Purpose -establishment of legal and institutional framework for registration and regulation of co-operative societies in order to- Promote growth and development Enhance good governance Promote local economic growth and development Promote the realization of Article 36 of the Constitution on freedom of association.

1. KIAMBU COUNTY
CO-OPERATIVE SOCIETIES BILL
2015
By Stephen Mwangi
Mr. Co-operative
@Frenzyied on Twitter

2. CONTENTS OF THE BILL
1.Preliminary
2.Administration and offices
3.Registration of co-operatives
4.Management of co-operatives
5.Rights and obligations of co-operative societies
6.Rights and liabilities of members
7.Accounts and funds of a co-operative society
8.Inquiry inspections and winding-up
9.General provisions

3. PRELIMINARIES
Purpose -establishment of legal and
institutional framework for registration and
regulation of co-operative societies in order to-
(a)Promote growth and development
(b)Enhance good governance
(c) Promote local economic growth and
development
(d)Promote the realization of Article 36 of the
Constitution on freedom of association.

4. PRELIMINARIES CON’T
The Act shall apply to any person operating or
intending to operate a co-operative society or
a branch of a co-operative society in the
County.
-Will have to be licensed to operate in the
county
-May be fined maximum of 5 million or
imprisoned for a term not exceeding 12
months or both.

5. PRELIMINARIES CON’T
The Executive Committee Member shall
be responsible for the growth and
development of co-operative societies in
the county.

6. ADMINISTRATION AND OFFICES
CON’T
-There shall be a Director for Co-operative whose office shall
be an office in the County Public Service.
-The Director shall–
(a) Process applications for registration of co-operatives;
(b) Supervise and inspect and ensure compliance;
(c) Maintain registers;
(d) Supervise dissolution, division or amalgamation;
(e) Advise the Department responsible for co-operatives;
(f) Undertake any other functions assigned by this Act or by
County Executive Committee Member.

7. REGISTRATION OF CO-OPERATIVES
A co-operative society may be registered with
either–
(a) Limited liability or
(b) Unlimited liability
At least 15 people intend to operate a co-operative
society or a branch of a co-operative society within
the County may apply to the Director for
registration.

8. REGISTRATION OF CO-OPERATIVES CON’T
A co-operative society shall
be a body corporate with
perpetual succession and a
common seal

9. REGISTRATION OF CO-OPERATIVES
CON’T
-All co-operative societies or branches of
co-operative societies within the county
shall within 6 months from the
commencement of the Act apply for
registration.
-Failure to comply attracts a fine of 5
million Shillings or imprisonment for a term
not exceeding 12 months or to both.

10. REGISTRATION OF CO-OPERATIVES
CON’T
1. All co-operatives shall be issued with a license to carry out
the business of co-operatives
2. A license shall be valid for a period of one year-renewed
on an annual basis upon payment of the requisite fee.
3. A license shall not be renewed unless the society has –
(a) Continued to comply the provisions the Act and relevant
laws, regulations and guidelines;
(b) Adheres to the directives issued by the Director in
implementing the Act;
(c) Continues to promote the principles of co-operatives; and
(d) There is no valid objection from its members for renewal
of the registration certificate.

11. REGISTRATION OF CO-OPERATIVES CON’T
-If a co-operative society fails to apply for renewal
of license or the renewal of the licence is declined,
the co-operative society shall cease to carry out the
business of a co-operative society within the
County.
-Executive Committee Member may withdrawal
the license for gross violation of the Act
-The Director may order the closure of an office or
a branch

12. REGISTRATION OF CO-OPERATIVES
CON’T
(1) A co-operative society shall display
the Certificate of Registration and the
license at its registered office and at its
branch offices or places that it carries on
its business.
(2) Failure attracts a fine not exceeding
one hundred thousand.

13. MANAGEMENT OF CO-OPERATIVE
SOCIETIES CON’T
1.The Annual general meeting of a co-operative
society shall be supreme authority of the co-
operative society.
2.The annual general meeting shall be held within
four months from end of each financial year of
the co-operative society and shall be convened
by written notice of at least fifteen days to the
date of the meeting.
3.The quorum for an annual general meeting shall
be fifty plus one of the voting members.

14. MANAGEMENT OF CO-OPERATIVE
SOCIETIES CON’T
(1) A co-operative society may convene a general meeting
for purposes of discussing a matter which by agreement of
members was set to be discussed at such a meeting during
the Annual General Meeting.
(2) A co-operative society may convene a special general
meeting to-
(a) discuss a matter which in the opinion of the Executive
Committee is of an urgent nature;
(b) To receive the report of the supervisory committee; or
(c) To address any directive issued by the Director which
may not wait for the Annual General Meeting.

