Kericho County Cooperative Societies Act, no. 4 of 2017

1. This Act may be cited as the Kericho County Co- Short title and commencenient Operative Societies Act, 2017 and shall come into operation upon publication in the Gazette.

2. In this Act, except where the context otherwise Interpretation requires— “agricultural produce” means any produce or article produced or obtained by the work or industry of members of a co-operative society or marketed by a co-operative society, whether the produce be of agriculture, animal husbandry, forestry, fisheries, handicrafts or otherwise: “apex society” means a national umbrella co-operative society whose membership is open to all co-operative societies and entire co-operative movement, to promote co- operative development and represent the interests of co- operative societies locally and internationally; “board of directors” means the governing body of a co- operative society to whom the management of its affairs is entrusted, and includes the committee; “bonus” in relation to a member of a co-operative society, means that member’s share of the surplus of the society which is divided amongst its members, calculated by reference to the proportion which that member's volume of business with the society bears to the total volume of business done by the society; “by-laws” means the by-laws made by a society and registered under this Act and includes any registered amendment of such by-laws; “capital” means the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings, grants or donations; 6 No. 4 Kericho Caunty Co-aperative Societies 2017 “deposit-taking SACCO business” means— (a) the accepting from members of money on deposit payable on demand or at the expiry of a fixed period or after notice: and (b) the employing of money held on deposit or any part of the money, by lending to members or other authorized persons, investment or in any other manner for the account and at the risk of the SACCO. “Director” means the County Director for Co-operative Management appointed under section 6 and includes a deputy director or any person discharging the functions of the Director: “Committee” means the governing body of a co- operative society to whom the management of its affairs is entrusted, and includes a board of directors; “contributor” means a person liable to contribute to the assets of a co-operative society in the event of its being wound up and for the purposes of any proceedings for determining and before the final determination of the persons who are to be deemed contributors, includes any person alleged to be a contributor; “co-operative society” means a society registered under section 7 and includes a co-operative society registered in another county and licensed to operate within the county; “co-operative union” means a co-operative society whose membership is restricted to primary societies; “date of dissolution” means the date on which the Director’s order cancelling the registration of a co-operative society takes effect, “deposit” means a sum of money received by a society from a member on terms under which it shall be repaid, with or without interest or premium, and either on demand or at a time or in circumstances agreed between the society and the member; “dividend” in relation to a member of a co-operative society, means that member’s share of the surplus of the society which is divided amongst its members, calculated by reference to the proportion which that member's share capital bears to the total share capital of the society; 7 2017 Kericho County Co-operative Societies No, 4 “East African Co-operative Society” is a Co-operative Society registered under the East African Co-operative Societies Act enacted by the East African Legislative Assembly and assented to all the East African Partner State members. “Executive Committee Member” means the County Executive Committee Member for Trade, Industrialization, Cooperative Management, Tourism and Wildlife being responsible for co-operative societies; “Investment co-operative society” means a co- operative society whose core activity is to raise money for investment in any sector not prohibited by law. “limited liability” means limited by shares or limited by guarantee, according to the nature of the liability prescribed by the by-laws of the co-operative society; “member” includes a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by- laws; “NACO” means a national co-operative organization; “officer” includes a chairperson, vice-chairperson, secretary, treasurer, committee member, employee or any other person empowered under any rules made under this Act, or by-laws of a co-operative society, to give directions in regard to the business of the society; “personal representative” means any person who, under law or custom, is responsible for the administration of the estate of a deceased person; “primary society’’ means a co-operative society whose membership is restricted to individual persons; “SACCO society” means a savings and credit co- operative society; “share” means the amount represented by a member's portion in the equity of a society as a co-owner; “special general meeting” means a general meeting, other than an ordinary general meeting, of which at least fifteen clear days written notice of the resolution and of the date, time and place of the meeting has been given to each member; 8 No.4 Kericho County Co-operative Societies 2017 “special resolution” means a resolution passed by two thirds of the members present and voting at a general meeting of a society; “supervisory committee” means an _ oversight committee elected at a general meeting; “Tribunal” means the Co-operative Tribunal established under section 77 of the Co-operative Societies Act (Cap 490) Laws of Kenya. “winding up” means all proceedings subsequent to the dissolution of a co-operative society.

3. The object and purpose of this Act is to provide Object and purpose the legislative and institutional framework to facilitate the — (a) promotion and development of co-operative societies pursuant to section 7 ( e) of Part Ul of the Fourth Schedule to the Constitution; (b) formation, registration and licensing of co- operative societies: (c) promotion of cooperation between the national and county governments in matters relating to co-operative societies; and (d) promotion of corporate governance of co- operative societies.

4. (1) Subject to subsections (2) and (3), this Act Application shall apply to all co-operative societies. (2) This Act shall apply to a Sacco society carrying out deposit-taking business under the Sacco Societies Act with respect to any matter, to the extent that the matter in question is not dealt with in the Sacco Societies Act. (3) This Act does not apply to the Apex Society, NACOs, East African co-operative Society or other co- operative society excluded under any law, unless operating within Kericho County. PART IT—ADMINISTRATION AND REGISTRATION OF CO-OOPERATIVE SOCIETIES

5. The County Executive Committee member shall Role of the County Executive be responsible for the growth and development of co- Committee, operative societies in the County, and shall in particular— Member 9 2017 Kericho County Co-operative Societies No.4 (a) develop and oversee the implementation of county co-operative societies policies and strategies; (b) promote good governance in co-operative societies; {c) provide liaison with the national government on matters relating to co-operative societies; {d) advise the County Government on matters relating to the co-operatives; {e) authorize the cancellation of licenses or de- registration of co-operative societies, subject to the provisions of this Act; (f) collaborate with one or more County Governments and National Government in promotion and development, registration, supervision and regulation of Co-operative Societies within and outside the County; (g) issue guidelines and rules to facilitate growth and regulation of co-operative societies; (h) establish and put in place an office specially tasked to promote good ethics and high integrity in management of Co-operatives and devise mechanisms of enforcing the same; (i) take affirmative action in promotion, development and registration of youth, women, persons living with disability co-operative societies; (j) act as the sole and central office through which all manner of trade licenses and permits to co- operative societies are issued; and (k) perform such other functions as may be assigned to the office under this Act. Director, deputy

6. (1) There shall be a County Director for Co- directors and other operative Management whose office shall be an office officers, within the county public service. (2) There shall be two deputy directors and such number of officers, as may be necessary to assist the Director in the administration of this Act. 10 No.4 Kericho County Co-operative Societies 2017 (3) The Director shall be responsible to the County Executive Committee Member for the growth, development and regulation of co-operative societies and shall in particular— (a) process applications for registration of Co- operatives: (b) Register cooperative societies; (c) supervise and inspect co-operative societies to ensure compliance with the law; (d) maintain the register of co-operative societies within the county; (e) supervise dissolution, division or amalgamation of a cO-operative societies; and (f) ensure mechanisms are in place for the revival of dormant cooperative societies; and g) perform such other functions as may be assigned to the office under this Act or by the County Executive Committee Member. (4) The two deputy directors shall be responsible to the Director for promotion and development; and administration of cooperative societies respectively. PART III—FORMATION, ORGANISATION AND STRUCTURE OF CO-OPERATIVE SOCIETIES

7. The structure of co-operatives is made up of primary prin ae * . . t fallves. Co-operative societies formed at the County level and inter-County level; NACOs and Apex Society.

8. A primary co-operative society may be formed primary Formation co- ofa by— Operative. (a) ten or more individuals; or (b) ten or more individuals for specialized skills co- Operative society and investment co-operative society. 9. ape A person other than a* co-operative society* shall . US aurea for a rsp, be qualified for membership of a co-operative society F unless — (a) the person has attained the age of eighteen years: lI 2017 Kericho County Co-cperative Societies No. 4 (b) the person’s employment, occupation or profession falls within the category or description of those for which the co-operative society is formed; and (c) the person ts resident within, or occupies fand within, the society’s area of operation or as described in the relevant by-law.

10.(1) A primary co-operative society may be a Affiliation. member of a co-operative union, affiliated to a NACO or an Apex society. (2) Co-operative unions and NACOs may be affiliated oO an Apex society.

