The Cooperatives Bill, 2024

SPECIALISSUE

Kenya Gazette Supplement No.32(National Assembly Bills No.7)

REPUBLICOFKENYA

KENYA GAZETTESUPPLEMENT

NATIONALASSEMBLYBILLS,2024

NAIROB1,9thFebruary,2024

CONTENT

| Bill for thtroductioni into the National Assembly- | PAGE | |------------------------------------------------------|--------| | The Cooperatives Bill,2024 | 141 |

Clause

PARTI-PRELIMINARY

• 1-Short title
• 2-Interpretation
• 3-Objects of theAct
• 4-Guidingprinciples
• 5-Application

PARTII-ESTABLISHMENTOFTHEOFFICES

ANDADMINISTRATION OFTHEACT

Division1-National Government Offices

• 6-Establishment of the Office of the Commissioner
• 7-Staff of theofficeofthe Commissioner
• 8-Vacancyin the office of the Commissioner
• 9-Functions of the Commissioner
• 10-Annual report by the Commissioner Division 2-County Government Offices
• 11-Establishment of the Office of the County Director for Cooperatives
• I2-Staff ofthe office of the County Director for
• Cooperatives
• 13-Vacancy in the office of the County Director for Cooperatives
• 14-Functions of the County Director for Cooperatives
• 15-Annual report by the County Director for Cooperatives
• Division3-Inter-Governmental Cooperatives Relations Technical Forum
• 16-Establishment ofInter-Governmental Cooperatives Relations Technical Forum

141 THECOOPERATIVESBILL,2024

ARRANGEMENTOFCLAUSES

• 17-Functions of the Inter-Governmental Cooperatives Relations Technical Forum
• 18-Meetings of the Inter-Governmental Cooperatives
• Relations Technical Forum

PARTII-STRUCTUREOFCOOPERATIVESIN

KENYA

• 19-The Cooperativesfour-tierstructure
• 20-PrimaryCooperatives
• 21-Prohibition against multiple objects in primary Cooperatives
• 22-Objects of secondary Cooperatives
• 23-Objects of Cooperative federations
• 24-Registration and Cooperative
• subscription tothe Apex
• 25-Role and functions of the Apex Cooperative
• 26-Annualreports of the Apex Cooperative
• 27-Registration,regulation and operations of Apex Cooperative

PARTIV-REGISTRATIONOFCOOPERATIVES

• 28-Registration of limitedliability Cooperatives
• 29-Procedure ofregistration
• 30-Restriction ofregistration of Cooperatives within
• the same common bond
• 31-Limitation onnames of Cooperatives
• 32-Registration of a Cooperative and itsby-laws
• 33-Evidence ofregistration
• 34-Displayof Cooperative certificate ofregistration
• 35-Change ofname or loss of certificate
• 36-Cooperative as a body corporate and prohibition against dual registration
• 37-Amendmentofby-laws
• 38-By-laws ofa Cooperative to be binding

• 39-Appeal against refusal to register

40-Signature by theCommissioner

41-Protection of Cooperative identity

• 42-Protection and restriction on the use of the name
• "SACCO"
• 43-Mandatory usage of namesin certain Cooperatives

PARTV-RIGHTSANDLIABILITIESOF

MEMBERS

44-Qualification formembership

45-Limitation of holding share capital

46-Exercise ofmembers'rights

47-Limitationofmembershipofproducer Cooperatives

48-Votingrights ofmembers

49-Transferofshares

50-Rights to members

51-Obligationsofamember

PARTVI-DUTIESOFCOOPERATIVES

• 52-Registered addressof Cooperatives
• 53-Cooperatives tokeep a copy of the Act and by-laws atregistered office

54-Estimatesofincome and expenditure

55-Accountsandaudits

56-Production ofbooks and otherdocuments

PARTVII-GOVERNANCEOFCOOPERATIVES

57-General meetings

58-Special general meeting ofa Cooperative

59-Presiding atgeneralmeetings

60-Physical,virtual or hybrid general meetings

61-Delegate system ofrepresentation

62-Membership andpowersof theboard

63-Eligibility totheboardof directors

64-Responsibilities of theboard

65-Supervisory board and its duties

66-Nomination committee

PARTVIII-AMALGAMATIONANDDIVISION OF

COOPERATIVES

67-Amalgamation of Cooperatives

68-Divisionof Cooperatives

PARTIX-RIGHTSAND OBLIGATIONSOF COOPERATIVES

69-Charge over member's produce

70-Fines forviolation of by-laws

71-First charge over debts and assets

72-First charge over members'share

73-Failure to remit the sum deducted

74Prohibition against attachment of member's share

75-Rightsofwithdrawing from membership

76-Liabilityofpastmembers

77-Liabilityof deceased members

78-Transfer of share or interestof deceased members

79-Evidence of member's interest in a Cooperative

80-Restriction on production of Cooperative books

PARTX-PROPERTYANDFUNDSOF

COOPERATIVES

81-Application of Cooperative's property and funds

82-Restriction ongivingloans

83-Restriction on borrowing

84-Investment of Cooperative'sfunds

85-Investment in non-core activities

86-Investment incompanies

87Declaration and payment of bonus

88-Maintenance ofreserve fund

89-Distribution of net balance

PARTXI-CHARGESBYCOOPERATIVES

• 90-Creatingcharge over Cooperativeproperty
• 91-Compliance of charges to applicable law
• 92-Registration of chargesby the Commissioner
• 93-Register of charges
• 94-Certificate of satisfaction of charges
• 95-Receiver togive notice of appointment
• 96-Cooperative to keep copy ofinstruments of charge
• at registered office
• 97-Register of particulars of charges
• 98-Right of members and creditors to inspect register ofcharges

PARTXII-INQUIRY,INSPECTIONAND SURCHARGES

• 99-Inquiry by the Commissioner

100-Power to surchargeofficersofa Cooperative

101-Appeal against surchargeorder

102-Recoveryofsurcharge

• 103-Inspectionofbooksofindebted Cooperatives

104-Expenses of inquiry andinspection

• 105-Routine inspection

PARTXIII-DISSOLUTION

106-Procedure fordissolution

107-Cancellation ofregistration

108-Effects ofcancellation

• 109-Liquidation of a Cooperative whoseregistration is cancelled

110-Appointment ofa liquidator

11l-Qualification ofa liquidator

112-Powersofa liquidator

• 113-Liquidation account of Cooperatives

• 114-Powers of the Commissioner during liquidation

115-Appealagainst order of aliquidator or the Commissioner

116-Enforcementoforders

117-Offencesrelating to liquidationofa Cooperative

PARTXIV-SPECIALPOWERSOFTHE COOPERATIVETRIBUNALTOSETASIDE CERTAINTRANSACTIONS

• 118-Power of the Cooperative Tribunal to set a
• transaction that is under value
• 119-Power ofthe Cooperative Tribunaltovoid preference
• 120-Meaning of'relevant time'in section 112and113
• 121-Orders under section 112 and 113 ancillary
• provisions
• 122-Power of the Cooperative Tribunal to set aside certain extortionate transactions
• 123-Circumstances in which floating charge on a Cooperativeundertaking or property to beinvalid

PARTXV-SETTLEMENTOFDISPUTES

• 124-Establishment ofthe Cooperative Tribunal
• 125-Appointment ofmembers of theCooperative
• Tribunal
• 126-Remuneration and term ofoffice for members of the Cooperative Tribunal
• 127-Appointments of membersof theTribunal tobe by
• Gazette

