Section 26 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 26 lets a multi-State co-operative society admit a person as a nominal or associate member if its bye-laws so provide. Such a member has no interest in the management: no vote, no right to be elected a director and no right to take part in general body meetings. The 2023 Amendment Act removed the bar on subscribing to shares from the first proviso and added two provisos: nominal or associate members can be issued non-voting shares, and a co-operative bank must issue them in accordance with the Reserve Bank's instructions.
The section is stated as per the Ministry of Cooperation copy of the Act read with the Multi-State Co-operative Societies (Amendment) Act, 2023 (in force from 3 August 2023). A society that wants to bring in investors or users without giving them control can check its bye-laws in a legal consultation.
A society may admit a nominal or associate member if its bye-laws provide. That member has no interest in the management, including no right to vote, to be elected a director or to take part in general body meetings. Since 2023, such a member can be issued non-voting shares, and in a multi-State co-operative bank those shares must be issued in accordance with the Reserve Bank's instructions issued from time to time.
The main rule
"A multi-state cooperative society may, if provided in its bye-laws, admit a person as nominal or associate member." Two conditions follow from the words:
- Bye-laws must provide. If the bye-laws are silent, the society cannot admit nominal or associate members. The matters bye-laws may cover include eligibility for and the procedure for obtaining membership (s.10(2)(d), (e)).
- A "person" is admitted. The section does not repeat the list in section 25(1). It does not say whether the persons admitted must come from that list; the Act is silent on the point. The eligibility rules of section 25 for members generally are explained in Section 25.
The first proviso: no interest in management
As it reads after the 2023 amendment: "Provided that no such nominal or associate member shall have any interest in the management thereof including right to vote, elect as a director of the board or participate in the general body meetings."
Before the amendment the proviso also said such a member could not "be entitled to subscribe the shares of such society or" have any interest in management. The 2023 Amendment Act (section 9 of that Act) omitted the words "be entitled to subscribe the shares of such society or". What remains is the bar on any interest in management, which the proviso lists as: the right to vote, the right to be elected as a director of the board, and the right to participate in the general body meetings.
The second proviso: non-voting shares (new)
"Provided further that nominal or associate member can be issued non-voting shares which may not confer any interest in the management of the multi-State co-operative society including right to vote, to be elected as a director of the board or participate in the general body meetings."
The effect: a nominal or associate member may hold shares, but those shares carry no management rights. They are described as shares which "may not confer" any such interest. The second proviso uses the same three items as the first: vote, election as a director, and participation in general body meetings.
The third proviso: co-operative banks (new)
"Provided also that in case of multi-State co-operative bank, such shares shall be issued in accordance with the instructions issued by the Reserve Bank from time to time." A "co-operative bank" is a multi-State co-operative society which undertakes banking business (s.3(f)). The Act says no more about the Reserve Bank's instructions and this article states none.
How the pieces fit
| Question | Answer in the Act |
|---|---|
| Who can be nominal or associate member? | A person admitted under bye-laws that provide for it |
| Can that member vote? | No; no right to vote (first proviso) |
| Can that member be elected a director? | No (first proviso) |
| Can that member attend general body meetings? | No right to "participate in the general body meetings" (first proviso) |
| Can that member hold shares? | Yes, non-voting shares (second proviso) |
| What about a co-operative bank? | Such shares are issued as the Reserve Bank's instructions direct (third proviso) |
The Act uses "interest in the management" in the first proviso and "may not confer any interest in the management" in the second. It does not say whether a nominal or associate member is entitled to share in profit or dues on the non-voting shares; it is silent on that. For redemption of shares, see the substituted section 35 in Sections 33-35.
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| First proviso | "no such nominal or associate member shall be entitled to subscribe the shares of such society or have any interest in the management thereof including right to vote, elect as a director of the board or participate in the general body meetings" | The words "be entitled to subscribe the shares of such society or" omitted |
| Second proviso | Not in the Act | Nominal or associate member can be issued non-voting shares which may not confer any interest in management |
| Third proviso | Not in the Act | In a multi-State co-operative bank, such shares are issued in accordance with the Reserve Bank's instructions from time to time |
A practical example
Rann Salt Workers Co-operative, an invented multi-State society, has bye-laws allowing "associate members". A trader who buys salt regularly applies and is admitted as an associate member. He is issued non-voting shares. He may not vote, stand for the board or take part in general body meetings. The society's full members, who do have these rights, keep control. If the same bye-law were in a multi-State co-operative bank, the issue of those shares would follow the Reserve Bank's instructions, whatever they are at the time.
A side-by-side view of the central and State routes is in the comparison with State co-operatives, and the wider Act is described in the complete guide.
Need help with membership categories?
Adding associate or nominal members can bring in capital or users, but the bye-law wording decides what they can and cannot do. Our legal consultation team can draft or review the clause.
Key takeaways
- A society may admit nominal or associate members only if its bye-laws provide for them.
- They have no interest in management: no vote, no election as director, no participation in general body meetings.
- Since 2023 they can be issued non-voting shares.
- In a multi-State co-operative bank those shares follow the Reserve Bank's instructions from time to time.
- The words barring subscription to shares were omitted from the first proviso in 2023.
Read next
- Section 25: persons who may become members
- Sections 27-28: educational course and rights only after payment of dues
- Sections 33-35: holding, transfer and redemption of shares
- Multi-State Co-operative Societies Act, 2002: complete guide
Disclaimer: Based on the Ministry of Cooperation copy of the Multi-State Co-operative Societies Act, 2002 read with the Multi-State Co-operative Societies (Amendment) Act, 2023 (in force from 3 August 2023), as consulted on 2 October 2026. The Multi-State Co-operative Societies Rules, 2002 as amended, later notifications and later amendments are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.