11. The Director may register the following types of Types of co- opérative societies. co-operative societies— (a) marketing co-operative societies to deal with the processing, packaging and marketing of members agricultural produce: (b) consumer co-operative societies to deal with wholesale and retail business to be patronized by members and other members of the public; (c) Industrial co-operative societies for production, manufacturing and sale of goods; (d) housing co-operative societies to deal with purchase of land, building and construction = - P . . . 7 of houses at affordable rates to members: (e) Livestock co-operative societies to deal with the needs of members in animal husbandry, livestock keeping and dairy farming; (f) Fisheries co-operatives to deal with fishing, processing, packaging and marketing of fish and sea products; (g) SACCOs to deal with offering members services of savings and credit; (h) Investment co-operative societies formed by not less than ten members to deal with investment in specific sectors; (i) Special skilled co-operative societies formed by j2 No.4 Kericho County Co-operative Societies 2017 specially skilled persons like doctors etc; (j) Such other co-operative societies as may be established from time to time.

12. (1) Subject to the provisions of this Act, a society Registration of co-operative which has as its objects — saciclics, (a) the promotion of the welfare and economic interests of its members; and (b) has incorporated in its by-laws the following co- operative principles— (i) voluntary and open membership; (11) democratic member control; (iii) economic participation by members; (iv) autonomy and independence; (v) education, training and information; (vi) co-operation among co-operatives; and (vit) concern for community in general, may be registered by the Director as a co-operative society under this Act with limited liability. (2) Two or more co-operative societies may apply to amalgamate and form one co-operative society subject to compliance with the rules on amalgamation prescribed in accordance with this Act. (3) A co-operative society may apply to divide into two or more co-operative societies subject to compliance with the prescribed rules under this Act.

13. For a society to be registered under this Act, it Eligibility for registration of a co- shall— operative society. (a) consist of at least ten persons all of whom shall be qualified for membership of the co-operative society under section 14, in the case of a primary society: or (b) consist of at least the minimum number of individual persons qualified for membership as provided for under section 8 of this Act.

14. (1) Where practicable, an application to register a Procedure for registration. 13 2017 Kericho County Co-operative Societies No.4 society shall be processed and endorsed by the ward co- operative officer or sub-county co-operative officer, before the same is presented to the Director in the prescribed form and shall be signed— (a) in the case of a primary society other than a specialized skills co-operative society and an investment co-operative society, by at least ten persons qualified for membership of the society under section 8; (b) in the case of a specialized skills co-operative society and investment co-operative society, by at least 10 persons qualified under section 8; (c) in the case of a co-operative union, by a person duly authorized in that behalf by each co-operative society or co-operative union, as the case may be, who are members thereof. (2) The application shall be accompanied by four copies of the proposed by-laws of the society in English and the persons on whose behalf the application is made shall furnish such information with regard to the society as the Director may require. (3) The proposed bylaws shall be made in conformity with model bylaws in the schedule. Provided that where the proposed by law has omitted to provide for an issue, the provisions of the model by law shall apply as if they were provided for in the proposed bylaw. (4) The Director shall, within thirty days from the date of receipt of an application— (a) register the society; or (b) reject the application with a written explanation pointing out the provisions of the Act not complied with and in the case where in the opinion of the Director he thinks corrections can be made, require a duly corrected application for registration to be re-submitted within [5 days from the date such rejection is communicated, (5) An application made under subsection (4)(b) shall be processed within 15 days from the date it is made.

15. (1) If the Director is not satisfied that a society Provisional registration. [4 No.4 Kericho County Co-operative Societies 2017 has complied with this Act, or is of the opinion that further steps need to be taken by the persons on whose behalf the application for registration is made in order to comply with this Act, the Director may in his discretion provisionally register the society for such period, not exceeding one year, and subject to its compliance with such terms and conditions and provisions, as the Director may specify in writing. (2) A provisional registration shall entitle the society to operate as a co-operative society and to operate as a body corporate. (3) A society which is provisionally registered shall cause the fact that it is provisionally registered to be stated in legible Roman letters in all bill heads, letters, papers, notices, advertisements and other official publications of the society, and on a sign board in a conspicuous position outside any premises in which it operates.

16. (1) A co-operative society may appeal to the Appeal against refusal to register. Executive Committee Member against the decision of the Director refusing to register the society. (2) Any party aggrieved by the decision of the Executive Committee Member under subsection (1) may appeal against the decision to the High Court within thirty days.

17. (1) No society shall be registered under a name Protection of the name “co- identical with that under which any other existing society is operative”. registered, or under any name likely, in the opinion of the Director, to mislead the members of the public as to its identity. (2) The word “co-operative” shall form part of the name of every co-operative society, and the word “limited” shall be the last word in the name of every co-operative society having limited liability.

18. (1) A certificate of registration or of a provisional Evidence of registration, registration signed by the Director shall be conclusive evidence that the society therein mentioned is duly registered or provisionally registered, unless it is proved that such registration of the society has been cancelled or has been terminated. (2) The certificate of registration bearing the number 15 2017 Kericho County Co-operative Societies No. 4 and date of registration shall be displayed at the head office of every co-operative society. (3) A copy of the by-laws of a co-operative society or of an amendment of such by-laws certified by the Director shall be satisfactory evidence for all purposes of the registration of such by-laws or such amendment. (4)A document purporting to be signed by the Director shall be presumed to have been signed by him until the contrary is proved.

19. (1) Upon registration, every society shall be a body Co-operative society to be body corporate and shall be capable in its corporate name of — corporate. (a) suing and being sued; (b) purchasing, acquiring, or otherwise holding, and or disposing of movable and immovable property; (c) entering into contract; and (d) borrowing money. (2) There shall be a county register of Co-operative Societies into which shall be entered particulars of all registered co-operative societies including— (a) the name of co-operative society; (b) physical address of its offices; (c) nature of business; (d) number of members: and (e) such other particulars as the director may determine. (3) A co-operative society registered under this Act may establish a branch or other offices other than its registered headquarters and file a notification of such establishment with the Director subject to payment of requisite fees. Membership to 20. <A co-operative society registered under this Act apex society and may by virtue of that registration become a member of the annual apex society and may participate in the affairs of the apex subseriptions society by way of annual subscriptions.

21. The by-laws of a co-operative society bind the co- By-laws to bind society and operative society and the members. members. 16 No.4 Kericho County Co-operative Societies 2017

22. (1) A co-operative society may, subject to this Act, Amendment of by- laws. amend its by-laws. (2) No amendment of the by-laws of a co-operative society shall be valid until the amendment has been registered under this Act by forwarding to the Director a copy thereof in the prescribed manner. (3) The Director may cancel the amendment if he discovers that an amendment was effected and registered through misrepresentation or concealment of a material fact. (4) An amendment which changes the name of a co- operative society shall not affect any right or obligation of that society or its members. (5) When the Director registers an amendment of the by-laws of a co-operative society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence of the fact that the amendment has been duly registered. (6) In this section, “amendment” includes the making of a new by-law and the variation or revocation of a by-law, but excludes the variation of the registered address of a co- operative society where this forms a part of the by-laws of such a society. PART IV—RIGHTS AND LIABILITIES OF MEMBERS

23. No member, other than a co-operative society, shall Limitation of holding share hold more than one-fifth of the issued and paid-up share capital. capital of any co-operative society.

24. No company incorporated or registered under the Membership subject to authorization by Companies Act (Cap. 486), and no unincorporated body of annual general persons shall be entitled to become member of a co- meeting, operative society, except with a written authorization through a resolution by a general meeting of that co- operative society.

25. No member of a co-operative society shall exercise Membership of co- operative society. any of the rights of a member unless he has made such payment to the society in respect of membership, or has acquired such interest in the society as may be prescribed under this Act or under the by-laws of the society.

26. No person shall be a member of more than one co- Limitation of membership to one 17 2017 Kericho County Co-operative Societies No.4 operative society having the same or similar object: society. Provided that a person who— (a) is a member of a co-operative society; and (b) carries on business on land or at premises outside the area of operation of that co-operative society, may be a member of a co-operative society in whose area of operation that land or those premises are situated, notwithstanding that its objects are the same as or similar to those of the - first-mentioned society.

27. Each member of a co-operative society shall have Voting rights of members. one vote only in the affairs of the society, irrespective of the number of shares the member holds: Provided that a co-operative society which is a member of a co-operative union or an apex society shall have as many votes as may be prescribed by the by-laws of the co- Operative union or apex society of which it is a member, and may, subject to such by-laws, appoint any number of its committee members, not exceeding the number of such votes, to exercise its voting power.

28. (1) The transfer or charge of the share or interest Transfer of shares. of a member in the capital of a co-operative society shall be subject to such conditions as to maximum holding as are laid down in section 23; (2) In the case of a co-operative society registered with ~ unlimited liability, a member shall not transfer or charge any share held by him or his interest in the capital of the society or any part thereof, unless— (a) he has held such share or interest for at least one year; and (b) the transfer or charge is in favour of the society or a member of the society.

