مروری بر قانون شرکتهای تعاونی ایران و هند

AN OVERVIEW TO COOPERATIVES LAW IN INDIA AND IRAN

Alihossein Shahrivar

L.L.M., Ph.D. Scholar in Criminology, University of Mysore

Abstract: This paper examines the experiences of India and Iran in relation to cooperative laws. Investigation indicates it felt the need to keep the legislation in tune with the changing economic policies and to facilitate the co-operative societies to take advantage of the new and emerging opportunities.

Key words: Cooperatives Law, Multi-State Co-operative Societies Act 2002, Act on Cooperative Sector of Economy of Islamic Republic of Iran.

Introduction:

The cooperative sector has been playing a distinct and significant role in the country's process of socio-economic development. Since cooperative organizations are essentially a distinct type of business association, the practice in every country has been to provide a separate law for them. The Cooperative Laws, consists of a Cooperative Act, enacted by the legislature of the country; subsidiary to the Act, rules framed by the Government; and bye-laws as adopted by the members and registered under the Act. At present there are two types of Cooperative Laws prevailing, (i) a Common Law for all types of cooperatives and (ii) Sectoral Laws. In India and Iran, both, there is one common law for all types of cooperatives. This paper will have an overview to Cooperatives Law in India and Iran.

Cooperatives law in India

In India, the beginning of cooperatives is linked to the Nidhi's in the Province of Madras, in the second half of 19th century. Other types of cooperatives, like consumer cooperatives, were also organized in the last decades of the century. Seeing these trends and considering the problems of rural agricultural economy, the First Cooperative Law of India was enacted by the British in 1904, covering the undivided India (including Bangladesh, Pakistan, and Burma). The law covered only credit cooperatives and was repealed by a new law to cover various types of cooperatives in 1912. The 1912 cooperative law focused on provisional issues and provinces were given powers to enact their own cooperative laws. Henceforth, all provinces/states introduced own cooperative laws. To cover the cooperatives that have members in more than one State, the Multi-unit Cooperative Societies Act was introduced by the Government of India in 1942.  This Act was an enabling Act and was replaced by a comprehensive enactment i.e. Multi State Cooperative Societies Act 1984. 1984 Act replaced by Multi-state Co-operative Societies Act, 2002 that is presently operative. Moreover, In India every state has its own law in addition to the federal law. Thus the object of the federal law is “to consolidate and amend the law relating to cooperative societies with objects not confined to one State and serving the interests of members in more than one State”.

Multi-State Co-operative Societies (MSCS) Act 2002

The objective of Multi-State Co-operative Societies (MSCS) Act 2002 is to facilitate the organization and functioning of the cooperative societies having jurisdiction in more than one States. This Act which came in force with effect from 19.8.2002 was enacted to replace the Multi-State Cooperative Societies Act, 1984. The Act facilitates voluntary formation and democratic functioning of multi-state cooperative societies as member driven institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and provides for functional autonomy.

Important features of this law are as follows:

Objectives

·         To consolidate law relating to multi-state cooperatives

·         To facilitate voluntary formation and democratic functioning of cooperatives

·         To enable cooperatives to promote economic and social betterment of members

·         To provide functional autonomy to cooperatives

Cooperative Identity Statement

·         ICIS included in the first schedule of the Act

·         Adherence to cooperatives principles made essential pre-condition for registration, basis to formulate byelaws

·         Federations made accountable to member cooperatives to promote effective inter-cooperative relations

·         Provision to prescribe maximum limit of share holding of members made

·         Restriction on transactions with non-members

Transforming state controlled cooperatives

·         Provision to redeem shares of government or other authorities

·         Restrictions on government officials becoming chairpersons of cooperatives

·         Responsibility to conduct elections of board member assigned to cooperatives

·         No nominee of the government on board where government does not hold shares

·         Power to appoint chief executive given to the board of management

Ensuring autonomy & independence

·         Discretionary power of registrar to register cooperatives curtailed

·         Provision of deemed registration made

·         Amalgamation and division of cooperatives at the discretion and expressed will of members

·         Expulsion of member with the approval of general body only

·         Board of management empowered to conduct elections

·         General Body empowered to appoint Auditor

·         State aid / support to co-operatives only at the request of co-operatives

·         Co-ops not allowed to make contributions to political parties

·         No approval of the Government required for business decisions

·         Cooperatives empowered to develop their support services

Provisions for Market Orientation, Competitiveness & Capitalization

·         Cooperatives are free to take their business decisions

·         Specific provisions to promote subsidiary companies/ institutions by cooperatives made

·         Federations assigned following roles:

a)       Develop market information, brand promotion, quality control & technology upgradation

b)       Undertake business services on behalf of members

·         Cooperatives ops required to make provisions in byelaws regarding minimum level of services to be used by members

·         Exercise of rights by members linked to payment of the economic responsibility as assigned in byelaws

·         Mode of working out net profits prescribed

Provisions for Professionalization of Management

·         Compulsory for Coop to organize educational programmes for members, directors & employees

·         Provision for contribution to cooperative education fund maintained by National cooperative Union of India

·         Provision to empower Board to formulate personnel policies

·         Provision to make Chief Executive accountable to Board

·         Enabling provision for associate experts with Board made

Recently, the Union Cabinet approved the introduction of the Multi-State Cooperative Societies (Amendment) Bill, 2010 in the Parliament. These amendments are intended to enhance the public faith in the cooperatives and to ensure better accountability of the management towards its members and the law of the land. It is proposed to define active member to ensure the member’s active participation in the affairs of the society. Time bound decision by the society for admitting members is proposed to prevent inordinate delay by the society in admitting members.

