

entitled to prepare an abridged set of audited financial

statements, for public inspection.

(2) A society may elect not to submit to the Board an abridged

set of audited financial statements together with the audit report

mentioned in subarticle (1)(b), in which case the Board shall make

the society’s audited financial statements, together with the audit

report, referred to in subarticle (1)(a), available for public

inspection.

(3) The Board may, if the auditor of the society is not of the

opinion that the society is entitled to prepare an abridged set of

audited financial statements, make available for public inspection

the society’s audited financial statements mentioned in subarticle

(1)(a).

(4) The audit reports mentioned in subarticle (1)(a) and (b)

shall be signed by the auditors.

(5) The society shall keep proper accounts and records of its

transactions and affairs and shall do all things necessary to ensure

that all payments out of its moneys are correctly made and properly

authorised and that adequate control is maintained over the assets

of, or in the custody of, the society and over the expenditure

incurred by the society. Such accounts shall, subject to the

provisions of this Act, conform to International Accounting

Standards.

(6) The society shall, as soon as practicable but not later than

three months after the close of each financial year, prepare and

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submit the financial statements in respect of that year to the auditor

who shall audit and report on them. Such an audit shall, subject to

the provisions of this Act, conform to the International Standards

on Auditing.

(7) References in this article to signature by the auditor shall

refer to the signature of an individual partner or partners signing on

behalf of the partnership and authorised to sign on its behalf, in

those cases where the office of auditor is held by a partnership.

(1) The auditor of a society shall audit the accounts and

other relevant records of the society and shall forthwith inform the

Board and the society or any of its officers, of any material

irregularity disclosed in the course of his audit. The financial

statements prepared by the society after the close of the financial

year shall be audited and reported on by the auditor.

(2) A society’s auditor shall present a report on all financial

statements of the society to the society’s members. Copies of the

financial statements and of the auditor’s report thereon are to be

laid before the society in general meeting, but shall be available for

inspection by the members at the society’s premises as from five

working days from the date announced for the holding of the

meeting.

(3) The auditor’s report shall be drawn up in accordance with

International Standards on Auditing and shall state whether, in the

auditor ’s opinion, the financial statements have been properly

prepared in accordance with this Act, and in particular whether a

true and fair view is given -

(a) of the state of affairs of the society as at the end of the

accounting period; and

(b) of the income and expenditure of the society for the

accounting period.

(4) A society’s auditor shall, in preparing his report, carry out

such investigations as will enable him to form an opinion as to

whether -

(a) proper accounting records have been kept by the

society;

(b) proper returns adequate for the audit have been

received from branches not visited by him;

(c) the society’s accounts are in agreement with the

accounting records and returns; and

(d) the society has functioned in accordance with its

statute and the provisions of this Act.

(5)

If the auditor -

(a) is of the opinion that any of the items mentioned in

subarticle (4) are not in conformity with the

requirements of this Act; or

(b) is unable to obtain all the information and explanations

which, to the best of his knowledge and belief, are

necessary for the purpose of his audit,

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he shall state that fact in his report.

(6) The auditor may at any other time report to the Board and

to the society upon any matters arising out of the performance of

the audit.

(7) The audit of the accounts of a society may, for management

purposes, include an examination of and a report on overdue debts,

if any, and an examination of and a report on the valuation of the

assets and liabilities of the society.

(1) The remuneration of auditors shall be fixed by the

society in general meeting or in such manner as the society in

general meeting may provide. The remuneration of auditors

appointed by the committee of management or by the Board shall

be fixed by the committee of management or by the Board, as the

case may be.

(2) There shall be stated in the notes to the accounts the

amount of the remuneration paid to the society’s auditors, including

any other remuneration earned by the auditors in any other capacity

from the same society.

(3) For the purposes of this article, "remuneration" includes

sums paid in respect of expenses.

(4) The provisions of this article shall apply in relation to

benefits in kind and to payments in cash; and, in relation to any

such benefit, references to its amount are to be construed as

references to its estimated money value. The nature of any such

benefit shall also be disclosed.

(5) The Minister may by regulations provide for the manner in

which the amount of any remuneration received or receivable by a

society’s auditors or associates of such auditors shall be disclosed;

in particular, the regulations may prescribe the circumstances in

which a person or body shall, for the purposes of such regulations,

be considered as an associate of the auditors.

The Minister, acting on the advice of the Board, may make

regulations, not inconsistent with the provisions of this Act,

regulating -

(a) the

appointment,

removal,

qualification,

disqualification, remuneration and resignation of

auditors;

(b) the powers, functions and duties of auditors;

(c) the keeping of accounting records, and the form and

content of accounts;

(d) the auditor’s report and any other reporting duties; and

(e) any other matter as may be necessary or appropriate

for the better carrying out of the provisions of this Part

of the Act.

PART V

R IGHTS AND D UTIES OF M EMBERS

CO-OPERATIVE SOCIETIES

(1) Any person who becomes a member of a society,

whether upon registration or at any later date, shall be deemed to

have agreed to comply with the rules of the said society, and to the

provisions of article 36. The names of members of the society shall

be entered in the register of members.

(2) New members shall be admitted by the committee of

management on an application made for that purpose

Provided that if a person’s application is refused by the

committee, such person may appeal to the general meeting of

members and in any such case he may be admitted as a member by

a resolution passed by not less than two-thirds of the members

present and voting at such a meeting.

(1) A person shall qualify for membership in a primary

society if he is an individual who -

(a) has attained the age of eighteen years and is of sound

mind; and

(b) satisfies such other requirements with regard to

residence, employment, profession or other matter as

may be prescribed by the statute; and

(c) is not an undischarged bankrupt.

(2) Where the statute of a society specifically so permits, a

commercial partnership may also qualify for membership of a

society

Provided that -

(a) the operations of the commercial partnership are

wholly or mainly similar or equivalent to the

operations of the society;

(b) the commercial partnership shall be represented by a

duly authorised individual at the general meetings of

the society; and that such an individual shall be a

director, partner or the majority shareholder of the said

partnership;

(c) a commercial partnership may not be a member of a

committee of management or of a supervisory board, if

any; and

(d) the Board is informed immediately, by the society,

whenever a commercial partnership is accepted as a

member of that society.

