Cooperative Societies Act

This section provides definitions of terms used in the Act (for example: "agricultural produce", "apex society", "beneficial owner", "Registrar", "winding up", etc.).

Registered societies may amend their byelaws but an amendment is not valid until registered; the Registrar registers amendments that are not contrary to the Act and issues certified copies; the Registrar may require or make amendments in certain circumstances; affected societies may appeal certain Registrar-made amendments to the Board within two months.

An appeal lies to the Board from every refusal of the Registrar to register a society or its byelaws or any amendment of its byelaws; the Board's decision, subject to section 144, shall be final.

Names of registered societies must not be identical to another society's name or misleading in the Registrar's opinion; every society's name must include "Cooperative"; societies with limited liability must end their name with "Limited".

A certificate of registration signed by the Registrar is conclusive evidence that the named society is duly registered unless its registration has been cancelled; the Registrar may issue a duplicate certificate if satisfied the original was lost or destroyed.

Cooperative societies must keep a register of beneficial owners with specific particulars and notify the registrar of the register's location within 14 days; the register must not be kept outside Uganda; the Minister may make regulations and penalties may be prescribed.

Establishes the Registrar for Cooperative Societies (also commissioner for cooperative development), sets out the Registrar's responsibilities, creates three deputy registrars with specific responsibilities, designates assistant registrars, requires district cooperative officers and staff to report to the Commissioner or designee, and authorises the Minister to confer Registrar powers on assistant registrars by statutory order.

A society whose object is promoting members' economic and social interests under cooperative principles may be registered under this Act, with or without limited liability, but cooperative unions and apex societies must be registered with limited liability.

A society cannot be registered unless it meets specified membership composition rules; the Registrar may exceptionally register a small unique society; cooperative societies must include a statement on cooperative identity in their byelaws; societies cannot have unlimited liability.

Applications to register a society must be made to the Registrar; primary societies by at least thirty qualified members, secondary/tertiary/apex societies by a person duly authorised by each registered society; applicants must furnish information as the Registrar may require.

The Registrar must register a society and its byelaws on probation for up to twenty-four months if satisfied of compliance; thereafter the Registrar shall either register permanently, cancel registration, or extend probation (by up to twelve months), with cancellation triggering application of sections 130 and 131.

Pre-incorporation (pre-registration) contracts are treated as made with the person purporting to act for the cooperative society; a cooperative society may adopt such a pre-incorporation contract when it is formed and registered on its behalf without novation; if it adopts the contract, the promoter's liability ceases.

A society registered under section 6(1) must state (in legible letters) in its receipts, letters, notices, advertisements or other official publications that it is registered probationary and must display the same on a conspicuous signboard outside any premises or office where it carries on business.

The Registrar may cancel a society's probationary registration by written notice stating reasons; from service of that notice the society ceases to be a registered society; the cancellation must be gazetted and published; contravening section 8 is an offence punishable by a fine up to 0.5 of a currency point and, for continuing offences, up to 0.05 of a currency point per day; a cooperative society is deregistered if its membership falls below the prescribed number in section 4.

To be a member a person (excluding certain bodies) must be at least eighteen and reside in or occupy land in the society’s area; persons over twelve may join but cannot serve on the committee until eighteen; the Registrar decides age questions and that decision is final.

Members (excluding registered societies) must not hold more than one-third of the paid-up share capital of any cooperative society.

Companies (incorporated or registered under the Companies Act) and unincorporated bodies of persons may not become members of a registered society unless they have the written permission of the Registrar.

Members have specified rights (attendance, voting, election, use of services, access to information) and must comply with byelaws, pay shares, meet debts on bankruptcy and patronise the society; members of a registered society may not exercise member rights until required payments or prescribed interests are made or acquired.

Members of a registered society each have one vote; societies (and cooperative unions or apex societies) that are members of another registered society have as many votes as the other society's byelaws prescribe and may, subject to those byelaws, appoint up to that number of committee members to exercise those votes.