Cooperative laws in Iran

The launch of formal cooperatives in Iran dates back to inclusion of some articles in the Trade Law of 1924. These articles dealt with producer and consumer cooperatives. In 1935, cooperatives initiated their formal activity in terms of corporation and registration and a rural cooperative society was established in Garmsar City by the government. The basis for establishment of the mentioned cooperative was Trade Law of 1932. In 1953, the bill on the first Cooperative Act of Iran was submitted to the parliament. It was inspired by cooperative laws of other countries.  In 1955, the said bill was passed by the then parliament after some amendments had been incorporated and the first Cooperative Act of Iran was approved. It made the basis of establishment of many cooperatives, particularly after 1962. In 1971, Cooperative Societies Act was approved, parts of which are still binding as the basis of cooperative operation.

After the outburst of Islamic Revolution, cooperation was highlighted and introduced a path towards economic development, a high criteria for employment generation and a leading sector among other economic sectors of the newly- established republic system of country. In Sept. 4, 1991, Act on Cooperative Sector of Economy of Islamic Republic of Iran (ACSEI) was approved and then amended in Sept. 27, 1998.  This law is presently operative.

According to ACSEI objectives of Cooperatives are as follows:

• To create and secure conditions and opportunities of job for all with a view to attain full employment.
• To place the means of work at the disposal of everyone who is able to work but lacks means.
• To prevent wealth concentration and circulation in the hands of a few individuals or groups aiming at realization of social justice.
• To avoid government turning into a major absolute employer.
• To make management, capital and earned profits available to work force and to encourage them to directly use the outcome of their job.
• To prevent monopoly, hoarding, inflation and harming others.
• To develop and reinforce public participation and cooperation among people.

Despite the importance given to cooperative sector by the Constitution of Islamic Republic of Iran, there are some of basic problems and bottlenecks. According to the National Cooperative Development Plan, 2006, some of problems are:

• Government as absolute employer of economy
• Legal restrictions in scope of cooperative activities and for cooperatives to enter service sector particularly in banking and insurance operations
• Multiple ambiguous and ineffective rules and regulations governing types of cooperatives
• Legal restrictions to attract more investment in cooperatives
• Multiplicity of decision and policy making centers for cooperatives

Discussion:

The purpose of enacting cooperative law should be to give a legal status to the cooperatives and facilitate their working. It should also ensure that cooperatives work as genuine bodies and in accordance to the universally accepted cooperative principles. The legal framework for cooperatives consists of the law, rules made under it and the bye-laws adopted by the members of cooperatives in accordance to the act and rules. This together makes up procedures and rules for the organization and work of cooperatives, and protect and preserve their cooperative character. The Cooperative Law thus should facilitate the working of cooperatives and should not curtail the autonomous working of cooperatives and change their basic character.

Present cooperative laws (especially in Iran) are primarily the product of a period where cooperatives are extensively supported by the Government, and used for government planned development programs. Since the introduction of market economy and globalization of trade, government support to cooperatives is constantly declining. The cooperative leadership continues to look towards government for financial support, more than towards their members. If the Government and cooperative leaders do not change this attitude, both, the cooperative idea will not survive long as a structural force. Cooperatives must compete and justify their existence by showing efficiency, better services and competence. Changes in the existing cooperative legislative structure are imperative. With their hands and feet tied under the existing laws, in many cases, cooperatives will not be able to compete and stand with the market forces. Therefore there is need to examine the various existing cooperative laws in the present context, and bring the necessary changes about so that the cooperatives are able to play an effective role to serve their members and the needs of the societies.

Conclusion:

Based on the experience of implementation of the Act on Cooperative Sector of Economy of Islamic Republic of Iran and MSCS Act, 2002, a need is feeling to further amend the cooperatives law in Iran and India. It felt the need to keep the legislation in tune with the changing economic policies and to facilitate the co-operative societies to take advantage of the new and emerging opportunities.

Suggestions

For amendment of the existing cooperative laws, governments must has attention to

• Recommendations of experts
• Incorporates cooperative principles
• Ensures autonomy & independence of cooperatives
• No interference of government
• Incorporates provisions for self-regulation
• Enables cooperatives to create their support services e.g. consultancy, financial systems
• Incorporates provisions for simplifying registration; mergers; division; liquidation

References:

T.N. Hajela, 2010. Cooperation, Principals, Problems and Practice. Ane Books Pvt. New Delhi, India.

National Cooperative Development Plan, ministry of cooperatives, Iran, 2006.

Cooperative law in India, a disquisition. Published 1964 by [Publication Division, Indian Cooperative Union] in New Delhi .

The Act on Cooperative Sector of Economy of Islamic Republic of Iran, 1998.

The Multi-state Co-operative Societies Act, 2002.

Reforms Initiative - Vision for Autonomous and Competitive Cooperatives, by:  B.D. Sharma, Sr. Consultant, ICA–ROAP, New Delhi.