Co-operative Societies Act

This Act may be cited as the Co-operative Societies Act.

Provides definitions of terms used in the Act (interpretation of defined expressions).

Creates the office of a Commissioner for Co-operative Development, provides for officers to assist the Commissioner, and makes the Commissioner responsible for growth and development of co-operative societies and administration of the Act.

Section 10 prohibits registration of a society under an identical or misleading name and requires every co-operative society to include the word "Co-operative" in its name; societies with limited liability must end their name with the word "Limited".

Certificates and certified documents from the Commissioner are conclusive or prima facie evidence of registration and must be displayed at a society's head office; documents purporting to be signed by the Commissioner are presumed genuine until rebutted.

Section 4: Registration of co-operative societies

A primary co-operative society must consist of at least ten persons, all of whom shall be qualified for membership under section 14.

Registration: primary societies must apply by at least ten qualified persons; secondary/apex societies must apply by an authorized person from each member society; applications must include four copies of proposed by-laws in English and any information the Commissioner requires; the Commissioner may register a society if satisfied it complies with the Act and rules and its by-laws are not contrary to them.

Allows the Commissioner to provisionally register societies (up to one year) subject to terms; provisionally registered societies are entitled to operate as co-operative societies; they must state their provisional status on official publications; the Commissioner may cancel provisional registration for good cause; contravening the publication requirement is an offence punishable by fines.

A co-operative society may amend its by‑laws; the Commissioner registers amendments and must issue a certified copy when registering; the Commissioner may cancel registrations made by misrepresentation.

A co‑operative society may appeal to the Cabinet Secretary against the Commissioner’s refusal to register the society (including by‑laws or amendments) within thirty days of notification; any party aggrieved by the Cabinet Secretary’s decision under subsection (1) may appeal to the High Court within thirty days.

Upon registration, every society becomes a body corporate with perpetual succession and a common seal and has powers to hold property, enter into contracts, sue and be sued, and act according to its by-laws.

When registered, a co-operative society's by-laws bind the society and its members as if signed by each member and include covenants requiring each member (and their personal representatives) to observe all provisions of the by-laws.

A co-operative society that disposes of members' agricultural produce may contract to require members to deliver their produce to the society; such contracts create a charge in favour of the society on proceeds of sale and may allow the society to claim liquidated damages and to pledge deliverable produce as security.

By-laws may provide fines up to twenty thousand shillings for members, subject to the Act; applicants for membership must disclose prior contracts; a disclosed prior contract can prevent a member being treated as infringing for failure to deliver produce.

A co-operative society has a first charge over debts and assets of a member or past member in situations where the society supplied goods, rendered services, or lent money to that member or past member.

A co-operative society has a first charge on a member's share, interest in capital, deposits, and any dividend, bonus or accumulated funds payable to that member for debts the member owes to the society, and the society may set off sums credited or payable to the member towards payment of such debts.

If an employer deducts money from a member's pay for remittance to a co-operative society but fails to remit within seven days, the employer must pay the sum deducted plus compound interest at not less than five percent per month.

A member's share in a co-operative society cannot be attached or sold to satisfy that member's debts; if a member is bankrupt the bankruptcy trustee generally cannot claim the member's share, except that if the society is dissolved the share vests in the trustee.

A past member remains liable for the society's debts as they were when they left, but where the society with limited liability is later found solvent at its first audit after they left, that past member's liability ends immediately; proceedings may be started within two years of leaving.

If the first audit after a member's death shows a credit balance in favour of the society, the estate's financial liability stops immediately.

When a member dies, a co-operative society must transfer or pay out the deceased member's share or interest to the nominated person or personal representative; in limited-liability societies the society shall transfer the share to a qualified nominee or representative or to a specified qualified person on application within one month; in unlimited-liability societies the nominee or personal representative may require payment of the share's value; the society must pay other moneys due to the nominee or personal representative.

A certified copy of an entry in a co-operative society's business books is prima facie evidence of that entry and of the matters, transactions and accounts recorded; the register records the dates when a person was entered as a member, when they ceased to be a member, and the number of shares held.

