Section 41 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 41 provides for the board of directors of every multi-State co-operative society. Members elect the directors at a general meeting. Since the 2023 Amendment Act replaced sub-section (3) and added sub-sections (4) to (7), the board has a maximum of twenty-one directors, one seat for a Scheduled Caste or Scheduled Tribe member and two for women in societies of individuals with members from such classes, up to two co-opted experts without a vote in office-bearer elections, functional directors outside the count, and a rule that a director must not take part in a contract in which he or a relative is interested.
The text is read 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). Sub-sections (1) and (2) come from the principal copy and were not amended. A society that is reconstituting its board can test its plan in a legal consultation.
Every society has a board of directors elected by the members in general meeting (s.41(1), (2)). The board has not exceeding twenty-one directors as the bye-laws specify, of whom one is Scheduled Caste or Scheduled Tribe and two are women in a society of individuals having members of such class or category (s.41(3)). The board may co-opt not more than two experts, who cannot vote in office-bearer elections or be office bearers (s.41(3), (4)). Functional directors sit outside the count (s.41(5)). A director interested in a contract must not be present or vote, on pain of disqualification (s.41(6), (7)).
Sub-sections (1) and (2): the board and its election
"Subject to the provisions of this Act and rules, there shall be a board of directors for every multi-state cooperative society consisting of such number of members as specified in sub-section (3)." And: "The members of a multi-state cooperative society, by a resolution in a general meeting, shall elect directors who shall be members of board."
Two points:
- Directors are chosen by members in a general meeting. The detailed conduct of board elections is in the new sections 45 to 45L, which replace the old section 45; those are covered in later articles, and nothing here describes them. Whether and when the Co-operative Election Authority was set up is not stated in the sources.
- The board is "subject to the provisions of this Act and rules". The size comes from sub-section (3).
Sub-section (3): size, reserved seats and co-option
As substituted in 2023: "The board shall consist of such number of directors not exceeding twenty-one, as may be specified by the bye-laws, out of which one member shall be Scheduled Caste or Scheduled Tribe and two shall be women in the board of multi-State co-operative society consisting of individuals and having members from such class or category of persons".
| Element | Text |
|---|---|
| Maximum | "not exceeding twenty-one" |
| Who decides the number | "as may be specified by the bye-laws" (see also s.10(2)(t)) |
| Reserved seats | "one member shall be Scheduled Caste or Scheduled Tribe and two shall be women" |
| Where they apply | "in the board of multi-State co-operative society consisting of individuals and having members from such class or category of persons" |
So the seats are required where the society consists of individuals and has members from the class or category concerned. The text does not say what happens in a society of societies, or where no members of the class exist; the Act is silent on those points.
Co-option provisos. "Provided that the board may co-opt as members of the board having experience in the field of banking, management, co-operative management and finance or specialisation in any other field relating to the objects and activities undertaken by such multi-State co-operative society: Provided further that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in this sub-section."
So the board may have up to twenty-one directors plus two co-opted members, that is twenty-three at most, before counting functional directors.
Sub-section (4): limits on co-opted directors
"The co-opted directors referred to in sub-section (3) shall not have the right to vote in any election of the office bearers or be eligible to be elected as office bearers of the board." Co-opted directors can sit and take part in the board's work, but they do not vote in the election of office bearers and cannot hold such office.
Sub-section (5): functional directors
"The functional directors in a multi-State co-operative society shall also be the members of the board and such directors shall be excluded for the purpose of counting the total number of directors specified in sub-section (3)." Before 2023 this rule applied to national co-operative societies only (it was the third proviso to the old sub-section (3)); it now applies to a "multi-State co-operative society". The Act does not define "functional directors".
Sub-sections (6) and (7): interested directors
"(6) No director of a multi-State co-operative society shall, as a director, be present in the discussion of, or vote on, any contract or arrangement entered into, or to be entered into, by or on behalf of such society, if he or his relative is directly or indirectly concerned or interested in such contract or arrangement and no relative of any of the sitting directors of the multi-State co-operative society shall be recruited as employee including the Chief Executive of that society."