15. MANAGEMENT OF CO-OPERATIVE
SOCIETIES CON’T
(1) Committees:
(a) Administration Committee responsible for giving directions in
regard to the business of the society; and
(b) Supervisory Committee which be responsible for verification of
all transactions and report to the AGM and the Director.
(2) Members of the committees may be remunerated for only four
sittings in a year at such rate the members in an annual general
meeting shall determine subject to approval by the Director.
(3) Notwithstanding, in circumstances warranting special sittings,
members of the committees may be remunerated for the special
sittings subject to prior sanction of such meetings by the Annual
General Meeting and approval by the Director.

16. MANAGEMENT OF CO-OPERATIVE SOCIETIES
CON’T
(1) A person shall not be elected as a committee member
of a co-operative society unless that person-
(a) has attained the minimum basic education;
(b) has met the constitutional threshold of integrity;
(c) is a member of the co-operative society; and
(d) has held an elective position for two terms;
(2) The tenure of an elected committee member shall be
as set out in the By-laws but shall not exceed three years
subject to renewal of such term once.

17. MANAGEMENT OF CO-OPERATIVE SOCIETIES
CON’T
-A member of a committee shall be removed from his
position if –
(a)Following an audit, is under investigation for
mismanaged of the affairs of the society
(b)Is under investigation for a criminal offense not related
to the co-operative society’s operations; or
(c) Is under bankruptcy proceedings.
(d) is unable to conduct his or her business due to ill health;
(e) has held the office for a period of two terms; or
(f) dies.

18. MANAGEMENT OF CO-OPERATIVE
SOCIETIES CON’T
If a vacancy in the position of a member of
the committee falls before the next annual
general meeting, the Members of the
Committee shall nominate one of the
members as an interim member to transact
business until the next annual general
meeting and such member shall not be
deemed an elected member for purposes
of the Act.

19. MANAGEMENT OF CO-OPERATIVE
SOCIETIES CON’T
A person appointed as a member of a
committee shall within thirty days of
such appointment and not later than
thirty days after ceasing to be such a
member submit with the Director a
declaration of his or her wealth.

20. RIGHTS AND OBLIGATIONS OF
CO-OPERATIVE SOCIETIES CON’T
1. A co-operative shall be governed by the provisions
of its By-laws approved by the Director.
2. A co-operative may from time to time amend its
by-laws subject to approval by the Annual
general meeting and the Director.
3. A co-operative may develop rules for better
carrying out of the functions set out in the by-
laws subject to approval by the Annual general
meeting and the Director.

21. RIGHTS AND OBLIGATIONS OF
CO-OPERATIVE SOCIETIES CON’T
(4) The by-laws shall bind the co-operative society
and the members to the same extent as if they were
signed by each member
(5) The By-laws of a co-operative society may
provide for the imposition of fines not exceeding
50,000 shillings on its members for any
infringement of the by-laws.

22. RIGHTS AND OBLIGATIONS OF CO-
OPERATIVE SOCIETIES CON’T
A co-operative society or a branch of a co-operative
society may recruit persons to their membership
provided the person has attained the age of fifteen years
and either -
(a) Is within common bond; or
(b) Is a resident within or occupies land within the area of
operation of the co-operative society.
(c) must meet the criteria set out in the Regulations
under this Act.

23. RIGHTS AND OBLIGATIONS OF CO-
OPERATIVE SOCIETIES CON’T
-No co-operative society shall fix any
limit to the number of its members.
-No co-operative society shall recruit into
its membership more than a third of
non-Kenyan nor shall non Kenyan
members be allocated more than a third
of the total shares.

24. RIGHTS AND OBLIGATIONS OF
CO-OPERATIVE SOCIETIES CON’T
-A co-operative society shall keep at its registered office and at its
branch offices
(a) A copy of its by-laws and rules;
(b) Books of accounts including the audited accounts in the last
five years;
(c) Records of members including the members profiles;
(d) Minutes of the meetings;
(e) Any other documents as may be directed by the Director.
-Any member of the co-operative or the Director or a person
authorized by the Director shall have unlimited access to the
records of the co-operative society at reasonable time.

