What they mean for Housing Societies

1. Key Amendments in Maharashtra Co-op Societies Act What they mean for Housing Societies KrishnarajRao RTI & Co-operatives Activist 9821588114 Krish.kkphoto@gmail.com 17thFeb, 2013 DNA Redevelopment Exhibition & Conference

2. Why?

3. Woh Log? Hum Log!

4. People To Stop CorruptionReform the System Policy

6. Policy – 97th Amendment • 97th Amendment of Constitution passed in Jan 2012. Process began in 2006. • It mandates big changesin Co-operative Sector. • Deadline for Implementation – Feb 16, 2013 • Each State has its own Cooperative Societies Act.Co-op is a State Subject. • Maharashtra Co-op Societies Act, 1960, was amended on 14th Feb, 2013, vide MCS (Amendment) Ordinance, 2013.

7. Big Changes in Co-op. Sector • a) Right to form Co-operative Societies as a Fundamental Right -- insertion in Article 19 • b) Ensuring voluntary formation, autonomous functioning, democratic member control and professional management of Co-op Societies as Directive Principle of State-- insertion of Article 43B & Article 243 ZI • c) Defining various terms of Co-op Societies, making it a constitutional body just like Municipalities and Panchayats;-- insertion of an entire Chapter IXB

8. 97th Amendment – Key Points • Right to form Co-op. is Fundamental Right. • Autonomy, democratic control & professional management • Maximum no. of directors is 21 • Fixed 5-year term for elected members & office bearers • Max. six months for suspension of Board of Directors • Independent audit + FIR for fraud, misappropriation • Strong penalties for Fraud, Hiding Accounts, etc. • Right of Information to members of Coop. Societies • Empower Govt to obtain periodic reports & accounts • Social Justice & Affirmative Action -- 5 Reserved Seats for SC-ST-OBC & women on Board

9. New MCS Act - Overview I • Empower active members. Non-serious participants cannot participate in decision-making. • Expel dormant members or compel them to become active. • No Administrators. Active members will be “authorized officer” or “interim committee”. • Regular education & training to groom fresh leadersthrough Apex Co-operatives. Allocate funds for that. • Managing Committee must attend regular training at least once in five years.

10. New MCS Act - Overview II 6. Stop washing dirty linen in co-op. court. Resolve internal differences through “Grievance Redressal Committee”. • Co-op. court to encourage Win-Win compromise. Not Win-Lose “Justice” in private dispute resolution. 8. Get professionals help for management… Adopt modern methods of management, record keeping etc. 9. Strengthen Audit function. Stop Crime!Auditors, Registrar etc. to pinpoint responsibility for fraud and Register FIR. 10. Realistic penalties for offences. Fine and prison sentences have increased.

11. Tough on Crime! CHAPTER VIII Audit, Inquiry, Inspection & Supervision 81. Audit.-- 1 (e) The auditor’s report shall have: • All particulars of the defects or the irregularities observed in audit and in case of financial irregularities and misappropriation or embezzlement of funds or fraud, the auditor/auditing firm shall investigate and report the modus operandi, the entrustment, amount involvement, and fix the responsibility for such misappropriation or embezzlement of funds or fraud, on the members of the board or the employees of the society or any other person as the case may be with all necessary evidence.

12. Tough on Crime! 81. (5B) The auditor shall submit an audit memorandum report within a period of one month from its completion and in any case before issuance of notice of the annual general body meeting, … Provided that where the auditor has come to a conclusion in his audit report that any person is guilty of any offence relating to the accounts or any other offences, he shall file a specific report to the Registrar within a period of 15 days from his submitting the audit report. The Auditor concerned shall after obtaining written permission of the Registrar, file a First information Report as contemplated by Criminal Procedure Code. Failure to file First information Report, would make Auditor liable for disqualification and removal of his name from Panel of Auditors or any other action as Registrar may think fit. 81.(1)(g)(b) Auditing firm means a firm of more than one Chartered Accountant within the meaning of the Chartered Accountants Act 1949, who shall have a fair knowledge of the functioning of the societies and shall have an experience of at least three years in auditing, of which the auditor would like to be included in the Panel, and Chartered Accountant shall have working knowledge of the Marathi language;

