Section 17 of MSCS Act, 2002 : Section 17: Amalgamation Or Transfer Of Assets And Liabilities, Or Division Of Multi-State Co-Operative Societies

Explanation using Example

Imagine a scenario where 'Farmers United', a multi-State co-operative society that operates in several states, has been facing operational difficulties due to its large size and diverse interests of its members. To address these issues, the society decides to reorganize itself for better management and efficiency. The board of 'Farmers United' proposes the following plan:

1. To transfer part of its assets and liabilities to 'Green Growers Co-op', another multi-State co-operative society that specializes in organic farming, which is in line with a segment of 'Farmers United' members' interests.
2. To divide 'Farmers United' into two new multi-State co-operative societies, 'Crop Masters Co-op' and 'Livestock Leaders Co-op', to focus on crop farming and animal husbandry respectively.

The board calls for a general meeting where members discuss and vote on the proposal. The resolution is passed with a two-thirds majority of the members present and voting in favor of the reorganization.

Following the resolution, 'Farmers United' sends out written notices to all members and creditors, informing them of the decision and their right to withdraw their shares, deposits, or loans within one month if they do not agree with the reorganization plan.

After the one-month period, those members and creditors who did not exercise their option to withdraw are considered to have agreed to the reorganization.

'Farmers United' takes steps to satisfy the claims of members and creditors who opted to withdraw. Once all assents are obtained and claims are settled, 'Farmers United' submits an application to the Central Registrar for the registration of the new societies, 'Crop Masters Co-op' and 'Livestock Leaders Co-op'.

The Central Registrar, after ensuring all conditions are met and there are no reasons to refuse, registers the new societies, and the division of 'Farmers United' becomes effective. The assets and liabilities are transferred to the new societies without the need for further legal conveyances.