Cooperatives Societies Act

This section says the Act may be cited as the Cooperative Societies Act.

This section defines key terms used in the Act, including types of societies, members, officers, and the Commissioner and Registrar.

The section creates a Registrar for cooperative societies and assistant registrars, and assigns them administration-related roles under the Act.

A society may be registered under the Act, either with or without limited liability; cooperative unions and apex societies must be registered with limited liability.

A society can be registered only if it meets the membership composition rules for its category, registered cooperative societies must follow cooperative principles, and the Registrar decides certain qualification questions.

To register a society, the application must be made to the Registrar and include the required signatures, by-laws copies, prescribed information, and prescribed fees.

The Registrar must register a society and its by-laws if the legal conditions are met, and must register a society within 30 days of application.

Registered societies must state that they are registered on receipts, letter-heads, notices, advertisements, other official publications, and on a signboard outside their premises or office.

The Registrar may cancel a society’s registration after written notice and reasons are given; once notice is served, the society stops being registered.

A registered society may amend its by-laws, but the amendment is not valid until it is registered.

If the Registrar refuses to register a society, its by-laws, or an amendment to its by-laws, an appeal may be made to the Minister.

Societies cannot be registered under a name that is identical to an existing society or likely to mislead the public. Registered societies must include "cooperative" in the name, and limited-liability societies must end their name with "Limited".

A registration certificate signed by the Registrar is conclusive evidence of registration unless cancellation is proved, and the Registrar may issue a duplicate if the original is lost or destroyed.

A person other than a registered society must meet the listed qualifications to be eligible for membership of a society.

A member may not hold more than one-fifth of the paid-up share capital of any cooperative society.

Companies incorporated under the Companies Act and unincorporated bodies of persons cannot become members of a registered society unless the Registrar gives written permission.

A member of a registered society cannot exercise member rights until the required membership payment is made or the required interest is acquired under regulations or by-laws.

A person generally cannot belong to more than one registered society, especially one with unlimited liability or the same or similar objects, unless the Registrar gives written consent or a stated proviso applies.

Members of a registered society have one vote each, unless the member is itself a registered society, cooperative union, or apex society and the by-laws prescribe more votes.

A member’s transfer of a share or interest in a registered society is restricted by maximum-holding rules, and in an unlimited-liability society a member cannot transfer or charge a share or interest unless it has been held for at least one year and the transfer is to the society or another member.

Registered societies must keep a registered address, notify the Registrar of any change within one month, and display their name and address on a signboard outside their place of business.

Registered societies must keep specified documents and the members list open for inspection at the society’s office during business hours.

Registered societies must have their accounts audited every year, and auditors must file reports and financial statements on time.

A person may not be appointed or approved as an auditor for a registered society unless they, or the firm, are members of a recognized accounting body. The Minister may change these qualifications by Gazette notice after consulting the Registrar.

Committees of registered societies must prepare 12-month income and expenditure estimates at least three months before the financial year ends, and send a copy to the Registrar.

Registered societies may amalgamate as one society with Registrar approval, but they must notify members, creditors, and affected persons and hold further meetings and resolutions before registration.

A registered society may transfer assets and liabilities to another society, but liability transfers need 90 days’ written notice to creditors, and creditor objections can block the transfer until the creditor is paid or an agreement is made.

A registered society may divide into two or more societies only with prior written approval from the Registrar and after the required member notice, meeting, and voting steps.

A registered society becomes a body corporate with perpetual succession, a common seal, and power to hold property, make contracts, sue, defend suits, and do necessary acts for its constitution.

Registered by-laws bind the society and its members, and members must observe them. A member cannot challenge disputes with the society or another member by arguing the by-laws are a restraint of trade.

A qualifying registered society may make member contracts about disposing agricultural produce through the society and may set liquidated damages for breach.

A society’s by-laws may allow fines on members, but a fine cannot be imposed until the member gets written notice and a chance to respond. Applicants for membership must disclose certain pre-existing delivery contracts, and a member is not treated as having breached the by-laws for failing to deliver produce if the failure was due to an earlier contract to deliver it elsewhere.