29. A member of a co-operative society shall have the Rights of members. right to— (a) attend and participate in decisions taken at all general meetings of the society and vote: (b) be elected to organs of the society, subject to its by- laws; 18 No. 4 Kericha County Co-operative Societies 2017 {c) enjoy the use of all the facilities and services of the society subject to the society's by-laws; (d) all legitimate information relating to the society, including: internal rules, registers, Minutes of general meetings, supervisory committees, reports, annual accounts and inventories, investigation reports, at the society's head office.

30. A member of a co-operative society shall have Member's obligations. the obligation to— (a) observe and comply with all the society by-laws and decisions taken by the relevant organs of the co-operative society in accordance with the by-laws of that society; (b) buy and pay up for shares or make any other payments provided for in the by-laws of the society: and (c) meet the debts of the society in case of bankruptcy in accordance with this Act and the by-laws of the society. PART V—DUTIES OF CO-OPERATIVE SOCIETIES

31. Every co-operative society shall have a registered Registered office and address of co- office and address to which notices and communications operative society. may be sent and shall send to the Director notice of every change of address and office within one month of the change.

32. Every co-operative society shall keep a copy of this Society to keep certain documents Act and of the Rules made thereunder including its own by- at registered office, laws and a list of its members (excluding details of nominees and shareholdings) at its registered office and shall keep them open for inspection by any person, free of charge, at all reasonable times during business hours.

33. For each financial year, the Committee of a co- Estimates of income and expenditure. operative society shall cause to be prepared estimates of the society's income and expenditure including recurrent and capital estimates for approval by the general meeting at least three months before the end of the preceding financial year.

34. (1) Every co-operative society shall keep proper Account and audit. accounts which shall— 19 2017 Kericho County Co-operative Societies No.4 (a) be prepared in accordance with International Accounting Standards; (b) reflect the true and fair state of the co-operative society's affairs; and (c) explain the co-operative society’s transactions including— (i) all sums of money received and paid by the co-operative society and the reasons thereto; (ii) all sales and purchases of goods and services by the co-operative society; and (iii) all assets and liabilities of the co-operative society. (2) The books of accounts shall be kept at the registered office of the co-operative society or at such other place as may be determined by the co-operative society and shall at all times be available for inspection by members of its supervisory committee and the auditor. (3) It shall be the duty of every co-operative society to cause its accounts to be audited at least once in every financial year by an auditor appointed under subsection (4). (4) The auditor shail be appointed at the annual general meeting from a list of auditors approved by the Director, in consultation with the Institute of Certified Public Accountants of Kenya. (5) Where at an annual general meeting no auditor is appointed, the Director may appoint a person to fill the vacancy and the remuneration of the person so appointed shall be borne by the co-operative society. (6) The accounts referred to in subsection (3) shall— (a) conform with International Financial Reporting Standards; (b) include the following records— (i) a balance sheet; (ii) a statement of comprehensive income and expenditure account; and (iii) a cash flow statement; (c) be approved by the Committee; and 20 No.4 Kericho County Co-operative Societies 2017 (d)be authenticated by at least three Committee members including the chairperson of the co- operative society. (7) No auditor shall present the audited accounts of a co-operative society to the members at a general meeting unless the accounts have previously been submitted to the Director in such form as may be prescribed. (8) The auditor shall present the audited accounts to a general meeting within four months after the end of the accounting period and shall include his opinion as to whether or not the co-operative society’s business has been conducted — (a) in accordance with the provisions of this Act and, whether the books of accounts kept by the co- Operative society are in agreement therewith and give a true and fair view of the state of the affairs of the society; and (b) in accordance with the co-operative society's objectives, by-laws and any other resolutions made by the society at a general meeting. (9) The auditor shall have the right to— (a) attend any general meeting of the co-operative society and be heard on any matter which concerns him as an auditor; (b) receive all notices and other communications relating to any general meeting which a member of the co-operative society is entitled to receive; (c) access, at all times, any accounting records, books or documents of the co-operative society as may be necessary for the purpose of carrying out his duties as an auditor and may at the time of his audit— (i) summon any officer, agent or member of the co- operative society for the purpose of obtaining information on the transactions of the co- operative society or management of its affairs; (ii) require the production of any book, document, cash or securities relating or belonging to the co- operative society by any officer, agent, trustee or member having custody of such book, document, 2 2017 Kericho County Co-operative Societies No.4 cash or securities; (iii) demand such other information or explanation from any officer of the co-operative society as may be necessary for the performance of his duties as an auditor. (10) Every co-operative society shall, at such time and in such form as may be prescribed, file with the Director an annual return together with a certified true copy of the audited accounts and balance sheet of the society for each period of twelve months. (11) Where a co-operative society fails to cause its accounts to be audited within the prescribed period in respect of its business for the previous financial year, members of the Committee shall automatically lose their positions at the next general meeting and shall not be eligible for re-election for three years. (12) For the purposes of this section, “International Accounting Standards” and “International Financial Reporting Standards” means the standards established by the Institute of Certified Public Accaquntants of Kenya must be complied with.

35. Any officer, agent, servant or member of a co- Production of books and other operative society who is required by the Director, or by a documents. person authorized in writing by him to do so shall, at such place and time as the Director may direct, produce all moneys, securities, books, accounts and documents belonging to or relating to the affairs of such society which are in the custody of such officer, agent, servant or member. PART VI—-MANAGEMENT OF CO-OPERATIVE SOCIETIES

36. (1) The supreme authority of a co-operative society*ner! meetings. shall vest in the general meeting in which members shall have the right to attend and vote on all matters. (2) Subject to subsection (3) a co-operative society shall hold an annual general meeting within four months after the end of each financial year. (3) In the first year after registration of a co-operative society, the first general meeting shall be held not later than one month after receipt of the certificate of registration of the co-operative society and during such 22 No.4 Kericho County Co-operative Societies 2017 meeting, the members shall — (a) elect the co-operative society's office bearers for the ensuing year; (b) determine the maximum borrowing powers of the co-operative society; (c) consider and approve estimates of income and expenditure for the ensuing financial year or part thereof; (d) appoint the co-operative society’s bankers and auditors; and (e) receive reports and decide upon such other matters as may be necessary for the conduct of the co- operative society’s business. (4) A general meeting of a co-operative society shall be convened by giving at least fifteen days written notice to the members. (5) At the annual general meeting of a co-operative society, the members shall — (a) consider and confirm the minutes of the last general meeting: (b) consider any reports of the Committee or the Director; (c) consider and adopt audited accounts; (d} determine the manner in which any available surplus is to be distributed or invested; (e) elect the co-operative society’s office bearers for the ensuing year; (f) determine, where necessary, the maximum borrowing power of the society; (g) appoint an auditor for the ensuing year; and (h) transact any other general business of the co- operative society of which notice has been given to members in the manner prescribed in the by-laws of the co-operative society. (6) A special general meeting of a co-operative society may be convened— 23 2017 Keriche County Co-operative Societies No. 4 (a) by the Committee for the purpose of approving annual estimates or discussing any urgent matter which in the Committee’s opinion is in the interest of the co-operative society; or (b) on receipt of a written notice for such meeting signed by such number of the members of the co- operative society as may be prescribed in the rules and stating the objects and reasons for calling the meeting. (7) If the Committee fails to convene a meeting within fifteen days of receiving the notice under subsection (6)(b), the members shall seek approval from the director to convene the meeting who may give notice to the other members of the co-operative society, stating the objects and reasons for the meeting and the fact that the Committee has failed to convene the meeting. (8) The Director may convene a special general meeting of a society at which he may direct the matters to be discussed at the meeting. (9) The chairperson or in his absence the vice- chairperson or such other person as may be prescribed in the by-laws of the co-operative society shall preside at a general meeting of a co-operative society. (10) The Director may preside at any meeting convened under subsection 8.