(3) It shall not be lawful for a person to appear as a member of

a society as nominee or for the interest of any undisclosed person.

Any nominee agreement or similar agreement contrary to this

subarticle shall be null and void, and the person whose name

appears on the statute or in the Register of members shall, for all

purposes, be deemed to be the member.

(4) Any person who at any time does not have the

qualifications for membership as provided in this article shall be

struck off the register of members by the committee of management

and shall thereupon cease to be a member of the society.

CO-OPERATIVE SOCIETIES

No member of a society shall exercise any of the rights of a

member unless he has made such payment to the society in respect

of membership, or has acquired such shares or other interest in the

society, as may be prescribed under this Act or by the statute of the

society.

(1) No member of a primary society shall be a member of

any other primary society having the same or similar objects or

activities.

(2) The statute of a society may contain rules prohibiting or

restricting its members from carrying out activities in competition

with those carried out by the society.

(1) Unless the statute of a society provides otherwise,

each member of a primary society shall only have one vote in the

affairs of the society, including at general meetings, irrespective of

the number of shares he holds, and the right to vote shall be

exercised in person and not by proxy. Notwithstanding anything

contained in any statute, the granting of a proxy shall be in written

form, and a proxy may not represent more than two members at a

meeting, including the member exercising the proxy.

(2) In a secondary society or tertiary society, each society

which is a member shall have as many votes as may be provided by

the statute of the secondary society or tertiary society, and may,

subject to such a statute, appoint any number of delegates, not

exceeding the number of such votes, to exercise its right to vote.

Notwithstanding anything which may be contained in the

statute of a society, no member shall hold more than forty per cent

of the share capital of any society

Provided that in the case of secondary or tertiary societies,

a member which is itself a co-operative society may hold more than

forty per cent of such share capital.

(1) No member of a society shall transfer any share held

by him or his interest in the capital of the society or any part

thereof unless -

(a) he has held such share or other interest for not less

than one year; and

(b) the transfer is in favour of the society, a member of the

society or a person whose application for membership

has been accepted by the committee of management of

the society.

(2) No transfer of a share or other interest shall be valid and

effective unless and until such transfer and the name of the

transferee has been approved and registered by the committee of

management.

(1) The liability of a member, present or past, of a society,

shall be limited to the amount, if any, unpaid of the shares held by

him.

(2) The liability of a past member for the debts of a society in

terms of subarticle (1) shall be limited to those which existed on the

date on which he ceased to be a member and shall cease on the

CO-OPERATIVE SOCIETIES

expiration of two years commencing on that date.

(3) The liability of the estate of a deceased member shall be

limited to the debts of the society, as they existed on the date of the

death of the member and shall cease on the expiration of two years

commencing on that date.

(1) A member may withdraw from a society subject to

such conditions, and by giving to the society such notice, as may be

prescribed by the statute.

(2) The amount that should be paid to the withdrawing member

for the redemption of his share or interest shall be the nominal

amount thereof.

(3) The statute of a society may stipulate the manner in which

such payment is to be effected.

A member who contravenes any of the provisions of this

Act or of any regulations made thereunder or of any provision of

the statute of the society, and any member who acts in any way

detrimental to the interests of the society, may be expelled from the

society

Provided that the statute of a society may provide for a

different procedure for the expulsion of members, as long as such

procedure provides for the giving to the person charged reasonable

notice of the charge and an opportunity to make representations and

to present evidence against the charge.

PART VI

O PERATION AND M ANAGEMENT OF S OCIETIES

(1) The supreme authority of a society shall vest in the

general meeting of its members.

(2) Subject to article 56 and to the provisions of this Act, every

member shall have the right to attend and vote at all general

meetings of the society, in person or by proxy.

The legal and judicial representation of a society shall be

clearly specified in its statute; a society which does not clearly

specify, in its statute, its legal and judicial representation shall not

be registered.

(1) Every society shall, within six months from its date of

registration, hold a first general meeting of its members.

(2) The business of the first meeting shall include the election

of the officers who are to serve until the first annual general

meeting.

(1) Every society shall provide in its statute for an annual

general meeting to be convened by the committee of management

and to be held as soon as practicable, but not later than six months,

after the end of each financial year, and may also provide for other

general meetings.

(2) Notice of every general meeting shall be given in writing

to each member or delegate entitled to attend the meeting. Such

notice shall be given at least fifteen clear days prior to the date of

CO-OPERATIVE SOCIETIES

the meeting

Provided that in cases of urgency a general meeting, other

than an annual general meeting or a general meeting having on the

agenda an amendment of the statute, may be called by a notice of

not less than three working days.

(3) Every notice of a general meeting shall state the matters for

discussion and the resolutions to be proposed, and no other subject

shall be discussed without the consent of the majority of the

members present and voting at such general meeting.

(4) The accidental omission to give notice of a meeting to, or

the non-receipt of notice of a meeting by, any person entitled to

receive notice, shall not invalidate the proceedings at that meeting.

The functions of the annual general meeting of a society

shall be -

(a) to consider and confirm, with such amendments as it

may deem fit, the minutes of the previous annual

general meeting and of any other intervening general

meeting not previously approved at another general

meeting;

(b) to consider the auditor’s report, the reports of the

committee of management and the supervisory board,

if any, and any report made by the Board;

(c) to consider and approve the financial statements;

(d) subject to the provisions of this Act and the statute, to

consider and determine the manner in which any

available net surplus shall be distributed or invested;

(e) to consider and adopt any amendments to the statute;

(f) to propose and approve any honoraria, allowances,

audit fees and/or other remuneration as defined in

article 77;

(g) to elect members of the committee of management and

of the supervisory board, if any;

(h) to appoint the auditors of the society;

(i) to decide appeals of persons whose application for

membership has been rejected by the committee of

management;

(j) to consider and determine the maximum amount the

society may borrow;

(k) to hear and decide upon any complaints brought by

members aggrieved by a decision of the committee of

management, provided that notice of the intention to

bring such complaints before the meeting has been

given to the secretary or manager at least two days

prior to the meeting;

(l) if so requested by him, to hear any auditor who has

been removed by the society;

(m) to transact any other general business of the society of

which due notice has been given to members.