The Board is the governing body of a society and must direct its affairs subject to general meeting directions and byelaws; it has powers to enter contracts, sue or be sued, appoint and supervise management; Board members must act with prudence and may be jointly liable for contraventions; board members serve four-year terms and are eligible for re-election.

The annual general meeting must elect a three-person supervisory board; the supervisory board must examine accounts and affairs, review officers' actions, make activity records available to the Registrar and auditors, present a report to the general meeting, may call a special general meeting in consultation with the Registrar, and must inform the Registrar in writing within five working days of any management recommendations. Members of the supervisory board are subjected to the provisions of section 20(10).

Members of a society registered with unlimited liability must not transfer or charge any share or interest except after holding it for at least one year and only if the transfer/charge is to the society or to another member.

Every registered society must have a registered address; must notify the Registrar of any change of address within one month; and must display its name and address on a conspicuous signboard outside its place of business.

Every registered society must keep its Act, regulations, byelaws and a list of members open for public inspection at its office during business hours, free of charge.

Records management in a society shall be done in accordance with the National Records and Archives Act; there shall be a cooperative archive in the Ministry responsible for cooperatives.

Registered societies must have their accounts audited at least once a year by an auditor appointed by the annual general meeting and approved by the Registrar; the audit cost is borne by the society. Auditors must submit detailed reports and have access to books and persons; the Registrar has powers to appoint or require audits.

Sets qualifications for auditors of registered societies: auditors (or auditing firms) must be members of the Institute of Certified Public Accountants of Uganda; the Registrar and the Minister have limited appointment and amendment powers.

Committees must prepare and circulate 12‑month income and expenditure estimates to the Registrar at least three months before the financial year end; supplementary estimates may be prepared and sent for opinion; no development capital expenditure until estimates are approved; non‑compliance is an offence subject to fines.

Two or more registered societies may amalgamate into a single society with the prior approval of the Registrar.

A registered society may transfer its assets and liabilities to another society that agrees; transfers of liabilities require a 90‑day written notice to creditors; creditors may object one month before the date and may appeal to the Registrar within 90 days, whose decision is final.

A registered society may divide into two or more societies with the prior approval of the Registrar; the society must send copies of the preliminary resolution to members and creditors and inform affected persons in writing; members, creditors and other affected persons have limited procedural rights.

The Registrar may order cancellation of a society's registration after an inquiry, inspection, or application; a member may appeal within two months; a society may not be wound up except by an order of the Registrar.

The Registrar may cancel a society's registration for specified grounds; a society must liquidate when two-thirds of its share capital is lost unless the Registrar is convinced the loss will be remedied within six months.

If, after an inquiry under section 59, the Registrar considers a society should be wound up, the Registrar may order it wound up, may appoint a liquidator and fix that liquidator's remuneration (to be paid from the society's funds); if no liquidator is appointed the society's assets and liabilities vest in the Registrar.

When a registered society is wound up, Schedule 5 applies to that society.

If a society's registration is cancelled, the society must cease to exist as a corporate body from the date of dissolution.

When an order is made to cancel a society's registration, the Registrar must file a copy of the order in the society's file, gazette it and publish it in at least one Ugandan newspaper.

If a society's registration is cancelled under section 125 or 126, the Registrar may appoint one or more persons as liquidator(s) of the society.

A liquidator appointed under section 131 has specified powers (subject to guidance and limitations of the Registrar), including appointing a day for creditors to state claims, instituting or defending legal proceedings, referring disputes to arbitration, determining member contributions, investigating claims and priorities, calling meetings, selling assets, carrying on business for liquidation, apportioning liquidation costs, taking possession of books and assets, arranging distributions with Registrar approval, directing disposal of books and documents, compromising claims with Registrar approval, and applying for discharge after completion.