128-Vacancy in the office of Cooperative Tribunal

129-Jurisdiction of the CooperativeTribunal

130-Registries and sittings of the CooperativeTribunal

131-Proceedingsof CooperativeTribunal

132-Orders by theCooperativeTribunal

133-Generaloffencesat the Cooperative Tribunal

134-Unlimited jurisdiction of the CooperativeTribunal

135-Quorum for the Cooperative Tribunal

136-Benches of the Cooperative Tribunal

137-Conflict of interest at the Cooperative Tribunal

138-Voting attheCooperative Tribunal

139-Powers of the chairperson exercised by presiding

members

140-Appeal to High Court from the Cooperative Tribunal

141-Power to appoint Cooperative assessor at the CooperativeTribunal

142-Contemptof Cooperative Tribunal

143-Appointment of DeputyRegistrarofthe

Cooperative Tribunal

144-Right ofpartiesbefore CooperativeTribunal

145-Immunityof officers of the CooperativeTribunal

146-Altermative Dispute Mechanism at the Cooperative

Tribunal

PARTXVI-GENERALPROVISIONS

• 147-Procurement of goods,services and works by
• Cooperatives
• 148Enforcement ofEthicsandintegrity in Cooperatives

149-Cooperative self-regulation

150-Creditinformation sharing

151-Inter-Cooperativeborrowing

152-Cooperative capital raising instruments

153-Remuneration to officers and members ofa Cooperative

154-CooperativeDevelopment Fund

155-Regulations

156-Exemptions

157-Powers of the Cabinet Secretary and County Executive Committee Member

158-Otherpowersofthe Commissioner

159-Otherpowersofthe County Director for Cooperatives

160-Offences and prosecution ofoffences

• I6l-Distinction of Cooperatives from trade unions

162-General Penalty

PARTXVII-TRANSITIONALPROVISIONS

163-Repeal of the Cooperative Societies Act No.12of

• 1997

164-Amendment ofPublic Officer Ethics Regulations. 2003L.N62/2003

• 165-Transition to the Offices of the Commissioner and County Director for Cooperatives

166-County Assembly legislations

167-Transitionof the members of the Cooperative Tribunal

• 168-Transition ofnotices.orders.directions and appointments

SCHEDULES:

FIRSTSCHEDULE-LIOUIDATIONOF COOPERATIVES

SECONDSCHEDULE-PREFERENTIAL DEBTS

THIRDSCHEDULE-OFFENCES

RELATINGTO

CONDUCTBEFORE

AND DURING

LIQUIDATIONAND

CRIMINAL

PROCEEDINGS

RELATINGTO

THOSEOFFENCES

THECOOPERATIVESBILL,2024

ABillfor

AN ACT of Parliament to establish the Office ofthe

Commissioner for Cooperative Development at the national level of govermment and the Office ofthe County Director for Cooperatives in each county government;to provide for promotion,registration. and regulation of Cooperatives:to provide for intergovermmental Cooperative relations:andfor connected purposes.

ENACTEDbytheParliament ofKenya asfollows-

PARTI-PRELIMINARY

• 1.This Act may be cited as the Cooperatives Act,
• 2024.
• 2.Inthis Act,unless the context otherwise Interpretation requires---

"agricultural produce"means any produce obtained by members ofa Cooperative or marketed bya Cooperative including the produce of agriculture,animal husbandry. forestry,fisheries or handicrafts:

"annual delegates meeting"means an annual general meeting where members are represented by delegates as provided under section 6l:

for all members duly convened by the Cooperative to conduct ordinary business of a Cooperative:

"Apex Cooperative" means theCooperative established at the national level ofgovernment topromote Cooperative development and represent the interests of Cooperatives locally and internationally:

"Authority"means the Sacco Societies Regulatory Authority established pursuant to the Sacco Societies Act. 2008:

"board of directorsmeans the governing body of a Cooperative elected or appointed by the members in accordance with this Act;

No.14af2008

"bonus".in relation to a member ofa Cooperative. means that member's share of the surplus of the Cooperative,which is divided amongst its members. calculated by reference to the proportion which that member'svolume of business with the Cooperative bears to the total volume of business done by the Cooperative:

"by-laws"means the internal rules made bya

Cooperative registered under this Act;

"Cabinet Secretary"means the Cabinet Secretary for the time being responsible for Cooperative development;

"capital"means the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings,grants or donations;

"Commissioner" means.theCommissioner for Cooperative Development appointed under section 5:

"commonbond"meanssimilar socio-economic interests of members in a Cooperative;

"contributormeans a person liable to contribute to the assets of a Cooperative in the event of its being wound up andincludes any other person deemed to be a contributor:

"Cooperativemeans a Cooperative duly registered under this Act;

"Cooperative company means acompany incorporated under the CompaniesAct which is owned or controlled by one or more Cooperatives;

"Cooperative federation"means a Cooperative which drawsitsmembershipfromprimary or secondary Cooperatives in a particular value chain.business line or

sub-sector,

"Cooperative technical officer"means an officer appointed by the Public Service Commission or a County PublicService Board for administration of thisAct:

"CooperativeTribunal" means established under section 124:

theTribunal

"County Director for Cooperatives"means a public officer appointed by a County Public Service Board to be responsible for the promotion,regulation,supervision and development of Cooperativesina county;

"county executive committee member"means the county executive committee member for the time being responsible for Cooperative development ina county:

"date of dissolution"means the date on which the Commissioner's order cancelling the registration of a Cooperative takes effect;

"deposit"means a sum of money paid on terms under which it shall be repaid,with or without interest or premium,and either on demandor at a time or in circumstances agreed by or on behalf of the person making the Cooperative to receive it at the risk of the Cooperative receiving it;

"dividend",in relation to a member of a Cooperative

means that member's share ofthe surplusof the Cooperative 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 Cooperative;

"employee" means any personwhoreceives remuneration or payment for produce or service from employer;

"employer"means any person,firm or organization holdingremuneration or payment forproduce or service of

amemberofa Cooperative;

"holding Cooperative" means anon-trading Cooperativewhose activities are limitedto holding investments on behalfof its members:

"inter-governmental cooperative relations technical forum"means a technical forum established under this Act tocoordinate Cooperative activities between the national govermment and county governments;

"limited liability" means the Cooperative shareholders'liability for debts of their Cooperative is restricted to their share subscriptionsto the Cooperative:

"member"includes a person or a Cooperative joining

in the application for the registration ofa Cooperative,and aperson or Cooperative admitted tomembership after registration in accordance with the by-laws:

"nominee"means a person to whom a member's

interest may be transferredto incase of death or total incapacitation:

"officer"in relation to a Cooperative,means a director or any other person,by whatever name or title he may be called or described,empowered under any Regulations made under this Act or by-laws ofa Cooperative to carry out functions relating to the overall direction of that Cooperative or takes part in the general management thereof:

"personal representative"means any person who.

under written lawor custom,isresponsible for administering the estate of a deceased person:

"primary Cooperative"means a Cooperative formed common socio-economic needs and aspirations:

"promoters"means the personswho come together to initiate the formation of a Cooperative;

"Sacco"means a savings and credit Cooperative registeredunderPart IVof this Act:

"secondary Cooperative"means a Cooperative whose membership isrestricted toprimary Cooperatives:

"share"means the amount represented by a member's

portion in the equity of a Cooperative as a co-owner;

"SICO"means a Savings and Investment Cooperative registered underthis Act:

"special delegate meeting"means a special general meeting where members are represented by delegates as provided forin thisAct;

other than annual general meeting.ofwhich a written notice with the date,time and place of the meeting has been given to each member;

"special resolutionmeans a resolution passed by two thirds of the members present and voting at a general meeting of a Cooperative;

"supervisory board"means an oversight board elected at ageneral meeting in accordance with this Act:

"trans-coop"means a Cooperative registered under

this Act to undertake transport services;

"vulnerable member" means amemberofa Cooperativewho due to socio-economic factorsisunable to effectively participate in the day-to-day activities of the Cooperative.

