Agricultural Finance Corporation Act

This Act may be cited as the Agricultural Finance Corporation Act.

This section provides definitions for terms used in the Act (for example: "this Act", "agricultural industry", "agricultural produce", "agriculture", "the Corporation", "Director", "farmer", "mortgage", "net profit", and "staff").

The Board may appoint officers and servants on terms it considers proper; staff must carry out powers, functions and duties assigned by the General Manager, subject to this Act.

Directors (other than public officers in receipt of salary), the General Manager and the staff are to be paid salaries, allowances and travelling and other expenses out of the Corporation's funds.

Section 12. Pension and provident funds Section 12(1) The Board may, subject to the approval of the Cabinet Secretary and the National Treasury, establish, control, manage, maintain and contribute to pension or provident funds for the

The Corporation's common seal must be authenticated by signatures of the Chairperson or deputy Chairperson and the General Manager (or a person authorized by the Board). Documents (other than those required to be under seal) and decisions may be signed by the Chairperson or deputy Chairperson, or by the General Manager if authorized; the General Manager may, with Board approval, authorize another officer to sign loan-approval documents not exceeding ten thousand shillings.

Section 14 lists the Corporation's powers (making loans, borrowing with National Treasury concurrence, providing advisory services, investing after consultation, dealing in negotiable instruments, and mortgaging property) and prohibits borrowing beyond a total indebtedness of fifteen million pounds unless increased by notice of the National Treasury; it also permits delegation of loan-granting power to the General Manager.

Section 15 lists the Corporation's funds and requires the Corporation to pay interest to the Government on certain parliamentary funds at rates and on dates determined by the National Treasury (after consultation) and directed by the Principal Secretary to the National Treasury.

The Board must create a reserve fund credited with net profits and must apply it to cover any losses or deficiencies of the Corporation.

Moneys borrowed by the Corporation under section 14(1)(b) are charged on the Corporation's assets and must be repaid primarily from the Corporation's revenues.

Establishes the Agricultural Finance Corporation and assigns it functions to support agricultural development by making loans, and grants it corporate powers including owning property, contracting, and suing.

Establishes a Board of Directors responsible for determining the Corporation's policy and controlling its operations, specifies appointment of directors (including Principal Secretaries), appointment of Chairperson and deputy by the Cabinet Secretary, term limits for certain directors (not exceeding three years) with eligibility for reappointment and deemed reappointment where no successor is appointed within one month, and requires the Board to follow Cabinet Secretary directions except when those would cause financial loss unless the Government reimburses losses.

A director is disqualified from office if specified conditions apply (insolvency, unsound mind, certain convictions, illness, specified subsection disqualifications, absence from two consecutive Board meetings, or inability/unfitness); vacancy also occurs on resignation, death or declaration under the subsection.

The Chairperson (or deputy in his absence) must convene Board meetings at times and places he determines, but not less than four times a year; the Chairperson (or deputy) may convene special meetings at any time and must convene a special meeting if at least three Directors request it in writing.

Rules for Board meetings: deputy Chairperson acts when Chairperson absent; three Directors (including Chairperson or deputy) form a quorum; Board acts by majority resolution when a quorum is present; Chairperson (or deputy) has a casting vote; Board orders must be signed by Chairperson/deputy or authorized General Manager; confirmed minutes are prima facie evidence.

Directors must declare loan-related interests, may be counted in quorum but must not vote on such matters, and contravention is an offence with penalties including up to three years imprisonment or a fine up to five thousand shillings.

The Board must appoint a General Manager with the Cabinet Secretary's approval after consultation; the General Manager must run the Corporation's executive functions, follow Board directions, may attend and speak at Board meetings but may not vote, and is empowered to administer oaths and take statutory declarations; a person acting in the General Manager's place may exercise the GM's powers and duties until the Board decides otherwise.

Defines "farmer" to include authorized attorneys, personal representatives of deceased farmers, trustees appointed by deed or will, and receivers appointed by court order or mortgagee, even if not specifically authorized to mortgage land.

The Board may make loans to farmers upon a written application and Board resolution; loans to reduce an existing mortgage are prohibited unless the mortgagee executes a waiver; loan terms may be for a period not exceeding thirty years.

Repayment of any loan made under subsections 14(1) and 19(1) must be made to the Corporation or to any branch thereof in accordance with rules made under this Act.

Mandates that, when the Board directs, a qualifying farmer must give a first mortgage to the Corporation; requires notification to and registration by the land registrar and specifies actions on repayment.

