Warehouse Receipt System Act

The Act may be cited as the Warehouse Receipt System Act.

Provides definitions for terms used in the Act, including "Agriculture and Food Authority", "agricultural commodity", "Cabinet Secretary", "central registry", "collateral manager", "Council", "county executive committee member", "electronic warehouse receipt", "holder", "inspector", "negotiable receipt", "owner", "person", "purchaser", "warehouse operator", "warehouse operator's lien", "warehouse", "warehouse receipt", and "warehouse receipt system".

The Council must employ whatever additional staff it considers necessary to properly and efficiently discharge its functions, on terms and conditions of service it determines.

The Council may engage consultants or experts to assist its functions; the Council must publish in the Gazette the names of those engaged under subsection (1).

Parliament may provide moneys from time to time for the purposes of the Council.

The Council's financial year is the twelve-month period ending on 30 June each year.

The Council must prepare its annual estimates in accordance with the Public Finance Management Act (Cap. 412A).

The Council must keep all proper audit books and records of accounts for its income, expenditure, assets and liabilities.

The chief executive officer must cause preparation of quarterly and annual reports of the Council; quarterly reports are due within one month after the quarter, annual reports within four months after the year, annual reports must include financial statements, and the Cabinet Secretary must transmit an annual report to both Houses of Parliament within thirty days of receipt.

Establishes the Warehouse Receipt Systems Council and sets membership, appointment and term rules.

The Council facilitates the establishment, maintenance and development of the Warehouse Receipt System for agricultural commodities produced in Kenya.

The county executive committee member must establish and maintain a county registry to manage warehouse receipt transactions.

The Council has the power to enter into contracts.

The Council must have its business and affairs as provided in the Schedule, and, except as provided in the Schedule, the Council may regulate its own procedure.

Members of the Council must be paid remuneration, fees, allowances and disbursements for expenses as approved by the Cabinet Secretary in consultation with the Salaries and Remuneration Commission.

Section establishes a chief executive officer for the Council, to be appointed by the Council through competitive recruitment, who manages the Council day-to-day, serves a three-year term (renewable once subject to satisfactory performance), may resign by written notice to the Chairperson, and must meet specified qualifications and Chapter Six requirements.

Warehouse operators must apply to the county executive committee member for a licence to operate in the Warehouse Receipt System; applications must be in the prescribed form and include the prescribed fee. Licences last twelve months and may be renewed subject to conditions. Operating without a licence is an offence. County executive committee members must report licence details to the Council within seven days; the Council must publish licensed warehouses annually.

Applicants for a licence must provide a performance bond in a form prescribed by the Cabinet Secretary.

A person must provide an insurance policy covering the warehouse and goods against listed risks; otherwise the person shall not qualify for a licence under this Act.

A person aggrieved by a decision of a county executive committee member may, within thirty days of being notified, appeal to the Council in the prescribed manner.

Describes when a licence may be revoked or suspended, sets notice and surrender procedures and deadlines, allows suspension of operations, requires interim management and publication, and prescribes penalties for failure to surrender.

The county executive committee member must charge fees for initial warehouse inspection and for issuing a warehouse operator's licence, subject to amounts prescribed by the Council.

Provides for a Warehouse Receipts Dispute Resolution Committee (composition and term) and allows a person aggrieved by certain Council decisions to appeal to the Committee within thirty days; the Cabinet Secretary appoints the chair (an advocate of at least seven years' standing with dispute resolution experience) and two other experienced persons.

Licensed warehouse operators must ensure stored commodities meet Kenya Bureau of Standards and are weighed with certified equipment; grading must be done by graders certified by a mandated institution; the Council must prescribe minimum qualifications and competencies for graders and weighers.

The chief executive officer, appointed Council Inspectors or authorised officers of the Council may inspect stored agricultural commodities in licensed warehouses and related warehouse receipt records when considered necessary.

The chief executive officer may publish, from time to time, the results of inspections under the Act, including licensed warehouses' names and locations and operators' names.