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(1) An extraordinary meeting of a society may be

convened at any time by the committee of management of the

society.

(2) An extraordinary general meeting of a society shall be

convened by the committee of management -

(a) on receipt of a request for such a meeting signed by at

least one-fourth or fifteen of the members or delegates

of the society, whichever is the less, stating the objects

of the meeting;

(b) on receipt of a request from the supervisory board, or

the Board, stating the objects of the meeting.

(3) If the committee of management fails to convene an

extraordinary general meeting in accordance with subarticle (2)

within one month of receiving the request for the meeting, the

supervisory board, or the Board, as the case may be, making the

request shall have power to convene the meeting themselves by

notice to all members of the society stating the object of the

meeting and the fact that the committee of management has failed

to convene the meeting.

(1) No business shall be transacted at any general meeting

unless a quorum of members or delegates is present. The quorum

necessary for the transaction of business shall be fifteen or one-

fourth of all members or delegates qualified to vote, whichever is

the less.

(2) If within thirty minutes after the time fixed for a general

meeting the members or delegates present are not sufficient to form

a quorum, such meeting shall be considered as dissolved if it is

convened on the request of members or of delegates; in all other

cases it shall stand adjourned to the same day in the next week at

the same time and place and a notice to this effect shall be sent by

post, to the registered addresses of the members and of whoever is

entitled to attend, by the secretary within forty-eight hours of the

adjournment; and if at the adjourned meeting a quorum is not

present within thirty minutes from the time fixed for the meeting

the members or delegates present shall form a quorum

Provided that a general meeting with such reduced quorum

shall not have the power to amend the statute.

(1) Except as otherwise provided in this Act or in the

statute, any question referred to the members or delegates present

at a general meeting shall be decided by a majority of votes.

(2) At any general meeting a resolution put to vote shall be

decided by a show of hands unless voting by call of names or by

ballot is demanded by at least two members, where the number of

members present is less than twenty, or by at least five of the

members present in any other case

Provided that for the election of officers the voting shall in

all cases be carried out by ballot.

(3) In the case of an equality of votes the motion shall be

rejected. The chairman shall have no casting vote.

CO-OPERATIVE SOCIETIES

(1) Minutes of the general meetings shall be entered in the

minute book and shall include

(a) the names of members or delegates present at the

meeting and the name of the chairman who presided;

(b) the time the meeting commenced and ended;

(c) all resolutions and decisions taken at the meeting.

(2) The minutes of each general meeting shall be read at the

next following general meeting, and when signed by the chairman

of that meeting and the secretary, whether following confirmation

or amendments, they shall be evidence of anything contained

therein.

(1) Every society shall have a committee of management

consisting of not less than three and not more than nine committee

members as may be provided by its statute.

(2) Members of the committee of management shall be elected,

suspended or removed only by a majority of members or delegates

present and voting at a general meeting of the society.

(3) All the members of a committee of management shall be

individual persons and shall serve on the committee of management

on their own responsibility and not as nominees or representatives

of any other person.

An individual shall be eligible for membership of the

committee of management of a society or to remain a member of

such a committee if he -

(a) is a member of the society;

(b) is an individual appointed in writing by a commercial

partnership which is a member of the society;

(c) does not engage in an activity which gives rise to a

conflict of interest;

(d) does not take part, on a permanent or occasional basis,

in any activity which is directly or indirectly in

competition with that of the society;

(e) is not an undischarged bankrupt

(f) has not been convicted of any crime punishable by

more than one year’s imprisonment;

(g) does not have any outstanding debt owing to the

society at the end of the society's financial year other

than in respect of a loan made under the relevant rules

of the society statute;

(h) in the case of a primary society, he is not already a

member of a committee of management of another

primary society having the same or similar objects or

activities;

(i) he does not receive any remuneration, salary or other

payments, except as provided for in article 77

Provided that, with respect to paragraph (c), the general

meeting of the society may decide that a person shall be so eligible

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notwithstanding that he engages in any such activity.

(1) All the members of the committee of management of a

society shall serve until the next annual general meeting of the

society

Provided that the statute of a society may provide that in

the annual general meetings that may be held following the first

annual general meeting, one-third of the members for the time

being, or if their number is not three or a multiple of three, then the

number nearest one-third shall retire from office and such members

shall be those who have been longest in office since their last

election

Provided further that in case of persons who became

members on the same day, those to retire in accordance with the

preceding proviso, shall, unless they otherwise agree among

themselves, be determined by lot.

(2)

A retiring member shall be eligible for re-election.

(3) If, during the term of office of a committee of

management, a vacancy occurs in the committee, the committee

may, and if the number of members falls below three shall, co-opt a

member of the society to serve on the committee of management

until the next general meeting of the society

Provided that, where the statute so provides, and where

applicable, the first person to be considered for such co-option

shall be the person who had obtained the highest number of votes

amongst the non-elected candidates, followed by the person with

the second highest number of votes, and so on in descending order.

(1) Saving those powers reserved to the general meeting

of members, and subject to the provisions of this Act, the

committee of management shall be vested with the conduct and

management of the affairs and business of the society and, subject

to any restrictions contained in the statute or in any resolution

taken at a general meeting of members, the committee of

management may exercise all the powers required to ensure the full

and proper administration and management of the affairs, business

and property of the society, including the putting into practice of

proper and prudent accounting policies.