Officers of a co‑operative society shall not be compelled to produce the society's books or to appear as witnesses to prove matters recorded there, where those contents can be proved under section 40, except if the court orders otherwise for special cause.

Membership qualification: he has attained the age of eighteen years.

Members (other than co-operative societies) must not hold more than one-fifth of the issued and paid-up share capital of any co-operative society.

Companies and unincorporated bodies may only become members of a co-operative society with written authorisation via a resolution of that society's meeting.

Members may not exercise any of their membership rights unless they have paid the required membership payment or acquired the prescribed interest in the society under this Act or the society's by-laws.

Defines who is a 'member' of a co-operative society, listing persons and co-operative societies who join an application for registration or who are admitted after registration under the by-laws.

Members of a co-operative society each have one vote; a co-operative society that is itself a member of a co-operative union or an apex society may have multiple votes as prescribed by the union/apex by-laws and may appoint committee members (up to that number) to exercise those votes.

The transfer or charge of a member's share or interest in the capital of a co-operative society is subject to conditions as to maximum holding laid down in section 15.

Members are entitled to attend and participate in decisions at all general meetings of the society and to vote.

Members must observe and comply with all the society by-laws and decisions taken by the relevant organs of the co-operative society.

Every co-operative society must have a registered address and must notify the Commissioner of any change of address within one month.

Every co-operative society must keep at its registered office a copy of the Act, the rules made thereunder, its by-laws and a list of members, and keep them open for inspection free of charge during business hours.

The Committee of a co-operative society must prepare annual income and expenditure estimates (recurrent and capital) for approval by the general meeting at least three months before the end of the preceding financial year.

Requires co-operative societies to have annual audited accounts, file audited accounts and returns with the Commissioner, gives auditors specific rights to inspect and attend meetings, and restricts auditors from presenting accounts at general meetings until submitted to the Commissioner.

Officers, agents, servants or members of a co‑operative society must produce all moneys, securities, books, accounts and documents in their custody relating to the society when required by the Commissioner or by a person authorized in writing, at the place and time the Commissioner directs.

Members are entitled to attend, participate and vote at general meetings; the co‑operative society must hold an annual general meeting within four months after the end of each financial year; various items are to be considered at general meetings and special meetings may be convened by notice or by the Commissioner.

Every co-operative society must have a Committee of between five and nine members; the Committee elects a chairman and vice chairman, may delegate duties but remains responsible, must exercise prudence and diligence, and the Commissioner may suspend a committee member charged with fraud or dishonesty.

Permits two or more co‑operative societies to amalgamate by a special resolution, requires notification to members, creditors and affected persons, allows members, creditors and other affected persons to give written notice (usually at least one month) to opt out or demand payment or object, requires a further special meeting at least three months after the preliminary resolution, allows repayment or satisfaction of claims as directed by the Commissioner, permits confirmation of the preliminary resolution by a two‑thirds vote, and provides consequences on completion including dissolution and transfer of assets and liabilities; refusal by the Commissioner may be appealed to the Cabinet Secretary.

Section 30 permits a co-operative society, by a special resolution, to divide itself into two or more new societies and sets procedures for notice, objections, meetings, treatment of members, creditors and other affected persons, and the role of the Commissioner and appeal to the Cabinet Secretary.

The property and funds of a co-operative society may only be used for the benefit of the society and its members, following this Act, rules made under it, and the society’s by-laws.

A co-operative society must not lend or extend credit to anyone who is not a member unless the society's by-laws permit it and a resolution to that effect is passed at a general meeting.

A co-operative society may receive loans from non-members but only to the extent and under conditions prescribed by its by-laws or rules under the Act; certain hire-purchase deposits are treated as loans.

Title: Investment of society funds in the Post Office Savings Bank.

Co-operative societies must declare yearly bonuses to members; if bonuses are for reinvestment or redemption of bonus certificates the society must issue bonus certificates redeemable from a revolving fund; societies must not pay dividends, bonuses or distribute accumulated funds without audited accounts disclosing surplus; societies must pay dividends at rates recommended by management committee and approved by the annual general meeting.

Co-operative societies that derive surplus must maintain a reserve fund; societies may transfer a portion of annual net surplus to that fund as prescribed; members may not claim a specific share of it.