• 3.(1)The object of this Act is to provide for a legal framework that promotes a sustainable and competitive cooperative sector for socio-economic development in a devolved system ofgovernance.
• (2)Without prejudice to the generality ofsubsection
• (1).the objects of the Act shall include toprovide for-
• (a)promotion, registration, regulation, supervision of Cooperatives;
• and
• (b) uniform norms and standards in the registration, regulation,supervision and managementof
• Cooperatives:
• (c)responsibilities and functions of the national and
• county governments and their respective agencies:
• (d)areasof concurrent jurisdiction in promotion. registration, regulation, and supervision of
• Cooperatives:
• (e)inter-governmental relations framework for promotion. registration, regulation, pue supervision of Cooperatives;
• (f)aframework for consultation and co-operation amongst counties:
• (g)a framework for consultation andco-operation between the national and county govermments in the growth and development of Cooperatives:and
• (h)a framework for good governance and ethical
• conduct in Cooperatives.
• 4.The implementation of this Act shall be guided Guiding byprinciples.

Objecis of the Act.

• (a)the Cooperative principles of-
• (i) voluntary and open membership:
• democratic member control:
• (i)
• (ii)economic participation by members:
• (iv)
• autonomy and independence;
• (v) education,training and information:
• (vi)cooperation among Cooperatives;and
• (vii)concer for the community:and
• (b)nationalvalues and principles of governance provided under Article iO of the Constitution.
• Applieation 5.(1)This Act shall apply to all Cooperatives in Kenya.
• (2)Despitethe generalityofsubsection(1): Cooperatives to which the Sacco Societies Act,2008 applies shall in the conduct of their business be licensed, regulated and supervised to the extent provided for by the Sacco Societies Act,2008.

PARTII-ESTABLISHMENTOFTHE OFFICES ANDADMINISTRATION OFTHEACT

Division 1-National Government Offices

• 6.(1)There is established the Office of the Commissioner for Cooperative Development.
• (2) The Office of the Commissioner for Cooperative Development shall be an officein the Public Service.
• 7.The Public Service Commission shall appoint such number of technicalofficerstothe office of the Commissioner,as may be necessary for the implementation of the provisions of this Acl.
• 8.(I)The Public Service Commission shall, wheneveravacancy arises in thepositionof the
• Commissioner.fill the vacancy through a competitive recruitment process.
• (2)Without prejudice to the generality of subsection (1).a person is not qualified for appointment asa Commissioner,unless the person-

No.14af2008

Establishmentol the Office of te Commissioner.

Suaff of the office ofthe

Commissioner.

Vacancy inte office of the Commissioner.

• (a)has
• necessary academic qualifications, competenciesand experience einCooperative management and practice;and
• (b)isamember ofaprofessionalbodyfor Cooperativepractitioners in good standing.
• 9.(l)The Commissioner shall be responsible for the growth,development and regulation of Cooperatives in Kenya.
• (2)Despite the generality of subsection (1),the Commissionershall-
• (a)recommend to the Cabinet Secretary the
• formulation ofa national policy framework and standards for the development and growth of Cooperatives;
• (b) co-ordinate the implementation of an intergovernmental relations mechanism in the Cooperatives sector;
• c register all Cooperatives in Kenya,and maintain
• a national register of all Cooperatives;
• (d) promoteand facilitate theregistrationof Cooperative federations and theApex Cooperative;
• e conduct inquiries into the affairs of Cooperatives
• in accordance with this Act;
• carry out supervision and inspections into the affairs of federations and the Apex Cooperative;
• (g) carry outcapacity building for county
• (h)
• govermments in matters relating to Cooperatives;
• develop and enforce good governance,ethics and integrity guidelines in Cooperatives;
• D
• k)
• maintain a list of auditing firms authorized by the Commissioner to audit Cooperatives;
• register audited financial statements
• of Cooperatives;
• develop andpromoteadoption ofuniform norms and standardsfor Cooperatives;

Functions of the Commissioner.

• promote and develop frameworks for public private partnerships in Cooperatives;
• (m)collaborate with therelevant government agencies on matters relating to Cooperatives amongst county governments,and at the regional and international levels;
• establish and maintain a national Cooperative
• research and information centre;and
• (o) perform such other functions asmay be necessary for the implementation of this Act.
• 10.The Commissioner shall prepare and submit performance and activities of the Cooperatives tothe Cabinet Secretary within six months after the end of the financial year.

Division2-County Government Offices

• 11.(l) There is established in each county the Office of the CountyDirectorfor Cooperatives.
• (2)TheOfficeoftheCountyDirectorfor Cooperatives shall be an office in the County Public Service.
• 12.The County Public Service Board shall appoint such number of technical officers to the Office of County Director for Cooperatives,as may be necessary for the implementation of the provisions of this Act.
• 13.(l)The County Public Service Board shall. whenever a vacancy arises in the position of the County Director for Cooperatives,fill the vacancy through a competitive recruitment process.
• (2)Without prejudice to the generality of subsection (1).aperson is not qualified for appointment as a County Director for Cooperatives,unless the person-
• (a)has necessary academic qualifications, competencies and experience inCooperative management and practice;and
• (b)isamember ofaprofessionalbodyfor Cooperative practitioners in good standing.

Annual repors by the Commissioner,

Establishment of Ihe Office of the County Directow

for Cooperatives.

Staff ofthe Offlee

of the County Director for Cooperatives.

Vacancy in the

Office of County Director for Coopertives.

• 14.(l) The County Director for Cooperatives shall be responsible for promoting the formation ofCooperatives and day-to-day supervision of Cooperatives in the county.
• (2)Despite the generality of subsection (l).the
• County Director for Cooperatives shall-
• (a) formulate and implement strategies,guidelines, and measures in cooperative matters in accordance with the national policy framework;
• (b)carryoutinspections intothe affairsof Cooperatives in the county;
• (c)supervise elections of Cooperatives within the county:
• (d)enforce good govermance in the management of Cooperatives in the county;
• (e)provide external auditing services to Cooperatives in the county;
• (f)carry out capacity building of Cooperatives in the
• sopunod
• (g)promote value addition.joint venture and adoption ofappropriate technology in Cooperatives;
• (h)establish and maintain a county Cooperative
• research and information centre;
• (i)facilitate collaboration and linkages between primary and secondary Cooperatives;
• (j)collect,collate,analyse,and disseminate data on the activities of Cooperatives in the county;
• (k)developstrategieson theimprovementof governance and growth of Cooperatives in the county:and
• (l)perform such other functions as may be necessary for the implementation of this Act.
• 15.The County Director for Cooperatives shall prepare and submit to the county executive committee member within three months after the end of the financial year,an annual report on the performance,activities and operations of the office and of the Cooperatives within the county.

Functions of the County Director for Cooperatives.

Annual report by

the County Director for Cooperatives.