25. RIGHTS AND OBLIGATIONS OF
CO-OPERATIVE SOCIETIES CON’T
-A co-operative society shall not later than ninety days from the
final day of the financial year submit an annual report detailing-
(a) Assessment of the co-operative operations during the year
concluded;
(b) Profile of new members of the co-operative society;
(c) Any occurrence of vacancy and names or names of
nominated committee member;
(d) Record of all the resolutions of the co-operative society;
(e) Profile of the appointed auditor; and
(f) Audited accounts of the year just concluded.
-A co-operative society that fails to submit its annual report shall
not qualify for renewal of license.

26. RIGHTS AND OBLIGATIONS OF MEMBERS
CON’T
1.A member of a co-operative society shall be
entitled to appoint a nominee
2.A co-operative society shall within sixty days
of notice of incapacity or death of a member
ascertain and pay the shares or benefits
payable to a nominee.
3.The Director may issue directives or order the
conduct of an inquiry of a co-operative
society that fails to comply with this section.

27. RIGHTS AND OBLIGATIONS OF
MEMBERS CON’T
(1)The share or interest of a member in the
capital of a co-operative society shall
not be liable to attachment or sale
under any decree or order of a court in
respect of any debt or liability
(2)A co-operative society shall have a first
charge upon the share or interest in the
capital and on the deposits of a member
or a past member.

28. RIGHTS AND OBLIGATIONS OF MEMBERS
CON’T
(1) A past member of the co-operative society shall be
discharged from any future liabilities of the co-
operative society but shall be liable for any debt of the
co-operative society existing at the time of termination
of membership and proceedings in this respect may be
commenced within two years from the date of
termination of membership.
(2) Where the first audit of the accounts of the co-
operative society after the termination of membership
discloses that the society is solvent the financial liability
of such past member shall cease forthwith.

29. ACCOUNTS AND FUNDS OF A CO-OPERATIVE
SOCIETIES CON’T
(1) A co-operative shall during annual general meeting appoint an
auditor from among the list of auditors gazetted by the Director to
audit its accounts.
(2) A co-operative shall cause its audited accounts to be published in
the County gazette.
(1) Each member of the Administration Committee shall be
personally liable for failure to ensure that the books of accounts of a
co-operative are audited and submitted to the Director within the
timelines set out in the Act and shall be liable to a fine not exceeding
one hundred thousand shillings for every month of the delay.
(2) The members of the Administration Committee shall not be liable
if the delay in auditing is due to an act of God or act beyond the
control of the members as certified by the Director.

30. ACCOUNTS AND FUNDS OF A CO-
OPERATIVE SOCIETIES CON’T
(1) A co-operative society which derives surplus from its
transactions shall maintain a reserve fund.
(2) A co-operative society shall within thirty days of
declaration of surplus deposit to the reserve fund at
least ten percent of the declared surplus.
(3) The reserve fund of a co-operative society shall be
indivisible and no member shall be entitled to claim a
specific any share of it.
(4) Upon dissolution of a co-operative society the funds
under reserve funds shall first be applied to discharge
the liabilities of the society.

31. INSPECTION, INQUIRY AND WINDING UP
The Director or its authorized officer shall
on reasonable notice and at least once every
year at the expense of the co-operative
society carry out routine inspection into the
affairs of a co-operative society to confirm
that the co-operative society is complying
with the law.

32. INSPECTION, INQUIRY AND WINDING
UP CON’T
1. The Director may of its own accord or on direction of the
Executive Committee Member or on the application of at least
one third of the members present and voting at a meeting of
the co-operative society hold an inquiry or direct any person
to hold an inquiry into the operations, management or
financial conditions of a co-operative society.
2. The Director shall consider the findings of the inquiry and may-
a) Direct the co-operative society to take measures to remedy a
finding;
b) Adopt the report with no recommendations if no negative
findings are made; or
c) Recommend the Cancellation of registration certificate to the
Executive Committee Member.

33. INSPECTION, INQUIRY AND WINDING UP
CON’T
Where an inquiry or an inspection is held under
this Act the Director may by a certificate make an
order apportioning the expenses or such part of
the expenses incurred between the co-operative
society the member or creditor demanding the
inquiry or inspection and the officers or former
officers of the co-operative society and the
decision of the Director shall be final.

