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Voluntary reduction of membership in lieu of substitution of new subscriber

Chit Funds Act 1971

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—(1) In any case referred to in section 32, the chit fund company may, before substituting a new subscriber in place of the defaulting subscriber whose name is removed from the register under that section, convene a meeting of the remaining subscribers for the purpose of obtaining their consent to a reduction of the number of subscribers and of the chit fund amount by refraining from substituting a new subscriber in place of the defaulting subscriber.(2) If at the meeting so convened the subscribers by a majority representing not less than two-thirds of the chit fund amount consent to such reduction and to the necessary alteration of the agreement, the chit fund company must record that fact in the minute book kept under section 27.(3) Upon the recording of the alteration made for the purposes of a voluntary reduction under this section, every subscriber who was the purchaser of a chit fund amount sold at any auction prior to the date of the reduction, is liable to continue the payment of the contributions specified in the agreement until the aggregate amount so contributed by him or her becomes equal to the chit fund amount at the time of the sale at which he or she was declared the purchaser.

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