The Registrar has multiple powers in liquidation including rescinding or varying liquidator orders, removing and appointing liquidators, calling for society books and assets, limiting liquidator powers, requiring accounts, procuring audits and distribution, ordering remuneration, granting discharge after completion, compelling third parties to transfer property to the liquidator, appointing special managers, and referring disputes to arbitration with binding arbitral decisions.

A person aggrieved by an order under section 132 or 133(1)(a) may appeal to the Board; the Board's decision shall be final, subject to section 144.

If a liquidator of a society (whose registration has been cancelled) alleges certain Schedule 5 offences have been committed, the liquidator must report to the Director of Public Prosecutions to institute necessary proceedings.

On liquidation after cancellation of a society’s registration, remaining funds are applied in order to liquidation costs (including liquidator remuneration), liabilities, share capital, and then—if the byelaws permit—a dividend not exceeding ten percent per year; unclaimed sums and any surplus are to be distributed among members in proportion to business done in the three years before dissolution (or alternative rules where shorter or no business), with unpaid creditor claims barred one year after the registration-cancellation order.

A person convicted under this part may not be an officer of a registered society or take part in its management for five years after release from prison or payment of a fine; contravening the section is an offence punishable by up to two years' imprisonment.

Offences under this Part shall be cognisable by a court presided over by a chief magistrate or a magistrate grade 1 having jurisdiction over the place in which the alleged offence was committed.

When a society is registered it must become a body corporate in the registered name, with perpetual succession and a common seal and the powers described.

The Board of the apex society must, subject to the byelaws and directions of the general meeting of the alliance, advise the Government on cooperative policy, make representations about matters affecting registered societies, and perform other duties assigned under this Act.

Registered societies' byelaws, when registered, bind the society and its members, and members (and their heirs, executors, administrators and assignees) are obliged to observe all byelaws; members may not contest proceedings on the ground that a byelaw is a contract in restraint of trade.

A registered society may require its members (by byelaw or separate document) to dispose of their agricultural produce to or through the society, and may provide for liquidated damages payable to the society.

Byelaws may provide for fines on members; applicants for membership must disclose certain prior contracts; a member is not treated as infringing byelaws for failing to deliver produce when a prior contract existed.

A registered society has a first charge on certain agricultural produce and other supplied materials and articles, subject to prior government or registered charges, and on agricultural produce within two years from when seed, manure, services or loans were provided.

A registered society must have a first charge on a member's (or past member's) shares, interest, deposits, and payable dividends/bonuses/accumulated funds for any debt the member owes to the society, and the society may set off sums credited or payable to the member towards that debt.

A member's share or interest in a registered society is protected from attachment or sale for that member's debts (subject to section 35); trustees in bankruptcy have no claim on such shares, except that if the society is dissolved the property in shares of a member adjudicated bankrupt vests in the trustee in bankruptcy.

A past member remains liable for a registered society's debts as they were when they left for two years from leaving, but liability ends immediately if the first post-membership audit shows a credit balance for the society.

The estate of a deceased member is liable for one year for debts of a registered society as they existed at the time of death, but liability ends immediately if a post-death first audit shows a credit balance in a limited-liability society.

On a member's death, a registered society may transfer the deceased member's share or value to a nominated person or legal personal representative; the society must transfer the share to a qualified nominee or legal personal representative (or to a qualified person specified in a timely application) and must pay other money due to the nominee or legal personal representative.

Registers or lists kept by a registered society and certified copies of book entries are to be received as prima facie evidence in legal proceedings.

An officer of a registered society cannot be compelled in proceedings where the society is not a party to produce the society’s books or to testify about their contents, except by an order of the court for special cause.

The Minister responsible for finance may, by statutory order, reduce or remit certain duties, stamp duties and registration fees for a registered society or class of societies; and must remit specified stamp duty when a registered society undergoes division, amalgamation or transfer of assets.