13. Tough on Crime! 81. (5B) The auditor shall submit an audit memorandum report within a period of one month from its completion and in any case before issuance of notice of the annual general body meeting, … Provided that where the auditor has come to a conclusion in his audit report that any person is guilty of any offence relating to the accounts or any other offences, he shall file a specific report to the Registrar within a period of 15 days from his submitting the audit report. The Auditor concerned shall after obtaining written permission of the Registrar, file a First information Report as contemplated by Criminal Procedure Code. Failure to file First information Report, would make Auditor liable for disqualification and removal of his name from Panel of Auditors or any other action as Registrar may think fit. 81.(1)(g)(b) Auditing firm means a firm of more than one Chartered Accountant within the meaning of the Chartered Accountants Act 1949, who shall have a fair knowledge of the functioning of the societies and shall have an experience of at least three years in auditing, of which the auditor would like to be included in the Panel, and Chartered Accountant shall have working knowledge of the Marathi language;

14. Tough on Crime! 146. Offences- It shall be an offence under this Act, if- (a) any member of a society transfers any property or interest in property in contravention of sub-section (2) of section 47 or any person knowingly acquires, or abets in the acquisition of, such property; or (b) any employer who without any sufficient cause fails to pay a co-operative society amount deducted by him from its employee within a period of 14 days… (c) A committee of a society or an officer or member thereof fails to invest funds of such society in the manner required by section 70; or (d) any person, collecting share money for a society in formation, does not within a reasonable period deposit the same in the State Co-operative Bank, or a Central Co-operative Bank, or an Urban Co-operative Bank, or a Postal Savings Bank; or (g) a co-operative society or an officer or member willfully makes a false return or fails to furnish a return under section 75 or 79 of the Act, or furnishes false information or willfully fails to furnish any information required from him by a person holding an inquiry under section 83, officer authorized under section 88 or as

15. Tough on Crime! • 147. Punishments for Offences under section 146.— • Every society, officer or past officer, member or past member, employee or past employee of a society, or any other person, who commits an offence under section 146 shall, on conviction, be punished- • (a) If it is an offence under clause (a) of that section, with imprisonment for a term which may extend to six month, or with fine which may extend to five hundredthousand rupees, or with both; • (b) if it is an offence under clause (b) of that section, with imprisonment for a term which may extend to three years, or with fine which may extend to fivefifteen thousand rupees, or with both; • (c) If it is an offence under clause (c) of that section, with fine which may extend to five hundredthousand rupees • (d) If it is an offence under clause (d) of that section, with fine which may extend to five hundredthousand rupees • (e) If it is an offence under clause (e) of that section, with imprisonment for a term which may extend to one year or with fine which may extend to ten thousand rupees, or with both;

16. 27. Voting powers of members. 73-A. Committee, its constitution. Sec 73-B. Reservation of seats on committees of societies … 73-D. Disqualification of Committee & its Members… 73-E. State Co-operative Election Authority: Superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all sections of a society or such class of societies as may be prescribed, shall vest in the Every election of the members of the board and election of the office bearers of a society shall be held as per the procedure prescribed. Elections TO be monitored closely

17. No Administrator • In a society not having any government grant or loan, no Administrators will be appointed. • In a Society having government aid, Administrator can be appointed only for six months. • Provisions are in Sec. 78 and 78-A

18. Active Member • Only active member will have power to vote in the affairs of the society including election. • A non active member cannot contest the election. • A member who does not attend at least one general body meeting & does not utilize minimum level of services as prescribed in bye-laws shall be classified as “non-active member” (See Sec. 26 & 27) • Non-active member shall be liable for expulsion under Section 35

19. Dispute Redressal Committee • Committee to settle disputes of members & society within 3 months. • Three active members incl. Chairman -- knowledgeable & senior, preferably experts whom general body considers independent & impartial • Aggrieved shall submit written application along with documents relied upon. • Assist the parties in an impartial manner to reach amicable settlement within the framework of the Acts, Rules and Bye-laws • Sign a Grievance Settlement Agreement • Sec 89AB defines Grievance Settlement & Redressal Committee, its constitution, powers, functions, etc.

20. Strict Audit & Reporting • Accounts to be audited at least once in each financial year, to be completed before notice of the holding of AGM. • Auditor or auditing firm from a panel approved by State Govt, appointed by general body • Auditor shall lay audit report before AGM • In case of financial irregularities, auditor must report the modus operandi, and fix the responsibility on board members or employees with evidence • Every society shall file audited annual returns within six months of the close of every financial year to the Registrar or to the person authorized. • Sec 79 and Sec 81 defines Audit & Reporting requirements of society.

21. So please read the Amended MCS Act! There are many more important changes… KrishnarajRao RTI & Co-operative Activist 98215 88114 Krish.kkphoto@gmail.com