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CO-OPERATIVE RURAL INTERMEDIATE CREDIT ASSOCIATIONS. 14. Nature of Associations. —The provisions of the Act dealing with the formation of co-operative rural intermediate credit associations meet the demand which existed for some time past for the provision of machinery to enable farmers to combine for the purpose of financing themselves as individuals on their collective financial strength as a group. Briefly, the procedure is for a group of farmers of not less than twenty in number to form a co-operative rural intermediate credit association, a special form of limited-liability company, to which the Board is authorized to advance funds to be re-lent by the association to its members upon securities approved by the Board. The minimum share capital which each member must contribute is twenty-five £l shares, and a shareholding of this amount will permit of a member obtaining a loan up to £250 if his security is considered sufficient. A member desirous of obtaining a larger loan must take up shares to the nominal value of one-tenth of the amount of the loan, and, as under the Act the maximum loan which may be granted to any one farmer is £1,000, the share capital subscribed by a member will be from twenty-five to one hundred £l shares, according to the amount of his loan. Members of associations are not liable for the loans obtained by other members beyond the amount of the share capital they have taken up. New members may be admitted to an- association from time to time, and members who have paid off their indebtedness may retire, if twenty shareholders remain in the association, and receive the agreed value of their shares. In view of their special nature, and particularly because they are not intended to be profit-making concerns, associations have been exempted from certain charges levied in the case of commercial companies, and the procedure in regard to their formation and working has been considerably simplified. At the same time special safeguards have been laid down in regard to their operations, by reason of the fact that they are debtors of the Board, which in turn is trustee for the debenture-holders who have invested their funds in the Board's business, and for the Crown in respect of the funds advanced on loan from the Consolidated Fund. The main safeguards are the requirement of the Board's consent to registration of associations as limited-liability companies before operations can be commenced, the representation of the Board upon the directorate of every association formed, the necessity for each investment of an association (except in regard to the association's paid-up share capital invested in Government securities) to be approved in advance by the Board, and the Board's control over any profits made by an association. The associations are required to adopt standard forms of memorandum and articles of association, and no departures are permitted from these standard forms without the consent of the Board. Loans may be obtained by members of associations only for certain purposes, namely— (a) The clearing, fencing, draining, and general improvement of land in the occupation of the applicant: (.b) The erection of buildings on any such land : (c) The purchase of implements, stock, seeds, plants, trees, and other things required in respect of the occupation and use of any land : (d) The payment of any mortgage, debt, or other liability of the applicant incurred in relation to farming operations : (e) Any other purpose in relation to farming operations that may be approved by the Board. The maximum term for which advances may be granted is fixed at five years, and the rate of interest chargeable to the borrower must not exceed 7 per cent. 15. Preliminary Expenses of Formation. —Section 18 of the Act authorizes advances to be made to the Board from the Consolidated Fund up to a total of £5,000, to be applied by the Board by way of loans to associations towards the preliminary expenses of establishment. The maximum advance which may be made to any one association is £25, and loans of this description are repayable at such time as the Board determines, but not later than ten years after the registration of the association. For the term for which the advances are granted by the Board

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