37. (1) A co-operative society may establish Membership and powers of the Committees consisting of not less than five and not more Committee than nine members. (2) The members of the Committee shall elect a chairperson, vice-chairperson, secretary and the treasurer from among their number. (3) The Committee shall be the governing body of the society and shall, subject to any direction from a general meeting or the by-laws of the co-operative society, direct the affairs of the co-operative society with powers to— (a) enter into contracts: (b) institute and defend suits and other legal proceedings brought in the name of or against the co-operative society; and (c) do all other things necessary to achieve the objects 24 No.4 Kericho County Co-operative Societies 2017 of the co-operative society in accordance with its by-laws. (4) No person shall be a member of a Committee if the person— (a) is not a member of the co-operative society; (b) is under eighteen years of age; (except in co- operatives formed under affirmative action for children under 18 years) (c) is unable to read and write; (d) receives any remuneration, salary or other payment from the co-operative society save in accordance with this Act; (e) is a committee member in not more than two other co-operative societies; (f) has been adversely named by the Director in an inquiry report adopted by a general meeting for mismanagement or corrupt practices while a member of the Committee; (g) has been convicted of any offence involving dishonesty or is sentenced to imprisonment for a term exceeding three months: (h) has been unable to pay a debt owing to a co- operative society as required other than in respect of a loan under the provision of any rules made under this Act; and (i) is a person against whom any amount of money is due under a decree, decision or order or is pending recovery under this Act. (5) The Committee may delegate any of its duties under this Act to an officer or officers of the co-operative society but, nothing in this subsection shall absolve the Committee from its responsibility to run the affairs of the co-operative society in a proper and business like manner. (6) In the conduct of the affairs of a co-operative society the Committee shall exercise the prudence and diligence of ordinary men of business and the members shall be held, jointly and severally liable for any losses sustained through any of their acts which are contrary to the 25 2017 Kericho County Co-operative Societies No.4 Act, rules, by-laws or the directions of any general meeting of the co-operative society. Provided that a member of the management committee shall not be liable for actions or omissions committed in good faith and in the course of duty to the Co-operative society. (7) The Director may suspend from duty any Committee member charged in a court of law with an offence involving fraud or dishonesty in respect to the co- operative society the committee member is serving pending the determination of the matter.

38. (1) The term of a committee shall be three years Term of the committee with one third of the members of the committee retiring at the end of each year on a rotational basis. Provided that a member of the committee retiring on a rotational basis may offer oneself for re election. (2) A serving member of the Management Committee or Board of Directors wishing to compete in any elective office either at the County or National level during the general elections shall need to resign within the period stated in the relevant election laws. PART VII —AMALGAMATION AND DIVISION OF CO-OPERATIVE SOCIETIES

39. (1) Any two or more co-operative societies may, Amalgamation of co-operative by special resolution (in this section referred to as the societies. preliminary resolution), resolve to amalgamate as a single society (hereinafter referred to as the amalgamated society). (2) A copy of the preliminary resolution shall be sent to all the members and creditors of each of the amalgamating societies, and to all other persons whose interests in any of the amalgamating societies will be affected by the amalgamation. (3) Any member of any of the amalgamating societies may, notwithstanding any by-law to the contrary, by notice in writing given to his society at least one month before the date specified as the date of amalgamation, intimate his intention not to become a member of the amalgamated society. (4) Any creditor of any of the amalgamating societies may, notwithstanding any agreement to the contrary, by 26 No. 4 Kericho County Ca-operative Societies 2017 notice in writing given to such society at least one month before the date specified as the date of amalgamation, intimate his intention to demand the payment of any money due to him. (5) Any other person whose interest will be affected by the amalgamation may, by notice in writing given to the concerned amalgamating society, not less than one month before the date specified as the date of amalgamation, object to the amalgamation unless his claim is satisfied. (6) Not less than three months after the date of the meeting at which the preliminary resolution is passed, a further special general meeting of each of the amalgamating societies shall be held to consider the preliminary resolution and any notices received under this section. (7) At the special general meeting held under subsection (6) provision shall be made by a further resolution of the society (in this section referred to as the secondary resolution) for— (a) the repayment of the share capital of any member who has given notice under subsection (3); (b) the satisfaction of any claims by creditors who have given notice under subsection (4); and (c) the satisfaction of the claims of such other persons who have given notice under subsection (5) securing of their claims in such manner as determined or directed by the Director. Provided that no member or creditor or other person shall be entitled to such repayment or satisfaction until the preliminary resolution is confirmed as provided in subsection (8). (8) Each amalgamating society may, by further resolution passed by a two-thirds majority of the members present and voting, confirm the preliminary resolution. (9) If, within such time as the Director considers reasonable, the Director is satisfied that the secondary resolutions of each of the societies amalgamating comply with the provision of this section, he may register the amalgamated society and its by-laws and thereupon— (a) each of the amalgamating societies shall stand 27 2017 Kericho County Co-operative Societies No. 4 dissolved and its registration cancelled; (b) the registration of the amalgamated society shall be a sufficient conveyance to vest the assets and liabilities of the amalgamating societies in the amalgamated society; (c) the remaining members of the amalgamating societies shall become members of the amalgamated society and will be subjected to its bylaws: (d) any share holders of the amalgamating societies or any other persons who have claims against the amalgamating societies and whose claims were not satisfied in accordance with the secondary resolution, may pursue such claims against the amalgamated society. (10) Where the Director refuses the amalgamation of the amalgamating societies under subsection (9) such societies may appeal against such refusal to the Executive Committee Member. Division of co-

40. (1)A co-operative society (hereinafter referred to as operative societies. the existing society) may, by special resolution (in this section referred to as the preliminary resolution), resolve to divide itself into two or more co-operative societies (hereinafter referred to as the new societies). (2) The preliminary resolution shall contain proposals for the division of assets and liabilities of the existing society among the new societies in which it is proposed to be divided and may prescribe the area of operation of, and specify the members who will constitute each of the new societies. (3) A copy of the preliminary resolution shall be sent to all the members and creditors of the existing society, and to all other persons whose interests will be affected by the division of the existing society. (4) Any member of the existing society may, notwithstanding any by-law to the contrary, by notice in writing given to the society within two months of the receipt of the copy of the preliminary resolution, intimate his intention not to become a member of any of the new societies. 28 No.4 Kericho County Co-operative Societies 2017 (5) Any creditor of the existing society may, notwithstanding any agreement to the contrary, by notice in writing given to the existing society within two months after his receipt of the copy of the preliminary resolution, intimate his intention to demand the payment of any money due to him. (6) Any other person whose interest will be affected by the division may, by notice in writing given to the existing society within two months of the receipt of the preliminary resolution, object to the division. (7) After the expiry of three months after the date of the preliminary resolution, a further special general meeting of the existing society shall be held to consider the preliminary resolution and any notices received under this section. (8) At the special general meeting held under subsection (7), provision shall be made by a further resolution of the society for— (a) the repayment of the share capital of any member who has given notice under subsection (2); (b) the satisfaction of any claims by creditors who have given notice under subsection (5); (c) the satisfaction of the claims of such other persons who have given notice under subsection (6) or the securing of their claims as the Director may determine, or direct: Provided that no member or creditor or other person shall be entitled to such repayment or Satisfaction until the preliminary resolution is confirmed as provided in subsection (9). (9) The society may, by further resolution passed by a two-thirds majority of the members present and voting, confirm the preliminary resolution, with or without changes as in the opinion of the Director are not substantial, and the decision of the Director as to whether any changes are or are not substantial shall be final. (10) If. the Director is satisfied within such time as he considers reasonable that the provisions of the secondary resolution and the provisions of this section have been complied with, he may, register the societies into which the existing society has been divided and the by-laws of such societies and thereupon — 29 2017 Kericho County Co-operative Societies No.4 (a) the registration of the existing society shall stand dissolved; (b) the registration of the new societies shall be sufficient to vest the assets and liabilities of the existing society in the new societies in the manner specified in the preliminary resolution, as confirmed; (c) the remaining members of the existing society shall become members of one or other of the new societies, as is provided by the preliminary resolution, as confirmed; and (d) any shareholders or creditors of the existing society and any other persons who have claims against the existing society and whose claims were not satistied in accordance with the secondary resolution, may pursue such claims against one or other of the new societies, as is provided by the preliminary resolution, as confirmed. (11) Where the Director refuses to approve the division of an existing society under subsection (10), the society may appeal to the Executive Committee Member within thirty days of the communication to it of the refusal. PART VITi—RIGHTS AND OBLIGATIONS OF CO-OPERATIVE SOCIETIES

41. (1) A co-operative society which has as one of its Society to have charge over objects the disposal of any agricultural produce, may enter member's into a contract with its members, either in its by-laws or by produce. a separate document binding the members to dispose of all their agricultural produce, or such amounts or descriptions of the same as may be stated therein, to or through the society, and the contract may bind the members to produce the quantities of agricultural produce therein specified. and the contract may also provide for payment of a specific sum per unit of weight or other measure as liquidated damages for any breach of the contract, and any such sum on becoming payable shall be a debt due to the society and shall be a charge upon the immovable property of the member (subject to registration of the charge under the law under which the property is registered) and all stock then being thereon. 30 2017 No.4 Kericho County Co-operative Societies (2) Any such contract as is mentioned in subsection co- (1) shall have the effect of creating in favour of the of all operative society a charge upon the proceeds of sale . produce mentioned therein, whether existing or future (3) A co-operative society may, on the authority of a e resolution passed in general meeting. pledge the produc is deliverable by members under any such contract as made to mentioned in subsection (1) as security for loans the the society, in all respects as if it were the owner of produce. (4) No contract entered into under this section shall be contested in any court on the ground that it constitutes a contract in restraint of trade. Fines for violation