The chief executive officer may, through authorized officers, employees or agents, examine specified contracts, registries, books, records, papers and accounts of licensed warehouses and their warehouse operators.

The Cabinet Secretary may, in consultation with the Council, make regulations to carry into effect the provisions of this Part.

A warehouse operator must issue a warehouse receipt for any agricultural commodity deposited in their warehouse.

Establishes a Central Registry operated by the Council; requires infrastructure linkage to a commodities exchange depository; assigns the chief executive officer to set up that infrastructure and to act as Registrar; requires warehouse receipts to be delivered to the Registrar for registration within fourteen days; and permits the Cabinet Secretary (with the Council) to make regulations governing the registry.

Warehouse operators may issue replacement receipts on a holder's request with a police report, and must notify the central registry when issuing a replacement; presenting the original after replacement is an offence.

A replacement receipt issued under section 31 has the same standing as the original and does not impose any additional liability on the warehouse operator.

A warehouse operator must deliver the goods described in a warehouse receipt to the receipt holder or depositor when the receipt is presented; if the operator refuses or fails to deliver, the operator must prove a lawful reason for the refusal or failure.

If a warehouse operator delivers stored agricultural commodities to someone not lawfully entitled to possess them, the warehouse operator is liable for the resulting loss.

Warehouse operators may commingle agricultural commodities of the same type and grade, and are liable to each depositor or holder for care and redelivery of commingled commodities as if stored separately.

A warehouse operator cannot be forced to give up possession of goods until the negotiable receipt is surrendered or the receipt is impounded by a court.

A warehouse operator has a lien on goods or their proceeds for lawful storage charges, may pursue creditor remedies to collect contracted charges and advances, and must give written notice—by personal delivery or registered letter—and, if the receipt is registered in the Central Registry, must also give notice to the chief executive officer.

A warehouse receipt issued to a person may be negotiated by endorsement and delivery to another specified person.

A warehouse receipt is treated as duly negotiated in favour of a person who purchases it in good faith, for value, and without notice of any defect or claim.

Rights acquired after negotiation of warehouse receipts

A transferee who gave value and acted in good faith can compel the transferor to endorse a negotiable warehouse receipt; a receipt is not negotiated until endorsed; endorsement in good faith does not make the transferee liable for defaults or fraud by the warehouse operator or prior endorsers.

Sets conditions under which a warehouse receipt is treated as genuine and transferable, implies merchantability for contracts transferring goods covered by such receipts, and excludes an implied warranty where a creditor of the transferor in good faith demands or receives payment on the secured debt.

It is an offence for a warehouse operator or their officers, agents, or employees to issue or assist in issuing a receipt for goods they know were not received or not under their control.

Warehouse operators and their officers, agents or employees must not fraudulently issue or facilitate issuing receipts based on false statements or falsely claim licensing or insurance; doing so is an offence punishable by a fine up to ten million shillings or up to ten years imprisonment.

Warehouse operators and their officers, agents or employees must not issue or facilitate issuing duplicate or additional negotiable receipts for goods knowing a previous receipt is outstanding and not cancelled, unless they plainly mark it "Replacement"; doing so is an offence punishable by a fine not exceeding ten million shillings or imprisonment not exceeding ten years, or both.

A person who deposits goods that belong to someone else in a warehouse licensed or registered under this Act without the owner's approval commits an offence and may be jailed for up to fourteen years.

A person must not obstruct inspection of a registered or licensed warehouse in contravention of this Act or any other law; doing so is an offence punishable by a fine not exceeding one million shillings or imprisonment not exceeding five years, or both.

A person convicted of an offence under the Act for which no other penalty is specified may be fined up to three hundred thousand shillings, imprisoned for up to six months, or both.

The Cabinet Secretary, in consultation with the Council, may make regulations to carry into effect the intent and purposes of the Act, including regulations on insurance policy, appeals procedure, qualifications and appointment of warehouse inspection officers, and the form of warehouse receipts.

The Cabinet Secretary may consult the Cabinet Secretary responsible for matters related to trade when carrying out functions under this Act.