(2) Without prejudice to the generality of subarticle (1), the

functions of the committee of management shall include the

following

(a) to consider, in terms of the provisions of article 52,

applications for membership of the society;

(b) to call for and examine reports from persons employed

by the society with the object of disclosing the true

position of the society, its operations and financial

condition;

(c) to open and operate banking accounts;

(d) to appoint sub-committees;

(e) to keep members informed of the progress of the

society, to encourage interest and a sense of ownership

CO-OPERATIVE SOCIETIES

on the part of the members and to carry out

educational and advisory work among the members

with respect to co-operative principles and the objects

of the society;

(f) to prepare and present to the annual general meeting of

the society proposals for the distribution of any net

surplus accrued during the preceding financial year in

accordance with this Act and the statute of the society;

(g) to present reports to the annual general meeting on the

work of the committee of management during the

preceding financial period and containing such

recommendations as they deem necessary to maintain

or improve the services provided by the society to its

members;

(h) to take immediate action to correct mistakes, errors or

malpractices, if any, which may be disclosed in the

reports of the supervisory board, the Board and, or, the

auditor.

(3) A full and correct record shall be kept of the proceedings

of the committee of management. Such records shall be available

for inspection by the supervisory board of the society, if any, by the

Board and by the auditor.

(4) The committee of management may appoint, on such terms

and conditions as it thinks fit, a manager to administer and manage

the affairs of the society and may employ such other persons as the

committee considers necessary to assist the manager in the

discharge of his duties.

(5) The committee of management may at any time suspend an

officer for any good and sufficient cause arising out of the

performance of his duties. Any such suspension shall be

communicated to the Board, together with the reasons for the

suspension.

(6) In the event of the suspension of an officer, the committee

may appoint a substitute to hold office during the period of such

suspension. The committee shall communicate the name of the

substitute to the Board.

(1) The committee shall meet as often as the business of

the society may require and in any case not less frequently than

once in every month.

(2) The quorum for a meeting of the committee of management

shall be a simple majority of its members.

(3) Decisions shall be taken by a simple majority of votes of

members present and the President shall have no casting vote.

(4) Minutes of committee meetings shall be recorded by the

secretary in the minute book and shall include -

(a) the number and names of those present;

(b) the name of the chairman of the meeting;

(c) a brief record of the business done and the decisions

CO-OPERATIVE SOCIETIES

taken and a statement with respect to each decision

whether it has been taken unanimously or by a

majority.

(5) Any member of the committee of management who,

without valid reason, fails to attend three consecutive meetings of

the committee of management shall be deemed to have vacated his

office which shall thereupon be filled as provided by article 73(3).

(1) In the conduct of the affairs of a society, the members

of the committee of management shall exercise the prudence and

diligence of ordinary persons of business and shall be jointly and

severally liable for any losses sustained through failure on their

part to exercise such prudence and diligence or through any act

which is contrary to the provisions of this Act or of any regulations

made thereunder, or to the statute of the society or to any direction

of any general meeting.

(2) Where the committee of management has employed a

manager to administer and manage the affairs of the society, such

appointment shall not absolve the committee from its responsibility

for the proper direction of the affairs of the society.

(1) Allowances and honoraria payable to members of the

committee of management or to the members of the supervisory

board, if any, shall be those authorised by the statute or by the

general meeting of the society.

(2) No member of a committee of management shall receive a

wage or a salary, except in such societies where the members of the

society are also the employees.

(1) Every society shall have a President and a Vice-

President, elected by the committee of management from among its

members.

(2) The committee of management shall also elect a secretary

and a treasurer from among its members

Provided that where a committee of management appoints

a person as a full-time manager, any of the duties of the secretary or

of the treasurer may be delegated to such manager, subject to the

general supervision of the committee of management.

(3) The offices of secretary and of treasurer may be held by the

same person.

(1) The President shall preside at all general meetings and

at all meetings of the committee of management. In the absence of

the President his functions shall be carried out by the Vice-

President, and in the absence of both the President and the Vice-

President at any meeting, by any other person elected by a majority

of those present at that meeting.

(2) The President shall be responsible for the smooth and

orderly running of all general meetings and all meetings of the

committee of management, and shall have the rights conferred upon

him by the statute.

The duties of the secretary shall include

CO-OPERATIVE SOCIETIES

(a) the duty to maintain all the society’s records, papers

and registers correctly and up-to-date;

(b) the duty to keep an inventory of the property

belonging to the society;

(c) the duty to handle all correspondence on behalf of the

committee of management;

(d) the duty to convene and attend general meetings and

meetings of the committee of management and to

record the proceedings of such meetings in the minute

book; and

(e) the duty to manage the day-to-day running of the

society’s activities, and perform such other duties

entrusted to him by the committee.

The duties of the treasurer shall include

(a) to take charge of all financial transactions of the

society, including all moneys received, and to make

disbursements in accordance with the directions of the

committee of management;

(b) to give or cause to be given all the receipts, vouchers

and documents required by the statute or called for by

the committee of management;

(c) to keep a proper record of the society’s accounts; and

(d) to assist the auditors of the society.

The manager shall have such duties as may be specified in

the statute of the society or in the letter of his appointment. He

shall conduct his duties under the general supervision and policy

directions of the committee of management. Such duties may

include

(a) to manage the business and property of the society;

(b) to attend the meetings of the society and of the

committee of management as may be requested by the

committee from time to time;

(c) to carry out all reasonable and legitimate instructions

of the committee of management.

(1) Every society shall, if required by its statute, or if

requested by at least a simple majority of members present and

voting at a general meeting convened in terms of the provisions of

this Act, have a supervisory board consisting of not less than three

and not more than five members or otherwise as may be prescribed

by its statute. The members of the supervisory board shall be

elected at the annual general meeting after the election of the

members of the committee of management.

(2) No member of the committee of management may be a

member of the supervisory board.

(3) The duration of the office of members of the supervisory

board of a society shall be regulated by the statute of the society or

by the general meeting, as the case may be. In the absence of any

such provision, the term of the supervisory board shall expire at the

CO-OPERATIVE SOCIETIES

next annual general meeting.

(4) The members of the supervisory board may include

i n d i v i d u a l s w h o a r e n o t m e m b e r s o f t h e so c i e t y, a n d s h a l l

preferably be chosen from persons having knowledge of

accounting, auditing and financial procedures.