Division3-Inter-Governmental Cooperatives

RelationsTechnical Forum

• 16.(l) There is established an Inter-Govermmental Cooperatives Relations Technical Forum as an unincorporated body consisting of
• (a) the Commissioner,who shall be the chairperson:
• (b)the forty-seven county directors for Cooperatives:
• (c)the chief executive officer of the Authority:
• (d)an officer appointed by the Council of Governors:
• and
• (e)a representalive of the Apex Cooperative who shall be an ex-officio member.
• (2)TheCommissionershall providesecretariat services to the Inter-governmental Co-operatives Relations Technical Forum.including designating an officer to serve as the secretary-
• (3)The Commissioner shall provide adequate annual budgetary allocations,for the funding of operations of the Inter-govermmental Co-operatives Relations Technical Forum.and implementation of its recommendations.
• 17.The Inter-GovernmentalCooperatives Relations Technical Forum shall be theplatform for-
• (a)consultation amongst county governments on
• Cooperative matters:
• (b) consultation between the national and county
• governments on Cooperative matters:
• (c)consideration of technical and policy proposals from Inter-Govermmental Cooperatives Relations Technical Forum in the Cooperative sector,
• (d)formulating Guidelines on the promotion and supervision of Cooperatives:and
• (e)performing any other matter asmay be provided in any other written law or incidental to the growth and development of Cooperatives inKenya.
• 18.TheInter-Governmental Cooperatives Relations Technical Forum shall meet at least twice in ayear.

Establashment of InerGovemmemal Cooperatives Relations

Technical Forum.

Functions of InterGovernmental Cooperatives Relations

Technical Forum

Meetings of the InterGovernmental Cooperatives Relations Technical.

PARTIII-STRUCTUREOFCOOPERATIVESIN

KENYA

• 19.The Cooperatives structure in Kenya shall comprise-
• (a)primary Cooperatives;
• (b) secondary Cooperatives;
• (c)Cooperative federations;and
• (d)the Apex Cooperative.
• 20.(l) Subject to any other written law and without limiting the number and variety of primary Cooperatives, the following typesof primary Cooperativemaybe registered in Kenya
• (a)producer Cooperatives;
• (b)housing Cooperatives;
• (c)savings and credit Cooperatives:
• (d)savings and investment Cooperatives;
• (e) transport Cooperatives;
• (f)worker Cooperatives:and
• (g)consumer Cooperatives.
• (2)Forpurposes of thisAct-
• (a)a producer Cooperative shall be a Cooperative registered under this Act with the objects of production, processing. andmarketing of members'produce.
• (b)a housing Cooperative shall be a Cooperative registered under this Act with the objects of facilitating its members to acquire housing for the
• benefit of members:
• (c)a savings and credit Cooperative shall bea Cooperative registered under this Act with the principal objects of mobilization of savings and granting of loans and advances to their members and connected purposes:
• (d)a savings and investment Cooperative shall bea
• Cooperative registered under this Act with the

The Cooperatives

Primary

• objects of receiving funds from members strictly for making common investment of the funds on behalf of the members or a section of the
• members;
• (e)a transport Cooperative shall be a Cooperative registered under this Act with the objects of organizing its members to operate public transport servicesand connectedpurposes;
• (f)aworker Cooperative shall be aCooperative registered under this Act with the objects of organizingworkers or professionals to offer a specialized service orgroup of services;and
• (g)a consumer Cooperative shall be a Cooperative registered under this Act with the objects of organizing consumers to acquire consumer goods and services in bulk or wholesale for sale to members atcompetitive costs and achieve economy of scale.
• (3)Subject to the provisions of this Act and the Regulations made under this Act,a primary Cooperative may admit into itsmembership acorporate or an unincorporated person.
• 21.Unless otherwise expressly permitted by the Commissioner.a primary Cooperative shall not be registered under this Act with multiple objects and shall not undertake multiple objectives or purposes.
• 22.(1)A secondary Cooperative shall have its objects as-
• (a)aggregationandwarehousing ofproduce of
• produce;
• (b)provision of specialized services;
• (c)processing andvalue addition:
• (d)provision ofwholesale credit to members:
• (e)lobbying and advocacy:
• (f)to market and organize for joint sale of affiliate members'produce:
• (g)information and publicity:and
• (h) education,training and capacity building

Prohibition objects in primary

against multiple Cooperatives,

Objectsof secondary Cooperatives.

• (2)Despitethe generalityof subsection (l).a secondaryCooperative shall not operatein direct competition with its affiliates or provide similar services as
• that of its affiliates.
• 23.(1)A Cooperative federation shall have its objects asto-
• (a)establish subsector standards for purposes of selfregulation;
• (b)prescribe and enforce codes of conduct for its
• affiliates;
• (c)carry out market research and disseminate its findings for the benefit ofits members;
• (d)previde education and training and provision of
• speeialized servlees;
• (e)advoeate on behalf of its members in mntters relating to Cooperative miattets;and
• (f)lubby the government at national and county levels on Cooperative matters for and on behalf of its
• affiliates.
• (2)Despite the generality of subsection (1)-
• (a)thefe shall be only one registered Cooperative federation at any given time within a specific value chain,business line or Cooperative subsector;and
• (b)a Cooperative federation shall not provide services which are in direct competition with its affiliates
• ormembers.
• 24.(l) There is established an Apex Cooperative in Kenya which shall be registered in accordance with this
• Act and the Regulations made hereunder.
• (2) Cooperatives shall subscribe to the membership of the Apex Cooperative.
• (3)The Cabinet Secretary may.in consultation with the Apex Cooperative,prescribe the subscription fees payable under subsection (2)bythe Cooperatives, including minimum or maximum rates of subscription,the frequency of such subscriptions,and the penalty for failure to make such subscriptions.

Objeetsof Cooperative federations.

Registraion and subscription to the Apen Cooperative.

25.The Apex Cooperative-

• (a)shall be the custodian and champion of the statement of the Cooperative identity:
• (b)shall represent andprotect the interests of Cooperatives locally and internationally:
• (c)shall lobby the govermment at national and county
• levels on Cooperativematters:
• (d) shall promote Cooperative education,training.
• research and self-regulation within the Cooperatives;
• (e)shallprovide mechanisms and framework for alternative dispute resolution for Cooperative
• disputes;
• (f)subject to compliance with the Advocates Act, shall provide a sharedpool of legal services to its affiliates inmatters relating to Cooperative disputes:
• (g)subject to compliance with the Accountants Act, 2008 shall provide shared pool ofaccounting and auditing services to its affiliates:and
• (h) shall provide national platform for co-operation among Cooperatives.
• 26.The Apex Cooperative shall prepare and submit to
• the general meeting of the Apex Cooperative,an annual report of its operations and activities,including its audited financial statements and the performance of its affiliate Cooperatives within four months after the end of its financial year.
• 27.The Cabinet Secretary shall,by Regulations,
• prescribe themanner ofregistration,regulation,governance and management of theApex Cooperative.

PARTIV-REGISTRATIONOFCOOPERATIVES

• 28.Subject to the provisions of this Act,a Cooperative which hasas its objects-
• (a)the promotion of the welfareand economic
• interests of its members:and

Role and functions of the Apex Cooperative,

Cap.16.

No.15 of 2008.

Annual reportsof theApex Cooperntive,

Registration. regulation and operationsof Apek Cooperative.

Registration of limited liability Cooperatives.