A registered society must not lend to non-members; with Registrar sanction it may lend to other registered societies; and, with prior written approval and conditions from the Registrar, it may stand surety for employee loans that benefit the society.

A registered society may only receive deposits and loans from non-members to the extent and under the conditions the Registrar authorises in writing; certain forms of credit and hire-purchase deposits are treated as loans.

Registered persons (other than members) must have their transactions subject to prohibitions and restrictions as the Registrar may direct in writing, except as provided in sections 45 and 46.

Establishes a cooperative bank to serve cooperative societies and their individual members, and states that the cooperative bank shall be regulated by the Bank of Uganda.

A registered society may invest or deposit its funds only in specified institutions, securities allowed for trust funds, or other modes set by its byelaws and approved by the Registrar.

Registered societies must not pay dividends, bonuses or distribute accumulated funds without prior written consent and acknowledgement by the Registrar that a balance sheet showing surplus funds has been lodged; societies must not pay dividends to members above the maximum rate set by regulations.

Societies that derive a surplus must maintain a reserve fund, allocate a prescribed portion of annual net surplus to that reserve, and (with the Registrar's approval) establish a contributory provident fund to pay pensions to permanent employees on retirement.

The net balance of each year, including any sums from previous years, may be distributed as prescribed by regulations under this Act or by the byelaws of the registered society.

Every registered cooperative society must contribute one percent per year of its net surplus to the National Cooperative Education Fund.

The Commissioner must provide cooperative member education; the Registrar must accredit and publish accredited bodies; registered cooperatives must allocate 5% of net surplus for member education; cooperatives must file annual education plans three months before the financial year end.

Establishes an Audit and Supervision Fund; registered societies must pay annual supervision fees (and audit fees if audited), the Registrar administers and fixes fees and may require extra contributions, the Fund is audited annually by the Auditor General, and societies must file annual returns and pay a fee deposited into the Fund.

Schedule 3 to this Act applies to the registration of charges against the property of a registered society.

The Registrar may require officers, agents, servants or members of a registered society to produce all money, securities, books, accounts and documents relating to the society at a place and time the Registrar directs.

The Registrar may hold or order inquiries into a registered society (in consultation with the Board); the Board must respond within fourteen days when consulted; the Registrar may suspend officers during inquiry, appoint a caretaker if the chief executive is suspended, convene a special general meeting within thirty days if the committee is dissolved, and officers and members must produce records and information when required.

The Registrar may, on application by a creditor or registered society meeting specified conditions and providing security for costs, direct a person to inspect the society's books; the Registrar must communicate the inspection results to the creditor.

When an inquiry under section 59 or an inspection under section 60 is held, the Registrar may award and apportion the costs between the society, its members or a creditor demanding the inquiry or inspection, and officers or former officers of the society.

An award under section 61 may be recovered in any court of competent jurisdiction in the same manner as a decree of that court.

Savings and credit cooperative societies must discharge the listed functions, be registered under this Act by the Registrar, and must include the words "savings and credit cooperative or organisation" in their name; they must operate an office open for inspection by the Registrar during designated working hours.

Sets board composition and eligibility rules for savings and credit cooperative societies, including minimum directors, chairperson role, limits on employee-directors, Registrar vetting, and restrictions tied to subsection (4) and dates from 20 March 2020.

Persons may only become directors if they meet specified fitness requirements and the Registrar approves; the Registrar may request further information and may approve or withhold approval; providing false information to the Registrar is an offence punishable by a fine or imprisonment; at least 50% of directors must be resident in Uganda during their tenure.

Directors, officers and Shari’ah Advisory Board members of a savings and credit cooperative society must not participate in discussions or decisions where they have an interest, must inform the meeting of such interests, and must leave the meeting for matters in which they have an interest.

The Board of Directors must ensure and report to members at the annual general meeting on adequate internal controls, management information systems, and that the society’s business complies with applicable laws and Shari’ah where relevant; the directors must appoint two executive directors from among themselves who must meet residence and competence qualifications and effectively direct the society.