Subject to sections 46 and 47, the net balance of each year and any sums available from previous years may be distributed as prescribed by rules made under this Act or by the by-laws of the society.

A co-operative society may charge all or part of its property if its by-laws allow and the general meeting passes a special resolution.

A charge created by a co-operative society under section 49 must comply with the provisions of the law applicable to that particular type of charge.

Every co-operative society must register with the Commissioner every charge it creates, and officers who default in registering a charge within thirty days commit an offence liable to fines.

The register of charges must record the charge creation or acquisition date, amount secured, particulars of the charged property and persons entitled; the Commissioner issues a certificate of registration stating the amount secured; the register is open for inspection by any interested person on payment of the prescribed fee; and the Commissioner must keep a chronological index in the prescribed form containing prescribed particulars.

The Commissioner may order that a memorandum of satisfaction be entered on the register when satisfied that the debt secured by a registered charge is paid; and shall, if required, give the co-operative society a copy.

Persons appointed as receivers or managers must give written notice to the Commissioner within seven days of appointment (and must notify on ceasing to act); the Commissioner must enter notices in the register of charges; failure to comply is an offence punishable by a fine not exceeding two thousand shillings per day of default.

Every co-operative society must keep at its registered address a copy of every instrument of charge required by the Act to be registered.

Every co-operative society must keep, at its registered address, a register of charges recording particulars (description, amount and person entitled) of specific and floating charges; officers who knowingly omit or permit omission of required entries commit an offence and may be fined up to ten thousand shillings.

The register of charges kept by a co-operative society must be open during business hours for inspection by any creditor or member without fee; officers who obstruct inspection commit an offence liable to a fine up to five hundred thousand shillings, and the court may order facilitation after conviction.

The Commissioner may order a co-operative society's dissolution and cancel its registration; aggrieved members may appeal to the Cabinet Secretary within two months; if no appeal is filed the order takes effect on expiry; the Commissioner must make further orders for custody of books and protection of assets when ordering dissolution.

The Commissioner may cancel a co-operative's registration for listed grounds (too few members; failure to file returns for three years; failure to achieve its objects), and a person aggrieved by such an order may appeal to the Cabinet Secretary within thirty days.

If the registration of a co-operative society is cancelled, the society shall cease to exist as a corporate body from the date the order takes effect.

The First Schedule applies to the liquidation of a co-operative society whose registration has been cancelled under section 61 or 62.

If a co-operative society's registration is cancelled under sections 61 or 62, the Commissioner may appoint one or more authorised insolvency practitioners as liquidator(s); the society's property vests in the liquidator(s) from the date the cancellation took effect; and 'authorised insolvency practitioner' is defined as an insolvency practitioner authorised under Part H of the Insolvency Act (Cap. 53).

The liquidator has a range of powers to manage and conclude the liquidation of a co‑operative society, including appointing claim deadlines, instituting and defending suits, appointing advocates, referring disputes to the Tribunal, determining contributions, investigating claims and priorities, calling meetings, selling property, carrying on business as necessary, allocating liquidation expenses, taking possession of books and assets, arranging distributions (once approved by the Commissioner), directing disposal of books, compromising claims with Commissioner approval, applying for discharge after completion, and summoning witnesses and compelling documents.

An account called the Co-operative society Liquidation Account must be kept by the Commissioner and administered in the prescribed manner with such bank as may be prescribed.

The Commissioner for Co-operative Development has specific powers during liquidation under Section 68, including overriding liquidator orders, removing or appointing liquidators, calling for books and assets, limiting liquidator powers, requiring accounts and audits, authorizing distributions, ordering remuneration and discharge, requiring members and officers to transfer society property, appointing a special manager, referring disputes to the Co-operative Tribunal with consent, and requiring indemnification.

A person aggrieved may appeal the Commissioner's or liquidator's order to the Tribunal within thirty days; a person aggrieved by the Tribunal's decision may appeal to the High Court within thirty days.

Subject to sections 68 and 69, an order or decision made under section 66 or section 68, when filed in court, may be enforced by a court as if it were the court's own order or decision.