The Board may, in its discretion, postpone repayment or extend the time for repayment of a loan or payment of interest thereon.

A trustee's consent to postpone his security to permit a loan is not by itself treated as improper or a breach of trust and does not by that alone make the trustee liable for any loss from the loan.

The Board may approve a loan to a co‑operative society only when specified conditions are met; the Commissioner must, at the Board's request, provide lists and information about any co‑operative society.

The Board must have full access to the accounts, books, papers and documents of any co-operative society that has applied for or received a loan, and may have them examined by staff or a person the Board appoints.

Members named on the society's list at the time of loan application are jointly and severally liable to repay the loan and interest; a member who leaves remains liable for outstanding amounts and must provide security; if the society is a registered company, shareholder liability is limited and the leaving-shareholder rule does not apply.

The Board may prescribe rates of interest (with approval of the Cabinet Secretary responsible for finance after consultation) and may determine the form of mortgages where no form is prescribed.

The Board may order an appraisal of land offered as security, and the appraiser must provide an appraisal to the Corporation in a Board-approved form.

Any mortgagee may, by a waiver endorsed on or incorporated in their mortgage, agree that a mortgage in favour of the Corporation has priority over their mortgage.

If an applicant does not, within a period fixed by the Corporation (not exceeding three months after notification), execute and lodge required documents and title deeds, the Board may withdraw its authorization and the loan will not be made and fees paid will not be refunded.

In every mortgage or security document securing a loan, the farmer must have the covenants and conditions set out in the Schedule implied in favour of the Corporation; those covenants and conditions also bind the successor in title of the mortgagor.

A corporation may withhold a loan when the debtor is in default.

If a borrower pays more than an instalment, the Corporation may apply the excess to capital and recalculate instalments; the borrower remains liable for the next instalment; the Corporation may give a 1% per annum rebate for premature payments; early full repayment limits interest to the date of payment but requires three months’ notice or the Corporation may claim shortfall interest.

The Corporation may, after serving notice on the debtor (and notice to subsequent mortgagees), demand repayment and — without going to court and subject to publication and notice conditions — enter on the land to take possession or sell it by public auction; it may bid at the auction and, as agent of the debtor, transfer the land and give good title.

Staff members or persons deputed by the Corporation may enter land tied to a loan and inspect it to check whether the loan is being properly applied.

Protection against liability where land comprised in a mortgage or other security for which a loan was granted was not used for agricultural purposes.

The Corporation may inspect valuation rolls without charge; officers of a local authority must, upon application, supply particulars of any valuation without charge.

The Corporation has the power to hold land for specified purposes; land acquired by foreclosure under subsection (1)(c) must be sold at the earliest favourable opportunity on terms the Corporation may determine; Directors, the General Manager and staff must not buy land sold under that subsection.

The Corporation may appoint appraisers to inspect and appraise land; applicants must pay the appraisers' fees and travelling expenses according to rates specified by the Corporation with National Treasury approval; public officers must, when required by the Corporation and without additional emolument, report on cases and act as agents or inspectors of the Corporation.

The Corporation may be appointed and act as agent of the Government for loans to farmers or others, and the Corporation is to be indemnified by the Government for losses, costs and expenses arising from performing that agency.

Statements of the Corporation must include specified financial statements; each such statement must be signed as correct by the General Manager and at least two Directors; the Cabinet Secretary must lay statements delivered under subsection (1) before the National Assembly; and the General Manager must promptly render other accounts, reports and statements to the Cabinet Secretary as required.

National Treasury has full access to the Corporation's accounts and records; the General Manager must provide information to the National Treasury on request; the Auditor‑General must examine, audit and report on the Corporation's accounts annually.

Applicants for loans must not wilfully withhold material information or wilfully make false statements; doing so is an offence punishable by up to three years' imprisonment, a fine of up to five thousand shillings, or both, and the loan may be cancelled and sums repaid with interest.

Corporation officers or appointed appraisers/agents must not accept unauthorized fees or rewards in connection with loans; persons must not bribe or corruptly influence those officers in connection with loans — both are offences punishable by up to five years' imprisonment or a fine not exceeding ten thousand shillings.

Officials and employees involved in administering this Act must keep loan application and loan-related documents and information secret.

Provides rules regarding the meeting and proceedings of the Board.

Regulations may set scales of application fees and appraisal fees according to the amount of the loan for which the application is made.