Two rules sit in one sub-section: (i) a director may not be present in the discussion or vote on a contract in which he or his relative is concerned or interested, and (ii) no relative of a sitting director may be recruited as an employee, including as Chief Executive.
The list of relatives (Explanation)
"Relative", for an individual, "includes" the following:
| Group | Persons listed |
|---|---|
| Spouse and parents | (a) spouse; (b) father (including step father); (c) mother (including step mother) |
| Children and their spouses | (d) son (including step son); (e) son's wife; (f) daughter (including step daughter); (g) daughter's husband |
| Grandparents | (h) father's father; (i) father's mother; (j) mother's father; (k) mother's mother |
| Grandchildren | (l) son's son; (m) son's son's wife; (n) son's daughter; (o) son's daughter's husband; (p) daughter's son; (q) daughter's son's wife; (r) daughter's daughter; (s) daughter's daughter's husband |
| Siblings | (t) brother (including step brother); (u) brother's wife; (v) sister (including step sister); (w) sister's husband |
| Family | (x) Hindu undivided family |
Sub-section (7): the consequence
"Any director of the board who violates the provision of sub-section (6), shall be disqualified for being a member of the board and deemed to have vacated his office from the date of such meeting of the board as is referred to in the said sub-section and such proceedings shall be deemed to be void." Three consequences follow: disqualification from being a board member, deemed vacation of office from the date of the meeting, and the proceedings being void. Section 43 contains further grounds relating to disqualification and removal, which are covered in later articles.
What the 2023 Amendment Act changed
| Provision | Before | After |
|---|---|---|
| Section 41(1), (2) | As printed | No change |
| Section 41(3) | Number "as specified in the bye-laws"; first proviso: maximum "in no case shall exceed twenty-one"; board may co-opt two directors in addition | Substituted: not exceeding twenty-one; one SC or ST member and two women where the society consists of individuals with members of such class or category; co-opted members to have experience in banking, management, co-operative management, finance or other relevant field; not more than two |
| Functional directors | Third proviso, national co-operative societies only | New sub-section (5), all multi-State co-operative societies |
| Sub-sections (4), (6), (7) | Not in the Act | Added: co-opted directors' limits, interested directors, disqualification |
A practical example
Sundarbans Honey Co-operative, an invented multi-State society of individual members, has bye-laws setting its board at twenty-one directors. As the members include persons from Scheduled Tribes and women members, the board must include one Scheduled Tribe member and two women. The board co-opts two experts, one in finance and one in co-operative management; they attend the board but do not vote in the election of the chairperson and cannot be elected chairperson. At one board meeting, a contract for transport is proposed with a firm owned by a director's brother. The director must not be present in the discussion or vote; if he does, he is disqualified and the proceedings are void.
For the general body that elects the board, see Section 38, and for the wider Act, the complete guide.
Need help with board composition and conflicts?
Board size, reserved seats, co-option and conflict-of-interest rules each need to be written into the bye-laws and followed at every meeting. A legal consultation can review your board structure and your conflict procedures against section 41.
Key takeaways
- Directors are elected by members in general meeting; the board has not more than twenty-one directors.
- One member from a Scheduled Caste or Scheduled Tribe and two women are required in a society of individuals having members from such class or category.
- Not more than two co-opted members, who cannot vote in office-bearer elections or be office bearers.
- Functional directors are excluded from the count.
- A director interested in a contract must not be present or vote; breach leads to disqualification and void proceedings.
- No relative of a sitting director may be recruited as an employee, including the Chief Executive.
Read next
- Section 40: special general meeting of the general body
- Section 39: annual general meeting of the general body
- Section 10: bye-laws of a multi-State co-operative society
- 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.