42. (1) The by-laws of a co-operative society may. of by-laws. subject to this Act, provide for the imposition of fines, not exceeding twenty thousand shillings, on its members for be any infringement of its by-laws, but no such fine shall ion imposed upon any member until written notice of intent served to impose the fine and the reason therefore has been cause on him and he has had an opportunity of showing s, of why the fine should not be imposed and, if he so desire being heard with or without witnesses. the co- (2) Any such fine shall be a civil debt due to to any other operative society, and shall. without prejudice means of recovery, be recoverable summarily. (3) The whole or any part of such fine may be set off ct of against any moneys due to such member in respe produce delivered by him to the co-operative societ y. the (4) A member shall not be taken to have infringed having by-laws of a co-operative society by reason of his failure was failed to deliver produce to such society. if the the due to the fact that, before becoming a member of to some society, he had contracted to deliver such produce discl osed in other person, and the contract had been accordance with subsection (5). for (5) It shall be the duty of every person applying to the membership of a registered society to disclose ione d in society particulars of all such contracts as are ment subsection (4). 3] 2017 Kericho County Co-operative Societies No.4

43. (1) Subject to any other written law as to priority Society to have of debts where a co-operative society has— first chatge over debts, assets. ete, (a) supplied to any member or past member any In certain cases seeds or manure, or any animals. feeding stuff, agricultural or industrial implements or machinery or materials for manufacture or building: or (b) rendered any services to any member or past member: or (c) lend money to any member or past member to enable him to buy any such things as aforesaid or to obtain any such services, the society shall have a first charge upon such things or, as the case may be, upon any agricultural produce, animals or articles produced therewith or therefrom or with the aid of such money. (2) The charge shall subsist for such period as the loan or value of the services rendered by a co-operative society to a member shall remain unpaid.

44. A co-operative society shall have a first charge Society to have upon the share or interest in the capital and on the deposits first charge over members’ share. of a member or past member, and upon any dividend, bomus or accumulated funds payable to a member or past member, in respect of any debt due from such member or past member to the society, and may set off any sum credited or payable to such member, or past member in or towards the payment of any such debt.

45. (1) Where an employer of a person who is a Failure to remit member of a co-operative society has, under the the sum deducted. instructions of the employee, made a deduction from the employee's emoluments for remittance to the co-operative society concerned but fails to remit the deductions within seven days after the date upon which the deduction was made, the employer shall be liable to pay the sum deducted together with compound interest thereon at a rate of not less than five per cent per month. (2) The Director may. on behalf of the society, institute legal proceedings in court for recovery of the sum owing under subsection (1) without prejudice to any other mode of recovery and such sum shall be a civil debt recoverable summarily. 32 No.4 Kericho County Co-operative Societies 2017 (3) The Director may, by written notice, appoint any person, bank or institution to be an agent of the society for the purposes of collection and recovery of a debt owed to the society. (4) The agent shall pay the amount specified in the notice issued under subsection (3) out of any moneys which may, at any time during the twelve months following the date of the notice, be held by him for the employer or are due from him to the employer. (5) Where an agent claims to be or to have become unable to comply with subsection (3) by reason of lack of moneys held by or due from him, he shall give a written notification to the Director stating the reasons for his inability and the Director may (a) accept the notification and cancel or amend the notice accordingly: or (b) if he is not satisfied with the reasons, reject the notification in writing. (6) Where an agent fails to notify the Director or the notification is rejected, it shall be presumed that the agent has sufficient moneys for the payment of the amount specified in the notice. (7) Where an agent fails to pay the amount specified in the notice within thirty days from the date of service or the date on which any moneys come into his hands for or become due to him from the employer, the agent shall be liable for the amount specified in the notification as if he were the employer. (8) In any proceedings for the collection or recovery of the amount specified in the notice, it shall not be a defence for the agent to claim lack of the moneys. (9) This section shall apply notwithstanding that the failure under subsection (1). to remit the sum deducted may constitute an offence under some other law for which the employer has been prosecuted, or is being, or is likely to be prosecuted. (10) In this section “employer” includes any person. firm or organization holding remuneration or payment for produce of a member of a co-operative society and the term “employee” includes any person who receives 33 2017 Kericha County Co-operative Societies No. 4 remuneration or payment for produce from such persons or firm or organization.

46. Subject to section 39, the share or interest of a Member's share member in the capital of a co-operative society shall not subject to not be liable to attachment or sale under any decree or attachment, order of a court in respect of any debt or liability incurred by such member, and a trustee in bankruptcy under the law relating to bankruptcy shall not have any claim on such share or interest: Provided that, where a co-operative society is dissolved, the share or interest of any member who is adjudged a bankrupt under such law shall vest jn the trustee in bankruptcy in accordance with such law.

47. The liability of a past member of a co-operati ve Liability of past society shall be in respect of the debts of members. the society as they existed at the date when he ceased to be a member and proceedings in respect thereof may be commenced within a period of two years from such date: Provided that, in the case of a co-operative socie with limited liability, if the first audit of the accou ty nts of such society after his ceasing to be a member discloses that the society is solvent, the financial liability of such past member shall cease forthwith.

48. The estate of a deceased member shall be for the debts of the co-operative society as liable Liability of deceased they existed at the time of his death, and proceedings in respe members. ct thereof may be commenced within one year of the death: Provided that— (a) in the case of a co-operative Society with limited liability, if the first audit of the accounts of the society after the death discloses a credit bala nce in favour of the society, the financial liability of the estate shall cease forthwith: and (b) a personal representative shall not be liable except in respect of assets in his possession or under his control.

49. (1) On the death of a member. a cO-o perative Transfer of share society may transfer the share or interest of the or interest of deceased member to— deveased members. 34 No.4 Kericho County Co-operative Societies 2017 (a) the person nominated in accordance with this Act and any rules made thereunder; or (b) if there is no person so nominated, such person as may appear to the Committee of the society to be the personal representative of the deceased member; or (c) if either of such persons is not qualified under this Act and any rules made thereunder or the by- laws of such society for membership, such person, specified by the nominee or personal representative, as the case may be, who is so qualified, or may pay to such nominee or personal representative. as the case may be, a sum representing the value of such member's share or interest ascertained in accordance with any rules made under this Act or by-laws of the society: Provided that— (i) in the case of a co-operative society with unlimited liability. such nominee or personal representative. as the case may be, may require the society to pay him the value of the share or interest of the deceased member ascertained in the manner mentioned in this subsection: or (ii) in the case of a co-operative society with limited liability. the society shall transfer the share or interest of the deceased member to such nominee or personal representative, as the case may be, being qualified in accordance with this Act or any rules made thereunder or the by-laws of such society for membership of the society, or on his application within one month of the death, to any person specified in the application, who is so qualified. (2) A co-operative society shall pay all other moneys due to the deceased member from the society to such nominee or personal representative, as the case may be. (3) All transfers and payments made by a co- operative society in accordance with this section shall be valid and effectual against any demand made upon the society by any other person. 35 2017 Kericho County Co-operative Societies No.4

36. (1) Any register or list of members or of shares Evidence of which is kept by a co-operative society shall be member's interest in society. satisfactory evidence of any of the following particulars entered therein— (a) the date on which the name of any person was entered in such register or list, as a member: (b) the date on which any such person ceased to be a member: and (c) the number of shares held by any member. (2) A copy of any entry in a book of a co-operative society regularly kept in the course of its business, shall, if certified in accordance with the rules made under this Act, be satisfactory evidence in any proceedings of the existence of such entry, and of the matters, transactions, and accounts, therein recorded,

31.No officer of a co-operative society shall in any Restriction on production of legal proceedings to the society or liquidator is not a party society's books. may be compelled to produce any of the society's books Where the contents can be proved under section 42 or to appear as a witness to prove the matters, transactions, and accounts therein recorded. unless the court, for special cause, otherwise orders. PART IX—PROPERTY AND FUNDS OF CO- OPERATIVE SOCIETIES

52. The property and funds of a co-operative society Application of shall only be applied for the benefit of the society and, its society's property and funds. members, in accordance with the provisions of this Act, the rules made hereunder and the by-laws of the society.