Directors of a savings and credit cooperative society owe fiduciary duties (honesty, best interests, independence, access to information) and the Board and each director must immediately report in writing to the Registrar when they have reason to believe the society faces specified financial or operational difficulties; the Registrar may withdraw approval if required reports are not made.

The Registrar may, for sufficient cause, remove a director or remove or suspend the whole Board.

The Registrar may order board meetings, require certified board minutes, direct board agendas and appoint observers; boards must meet within three days when ordered, meet quorum rules, and decisions under that meeting are binding; the Registrar must act if no director attends.

The Board must form an audit committee of at least two members, appoint a chairperson, and require specified officers to attend; the committee must meet quarterly and carry out listed audit and review duties; executive directors are disqualified from serving.

The Board must constitute an Asset and Liability Management Committee of at least two persons to carry out functions specified by the Board on risk tolerance and investment expectations; the Registrar may issue notices to societies about matters for that Committee.

Every savings and credit cooperative society must appoint an internal auditor qualified and experienced in banking who reports to the committee on audit; the internal auditor must perform specified duties including evaluation, appraisal, investigations and certifying returns to the Registrar.

Savings and credit cooperative societies must annually nominate a qualified audit firm from a Registrar-published pre-qualified list; societies must apply for Registrar approval and may have nominations approved, approved with conditions, or declined by the Registrar; the Registrar may appoint auditors and withdraw approvals for sufficient cause; societies must pay remuneration if the Registrar appoints auditors after a society's failure to nominate or obtain approval.

No person may hold office as an external auditor of a savings and credit cooperative society unless their appointment is approved by the Registrar under section 74.

A person shall not qualify to be appointed or act as an external auditor of a savings and credit cooperative society if any of several disqualifying conditions apply (registration, material interest, impaired independence as judged by the Registrar, employment or close association with the society, or performing secretary/bookkeeper duties).

External auditors must give written notice to the society and the Registrar when resigning or not seeking re-appointment; societies must not remove or change their auditor before the auditor's term expires except with the Registrar's prior written approval.

Firms of external auditors approved by the Registrar must have valid professional indemnity insurance for negligence in performing their duties, in force before the audit starts.

Audit firms and individual auditors must not serve the same savings and credit cooperative society as external auditors for a continuous period exceeding four years.

External auditors appointed under the Act must perform a primary audit duty and several specific duties (warn the Board of material matters, obtain sufficient evidence, plan and supervise work, test internal controls, exercise professional care and follow International Standards on Auditing, and assess and comment in writing on the Board's report before it is tabled at the annual general meeting).

External auditors must inform the Registrar on reasonable grounds of insolvency or contraventions, verify quarterly returns and required reports, submit a management letter disclosing shortcomings or contraventions, and perform other functions assigned by the Registrar.

External auditors appointed under the Act have a right of access at all times to the society's books, records, computer systems, vouchers and securities and to receive from officers and staff all information and explanations; any person must not obstruct the auditor or refuse or neglect to provide those items.

The Registrar may require current or former external auditors of a savings and credit cooperative society (or its subsidiary/affiliate) to provide information; failing to comply or providing false/misleading information is an offence punishable by a fine up to 250 currency points or up to two years' imprisonment, or both.

External auditors must submit an audit report to the savings and credit cooperative society; the society must ensure that report is submitted to the Registrar within three months after the close of its financial year; the society must provide a management letter of assurance and submit a copy with the audit report; failure to submit within the period is an offence with a fine of twenty currency points per day.

The auditor must identify and, where possible, quantify matters that caused a qualification in the audited annual financial statements of a savings and credit cooperative society.

The Registrar may reject an audit report and call for a fresh audit (at the expense of the cooperative society, the external auditor, or both); may appoint an auditor when rejecting a report; and must fix the auditor's remuneration to be paid by the savings and credit cooperative society.

