The liability of member cooperative sugar factories shall be limited to the amount of subscription, contribution supervision fee and amount of principal state partnership fund remaining unpaid share capital as the case may be.

The liabilities of the State Government be limited to the extent of nominal value of share held by it.

In the event of dissolution of the Federation if there is net surplus after paying off all the loans and liabilities, such surplus shall be distributed among the member cooperative sugar factories-prorata of the average subscription paid (payable) during the three years immediately preceding the year of dissolution. However, for the cooperative sugar factories being members for a period of less than last three years, such distribution shall be on the basis of average subscription for the actual number of their membership.