(1) The

supervisory

board

shall

regulate

its

own

procedure.

(2) The quorum of a meeting of the supervisory board shall be

half the number of its members.

(3) Decisions shall be taken by a simple majority of votes of

members present at the meeting. The chairman shall have no

casting vote.

(1) The supervisory board shall be responsible to the

general meeting of the society for assisting the committee of

management in the effective and efficient running of the society,

and to ensure that the management thereof is conducted in

accordance with the provisions of this Act as well as in accordance

with the statute of the society and with the decisions and

resolutions adopted at general meetings or the committee of

management or committee meetings. Its functions shall include

(a) to present to the annual general meeting a specific

report on the management and financial position of the

society only in such cases in which the committee of

management has failed to act in accordance with the

requirements of the statute or with the

recommendations of the same supervisory board;

(b) to summon extraordinary general meetings of the

society in accordance with article 67; and

(c) bring forthwith to the attention of the committee of

management any matters concerning the affairs of the

society which may require the same committee of

management to take action.

(2) The supervisory board may at any time require the

committee of management to summon an extraordinary general

meeting whenever it considers that the members should be

informed immediately of the position of the society and shall also

have the power to summon an extraordinary general meeting

themselves if the committee fails to do so within one month from

receiving the request.

Notwithstanding anything contained in this Act, the statute

of a society may make provision for the holding of general

meetings, and of meetings of the committee of management and of

the supervisory board, if any, through suitable electronic means,

including internet, telephone or video conferencing, provided that

adequate measures are put in place to safeguard the right of each

and every member to participate, to vote, and to ensure the

adequate recording of the proceedings. In such an event, the

provisions of this Part shall be construed and applied accordingly.

PART VII

CO-OPERATIVE SOCIETIES

P ROPERTY AND F UNDS OF S OCIETIES

(1) The capital of a society may be raised, subject to the

provisions of this Act, in any one or more of the following

(a)

admission fees;

(b)

subscription and payment of shares;

(c)

savings deposits made by its members;

(d)

deposits or loans from non-members;

(e)

surplus carried to reserve funds.

(2) The following rules shall have effect with respect to the

manner of raising capital specified in subarticle (1)

(a) no admission fee shall be refundable except in respect

of an application for membership that has been

rejected;

(b) no share may be redeemed except in accordance with

the statute of the society and no rule in the statute

allowing such redemption shall have effect unless such

rule also specifies the minimum number of shares a

member shall hold while he is a member;

(c) savings deposits may be either obligatory and regular

or voluntary. Regular and obligatory deposit shall be

made in accordance with the statute of the society and

may not be withdrawn except for purposes and in

accordance with conditions specified in the statute, or

on termination of membership; such deposits may

serve to secure loans taken by or guarantees given by a

member. Voluntary deposits may be withdrawn,

subject to any conditions or restrictions specified in

the statute;

(d) deposits or loans from non-members shall be subject to

the provisions of this Act and of the statute of the

society;

(e) a reserve fund shall be kept and used in accordance

with the provisions of this Act and of the statute of the

society.

(3) A society may not issue bonds or debentures without the

authority of the Board and shall, in any such issue, comply with any

conditions prescribed by the Board.

(1) A society may receive deposits and loans from

members and from persons who are not members only if so

authorised by its statute and only to such extent and under such

conditions as may be determined or prescribed by its statute or

under the following provisions of this article.

(2) A society which under its statute has power to borrow

money shall determine from time to time, at a general meeting, the

maximum liability which it may, within the limits prescribed by its

statute, incur in respect of loans or deposits from members and

non-members including bank overdrafts.

CO-OPERATIVE SOCIETIES

A society may invest or deposit its funds -

(a) in accordance with the provisions of its statute; or

(b) in any other manner not inconsistent with its statute, as

the committee of management may consider

appropriate, subject to any general or specific

directions, if any, as may be determined by the general

meeting.

(1) Every society shall maintain a reserve fund, and such

fund shall be used exclusively to cover losses incurred by the

society.

(2)

The reserve fund shall be kept in the form of liquid assets.

(3) Every society shall transfer into the reserve fund at least

twenty per cent of its surplus at the end of each accounting period

Provided that the requirement of this subarticle shall not

apply at the end of any accounting period in which the reserve fund

is equal to the total of the paid-up share capital and of twenty per

cent of the borrowed capital of the society as shown in the audited

and approved balance sheet of the preceding financial period.

(1) There shall be a Central Co-operative Fund,

hereinafter referred to as ''the Fund'', which shall be administered in

such manner as the Minister may prescribe by regulations made

under this Act.

(2) The Fund shall be used in furtherance of co-operative

education, training, research, and for the general development of

the co-operative movement in Malta, and for such other purposes as

may be stipulated in regulations made under this article.

(3) Every society shall contribute five per cent of the surplus

resulting from its activities, operations, investments and any other

sources at the end of each accounting period to the Fund.

(4) Regulations made under this article may establish the

highest amount that a society may be obliged to contribute in any

financial year to the Fund.

(5) The Fund shall have a distinct legal personality and,

subject to the provisions of this Act, shall be capable of entering

into contracts, of suing and being sued, and doing all such things

and entering into all such transactions as are incidental or

conducive for the fulfilment of its objectives.

(6) The Fund shall be responsible for collecting, recovering

and instituting proceedings for the payment of sums due to it, in

terms of the provisions of this Act.

(7) The Board shall, on receipt of the audited accounts of a

society, furnish to the Fund such information as will enable the

Fund to determine the contribution of the said society towards the

said Fund.

(1) The net surplus of a society at the end of each

accounting period after transfers have been made to the reserve

fund and to the Fund in accordance with articles 90 and 91 may be

divided among the members by way of dividend or in any manner

CO-OPERATIVE SOCIETIES

authorised by this Act or by the statute of the society, and may also

be allocated to any other funds of the society to such extent and

under such conditions as may be prescribed under this Act or by the

statute of the society.

(2)

(a) The statute of a society may establish the maximum

rate that the society may pay to its members by way of

dividend.