53. A co-operative society shall not give a loan nor Restriction on allow any credit. to person other than a member. unless the giving loans. by-laws of the society provide for giving a loan subject to a resolution passed at the general meeting of the society to that effect.

54. A co-operative society may receive loans from Restriction on borrowing, persons who are not members only to such extent and under such conditions as may be prescribed by its by-laws or by rules under this Act, and for the purposes of this section a deposit of money under a_hire-purchase agreement shall be deemed to be a loan. 36 No. 4 Kericho County Co-operative Societies 2017

55. A co-operative society may invest or deposit its Investment of society's funds. funds only— (a) in and upon such investments and securities as are for the time being authorized for the investment of trust funds; (b) in the shares of any other co-operative society: (c) with any bank licensed under the Banking Act (Cap. 488): (d) in the stock of any statutory body established in Kenya or in any limited liability company incorporated in Kenya or in any other manner approved by a resolution at a general meeting of the said society.

56. (1) Subject to this section, every co-operative Declaration and payment of bonus, society shall declare each year all bonuses due to members; but, where the bonuses are required for re- investment by the society for capital development, or for the redemption of bonus certificates, the society shall issue bonus certificates to its members in lieu of cash payments, redeemable from a revolving fund established by the society for that purpose. (2) No Co-operative society shall pay a dividend. bonus: or distribute any part of its accumulated funds without a balance sheet and audited account and report disclosing the surplus funds out of which the dividend. bonus or distribution is to be made. (3) A co-operative society shall pay a dividend at such rate as may be recommended by the management committee and approved by the annual general meeting of the society.

57.(1) Every co-operative society which does or can Maintenance of reserve fund. derive surplus from its transactions shall maintain a reserve fund. (2) A co-operative society may carry to the reserve fund such portion of the net surplus in each year as may be prescribed by rules made under this Act or by the by-laws of the society. (3) The reserve fund shall be invested in the manner provided for under this section. 37 2017 Kericho County Co-operative Societies No.4 (4) The reserve fund set up under this section shall be indivisible and no member shall be entitled to claim a specific share of it. (5) Upon the dissolution of a co-operative society, the assets under the reserve fund shall be applied in the discharge of the liabilities of the society.

38. Subject to sections 48 and 49, the net balance of Distribution of net each year with, any sum available for distribution from balance, previous years, may be distributed in the manner prescribed by rules made under this Act or by the by-laws of the society, PART X—CHARGES BY CO-OPERATIVE SOCIETIES

59. A co-operative society may from time to time, Creating charge charge the whole or any part of its property, if its by-laws over society's property. expressly empower it to do so, subject to a special resolution by the general meeting.

60. A charge created by a cO-operative society in Charge to comply accordance with section 51 of this Act shall comply with with appheable law. the provisions of the law applicable to the particular type of charge.

61. (1) It shall be the duty of every co-operative Charges to be Society to register with the Director. every charge created registered with the Direstor by it and the particulars thereof: Provided that registration of a charge may be effected on the application of any person interested therein: Provided further that where registration is effected on the application of a person other than the co-operative society, such person shall be entitled to recover from the co- Operative society the amount of any fees properly paid by him to the Director for such registration. (2) If any co-operative society fails to send to the Director for registration the particulars of any charge created by it within a period of thirty days, then unless the registration has been effected by some other person within that period, every officer of the society shall be guilty of an offence and shall be liable to a fine not exceeding two thousand shillings for every day during which the default continues. 38 No.4 Kericho County Co-operative Societies 2017 (1) The Director shall, with respect to each co- Register of 62. charges. operative society, register in such form as may be prescribed by or under this Act, all charges requiring registration and shall enter in the register, with respect to every charge, the following particulars— (a) if the charge is a charge created by the society, the date of its creation, and if the charge was a charge existing on property acquired by the society, the date of the acquisition of the property: (b) the amount secured by the charge; (c) short particulars of the property charged; and (d) the persons entitled to the charge. (2) The Director shall issue a certificate under his hand of the registration of any charge registered under this Act stating the amount secured and the certificates shall be conelusive evidence that the requirements of this Act as to registration of charges have been complied with. (3) The register kept in pursuance of this section shall be open for inspection by any interested person on payment of the prescribed fee. (4) The Director shall keep a chronological index in the prescribed form and containing the prescribed particulars, of the charges entered in the register. Cem

63. The Director may. on evidence being given to his sunsfaction Ol satisfaction that the debt for which any registered charge charges. — el was given has been paid or satisfied. order that a memorandum of satisfaction be entered on the register, and shall if required, furnish the co-operative society concerned with a copy thereof.

64.(1) If any person obtains an order for the Receiver to give notice of his appointment of receiver or manager of the property of a appointment. co-operative society, or if the Director appoints such a receiver or manager under any powers contained in any instruments. he shall, within seven days from the date of the order of the appointment under the said powers, give written notice of the fact to the Director and the Director shall enter the notice in the register of charges. (2) Where any person appointed receiver or manager of the property of a co-operative society under the powers 39 2017 Kericho County Co-operative Socieries No, 4 contained in any instrument ceases to act as such receiver or manager, he shall, on so ceasing. give written notice of the fact to the Director and the Director shall enter the notice in the register of charges. (3) If any person makes default in complying with the requirements of this section, he shall be guilty of an offence and shall be liable to a fine not exceeding two thousand shillings for every day during which the default continues.

65. Every co-operative society shall cause a copy of Society to keep copy of every instrument of a charge which is required by this Act instruments of to be registered, to be kept at the registered address of the charge at society. registered office.

66. (1) Every co-operative society shall keep, at the Society to keep register of registered address of the society, a register of charges in particulars of which shall be entered all charges specifically affecting the charges. property of the society and all floating charges on the property or assets of the society, giving in each case a short description of the property charged, the amount of the = charge. and the name of the person entitled thereto. (2) If any officer of a co-operative society knowingly omits, or permits the omission of, any entry required to be made in any register in pursuance of this section, he shall be guilty of an offence and shall be liable to a fine not exceeding ten thousand shillings.

67.(1) The copies of the instruments creating Right of members and creditors to charges which are required by this Act to be registered Inspect register of and the register of charges kept by the co-operative charges society under section 54 shall be open, during business hours, to inspection by any creditor or member of the society, without fee, subject to such reasonable restrictions as the society, in general meeting, may impose. Provided however, that not more than two hours in each day shall be allowed for inspection, and the register of charges shall also be open to inspection by any other person on payment of the prescribed fee. (2) Any officer of a co-operative society who refuses to allow inspection of the register of charges or copies of the instruments creating charges in accordance with subsection (1) of this section, or who permits such refusal, shall be guilty of an offence and shall be liable to 40 No.4 Kericho County Co-operative Societies 2617 a fine not exceeding two thousand shillings for every day during which the refusal of permission continues, and the court may order an immediate inspection of such register or copies. PART XI—INQUIRY, INSPECTION AND SURCHARGE

68. (1) The Director may hold an inquiry or, in Tnquiry by Director writing, direct any person to hold an inquiry — (a) on the direction of the Executive Committee Member: or (b) on the application of not less than one-third of the members present and voting at a properly convened General meeting of the society: or (c) on the application of the liquidator or of any creditor. (2) The inguiry under subsection (1) may inquire into— (a) the by-laws. working and financial conditions of any cO-Operative society; or (b) the conduct of any person who has taken part in the organization or management of a co-operative society. or any past or present officer or member of the society. (3) All officers and members of the co-operative society shall produce such cash, accounts, books, documents and securities of the society, and furnish such information in regard to the affairs of the society, as the person holding the inquiry may require. (4) The Director shall report the findings of the inquiry at a general meeting of the society and shall give directions for the implementation of the recommendations of the inquiry report, (5) Where the Director is satisfied, after due inquiry, that the Committee of a co-operative society is not performing its duties properly. he may dissolve and cause to be appointed an interim Committee consisting of not more than five members from among the members of the society for a period not exceeding ninety days. 41 2017 Kericho County Co-operative Societies No.4 (6) Any person found to have misapplied or retained or become liable or accountable for any money or property of the society or has been guilty of misfeasance or breach of trust in relation to the society, he may, if the Director so directs, be required to repay or restore the money or property or any part thereof to the co-operative society together with interest at such rate as the Director thinks fit. (7) This section shall apply notwithstanding that the act or default by reason of which the order is made may constitute an offence under another law for which the person has been prosecuted, or is being or is likely to be prosecuted. (8) Any person aggrieved by an order of the Director under sub-section (9) may. within thirty days appeal to the Tribunal. (10) Any party aggrieved by the decision of the Tribunal may within thirty days appeal to the High court on matters of law. (11) Subject to sub-section (8) an order made pursuant to Sub-section (6) for any monies to be repaid or contributed to a co-operative society shall be filed with the Tribunal and shall, without prejudice to any other mode of recovery, be a civil debt recoverable summarily.