A registered society has a first charge over certain produce and related items, but only after prior government, landlord, and registered charges.

A registered society may set off sums payable to a member or past member against debts owed to the society, and it has a first charge over specified member assets for those debts.

A member’s share or interest in a registered society cannot be attached or sold for the member’s debts, and a trustee in bankruptcy has no claim to it, except that on dissolution the bankrupt member’s shares vest in the trustee in bankruptcy.

A past member remains liable for a registered society’s existing debts for two years after leaving the society.

The estate of a deceased member is liable for the society’s debts for one year after the member dies.

When a member dies, a registered society may transfer or pay out the member’s share or interest to the nominated person or legal personal representative; in some cases it must transfer or pay value instead.

Registers, member lists, and certified copies of society books can be accepted as prima facie evidence in certain cases.

An officer of a registered society generally cannot be forced in court proceedings to produce certain society books or testify about them, unless the court orders it for special cause.

The Minister responsible for finance may, by Gazette order, remit or refund certain duties, taxes, fees, and customs/excise duty for registered societies; in some asset-transaction cases, the Minister must remit the relevant stamp duty.

A registered society must not lend to non-members, but it may lend to another registered society or guarantee an employee’s loan if the general meeting approves and any required conditions are met.

A registered society may receive deposits and loans from non-members only within limits and conditions approved by the members’ general meeting by resolution.

A registered society’s transactions with non-members can be limited by the general meeting and must stay within a yearly one-half cap for each produce type; profits from those transactions must go to the statutory reserve fund and cannot be shared with members.

A registered society may invest or deposit its funds only in the listed approved ways.

Registered societies cannot pay dividends, bonuses, or distribute accumulated funds without annual general meeting approval.

Societies with surplus must keep a reserve fund, and some societies must also set aside part of annual surplus or create a provident fund for permanent employees.

The net balance for each year, together with any distributable amount from previous years, may be distributed under regulations made under the Act or under the registered society’s by-laws.

A National Cooperative Education Fund is established, and every registered society must contribute 1% per year of its net profit to the Fund.

The Fund committee runs the Fund, must prepare an annual budget and annual report for the Minister, needs three members for a quorum, and may set its own procedure with the Minister’s approval.

The Fund Committee must keep proper accounts and records for the Fund and have the books audited within three months after the end of each financial year.

The Fund’s financial year is 12 months ending on 30 June each year.

The Fund Committee may authorize payments from the Fund for educational costs and reasonable, necessary expenses linked to maintaining the Fund.

Fund money must go into a bank account; withdrawals are only by cheque signed by persons authorized by the Fund Committee, and unused funds may be invested as agreed by the Committee.

A registered society may charge its property only with the Registrar’s consent and only if its by-laws expressly allow it.

Registered societies must register covered charges with the Registrar on time, or the charge can be void against the liquidator and creditors.

A registered society must send the Registrar the particulars of every charge it creates that falls under section 55.

A registered society that acquires property subject to a relevant charge must send the charge particulars and any supporting instrument to the Registrar for registration within the stated time limit.

The Registrar must keep a register of charges, enter specified details for each charge, issue registration certificates, and keep a chronological index. Any person may inspect the register on payment of the prescribed fee.

Registered societies must endorse the section 59 certificate of registration on covered debentures or debenture stock, with a limited exception for stock issued before the charge was created.

The Registrar may order a memorandum of satisfaction to be entered on the register when satisfied that the secured debt has been paid or otherwise satisfied, and must give a copy to the registered society if asked.

The Registrar may extend the time for registering a charge or rectify an omission or mis-statement if the stated conditions are met.

A person who gets or appoints a receiver or manager for a registered society’s property must give written notice to the Registrar within 7 days, and the Registrar must enter the notice in the register of charges.

Every registered society must keep a copy of each registrable charge instrument at its registered address.

Registered societies must keep a register of charges at their registered address, and officers who knowingly omit required entries commit an offence punishable by a fine up to K3,000.

