The Department of Cooperatives has issued new directives based on complaints that some individuals are still directors of more than one cooperative organization.
What you should know
The Department of Cooperatives has issued a directive for the effective implementation of the provision that a person cannot be a director of more than one cooperative at the same time. This directive is old. However, the Department of Cooperatives has re-issued the directive based on complaints that some people are still directors of more than one cooperative organization.
Section 41 (5) of the Cooperatives Act, 2074 provides that a person can be a director of only one cooperative organization at a time, and Section 44 (1) (c) provides that a director cannot continue in his/her position if he/she is a director of another cooperative organization.
The following instructions and standards have been issued by this department and cooperative regulatory bodies for the implementation of this provision. However, it has not been implemented effectively. For the same reason, the department has issued the instructions now.
‘Since complaints are being received that some people are still working as dual directors, despite the instructions, this instruction has been issued to all the concerned cooperative organizations and director members to implement the said legal provision as soon as possible,’ the directive issued by the department states.
Earlier, the Department of Cooperatives had issued instructions on 19 Ashar 2081 and 17 Shrawan 2081 that a person cannot be a director of more than one organization at the same time. The National Cooperative Regulatory Authority also issued the same provision in the Regulatory Standards for the Operation of Cooperatives Mainly Engaged in Savings and Loans, 2082, issued on 9 Jestha 2082.
The Integrated Directive for the Promotion of Good Governance in Cooperatives, 2082, issued on 32 Ashad 2082 by the Department of Cooperatives, Point No. 16 of 2082, and the Directive and Standards for Cooperatives Mainly Engaged in Savings and Loans, 2081, issued by the Nepal Rastra Bank on 4 Chaitra 2081, also prohibit the same person from becoming a director of more than one cooperative at the same time.
The department has stated that the aforementioned provisions must be effectively followed in order to establish the values and principles of cooperatives through the promotion of good governance in the entire cooperative sector and adopt cooperatives as a strong backbone of the country's economic, social and cultural transformation.
‘There is no doubt that we should all be aware and vigilant regarding the issue of the joint responsibility of the cooperative movement and the regulatory body, preventing misuse of resources that may result in conflict of interest, and the board of directors,’ the directive states. ‘All regulatory bodies in the role of regulating cooperatives will also look into the status of compliance with the aforementioned legal provisions and if it is found that there is non-compliance, action will be taken according to the law.’