69. (1) The Director may, if he thinks fit. on the Inspection of books of indebted application of a creditor of a co-operative society, inspect. society, or direct some persons authorized by him in writing to inspect, the books of the society, if— (a) the creditor satisfies the Director that the debt is a sum then due, and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and (b) the applicant deposits with the Director such sum as security for the expenses of the inspection as the Director may require. (2) The Director shall inform the creditor of the results of the inspection.

70. (1) Where an inquiry is held under section 64, wag of or an inspection is made under section 65 of this Act, the . ‘* 7 « . Tt I Director may, by a certificate under his hand, make an 42 No.4 Kericke Country Co-operative Societies 2017 order apportioning the expenses, or such part of the expenses as he considers proper, between the society. the members or creditor demanding the inquiry or inspection. and the officers or former officers of the society: and the decision of the Director thereon shall be final. (2) Any sum awarded by way of expenses under subsection (1) shall be a civil debt recoverable summarily on production of the certificate referred to in that subsection.

71. Notwithstanding the provisions of sections 60 Routine inspection. and 61, the Director may from time to time carry out routine inspection into the affairs of a co-operative society. PART XIi—DISSOLUTION Procedure for

72. (1) If the Director, after holding an inquiry dissolution, under section 68 or making an inspection under section 69 of this Act. or receiving an application made by at Jeast three fourths of the members of a co-operative society, is of the opinion that the society ought to be dissolved, he may, in consultation with the County Executive Committee Member. order the dissolution of the society and subsequent cancellation of registration. (2) Any member of a co-operative society who feels aggrieved by an order under subsection (1) may, within two months after the making of such order, appeal against the order to the County Executive Committee Member with a recourse to the Tribunal. (3) Where no appeal is filed within the prescribed time, the order shall take effect on the expiry of that period, but where an appeal is filed within the prescribed time the order shall not take effect unless it is confirmed by the Executive Committee Member or by the High Court, as the case may be. (4) Where the Director makes an order under subsection (1) he shall make such further order as he thinks fit for the custody of the books and documents and the protection of the assets of the society. (5) No Co-operative society shall be dissolved or wound up save by an order of the Director. 43 2017 Kericho County Co-operative Societies No. 4

73. (1) Where a co-operative society has— Cancellation of registration. (a) less than the prescribed number of members; or (b) failed to file returns with the Director for a period of three years; or (c) failed to achieve its objects, the Director may, in writing. order the cancellation of its registration and dissolution of the society and the order shall take effect immediately. (2) A person aggrieved by an order of the Director under subsection (1) may appeal against such order to the Executive Committee Member within thirty days of the order. (3) Upon cancellation, the director shall gazette the name of the cooperative society that has been deregistered,

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

75. The provisions of the Companies Act, 2015 Winding up of relating to winding up, shall apply winding up of co- cooperative societies. operative societies with necessary modifications,

76. (1) Where the registration of a co-operative Appointment of society is cancelled under section 64 or 65, the Director liquidator, may appoint one or more persons to be liquidator or liquidators of that society (hereinafter referred to as the liquidator) and all the property of such society shall vest in the liquidator from the date upon which the order of cancellation takes effect. (2) The provisions of the Insolvency Act, 2015 shall, with necessary modifications, apply to the liquidation of a cO-operative society.

717. (1) The liquidator shall, subject to this Act. Powers of a have the following powers— liquidator. (a) to appoint a day, in the prescribed manner, before which the creditors whose claims are not already recorded in the books of the co-operative society shall state their claims for admission, or be excluded from any distribution made before they have proved them: +4 No.4 Kericho County Co-operative Societies 2017 (b) to institute and defend suits and other legal proceedings by, and on behalf of, the society in his own name or office, and to appear before the Tribunal as litigant in person on behalf of the society: (c) to appoint an advocate to assist him in the performance of his duties: (d) to refer disputes to the Tribunal in the prescribed manner; (e) to determine from time to time the contributions to be made by the members and past members, and by the estates of deceased members of the society, to the funds of the society; (f) to investigate all claims against the society, and subject to this Act, to decide questions of priority arising between claimants: (g) to call such meeting of members and creditors as may be necessary for the proper conduct of the liquidation: (h) to sell the movable and immovable property and rights of action of the society, by public auction or private contract with power to transfer the whole thereof to any person or company or to transfer the same in parcels: (i) to carry on the business of the society as far as may be necessary for the proper liquidation of the affairs of the society; (j) to determine. from time to time. by what persons and in what proportion the expenses of the liquidation are to be borne: (k) to take possession of the books, documents and assets of the society; (1) to arrange for the distribution of the assets of the society in a convenient manner when a scheme of distribution has been approved by the Director; (m)to give such directions in regard to the disposal of the books and documents of the society as may appear to him to be necessary for winding up the affairs of the society; 45 2017 Kericho County Co-operative Societies No.4 (n) to compromise. with the approval of the Director, any claim by, or against, the society; (0) to apply to the Director for his discharge from the duties of liquidator after completion of the liquidation proceedings. (2) The liquidator shall have power to summon and enforce the attendance of witnesses and to compel the production of documents by the same means and so far as may be necessary, in the same manner as is provided in the case of a court under the Civil Procedure Act (Cap. 21), in so far as such powers are necessary for carrying out the purposes of this section.

78. The Director shall open and maintain a co- Liquidation account of operative societies liquidation account. which shall be societies, administered in the prescribed manner.

79. The liquidator shall exercise his powers subject Powers of the Director during to the guidance and control of the Director and to any liquidation, limitations imposed by the Director, and the Director may— (a) rescind or vary any order made by the liquidator and make any new order he thinks proper: (b) remove the liquidator from office and appoint a new liquidator in his place; (c) call for all books, documents and assets of the society; (d) by order in writing. in any particular case, limit the powers of the liquidator conferred by section 69; (e) at his discretion, require accounts to be rendered to the Director by the liquidator: (f) procure the auditing of the liquidator’s accounts and authorize the distribution of the assets of the society: (g) make an order for the remuneration of the liquidator; (h) grant a discharge to the liquidator on application by him after completion of the liquidation proceedings; 46 2017 No.4 Kericho County Co-operative Societies (i) require any member or past member of the society and any trustee, banker, receiver, agent or officer of the society to pay. deliver, convey. surrender or transfer forthwith, or within such time as he shall direct, to the liquidator. any money. property, books or papers in his hands to which the society appears to be entitled: (j) appoint a special manager for the management of the business of the society and determine his remuneration and what, if any. security he shall give for the proper performance of his duties: (k) refer any dispute between a liquidator and any third party to the Tribunal if that party consents in writing to be bound by the decision of the Tribunal; or (1) require the indemnification of the liquidator. (1) A person aggrieved by any order or decision peal against 80. of the Director or the liquidator under section 69 theor close section 71. as the case may be, may appeal against order or decision to the Tribunal within thirty days of the order or decision. (2) A petson aggrieved by a decision of the Tribunal under subsection (1) may appeal to the High Court within thirty days of the decision.

