Which of the following is an exception to automatic dissolution of a cooperative by the CDA?

• A. Failure to meet the required minimum number of members.
• B. It has not carried on its business for two consecutive years.
• C. Having obtained its registration by fraud.
• D. Existing for an illegal purpose.

Answer: (B)

The important idea is which circumstances automatically end a cooperative’s legal existence through the CDA versus those that don’t. Automatic dissolution happens when there are clear, terminal grounds showing the cooperative cannot continue in a lawful, active form: failing to maintain the required minimum number of members, obtaining registration by fraud, or existing for an illegal purpose. These conditions signal an irreparable breach of the cooperative’s foundational requirements, so the authority can dissolve without additional steps. Not carrying on its business for two consecutive years, however, does not on its own force automatic dissolution. It describes inactivity or dormancy, which may require administrative actions or a process to revive or reorganize the entity rather than an immediate dissolution. In short, inactivity is the exception because it doesn’t automatically terminate the cooperative’s existence, unlike the other grounds that clearly justify automatic dissolution.