34. INSPECTION, INQUIRY AND WINDING UP CON’T
(1) The Executive Committee Member may on the recommendation of the
Director cancel a registration certificate of a co-operative if the business of a co-
operative is-
(a) Fraudulent
(b) Insolvent
(c) Against the principles of co-operative society
(d) Is not promoting or likely to promote the economic wellbeing of its members
(e) Is prejudicial to the general public interest.
(2) No certificate of registration of a co-operative society may be cancelled
unless-
(a) The co-operative society has been notified in writing on the reasons for
proposed cancellation and within six months has failed to attend to the reasons
raised to the satisfaction of the Director; and
(b) The co-operative society has been given an opportunity to be heard.
3) A co-operative society whose registration certificate has been cancelled shall
be subject to the winding up process in accordance with the Act.
(4) The name of a co-operative society which has been wound up shall be struck
off the register of co-operatives and a notice published in the County Gazette.

35. GENERAL PROVISIONS
(1) A co-operative society operating under the Act shall adhere to
the following principles:
a) Voluntary and open membership;
b) Democratic governance;
c) Corporate governance;
d) Pursuit of common lawful interests;
e) Benefits to members as a core purpose;
f) Desire to improve the economic and social welfare of its
members;
g) Education and training of its members;
h) Cooperation; and
i) Free participation of members in the activities of the society.
(2) The Directorate shall ensure that a co-operative society
operating under the Act adheres to the principles of co-operatives.

36. GENERAL PROVISIONS CON’T
(1) The word “co-operative” and “society” shall form part
of the name of every co-operative society registered
under the Act.
(2) No person shall use the words “co-operative society”
as part of the name of a business within the County
unless they are registered.
(3) A person who contravenes these provisions commits
an offence liable to a fine of 5 million or to imprisonment
for a term not exceeding twelve months or to both.

37. GENERAL PROVISIONS CON’T
-The Director shall ensure that no co-operative society is
registered in the name -
a) Of a registered co-operative society within Kenya;
b) Which is identical or similar to or bears close semblance to a
name of a co-operative society
c) Likely to mislead members of the public as to its identity;
d) Consists of abbreviations or initials; or
e) In the opinion of the Director is undesirable in the public
interest.
-The Director shall publish the name of a co-operative society
registered under this Act in the County Gazette within thirty
days from the date of grant of a certificate of registration.

38. GENERAL PROVISIONS CON’T
-The Executive Committee Member may from time to
time by a notice in the County gazette publish
regulations for the better carrying out of the objects of
the Act, in particular to provide for-
(a) The winding up process of a co-operative society;
(b) Conduct of an inquiry or an inspection;
(c) Prescribing fees for services rendered;
(d) Conduct and procedure of meeting of co-operatives;
(e) Transfer of shares and rights of members of co-
operative society; and
(f) Any other regulations deemed necessary for better
implementation of the Act.

39. GENERAL PROVISIONS CON’T
(1)The Director may make an order requiring a person to
repay or restore the money to the co-operative society
together with interest at such rate as the Director thinks
just
(2)This shall apply notwithstanding that the order made may
constitute an offence under another law for which the
person has been prosecuted or is being or is likely to be
prosecuted.
Any person aggrieved by the decision of the Director or a
liquidator may appeal in writing to the Executive Committee
Member within thirty days from the date of communication
of the decision of the Director or liquidator and the decision
of the Executive Committee Member shall be final.

40. GENERAL PROVISIONS CON’T
No member of a co-operative society shall
receive remuneration, salary, commission or
any other payment from the society for
services rendered save by resolution of the
members in an annual general meeting and
approved by the Director.

41. GENERAL PROVISIONS CON’T
-Without prejudice to any other powers under the Act,
the Director may-
(a) Call for elections in any co-operative society that has
failed to undertake this function in accordance with its by-
laws;
(b) Attend meetings of a co-operative society and require
a co-operative society to send within proper time a notice
and agenda of every meeting and all minutes and
communications in respect thereof;
(c) Require that co-operative societies update their by-
laws; and
(d) Exercise such other powers consistent with the Act.

42. GENERAL PROVISIONS CON’T
-It shall be an offence to contravene the Act and
shall be liable to a fine not exceeding one million
shillings or to imprisonment for a term not
exceeding twelve months or to both.
-The Executive Committee Member may
recommend to the Director of Public Prosecution
persons who may be appointed public prosecutors
for cases arising under the provisions of the Act.

43. GENERAL PROVISIONS CON’T
A co-operative society existing before the
enactment of the Act shall within one year from
the date of enactment ensure that it is in
compliance with the provisions of the Act and in
particular –
(a)Hold fresh elections
(b)Amend its by-laws and any rules
(c)Undertake such other actions as shall be
necessary.

44. THE END
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