• (b)has incorporated in its by-laws the Cooperative
• principles prescribed in section 4 of this Act,

may be registered by the Commissioner asa limited liability Cooperative under this Act.

• 29.(1)An application to register a Cooperative shall be made to the Commissioner in the prescribed form and be signed-
• (a)by ten persons representing at least twenty-five prospective members in the case of registration of aprimary Cooperative;
• (b)by at least two primary Cooperatives in the case of
• the ofregistration of a secondary Cooperative;or
• (c)by at least two secondary Cooperatives in case registration ofa Cooperative Federation.
• (2)Despite the provisions of subsection (1),there shall
• be only one Apex Cooperative at any given time inKenya.
• (3)The application in subsection (1) shall be accompanied by-
• (a)a letter of no objection to the registration issued by the County Director for Cooperativesof the county where it is proposed that the Cooperative head
• offices shall be located;
• the County Director for Cooperatives of the county where it is proposed that the Cooperative head
• offices shall be located;
• (c)copies of the proposed by-laws of the Cooperative, signed by the promoters and duly approved by the County Director for Cooperatives,amongst other
• thingsproviding-
• (i) objects of the Cooperative;
• (i)
• registered physical offices;
• (ili)
• (iv)
• the names ofinterim officials:
• mode of submission of contributions;
• (v) form of the Cooperative to be registered;
• (vi)
• common bond or field ofmembership;

Procedure for registration.

• (vii)area of operations;
• (viii) namesofpartieipants;
• (ix) qualifications for membership and eligibility to the boards;and
• the prospective members'commitment t6
• (x) Cooperative principles and values
• (d)minutes of the pre-Cooperative meeting duly certified by the County Directof for Cooperatives providing amongst others names,identification numbers,addresses,telephonenumbersand signatures ofall the prospeetive members:
• (e)in case of an employer-based savings and eredit Cooperative,a letter from the employer indicating his commitment for check off remittances of the Cooperative deductions:
• (f)the prescribed fee for registration of Cooperatives and
• (g)any other matter as may be prescribed in the Regulations.
• (4)Prior to applying for registration,the promoters of
• a Cooperative shall-
• (a)hold at least one meeting of the prospective members of the proposed Cooperative presided over by the County Director for Cooperatives or the appointed representative in case ofa primary orsecondary Cooperative,where-
• (i) the prospective members are sensitized on the Cooperative principles,values and ethical beliefs,members'rights and obligations and requirements forregistration;
• ()
• compliance upon registration;and
• () the common bond or field of membership of prospective members is determined.
• (b)obtain aname reservation certificate from the Commissioner which shall bevalid fora periodof
• three months from the date of issuance.
• (5)The provisions of subsection (4) shall apply in respect of an application for registration ofa Cooperative

federation to the extent that the meeting shall be presided

over by the Commissioner or the appointed representative.

• 30.The Commissioner may not registera Cooperative
• under this Act where in the opinion of the Commissioner there already exists or there is in existence a Cooperative drawing its membership from the same common bond or field of membership and undertaking same objectives as the proposed Cooperative.
• 31.A Cooperative name shall not be registered if-
• (a)it has the same as a name appearing in the national
• register of Cooperatives;
• (b)it has a close phonetic resemblance to the name of aregistered Cooperative:
• (c)it differs from the name of another registered
• Cooperative only by the addition ofthe name ofa place,locality or region within Kenya;
• (d)it is identical to,or closely resembles,that ofa name that has been reserved by the Commissioner foruse in connection with a proposed Cooperative;
• (e)it is identical to or closely resembles the name of
• one ormore of thepromoters;
• (f)it is identical to or closely resembles,the name of a Cooperative that has becn dissolved,or whose registration has been cancelled;
• (g)the Commissioner believes on reasonable grounds that its use would involve the commission ofa criminal offence;or
• (h) it is offensive,undesirable or contrary to public interest.
• 32.If the Commissioner is satisfied that a Cooperative
• has complied with the provisions of this Act and any Regulations made thereunder and that its proposed by-laws are not contrary to this Act or any Regulations made thereunder, the Commissioner shall register the Cooperative and itsby-laws under this Act within a period not exceeding thirty days from the date ofverification.
• 33.Acertificate of registrationsignedby the Commissioner shall be conclusive evidence that the

Restrletion of registmtion of Cooperatives within the same

contmon bond.

Limitation on namesof Cooperatives,

Registration ofa

Cooperative and its by-laws.

Evidence of registration.

Cooperative therein mentioned is duly registered,unless it isproved that such registration of the Cooperative hasbeen cancelled or terminated.

• 34.(1)A copy of the certificate of registration bearing
• thenumber and date ofregistration shall be displayed at the head office ofevery Cooperative and a copy thereof shall business of the Cooperative.
• (2)The Board of Directors of aCooperative who violate the provisions of subsection (l)commit an offence and shall be liable upon conviction to a fine not exceeding one hundred thousand shillingsor imprisonment fora term notexceeding three years orboth.
• (3)Despite the penalty prescribed in subsection (2), where anofficer ofa Cooperative ora Cooperativeviolates the provisions of subsection (l) without any good reason. the Commissioner may after hearing such officer or Cooperative impose a financial penalty notexceeding the
• sum of fifty thousand shillings.
• 35.(1) Where a Cooperative changes its name,the Commissioner shall issue the Cooperative with a certificate ofchange ofname bearing thenewname ofthe Cooperative and the date of change of name.
• (2)Where a certificate ofregistration ofa Cooperative
• islost or destroyed,the Cooperative shall apply to the Commissioner,in writing.for the issuance of a replacement duplicate certificate ofregistration,and the Commissioner shall issue a replacement duplicate certificate in such form and manner,and on such terms as conditions as may be prescribed.
• 36.(1) Upon registration,every Cooperative shall be deemeda body corporate by the name under which it is registered,with perpetual succession and a common seal, andwith power tohold movable and immovableproperty ofevery description,to enter into contracts,to sue and be sued and to do all things necessary for the purpose of,or in accordance with,itsby-laws.
• (2)A Cooperative registered under this Act,shall not be registered underany otherlaw.

Displayof certificate of registrtion.

Change ofname certificate.

Cooperative as body corporate andprohibition against dual registrmion,

• 37.(1)A Cooperative,through a special resolution in ageneral meeting,may amend its by-laws,including the by-law which declares the name of the Cooperative.
• (2)No amendment of the by-laws of a Cooperative
• shall be valid until the amendment has been registered under this Act,forwhich purpose a copy of the amendment shall be forwarded to the Commissioner in the prescribed manner.
• (3)If the Commissioner is satisfied that any amendment ofthe by-laws ofthe Cooperative is not contrary to this Act,the Regulations made hereunder and any other written law,the Commissioner may register the amendment.
• (4)The Commissioner may.if satisfied,that an amendment under this section was effected pursuant toa misrepresentation or concealment ofamaterialfactorfraud by the person applying for registration,he may cancel the amendment.
• (5)An amendment which changes the name of a proceedings pending may be continued by or against the
• Cooperative shall not affect any right or obligation of that Cooperative or any of its members,and any legal Cooperative underitsnew name.
• (6)Upon registering an amendment of the by-laws of
• aCooperative,the Commissioner shall issue to the Board ofDirectors a copy of the amendment certified by the Commissioner,which shall be conclusive evidence of the fact that the amendment has been duly registered.
• (7)In this section-

"amendment"includes the making of a new by-law where this form a part oftheby-laws of such a

and the variation orrevocation of a by-law,but excludes the variation of the registered address of a Cooperative Cooperative.