If a liquidator of a co-operative society with cancelled registration reasonably suspects an offence in the Third Schedule before or during liquidation, the liquidator must report it to the Commissioner; the Commissioner must, as soon as practicable after the report, take such action (including prosecution) as the Commissioner considers appropriate.

A person convicted of specified Companies Act offences must not be or act as an officer or take part in management of a co‑operative society for five years from conviction; doing so is an offence punishable by up to two years' imprisonment.

The Commissioner may on his own accord, and must where directed by the Cabinet Secretary or on application by not less than one‑third of members present and voting at a duly advertised meeting, hold an inquiry (or direct an authorised person) into a society's by‑laws and working and financial conditions. Officers and members must produce documents and information to the person holding the inquiry. The Commissioner must report findings at a general meeting and give directions for implementing recommendations. Contravening the requirement to produce documents is an offence punishable by a fine not exceeding two thousand shillings per day.

A creditor who satisfies the Commissioner that a debt is due and who has demanded payment may trigger an inspection if the applicant deposits with the Commissioner a sum as security; the Commissioner must inform the creditor of the inspection results.

The Commissioner may, by certificate, order that inquiry or inspection expenses (or part) be apportioned between the society, the members or creditor who demanded it, and the officers or former officers; the Commissioner's decision is final.

The Commissioner may carry out impromptu inspections into the affairs of a co-operative society.

Gives the Court power to set aside transactions entered at an undervalue and allows a liquidator to apply for such an order; if the Court finds the transaction was undervalue it must set it aside and restore the prior position.

The Commissioner may apply to Court if a co‑operative society gave a preference; if the Court is satisfied it shall void the preference and restore the prior position, but the Court must not do so unless satisfied the society was influenced by a wish to produce the effect in subsection (4)(b).

Defines what "relevant time" means for sections 60B and 60C: (1)(a) two years before liquidator appointment for undervalue transactions or preferences given to connected persons (other than employees); (1)(b) six months before appointment for other preferences; (2) the society is or becomes unable to pay its debts (including as a consequence of the transaction or preference); (3) a presumption that conditions in (2) exist for undervalue transactions entered into by the society with a connected person, absent contrary evidence.

Section 60E allows orders under sections 60B and 60C to require persons to pay amounts to a liquidator as the Court specifies, and permits the Court to impose new or revived obligations on sureties or guarantors; it also preserves the Court's powers under sections 60B(4) and 60C(3) and the availability of other remedies.

Court may set aside or vary extortionate credit transactions involving a co-operative society and may order payments to or surrender of security to the Commissioner.

Section 60G describes circumstances in which a floating charge over a co‑operative society’s undertaking or property may be invalid, including amounts recoverable as consideration, timing windows before liquidation for connected and other persons, insolvency at creation or caused by the transaction, and how to value goods or services supplied as consideration.

Upon inquiry under subsection (1), the Commissioner may order a person who has misapplied, retained, become liable for money or property of the society or has been guilty of misfeasance or breach of trust to repay or restore money or property with interest or to contribute compensation.

Persons aggrieved by a Commissioner’s order may appeal to the Tribunal within thirty days; parties aggrieved by the Tribunal’s decision may appeal to the High Court on matters of law within thirty days.

Orders under section 73 filed with the Tribunal are civil debts recoverable summarily; the Committee may take action to recover surcharges and the Commissioner may, on behalf of the society, institute such action.

Section 76 lists categories of disputes and claims that may be brought to settlement by or concerning co-operative societies, including disputes among members, between members and the society or its officers, between societies, and claims for debts or licence grievances.

Section 77 establishes a Co-operative Tribunal and sets who is to be appointed to it (chairman and deputy chairman, an advocate, a lawyer experienced in co-operative law, and three persons experienced in co-operative management), requires Gazette notice for appointments, sets three-year terms and a two-consecutive-term limit, and prescribes qualification requirements for chairman and deputy chairman.

Section 78 sets rules for the Co-operative Tribunal: it is not bound by the rules of evidence; it must inquire into matters referred or applied in writing and make awards and notify parties; it shall sit when and where it decides; proceedings are open to the public unless it, for good cause, directs otherwise; and it shall regulate its own procedure except as provided elsewhere in the Act.

