A society referred to as an existing society may by special resolution called the preliminary resolution resolve to divide itself into two or more societies referred to as new societies. The preliminary resolution shall contain proposals for the division of assets and liabilities of the existing societies among the new societies in which it is proposed to be divided. It may also prescribe the area of operation and specify the members who will constitute each of the new societies.
A copy of the preliminary resolution is required to be sent to all members and creditors of the existing societies and to any other persons whose interests will be affected by the division. Any member of the existing society may not withstanding any bylaw to the contrary by notice in writing given to the society within two months of receiving a copy of the preliminary resolution intimate its intention not to become a member of any of the new societies.
2. Any creditor of the existing society may again notwithstanding any agreements to the contrary by notice in writing given to the existing society within two months after receiving a copy of the preliminary resolution intimate his intention to demand payment of any money due to him.
3. Any other person whose interest will be affected by the division may by notice in writing given to the existing society within two months of receiving the preliminary resolution object to the division. (3rd parties who might be affected by the division).
After the expiry of the 3 months after the date of the preliminary resolution a further special general meeting of the existing society shall be held to consider the preliminary resolution and any notices received. At this meeting provisions shall be made by a further resolution for the repayment of the share capital of any member who has given notice and the satisfaction of any claims by creditors who have given notice and the satisfaction of the claims of other persons who have given notice for the securing of their claims as the registrar may determine or direct.
Note that no member or creditor or other person shall be entitled to such repayment or satisfaction until the confirmation of the preliminary resolution. The society may by a further resolution passed by a two thirds majority of the members present and voting confirm the preliminary resolution with or without changes as in the opinion of the registrar are not substantial and the decision or the registrar relating to these changes is final.
If the registrar is satisfied within such a time as he considers reasonable that the provisions of the second resolution and the law have been complied with then he may register the societies into which the existing society has been divided and their bylaws. Once that is done then the following occurs;
(a) The registration of the existing societies shall stand dissolved;
(b) The registration of the new societies shall be sufficient to vest the assets and liabilities of the existing society in the new societies as specified in the preliminary resolution;
(c) The remaining members of the existing societies become members of one or other of the new societies as provided by the preliminary resolution;
(d) Any shareholders or creditors of the existing societies and any other persons who have claims against the existing societies which were not satisfied in accordance with a second resolution may pursue such claims against one or other or the new societies. If the registrar refuses to approve the division of an existing society it may appeal against such refusal to the cooperative societies tribunal established under Section 77.
These are the provisions under which the societies want to amalgamate themselves.