• (8)A copyof the by-laws of a Cooperative or of an amendment of such by-laws certified by the Commissioner shall be prima facie evidence for all purposes of the registration of such by-laws or such amendment.

Amendment of

by-laws.

• 38.The by-laws of aCooperative,shall,when
• registered,bind the Cooperative and the members thereof to the same extent as if they were signed by each member and contained covenants on the part ofeach member for the member and the member's personal representatives to observe all the provisionsof theby-laws.
• 39.Any party aggrieved by the decision of the
• Commissioner not to register the Cooperative and its by: the decision to the Cooperative Tribunal.
• Commissioner shall be presumed to have been signed by Commissioner until the contrary is proved.
• written law,the word "Cooperative"or its derivatives shall form part of the name of every Cooperative,and the word "limited shall be the last word in the name of every Cooperative.
• (2)A person shall not use the word"Cooperative"or
• any of its derivatives or any other words indicating the transaction of Cooperative business or the equivalent,in the name,description or title under which it transacts business inKenya or make any representation that the person transacts Cooperative business unless such person is duly registered under this Act.
• (3)Where the Cooperative is registered as-
• (a)a secondary Cooperative,the Cooperative shall
• Cooperative in its name:and
• (b)a Cooperative federation, the Cooperative shall incorporate the word"federation"immediately after the word Cooperative in its name.
• (4)A person who contravenes the provisions of this section commits an offence and shall,upon conviction,be liable to a fine not exceeding five hundred thousand shillings,or to imprisonment for a term not exceeding five years,ortoboth.
• 42.(1) For purposes of this section,"Sacco business" has the meaning assigned to it under the Sacco Societies
• Act,2008.

Cooperative to be

obinding.

Appeal against i

Signature by the

Commissioner,

Proipctiona Cooperative identity.

Pratoction and restriction on the ueupjo "Sacpo" No.14af2008.

• (2)Despite section 4l,where aCooperative is registered as a savings and credit Cooperative,the word "Saccoshall form part af the name of every such Cooperative instead of the word "Cooperative",and the word Limitedshall be the last word in the name of such Cooperative.
• (3)A person shall not use the word"Sacco"or any of its deriyatives or any other words indicating the transaction ofSacco business or the cquivalent,in the name, description or title under which it transacts business in Kenya or make any representation that the person transacts Sacco business unless such person is duly registered as a savings and credit Cooperative under this Act.
• (4)In addition to any penalty provided under the Sacco Societies Act,2008,any person who contravenes the provisions of this section commits an offence and shall upon conviction be liable to a fine not exceeding five hundred thousand shillings,or to imprisonment for a term not exceeding five years,or to both.
• 43.(1)Despite theprovisions of section 41
• (a)where a Cooperative is registered as an investment
• Cooperative,the Cooperative shall
• "savings and word
• (i)incorporate the investmentimmediatelybefore the "Cooperative"as part of its name;and
• (ii)at all times use the said name or the acronym "SICO"or any of its derivatives or any other words indicating the transaction of investment Cooperative business or the equivalent,in the name,descriptionor title under which it transacts business.
• (b)where a Cooperative is registered as a transport Cooperative,the Cooperative shall-
• (i)incorporate the word "transport"immediately before the word "Cooperative"as part of its
• pueseu
• (ii)at all timesuse the said name or the abbreviation TRANS-COOP or any of its derivatives or any other words indicating the

No.14of2008.

Mandatory usage ofnames in certain Cooperatives.

• transaction of transport Cooperative business or the equivalent,in the name,description or

title under which it transacts business.

• (c)where a Cooperative is registered as a housing
• Cooperative,the Cooperative shall-
• (i)incorporate the word "housing"immediately
• before the word "Cooperative"as part of its name;and
• (ii)at all times use the said name or any of its derivatives or any other words indicating the transaction ofhousing Cooperative business or the equivalent,in the name,description or title
• under which it transacts business.
• (2)A Cooperative or an officerofa Cooperative who without lawful cause contravenes or causes a Cooperative to contravene the provisions of subsection (l)shall be liable to pay a penalty not exceeding fifty thousand
• shillings on beingcalled upon by the Commissioner.
• (3)Any person who contravenes the provisions ofthis section commits an offence and shall upon conviction be liable to a fine not exceeding five hundred thousand shillings,or to imprisonment for a term not exceeding five years,ortoboth.

PARTV-RIGHTSANDLIABILITIESOF MEMBERS

• 44.(1)A person other than a Cooperative shall not be
• qualified for membership ofa Cooperative unless the person-
• (a)has attained the age of eighteen years;and
• (b)has employment,occupation or profession falling within the category or description of those for
• which the Cooperative is formed;or
• (c)is resident within,or occupies land within,the Cooperative's area ofoperation as described in the
• Cooperative'sby-law.
• (2)An unincorporated or corporate body may become a member of a Cooperative,only with the approval of the members at a general meeting or the board of directors
• subject to ratification by the members at a general meeting.

Qualification foe membership.

• 45.A member,other than aCooperative,shall not
• hold more than one-fifth of the paid-up share capital of any Cooperativeregistered inKenya.
• 46.A member of a Cooperative shall not exercise any ofthe rights ofamemberunless the memberhasmade such payment to the Cooperative in respect ofmembership.or has acquired such interest in the Cooperative as may be prescribedunder this Act or under the by-laws of the Cooperative.
• 47.No person shall bea member ofmore than one
• producer Cooperative having similar objects:

Provided that a person who-

• (i)isa memberof aproducer co-operative society:and
• (i)carries on business on land or at premises outside the area of operation of that producer cooperative society,

situate,notwithstanding that its objects are the same as or similartothoseofthefirst-mentionedproducer cooperative.

• 48.(l)Each member of a Cooperative shall have one vote only in the affairs of the Cooperative,irrespective of thenumber of shares the member holds.
• (2)A Cooperative shall notclassify or categorize its members into clusters or groups in such a manner as to restrict the members'rights of voting as provided in subsection (1).
• (3)Despite subsection (1).a Cooperative which is a member ofasecondaryCooperative,aCooperative federation or the Apex Cooperative
• (a)shall have as many votes as may be prescribed by the by-laws of the secondary Cooperative Cooperative federation or Apex Cooperative of which itis a member;and
• (b)may appoint anysuch number ofits representatives to the secondaryCooperative,

Limitation of holding share capital.

Exercise of s

Limitation of

membership to producer Cooperatives.

Voting nighis of

members.

Cooperative federation or Apex Cooperative.as may be allotted by the by-laws of the secondary Cooperative,Cooperativefederationor Apex Cooperative as the case may be.

• 49.The transfer or charge of the share or interest of a member in the capital of a Cooperative shall be subject to such conditions as to maximum holding as are laid in section 45.

50.Amember ofa Cooperative shall-

• (a)have a right to attend and participate in decisions made at all general meetings of the Cooperative and vote:
• (b)be eligible for election to anyorgan ofa Cooperative,subject to its by-laws:
• (c)have the right lo use all the facilities and services ofthe Cooperative,subject to the Cooperatives by-laws:and
• (d)have the right to access information relating to the Cooperative and its subsidiaries,including bylaws,intemal Regulations,registers,minutes of generalmeetings,supervisoryboards reports, financial statements,and statutory reports and any Regulations.