Section 79 sets out the Co-operative Tribunal's procedural powers (orders, oaths, summons) and its power to issue decrees and compensation; it also lists conduct prohibited before the Tribunal (fail to attend, refuse oath/produce documents, give false evidence, insult or interrupt), and states the Tribunal's unlimited jurisdiction.

The Tribunal's quorum is the Chairman plus two members; the Chairman may sit with one member or alone if members are absent; a member with a direct interest must not take part; matters are decided by majority vote with the presiding person having a casting vote and exclusive authority on points of law; the Chairman alone can deal with temporary injunctions; the Deputy Chairman may act when the Chairman is unable or authorises him.

A party aggrieved by an order of the Tribunal may appeal to the High Court within thirty days; the High Court can extend the period and has specified powers on appeal.

The Chairman of the Tribunal may appoint a person with special skills or knowledge on co-operative issues to act as an assessor in an advisory capacity in proceedings or inquiries when such skills or knowledge are required for proper determination of the matter.

Any person must not engage in acts or omissions that amount to contempt of the Tribunal; the Tribunal may punish such persons for contempt under this Act.

The Chairman and members of the Tribunal are to be paid remuneration and allowances, which the Cabinet Secretary will determine from time to time.

The Cabinet Secretary shall appoint a public officer to be secretary to the Co-operative Tribunal and shall determine the allowances to be paid; appointments under subsection (1) require the qualification specified under sections 12 and 13 of the Advocates Act.

The Cabinet Secretary may establish one or more benches of the Co-operative Tribunal and must provide for their constitution and jurisdiction in consultation with the Chairman of the Tribunal.

A person who is a party to proceedings before the Tribunal may appear in person or be represented by an Advocate.

Chairman and other tribunal members, and certain officers or persons executing tribunal processes, are not liable to be sued for acts done in the discharge of their duties when they in good faith believed they had jurisdiction, and for execution of warrants/orders they were bound to execute.

Officers and members of a co‑operative society must not accept payments from third parties for society business, but the society may authorize such payments by resolution at a general meeting in special circumstances.

Non-cooperative persons must not trade using the word "Co-operative" (or equivalent) in their business name unless they obtain the Commissioner’s written approval; breach is an offence with fines.

The Cabinet Secretary may establish the Co-operative Development Fund to promote education, training, research, consultancy and related co-operative activities; the Fund is to be managed by a nine‑member Board with six elected by the co‑operative movement and three appointed by the Cabinet Secretary, and the Cabinet Secretary may prescribe the Fund's formation and maintenance in consultation with the apex society.

The Cabinet Secretary may, in consultation with the apex society, make rules to carry out the provisions and purposes of this Act.

Section 91A has been repealed by Act No. 14 of 2008, s. 73.

The Cabinet Secretary may exempt co-operative societies from provisions of the Act (with conditions or modifications) and must publish thirty days' notice in the Gazette; any person may make representations within the notice period; the Cabinet Secretary may either abstain or grant the exemption subject to terms.

The Cabinet Secretary responsible for co-operative development may at any time and on any matter direct the Commissioner for Co-operative Development as to the exercise of his powers and duties under this Act.

The Commissioner has a power to call for elections in any co-operative society.

Section 94 creates several offences by co‑operative societies, officers and members for failing to perform required acts, doing prohibited acts, wilfully refusing to furnish information, making false returns, disobeying summonses, and acting as an officer when not entitled; conviction under subsection (1) attracts a fine not exceeding five hundred thousand shillings, and the Director of Public Prosecutions may appoint public prosecutors for such cases.

The Companies Act (Cap.486), the Insolvency Act (Cap.53) and the Registration of Business Names Act (Cap.499) do not apply to a co-operative society, except as expressly provided by rules made under section 91.

Section 96 repeals the Co-operative Societies Act, 1966 and contains savings and deeming provisions preserving registrations, registers, document references, orders and acts under the repealed Act; it also preserves the effect of acts concerning the Cabinet Secretary around the 2015 commencement.