(b) Where a maximum rate is not specified in the statute of

a society, the maximum rate shall be that specified,

from time to time, by regulations made by the Minister,

in consultation with the Board.

(3) Subject to any provisions contained in the statute of a

society, or to general or specific directions determined by a general

meeting, a society may apply an amount of its net surplus for any

charitable, educational or other public purpose.

(1) A society may distribute any part of the remainder of

its net surplus by way of patronage refund.

(2) Patronage refund means the distribution of all or any part

of the net surplus of a society, paid among its members in

proportion to the volume of business or other transactions done by

them with the society.

(1) A society may distribute any part of its net surplus

among its members in the form of bonus certificates or bonus

shares.

(2) A bonus certificate shall entitle the holder to claim

payment of the sum for which the certificate is issued out of the

society’s funds on a date specified in the certificate, being a date

not earlier than five years from the day when the bonus certificate

was issued. No interest or dividend shall be paid on such

certificates.

(3) A bonus share may not be withdrawn or transferred before

the expiration of ten years from the date of its issue unless the

holder of the bonus share has ceased to be a member, in which case

the sum claimed by a former member may be claimed by the same

person, or his heirs, up to twelve months after the date when the

person had ceased to be a member.

PART VIII

A MALGAMATION OF S OCIETIES

(1) Subject to the provisions of this Act, any two or more

societies may by instrument in writing amalgamate into a single

society if each of such societies has so resolved, by a three-fourths

majority of the members present and voting, at an extraordinary

general meeting held for the purpose and for which a notice in

writing, containing the resolution and giving the date and place of

the meeting, has been given at least fifteen days before the meeting

is held.

(2) The new society formed as aforesaid may apply for

registration under article 26 and may be registered under article 29.

CO-OPERATIVE SOCIETIES

(3) The instrument of amalgamation shall have no effect until

and unless the new society is so registered.

(1) Subject to the provisions of this Act, any two or more

societies may, by instrument in writing, amalgamate by merger in

such a manner that one or more societies are acquired by another

society, referred to as the acquiring society, if each of such

societies has so resolved, by a three-fourths majority, or by a higher

majority as may be stipulated in the statute, of the members present

and voting, at an extraordinary general meeting held for the

purpose and for which a notice in writing, containing the resolution

and giving the date and place of the meeting, has been given at least

fifteen days before the meeting is held.

(2) The society or societies which are acquired by the

acquiring society as provided for in subarticle (1) shall be dissolved

and struck off the register without winding up.

(1) An acquiring society referred to in article 96, or a new

society set up in terms of article 95, shall succeed to all the assets,

rights, liabilities or obligations of the society or societies ceasing to

exist by virtue of the act of amalgamation, without the requirement

for any formalities, and the said succession shall thereupon be

effective even as regards third parties.

(2) The succession to all assets, rights, liabilities or

obligations of the society or societies ceasing to exist by the

acquiring or by the new society, as the case may be, shall not give

rise to any liability for the payment of any duty or tax under the

Duty on Documents and Transfers Act or the Income Tax Act.

(1) Subject to the provisions of this Act, a society which is

so authorized by a resolution passed as provided in article 95(1),

m a y, b y i n s t r u m e n t i n w r i t i n g , t r a n s f e r t o a n o t h e r s o c i e t y

authorised to accept the transfer by a resolution similarly passed,

all its assets and liabilities without exception.

(2) The instrument effecting such transfer shall be registered

with the Board, and shall not have effect until it is so registered.

(1) The amalgamation of societies in terms of articles 95

and 96, and the transfer of the assets and liabilities of a society to

another society in terms of article 98 shall not be effected and the

relative instrument shall not be signed before the expiration of a

period of three months, or such shorter period as the Board may, in

exceptional circumstances, allow, from the publication in the

Gazette of a notice by the Board, containing the general particulars

of the intended amalgamation or transfer.

(2) During the period referred to in subarticle (1), any creditor

of the societies involved may in writing to the society object to the

proposed amalgamation or transfer, and the amalgamation or

transfer shall not take place unless the society in question satisfies

the Board that the proposed amalgamation or transfer shall not

adversely affect the legitimate interests of the said creditor and that

sufficient guarantees would remain for the settlement of his

legitimate claims.

(3)

Any member of an amalgamating society or of a transferor

CO-OPERATIVE SOCIETIES

society may, notwithstanding any rule to the contrary, by notice in

writing given to the society of which he is a member, not later than

two months from the date of the relevant resolution passed by that

society, declare his intention not to become a member of the new

society, or of the acquiring society, or of the transferee society, as

the case may be; and upon giving such notice he shall cease to be a

member and shall be entitled to receive the nominal value of his

shares.

(4) Where a transfer of the assets and liabilities of a society to

another society has been effected as provided in article 98, the

transferee society shall succeed to all such rights, assets, liabilities

and obligations as may be stipulated in the transfer agreement, duly

registered with the Board as provided in article 98(2), and all

deeds, contracts, instruments and other documents shall have effect

and be construed accordingly.

PART IX

D ISSOLUTION AND L IQUIDATION OF S OCIETIES

(1) If the Board, after holding an inquiry under article 14,

is of the opinion that such society ought to be dissolved, it may

issue a dissolution order, dissolving the society. In taking its

decision, the Board shall consider the interests of the members,

creditors and employees of the said society.

(2) The Board shall, on receipt of a resolution passed by a

three-fourths majority, or such other higher majority as may be

stipulated in the statute, of the members of a society present and

voting at an extraordinary general meeting convened for the

purpose of dissolving the said society, issue a dissolution order

Provided that where the statute of a society requires that a

resolution for the dissolution of a society be confirmed at a second

and subsequent general meeting, the Board shall only issue such

order if the resolution is so confirmed.

(3) The Board may, on its own motion, make a dissolution

order in respect of a society which has become insolvent, or has not

commenced operations or has ceased to operate or the membership

of which is reduced to less than the minimum membership required

by article 22.