S1.Amember ofa Cooperative shall-

• (a)observe and comply with all the Cooperative bylaws and decisions taken by the relevant organs of the Cooperative in accordance with the by-laws of thatCooperative:
• o ue e Jo seu Jo dn ed pu nq() payments provided for in the by-laws of the Cooperative:and
• (c)meet the debts of the Cooperative in case of insolvency in accordance with the provisions of this Actand the by-laws of the Cooperative.

PARTVI-DUTIESOFCOOPERATIVES

• 52.Every Cooperative shall have a physical registered address in Kenya.including postal and other electronic

Transferof shares.

Righes of

members.

Obligatlons ofa member.

• Registered joppe

addresses to which notices and communications may be sent and shall send to the Commissioner notice of every change of address within one month of the change.

• 53.Every Cooperative shall keep a copy of this Act andof the Regulations made thereunder and ofitsown bylaws and a list of its members,excluding details of nominees and shareholdings,at its registered office and shall keep them open forinspection by any member,free of charge,at all reasonable times during business hours.
• 54.(1)For each financial year,the board of directors ofa Cooperative shall cause tobeprepared estimates of the Cooperative's income and expenditure including recurrent and capital estimates for approval by the general meeting held in accordance with this Act and the Cooperative s bylaws.
• (2)Estimates of income and expenditure shall be provided to members fifteen days prior to the date of the general meeting through physical copies,posting on notice boards placed in conspicuous places or through other electronic means.
• (3)A Cooperative oran officerofa Cooperative who without lawful cause fails to comply with subsection (2) shall be liable to a penalty of onehundred thousand shillings and the Commissioner or the County Director for Cooperatives may cancel the general meeting until the Cooperative complies.
• 55.(1)Every Cooperative shall keep proper books of accounts which shall-
• (a)be prepared in accordance with International Acconting Standards;
• (b)reflect the true and fair state of the Cooperative's
• financial affairs;and
• (c)explain the Cooperative's transactions including-
• (i)all sums of money received and paid by the Cooperative and the reasons thereto;
• all sales and purchases of goodsand services by the Cooperative:and
• (ii)all assets and liabilities of the Cooperative

Cooperatives.

Cooperatives Io keepa copy of the at registered office.

Eatimates of income and expenditore.

Accounts and

audits.

• (2)The booksof accounts shallbe kept at the registered office of the Cooperative or at such otherplace as may be determined by the Cooperative and shall at all times be available for inspection bymembers of its supervisoryboard and the auditor.
• (3)It shall be the duty ofevery Cooperative to cause
• itsfinancial statements to be audited at least once in every
• (4)The auditors of a Cooperative shall be appointed at the annual generalmeeting from a list ofauditors approved by the Commissioner.
• (5)Where at an annual general meeting.no auditor is appointed,the Commissioner may appoint a person to fill the vacancy and the remuneration ofthe person so appointed shall be borne by the Cooperative.
• (6)The accounts referred to in subsection (3)shall-
• (a)conform with International Financial Reporting Standards:
• (b)include the following financial statements-
• statement of financial position:
• (ii)statement of comprehensive income;
• (ii) statement of changes in equity:
• (iv)a cash flow statement:and
• (v)notes to the accounts,
• (c)be approved by the board of directors;and
• (d)be authenticated by the chairperson and any two
• other members of the board of directors.
• (7)An auditor shall not present the audited financial statements ofa Cooperative to the members at a general meetingunless-
• (a)the accounts have been approvedby the Commissioner in such form as may be prescribed;
• and
• (b)in the case ofCooperatives towhich the Sacco Societies Act,2008apply,the accounts have been
• accordance with that Act.

• (8)The auditor shall submit the audited financial statements to a general meeting within four months after the end of the accounting period and shall include the auditor's opinion as to whether or not the Cooperative's business has been conducted in accordance with the-
• (a)provisions of this Act and any other written law governing the operations and activities of the Cooperative;and,whether the books of accounts keptby the Cooperative are in agreement therewith and give a true and fair view of the state of the affairs ofthe Cooperative:
• (b) Cooperativesprinciples,values and ethical beliefs: and
• (c) Cooperative's purpose and objects,by-laws,any other resolutions made by the Cooperativeata general meeting.and any directive or order issued by the Commissioner,the County Director for Cooperatives or the Authority.asthe case may be.
• (9)The auditor shall have the right to-
• (a)attend any general meeting of the Cooperative and and the auditor's opinion on the Cooperative's
• be heard on any matter which concerns the auditor financial statements;
• (b)receiveallnoticesand othercommunications relating to any general meeting which a member of the Cooperativeis entitled to receive:
• (c)access,at all times,any accounting records,books or documents of the Cooperative as may be necessary for the purpose of carrying out the auditor's duties as an auditor and may at the time ofthe audit-
• summon any officer,agent or member of the Cooperative for the purpose of obtaining informationonthe transactions ofthe Cooperative or management of its affairs;
• (ii)requiretheproduction of anybook. document,cash or securities relating or belonging to the Cooperative by any officer, agent,trustee or member having custody of suchbook,document,cash or securities;or

• (ii) demand such other information or explanation fromany officerofthe Cooperative as may be necessary for the performance of the duties of an auditor.
• (10)Where a Cooperative has subsidiaries,the Cooperative shall consolidate its financial statements.
• (11)Every Cooperative shall,at such time and in such form as may be prescribed,file with the Commissioner an annual return together with a certified true copy of the audited financial statements of the Cooperative for each periodof twelvemonths.
• (12) Where a Cooperative fails to cause its financial statements to be audited within the prescribed period in respect of its business for the previous financial year, members of the board of directors shall automatically lose their positions at the next general meeting and shall not be eligible for re-election forthreeyearsunlessthe Commissioner is satisfied that the failure was due to circumstances beyond their control.
• (13) The County Director for Cooperatives shall ensure that all primary and secondary Cooperatives within their respective counties comply with the provisions of this section.
• 56.(1) An officer,agent,servant or member of a
• Cooperative who is required by the Commissioner or County Director for Cooperatives or by any person authorized in writingby them to do so shall,at such place and time as they may be directed,produce all monies, securities,books,accounts and documents belonging to or relating to the affairsof such Cooperative which are in the custody of such officer,agent,servant or member.
• (2)A person who fails to comply with subsection (1) commits an offenceand shall beliable upon conviction to a fine not exceeding one hundred thousand shillings or to imprisonment for a term not exceeding six months.

PARTVII-GOVERNANCEOFCOOPERATIVES

• 57.(1) Subject to the provision of this Act and any other written law,the supreme authority of a Cooperative
• shall be vested in the general meeting at which members

Production of booksandother documents,

General meetings.