Members and creditors can inspect the charge-related register and required copies during business hours, generally without fee; officers who refuse inspection commit an offence and can be fined.

The Registrar, or someone authorized in writing by the Registrar, may require certain society officers, agents, servants, or members to produce society money, securities, books, accounts, and documents in their custody and control.

The Registrar may investigate a registered society and can order related actions like suspending people, appointing a caretaker manager, dissolving the committee, and requiring records and information.

The Registrar may authorize an inspection of a society’s books if a creditor or registered society applies and certain conditions are met.

The Registrar may apportion the costs of an inquiry or inspection among the society, the requesting member or creditor, and the society’s current or former officers.

An award under section 70 may be recovered in a court of competent jurisdiction like a judgment.

The Registrar may cancel a society’s registration after an inquiry, inspection, or a two-thirds member application; a member of an unregistered society may appeal to the Minister within two months.

The Registrar may cancel a society’s registration for listed reasons, a society must be liquidated if two-thirds of its share capital is lost unless the Registrar is satisfied the loss will be made good within six months, and appeals must be lodged with the Minister within 60 days.

If, after an inquiry under section 68, the Registrar thinks the society should be wound up, the Registrar may order winding-up, appoint a liquidator, and set the liquidator’s pay.

If a registered society is being wound up, the Minister may publish a Gazette notice declaring certain Companies Act provisions to apply to it.

If a society’s registration is cancelled, the society stops existing as a corporate body from the date of cancellation.

If an order is made to cancel a society’s registration, the Registrar must file a copy of the order and publish another copy in the Gazette.

If a society’s registration is cancelled under section 73 or 74, the Registrar may appoint a liquidator. If the society is being wound up voluntarily, the members may appoint the liquidator instead.

A liquidator has specified powers, but must act under the Registrar’s guidance and any limits the Registrar or a section 80 order imposes.

The Registrar controls liquidators in liquidation and may issue a range of orders about their actions, accounts, assets, remuneration, discharge, and related disputes.

A person aggrieved by certain orders of a liquidator or the Registrar may appeal to the Minister.

When a society’s liquidation follows cancellation of registration, its funds must be used in a set order; remaining surplus is shared among members or paid into the Fund if distribution is impracticable.

If a liquidator believes offences were committed after a society’s registration was cancelled, the liquidator must report the facts to the Registrar, and the Registrar must send a copy to the Director of Public Prosecutions.

People convicted of an offence under this Part cannot be appointed as officers of a registered society or take part in a society’s management for five years after release from prison or payment of a fine.

A court with jurisdiction over where the alleged offence was committed must try offences under this Part.

The Registrar may investigate certain society officers or managers and order repayment, restoration, or compensation if they misused or held society money or property, or committed misfeasance or breach of trust.

A person aggrieved by an order of the Registrar under section 86 may appeal to the Minister.

The Registrar may order conditional attachment of a person’s property if satisfied that the person is trying to defraud or delay enforcement, unless adequate security is provided.

Disputes about a registered society’s business must go to arbitration, with specific rules for appointing arbitrators, appealing awards, and handling certain fraud-related debts.

An arbitrator is protected from civil liability for acts done under section 89 if they are done bona fide to execute that section.

A Minister’s decision on an appeal under this Act can be appealed to a court of law, and the Chief Justice may make court rules for how those appeals are heard.

The Minister may make regulations to carry out this Act.

Officers or members of a registered society cannot receive remuneration or similar payments from the society or others for society business unless the required approvals are obtained.

Only a registered society may use the word “cooperative” in a business name or title.

This section makes certain conduct by registered societies, their officers or members, and other persons an offence, and sets the penalty on conviction.

A person, firm, or company that knows about a contract under section 31 must not solicit, persuade, or assist anyone to sell or deliver goods or services in breach of that contract.

A society must still follow any other written laws that govern its business activities.

A registered society is exempt from the Companies Act, the Business Names Registration Act, and the Labour Relations Act, subject to section 75 of this Act.

This section repeals the Cooperative Societies Act and preserves certain existing subordinate laws, agreements, societies, and official acts.