(4) When making a dissolution order under subarticle (1), (2)

or (3), the Board shall appoint a liquidator for the purposes of

winding up the affairs of the society.

(5) The liquidator shall be appointed from amongst persons

who have, for at least five consecutive years, held a warrant to

practise as a Certified Public Accountant (CPA) or as a Certified

Public Accountant and Auditor (CPAA), not being a person who

has served as an officer, accountant or auditor of the society, at any

time during the five years prior to the date of the dissolution order.

(6) A person shall be disqualified from appointment as

liquidator in the same cases, mutatis mutandis, in which under

article 46 he would be disqualified to be appointed as auditor.

(7)

Upon the appointment of a liquidator by the Board, all

CO-OPERATIVE SOCIETIES

powers and functions of the committee of management, and of the

supervisory board, if any, shall cease.

(8) When a society has been dissolved, it shall, from the date

of dissolution, cease to carry on its business except in so far as may

be required for the beneficial winding up thereof.

(9) The costs of the liquidation, including the remuneration of

the liquidator, shall be payable out of the assets of the society in

priority to all other claims.

(10) As soon as a liquidation is started, the Board shall

determine whether the assets of the society in liquidation are

sufficient to cover all the costs of the liquidation, including the

remuneration of the liquidator. If the assets of the society are not

sufficient for the above purposes, these costs, and these costs only,

shall be payable by the members of the committee of management

or by all the members of the society, as the Board may determine in

each particular case.

(11) The Board shall, as soon as possible, cause a notice to be

published in the Gazette, giving the general particulars of any

dissolution order issued by it under this article.

(1) Subject to the provisions of any order made by the

Board under article 102, a liquidator appointed by the Board shall

have the power to -

(a) take immediate possession of all assets belonging to

the society and of all books, records and other

documents pertaining to the business thereof;

(b) carry on the business of the society in as far as may be

necessary for winding up its affairs beneficially,

provided that he shall not for this purpose be entitled

to issue any loan;

(c) fix by notice published in one or more local

newspapers the day before which creditors must

present their claims in order that they may be admitted

to any distribution;

(d) refer any dispute to arbitration and institute and defend

suits and other legal proceedings on behalf of the

society;

(e) take such decisions as may be necessary in regard to

the collection and realisation of assets in the course of

winding up the society;

(f) investigate all claims against the society and, subject

to the provisions of this Act, decide questions of

admissibility of claims and of priority between

claimants;

(g) pay claims against the society, including interest

payable up to the date of the dissolution order,

according to their respective priorities, if any, in full or

to such extent as the assets of such society permit;

(h) with the approval of the Board, enter into any

compromise with regard to any claim by or against the

CO-OPERATIVE SOCIETIES

society;

(i) call such meetings of members as may be necessary

for the proper conduct of the liquidation, giving not

less than fifteen clear days’ notice of every such

meeting;

(j) subject to any rule limiting the liability of members

and subject to the provisions of article 59, decide on

the contributions to be made to its assets by members,

past members or by the estates of deceased members

of the society;

(k) submit a scheme of distribution to the Board for its

approval, and arrange for the distribution of the assets

of the society in a convenient manner; and

(l) report to the Board any suspected irregularities which

occurred either before or after the dissolution order,

and which come to his notice during the course of the

dissolution.

(2) Any person aggrieved by any order of the liquidator made

under the provisions of subarticle (1)(f), (j) or (l) may appeal in

writing to the Board within thirty days from the date of such order.

(3) A liquidator shall deposit the funds and other assets of a

dissolved society which are collected by him or which come into

his possession as liquidator in such manner and in such place as

may from time to time be determined by the Board.

(4) A liquidator shall, every year, submit to the Board a report

stating the progress made in winding up the affairs of the society, as

well as the audited financial statements of the society for that year

and shall, on completion of the liquidation proceedings, submit a

final report which includes an audited scheme of distribution and

hand over to the Board all books, registers and accounts of the

society in his possession.

(1) A liquidator shall exercise his powers subject to the

supervision of the Board.

(2) Without prejudice to the generality of the provisions of

subarticle (1), the Board may -

(a) remove a liquidator from office and appoint a new one;

(b) by order in writing, limit the powers of a liquidator, as

it may deem appropriate;

(c) determine the remuneration of the liquidator.

An order made by a liquidator in terms of article 101(1)

and (2) and ratified in writing by the Board shall be enforceable by

the Civil Court or by the Court of Magistrates (Malta) or the Court

of Magistrates (Gozo), in its superior jurisdiction as if it were a

judgement of that Court, and the provisions of article 19(3) shall,

mutatis mutandis, apply.

Upon the winding up of a society, the assets, including the

reserve fund, shall be applied first to the costs of liquidation, then

to the discharge of the liabilities of the society, then to the payment

CO-OPERATIVE SOCIETIES

of the share capital or subscription capital, and thereafter, if the

statute of the society permits, to the payment of a dividend or

patronage refund at a rate not exceeding that specified in

regulations made under this Act or in the statute of the society for

any period during which no dividend or patronage refund was in

fact paid.

(1) When the affairs of a society have been wound up, the

Board shall make an order cancelling the registration of such

society and the society shall be struck off the register. A notice of

such an order shall be published in the Gazette.

(2) The claim of any creditor of the society which remained

unsatisfied under the approved scheme of distribution shall be

barred by prescription on the expiration of two years from the date

of a cancellation order of the society.

(3) Any moneys remaining after the application of the funds to

the purpose specified in article 104 and any sums unclaimed during

the period mentioned in subarticle (2), shall not be divided among

the members, except in the case of the liquidation of a secondary

society, but shall be deposited into the Co-operative Societies

Liquidation Account kept by the Board.

(4) Any sum deposited into the Co-operative Societies

Liquidation Account shall, after a period of five years, be

transferred to the Fund.