81. If the liquidator of a society whose registration [stitution of has been cancelled alleges that any of the offences hie al a relating to winding up of a company have been mentioned in the Companies Act, 2015 have been committed, he shall report the facts to the Director, who shall. if he ary. thinks fit, institute such proceedings as may be necess foretrer

82. Any person who is convicted Se en onence Saga under sections of the Companies Act. 2015 specioffieda CO-in sania r officers of society. section 77 shall cease to be, or remain, an office society, and shall cease to be concerned in or operative the take part in, whether directly or indirectly, management of a co-operative society. for a perio d of five years from the date of his conviction, and any person r, or acting as. or purporting to be acting as such an office being so concerned in, or taking part in the management of a co-operative society during that period, shall be guilty for a of an offence and shal] be liable to imprisonment term not exceeding two years. 47 2017 Kericho County Co-operative Societies No.4 PART XIIIT—SETTLEMENT OF DISPUTES

83. (1) If any dispute concerning the business of a Disputes Co-operative society arises— (a) among members, past members and persons claiming through members, past members and deceased members; or (b) between members, past members or deceased members, and the society, its Committee or any officer of the society: or (c) between the society and any other co-operative society, it shall be referred to the Tribunal. (2) A dispute for the purpose of this section shall include— (a) a claim by a co-operative society for any debt or demand due to it from a member or past member, or from the nominee or personal representative of a deceased member, whether such debt or demand is admitted or not; or (b) a claim by a member, past member or the Pu nominee or personal representative of a deceased member for any debt or demand due from a co- Operative society, whether such debt or demand is admitted or not: (c) a claim by a Sacco society against a refusal to grant Or a revocation of licence or any other due, from the Authority. The establishment, functions, proceedings and operation of Tribunal shall be governed by sections 77, 78, 79, 80. 81, 82. 83. 84. 85, 86, 87 and 88 of the Co-operatives Act. (Cap. 490). PART XIV—GENERAL PROVISIONS

84.(1) No officer or member of a co-operative Remuneration of officers and society shall receive any remuneration, — salary, members of commission or any other payment from the society for society. services rendered to the society unless the society has, by a resolution passed at a general meeting, approved the payment of such remuneration, salary, commission or other payment, (2) No officer or member of a co-operative society shall receive any remuneration, salary, commission or other payment from any person or body or association 48 No, 4 Kericho County Co-operative Societies 2017 other than the society in respect of any business or transaction entered into by the society: Provided that in special circumstances the society may, by resolution passed at a general meeting, authorize such remuneration, salary, commission or other payment to be made. (3) Any officer or member of a co-operative society who receives any remuneration, salary. commission or other payment in contravention of this section shall be guilty of an offence and liable to a fine not exceeding one hundred thousand shillings or to imprisonment for a term not exceeding two years, or to both such fine and such imprisonment; and shall, if the offence is the contravention of subsection (1) of this section, be ordered to repay the amount of the remuneration, salary, commission or other payment received from the society in addition to or in lieu of any other punishment, and default in such payment shal! be dealt with in the same manner as default in paying a fine imposed by a court.

85. (1) No person, other than a co-operative Restriction on use of word “Co- society, shall trade or carry on business under any name operative”. or title of which the word “Co-operative” or its equivalent in any other language is part, without the written approval of the Director. (2) Any person who contravenes subsection (1) of this section shall be guilty of an offence and shall be liable to a fine not exceeding fifty thousand shillings, and in the case of a continuing offence, to a further fine not exceeding two thousand shillings for each day on which the offence is continued afier conviction therefor.

86. (1) There is established a fund to be known as County Co- operative the Kericho County Co-operative Development Fund Development Fund. (hereinafter referred to as “the Fund”), (2) The object and purpose for which the Fund is established is the promotion of education, training, research, consultancy and other related activities in the co-operative sector in Kericho County. (3) The Fund shall consist of money allocated by the county assembly for purposes of co-operative societies, contributions by co-operative societies and any other lawful source. 49 2017 Kericho County Co-operative Societies No. 4

87. (1) The Executive Committee Member may in #!*s consultation with the apex society make rules for the better carrying out of the provisions and purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may— (a) prescribe the forms to be used and conditions to be complied with in making application for the registration of a society and the procedure to be followed: (b) prescribe the matter in respect of which a co- operative society may or shall make by-laws, and the procedure to be followed in making, varying and revoking by-laws, and the conditions to be satisfied before making, varying or revoking by- laws: (c) prescribe the conditions to be complied with by persons applying for admission or admitted as members, and the payments to be made and the interest to be acquired before the exercise of the right of membership: (d) regulate the manner in which funds may be raised whether by means of shares or debentures or otherwise; (e) provide for general meetings of the members and for the procedure at such meetings and the powers to be exercised by such meetings; (f) provide for the appointment, suspension and removal of the members of the Committee and other officers, and for the procedure at meetings of the Committee, and for the powers to be exercised and the duties to be performed by the Committee and other officers; (g) prescribe the accounts and books to be kept by a co-operative society; (h) provide for the form of the final accounts and the balance sheet to be prepared annually and any other statements and schedules relating thereto; 50 No.4 Kericho County Co-operative Societies 2017 (i) provide for the resignation and expulsion of members and for the payments, if any, to be made to members who resign or are expelled, and for the liabilities of past members: (j) provide for the persons by whom and the form in which copies of entries in books of co-operative societies may be certified: (k) provide for the inspection of documents and registers at the Director’s office and prescribe the fees to be paid thereof and for the issue of copies of such documents or registers; (1) provide for the formation and maintenance of a register for members and, where the liability of members is limited by shares or limited by guarantee, of the register of shares: (m)provide for the order in which the value of a deceased member’s interest shall be ascertained and subject to section 39 for the nomination of a person to whom such interest may be paid or transferred: (n) provide for the mode in which the value of the interest of a member who has become of unsound mind or incapable of managing his affairs shall be ascertained and for the nomination of any person to whom such interest may be paid or transferred: (0) provide for the manner of formation and maintenance of reserve funds and the objects to which such funds may be applied and for the investments of any funds under the control of a co-operative society: (p) prescribe the procedure to be followed in appeals made to the Executive Committee Member under this Act; (q) prescribe the returns to be submitted by a co- operative society to the Director and the person by whom and the form in which such returns shall be submitted; (r) prescribe the fees to be paid on applications. registrations and other acts done by the Director under this Act; 51 2017 Kericho County Co-operative Societies No.4 (s) prescribe the procedures to be followed in the liquidation of societies; and (t} Prescribe anything which under this Act may be prescribed. (3) In any case where the Director is satisfied that a substantial number of members of any co-operative society are unacquainted with the English language, he may cause any rules made under this section to be translated into a language with which such members are acquainted, and to be made known in a manner customary for the community to which such members belong, provided that on any matter of interpretation the English version of the rules shall prevail.

88. (1) Notwithstanding anything contained in this Exemption. Act, the Executive Committee Member may, by notice in the Gazette— (a) exempt any co-operative society from any of the provisions of this Act, subject to such conditions, exceptions or qualifications as he may deem fit to impose; (b) apply to any co-operative society any of the provisions of this Act subject to such modifications as he may deem fit. (2) The Executive Committee Member shall cause to be published in the Gazerte thirty days’ notice of the intention to grant an exemption under subsection (1). (3) Any person with an objection regarding an intended exemption under this section may make representations to the Executive Committee Member within the period of the notice. (4) The Executive Committee Member may upon considering representations and objections made under this section, either— (a) abstain from granting the intended exemption; or (b) grant such exemption subject to such terms and conditions as he may deem fit. tn i) No.4 Kericho County Co-operative Societies 2017 89, (1) It shall be an offence under this Act if— Offences (a) a co-operative society, or an officer or a member thereof, fails to do or to cause to be done any act or thing which is required by or under this Act or any rules made thereunder to be done; or (b) a co-operative society, or an officer or a member thereof, does anything which is prohibited by or under this Act or any rules made thereunder; or (Cc) a co-operative society, or an officer or a member thereof, willfully neglects or refuses to do any act or to furnish any information required for the purposes of this Act by the Director or the Registrar, or any person duly authorized in that behalf, by the Director or the Registrar: or (d) a co-operative society or an officer or member thereof wilfully makes a false return or furnishes false information with respect to any return or information in or which is required by or under this Act or any rules made thereunder; or (e) any person wilfully and without reasonable excuse disobeys any summons, requirement or lawful order issued under this Act, or fails to furnish any return or information lawfully required from him by a person authorized to do so, or which he is required to furnish, by or under this Act or any rules made thereunder: or (f) an\y person acts or purports to act as an officer of a co-operative society when not entitled to do so. (2) Every co-operative society, officer or member of a co-operative society or other person who commits an offence under this section shall be liable to a fine not exceeding fifty thousand shillings or to imprisonment for a term not exceeding two years, or to both. (3) The Director of Public Prosecution may appoint public prosecutors for cases arising under of this Act.

90. (1) Every society, and all by-laws of a society, Savings. registered under the Co-operative Societies Act (Cap 490) shall be deemed to have been registered under this Act: 53 2017 Kericho County Co-operative Societies No.4 (2) Any register kept in pursuance of the Co- operative Societies Act (Cap 490) shall be deemed to be part of the register to be kept in pursuance of this Act: (3) Any document referring to a provision of the Co- operative Societies Act (Cap 490) shall be construed as referring to the corresponding provision of this Act: and (4) Any orders, directions, appointments and other acts lawfully made or done under any of the provisions of the Co-operative Societies Act (Cap 490) and in force immediately before the commencement of this Act shall be deemed to have been made or done under the corresponding provision of this Act and shall continue to have effect accordingly. (5) Save as provided under this Act, the Co- operative Societies Act (Cap 490) shall cease to apply to co-operative societies to which this Act applies.