The Registrar must, before annual accounts are finalised, dividends paid, and capital requirements met, require that a savings and credit cooperative society satisfy: (1) sufficiency of provisions for bad debts; (2) existence and enforcement of a policy of non‑accrual of interest on non‑performing loans; and (3) amortisation of preliminary expenses, goodwill and similar expenses.

The Registrar may require external auditors to provide additional information or carry out investigations, and must arrange annual meetings with each society and its auditor; auditors acting in good faith are not to be treated as breaching duties or professional codes for such actions.

The Registrar may remove certain officers of a savings and credit cooperative society and take steps including appointment of replacements; aggrieved persons may make representations within fourteen days; removed persons are entitled to up to three months’ salary compensation; persons convicted of financial impropriety cannot serve in management.

Savings and credit cooperative societies must promptly report specified non-performing loans and certain customer financial malpractice information to a credit reference bureau; other disclosures require customer consent; customers have the right to know what is held about them; the Registrar may establish and license bureaux and make related regulations.

Savings and credit cooperative societies must perform a credit check on any customer applying for credit unless the Registrar directs otherwise; the Registrar may, by statutory instrument after consulting the Minister, prescribe other circumstances when such checks are required.

The Registrar may investigate persons connected to a registered society for misapplication or breach of trust and order them to repay, restore or contribute money or property; amounts awarded are a civil debt recoverable summarily.

Any person aggrieved by an order of the Registrar under section 139 may appeal to the Minister within twenty-one days from the date of that order; the Minister's decision shall be final subject to section 143.

The Registrar may order the conditional attachment of a person's property if satisfied the person intends to defraud or delay execution or is about to dispose of property, unless adequate security is furnished.

Sets arbitration procedures for disputes involving registered societies, including appointment of arbitrators, arbitrator powers, appeals to the Board, and exceptions for Cooperative Bank Limited.

Acts done by an arbitrator or arbitrators bona fide to execute section 141 do not subject the arbitrator to civil liability.

Anyone aggrieved by the Registrar's decision (including under section 141 or other provisions of the Act) may apply to court for redress; the Chief Justice may make court rules governing the hearing of such applications.

A party to a dispute under section 142 is prohibited from engaging a legal representative before an arbitrator or arbitrators, except in three specified situations.

Requires cooperative training colleges to be managed by the Ministry responsible for cooperatives and for those colleges to develop cooperative knowledge for members.

Officers or members of a registered society must not receive payment from the society unless approved by a general meeting resolution after consultation with the Registrar; payments from others require society consent after consultation with the Registrar in special circumstances; contraventions are offences with fines or imprisonment and repayment may be ordered; the Registrar and the Board have powers to report and prohibit payments.

Persons who are not a registered society must not trade or carry on business using any name that includes the word “Cooperative” unless the Registrar sanctions it.

The Minister may make regulations (in consultation with the Board) to carry out the Act; the regulations may prescribe a long list of matters such as forms, byelaws, membership rules, audits, accounts, registers, fees, loans, reserve funds, dividends and appeals procedures.

Specifies various offences by registered societies, their officers or members and others (e.g. failing to do required acts, doing prohibited acts, providing false information, disobeying summons), and sets penalties of up to 0.25 of a currency point or up to six months imprisonment, or both.

Persons, firms or companies who know of a contract under section 35 must not solicit, persuade, or assist others to sell or deliver produce in breach of that contract; on conviction they commit an offence and face a fine up to 0.25 of a currency point for each offence and must also be ordered to pay damages to the society concerned.

Nothing in this Act relieves any society of its obligations under other laws governing or regulating its business activities.

The Companies Act and the Business Names Registration Act do not apply to a registered society; and registered societies are not to be deemed labour unions notwithstanding the Labour Unions Act.

The Minister responsible for finance may, by statutory instrument and with Cabinet approval, amend Schedule 1 to this Act.