PART X

C ONSTITUTION , F UNCTIONS AND D UTIES OF THE A PEX

ORGANISATION

An Apex organisation shall be an association which

satisfies the Board that it complies with the following

requirements

(a) that it has a membership of at least an absolute

majority of all primary co-operative societies enjoying

full registration in terms of article 29;

(b) that its statute states that the principal object of the

association is to facilitate the operations of all primary,

secondary and tertiary co-operative societies in Malta;

(c) that its statute states that the object of the association

is to provide, organise and supervise effective

centralized services for co-operative societies and for

co-operative education and training, and such other

services as may be necessary or expedient for its

members;

(d) that its statute makes provision for the association to

be managed by persons freely elected by the members

of the association in an election which is held at least

once every calendar year;

(e) that the association does not have the making of profit

as one of its objects;

(f) that the association is independent of any other

association, or grouping whose principal object is not

CO-OPERATIVE SOCIETIES

the promotion and development of co-operative

societies; and

(g) that the association may accept as its members any

society, whether primary, secondary or tertiary.

(1) An association wishing to be recognised and

registered as an Apex organisation shall submit to the Board

(a) an application on the appropriate form issued under

the authority of the Board;

(b) an updated copy of its statute, duly certified by the

persons elected in terms of article 106(d);

(c) a list of the officers of the association;

(d) a list of the co-operative societies which have joined

as members of the association; and

(e) its official address.

(2) The Board shall, at its earliest opportunity, examine and

verify whether the association satisfies the requirements laid down

in article 106. Where these requirements are satisfied, the Board

shall register the association as the registered Apex organisation,

and shall issue a certificate confirming the registration of the said

association and the date of registration.

(3) Where the Board determines that an association does not

satisfy the requirements for registration as an Apex organisation, it

shall within fourteen days of its decision give notice thereof in

writing to the association, stating the grounds for such a decision.

(4) A certificate issued by the Board to the effect that a

particular association is a registered Apex organisation shall be

valid and conclusive evidence of the fact that the association is so

recognised and registered for all intents and purposes of law.

(5) No fees shall be charged for the registration, by the Board,

of an association as an Apex organisation.

P ART XI

M ISCELLANEOUS

(1) The Minister may make regulations for the purpose of

carrying out and giving effect to any of the provisions of this Act.

(2) Without prejudice to the generality of the power conferred

by subarticle (1), the regulations may -

(a) make provision for the administration of the Central

Co-operative Fund and of the Co-operative Societies

Liquidation Fund;

(b) prescribe the maximum rate of dividend on share

capital which may be paid by societies, unless

specified in the society’s statute;

(c) prescribe in which form and under what conditions the

Government may recognise and support co-operative

schemes in the public sector;

(d) prescribe fees to be levied with respect to any matter

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required or allowed under this Act;

(e) prescribe the circumstances under which a society may

be required to prepare consolidated accounts and the

format and other requirements to be adopted for this

purpose;

(f) prescribe for the conduct of winding-up proceedings

under Part IX of this Act; and

(g) prescribe or otherwise provide for any matter which is

to be or may be prescribed or provided for by

regulations under this Act.

(3) The Minister shall also have power, by regulations made

under this article, to amend or substitute the Schedules to this Act.

(4) The Minister may, acting in concurrence with the Minister

responsible for commercial partnerships, make regulations

establishing the procedures and other requirements whereby

(a) a commercial partnership may be converted into a

society;

(b) a society may be converted into a commercial

partnership.

(5) The regulations referred to in subarticle (4) may make

provision for the consequences of such a conversion, and may

provide for the application of any provision of Part VIII of this Act,

or of Part VII of the Companies Act, subject to such modifications,

amendments or qualifications as may be laid down in the

regulations.

If any dispute concerning the constitution of a society, the

election of its officers or the conduct of its general meetings, or the

management or business of the society, arises -

(a) among members, past members and persons claiming

through members, past members and deceased

members; or

(b) between a member, past member or deceased member,

and the society, its committee of management, its

supervisory board, or any officer of the society; or

(c) between the society or its committee of management

or its supervisory board and any officer of the society;

or

(d) between a society and any other society; or

(e) on the basis of a claim by a society for any debt or any

other dues from a member, a past member or the heirs

of a deceased member, whether such debt or other dues

are admitted or not; or

(f) any dispute arising out of the interpretation of the

statute of a society, or of any rule thereof,

then such dispute may, and if provided in the statute of a society

or if agreed to by the parties involved in the dispute shall, be

submitted to arbitration by an arbitrator appointed by the Chairman

of the Malta Arbitration Centre

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Provided that the provisions of this article shall not apply

to a dispute between a society and its employees in matters

concerning the contracts of service of such employees.

(1) It shall be an offence under this Act if -

(a) a society or an officer or member thereof wilfully

neglects or refuses to do any act or furnish any

information required for the purposes of this Act by

the Board or by any person duly authorised in that

behalf by the Board; or

(b) a society or an officer or member thereof wilfully

makes a false return or furnishes false information; or

(c) any person wilfully or without reasonable excuse

disobeys any summons, requisition or lawful written

order issued under the provisions of this Act, or does

not furnish any information lawfully required from

him by a person authorised to do so under the

provisions of this Act; or

(d) any person acts or purports to act as a member of a

committee of management or supervisory board when

not entitled to do so; or

(e) a society or an officer or member thereof, wilfully

performs any act which requires the consent or

approval of the Board without first having obtained

such consent or approval; or

(f) a society or an officer or member thereof wilfully

omits to do or to cause to be done an act or thing which

is required by or under this Act to be done or to be

caused to be done; or

(g) a society or an officer or member thereof wilfully does

or causes to be done any act or thing prohibited by or

under this Act.

(2) Every society, officer or member of a society or other

person found guilty of an offence under this article shall, on

conviction, be liable to a fine (multa) not exceeding four thousand

and six hundred and fifty-eight euro and seventy-five cents

(4,658.75), in the case of a continuing offence, to a further fine

(multa) not exceeding forty-six euro and fifty-nine cents (46.59)

for each day during which the offence continues.

Any registration, authorization, approval, appointment,

order, regulations or other action whatsoever made or issued by

virtue of the Co-operative Societies Act (Cap. 278, repealed by this

Act) shall continue in force as if made under this Act.

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