• shall have the right to attend,participate and vote on all
• matters.
• (2)In the first year after registration of a Cooperative, the general meeting shall be held not later than one month after receiptof the certificateof registration ofthe Cooperative and during such meeting,the members shall-
• (a)elect the board of directors and supervisory board;
• (b)consider and approve estimates of income and expenditure for the ensuing financial year or part
• thereof;
• (c)determine the maximum borrowing powers of the Cooperative;
• (d)appoint the Cooperative's bankers and auditors;
• (e)fix the value ofindemnity for the officers of the Cooperative;and
• (freceive reports and decide upon such other matters as may be necessary for the conduct of the Cooperative's business.
• (3)In subsequent years,a Cooperative shall hold an annual general meeting within four months after the end of cach financial year.
• (4)Ageneral meeting ofaCooperative shall be convened by giving at least fifteen days'written notice to
• the members.
• (5)At the annual general meeting of a Cooperative, members shall--
• (a)consider and confirm the minutes of the last general meeting:
• (b)consider any reports of the board of directors, supervisory board,the Commissioner or County Director for Cooperatives or the Authority.as the case may be;
• (c)consider and adopt audited financial statements;
• (d) determine the manner in which any available surplus is to be distributed or invested;

• (e)elect the board of directors and supervisory board members for the ensuingyear;
• (f)determine,wherenecessary.the maximum borrowingpower of the Cooperative;
• (g)consider and approve the annual estimates of income and expenditures for the ensuing year.
• including the recurrent and capital expenditures:
• (h)appoint,elect or approve members to the Cooperative's nominationcommitteefor the ensuing year;
• (i)fix the value of the indemnity for the officers of
• the Cooperative:
• (j)appoint an auditor for the ensuing year;and
• (k)transact any other general business of the Cooperative of which notice has been given to
• members in the manner prescribed in the by-laws of the Cooperative.
• 58.(l) A special general meeting of a Cooperative may be convened-
• (a)by the board of directors for the purpose of approving annual estimates or discussing any urgent matter which in the board of directors opinion isin the interest of the Cooperative;or
• (b)on receipt ofa written notice for such meeting signed by such number of the members of the Cooperativeas maybeprescribed in the Regulations and stating the objects and reasons for
• calling the meeting.
• (2)If the board of directors fails to convene a meeting within fifteen days of receiving the notice under subsection (1)(b).the members demanding the meeting may,upon written notification to the Commissioner or County Director for Cooperatives,convene the meeting by giving notice to the other members of the Cooperative,stating the objects and reasons for the meeting and the fact that the board of directors have failed to convene the meeting.
• (3) The Commissioner may convene a special general meeting ofa Cooperative at which the Commissioner may
• direct the matters to be discussed at the meeting

Special general o Cooperative.

• (4)The CountyDirector for Cooperatives may convene a special general mceting ofa primaryor a secondary Cooperative in a county at which County Director of Co-operatives may direct the matters to be discussed at the meeting.
• 59.(1) The chairperson,and in the absence of the
• chairperson,the vice-chairperson or such other person as maybe prescribed in the by-laws of the Cooperative shall preside at ageneral meeting of a Cooperative.
• (2)Despite the generalityof subsection (l),the Commissioner or the County Director for Cooperatives may preside at any meeting of a Cooperative convened pursuant to a directive of the Commissioner or the County Director for Cooperatives,as the case may be.
• 60.(1)Except as provided herein,a Cooperative shall
• hold itsgeneral meetingsphysically
• (2)Despite subsection (1).a Cooperative may,hold its general meetingvirtually or a hybrid ofvirtual and physical meeting inexceptionalcircumstancesand subject to
• compliance with such requirements asmay be prescribed in the Regulations orby anyotherwritten law.
• 61.(1)Despite the provisions of the Cooperative members of aprimary Cooperative to attend and vote ata
• principle of democratic member control,and the rights of general meeting in person,a Cooperative may in its bylaws provide for delegated representation at its general meeting.in such manner and to such extent as may be prescribed in the Regulations.
• (2)Despite the generality of subsection (1).decisions relating tothe following matters in respect toa primary Cooperative shall be exclusively discussed at a physical general meeting of the entire membership--
• (a) dissolution of the Cooperative;
• (b)amalgamation or division of a Cooperative;
• (c)formation of subsidiary companies;
• (d)acquisition ofamajority shareholdingofa company or any other entity or a takeover ofa companyin whichthe Cooperative isa
• shareholder:

Presiding at generalmeetings.

Physical,virtual meclings.

Delegate system

ofrepresentation.

• (e) liquidation or winding-up of a subsidiary company oftheCooperative;
• (f)proposed change in the core business in respect of which the Cooperative was incorporated;and
• (g)any other matter as the Cabinet Secretary may prescribe.
• 62.(l) Every Cooperative shall have a board of directors consisting ofnot less than five and notmore than nine members who shall be elected by members at the general mceting.
• (2)Members of the board of directors shall beelected for a term of three years,and shall be eligible for reelection.
• (3)The members of the board of directors shall elect a chairperson and a vice-chairperson from among their
• members.
• (4)The board of directors shall be the goverming body ofthe Cooperative and shall,subject to any direction from a general meeting or the by-laws of the Cooperative,direct the affairs of the Cooperative with powers to-
• (a)enter into contracts;
• (b)institute anddefend suits and otherlegal proceedings brought in the name ofor against the Cooperative;and
• (c)do all other things necessary to achieve the objects ofthe Cooperative in accordance with its by-laws.
• (5)In constituting its board of directors,a Cooperative
• shall ensure-
• (a) that not more than two thirds of the directors are of the same gender in such manner and to such an extent as shall be provided in the Cooperative's
• by-laws;
• (b) there is regional representation in the composition ofthe boardconsideringtheCooperative geographical location and field ofmembership:
• and

Membershipand powers of the Board.

• (c)the vuinerable members of the Cooperative are represented in such manner and to such an extent as shall be provided in the Cooperative's by-laws.
• 63.(1)A person shall not be a member ofaboard of EHgibiliky to de dinectors or continue to be a member ofthe board of boardufJincton. directors,if that person-
• (a)is not a member of the Cooperative;
• (b)does not have a mininum of secondary level ofNo.Hef200.
• education certificate,unless exempted by the Cabinet Secretary in the case of a secondary Cooperative or Cooperative federation of the Apex Cooperative or by the County Executive Committee member in case ofaprimary Cooperative within therespective county's jurisdiction:
• Provided that this subparagraph shall not apply to Cooperatives in respect ofwhich the
• Sacco Societies Act apply:
• being a memberofa Cooperative,which trades in goods or produce,trades either on the person's own account or some other person's account in the same type of goods or produce;
• (d)has not,within thirny days of being elected, submittedawealthdeclarationlothe Commissioner in the prescribed manner;
• (e) has not within fourteen days of being clected filed indemnity with the Commissioner in the prescribed manner;
• is an undischarged bankrupt;
• (g)isofunsound mind;
• (h) has been adversely named by the Commissioner in an inquiry report or any inspection report for
• mismanagement or corrupt practices while a member of the board of directors;
• has been charged in a court oflaw with an
• offence relating to abreach of fiduciary duty:

• (i)has been convicted of any offence involving dishonesty or is sentenced to imprisonment for a
• term exceeding three months:
• (k) has been convicted of an offence under this Act orRegulations made thereunder;
• has any debt owing to a Cooperative at the end of
• its financial year other than inrespect ofaloan under the provision of any Regulations made under this Act;
• is due under a decree,decision or order or is pendingrecovery under this Act;
• (n)has been a member of the supervisory board or
• the nomination committee or other management officers of the Cooperative for the three years preceding the election;or
• (o)
• does not satisfy the provisions of Chapter six of the Constitution.
• (2)The provisionsofthis sectionrelating to qualifications and disqualification of appointment of persons to the board of directors,shall apply to the qualifications and disqualifications ofmembers of the supervisory board with such modifications asmay be necessary.
• 64.(1)The board of directors shall be responsible for strategy,riskmanagement,internal controls,policy formulation and oversight of the Cooperative.
• (2)The board ofdirectors-
• (a)shall appoint a chief executive officer of the Cooperative,who shall be responsible for the day today management of theaffairs ofthe Cooperative:and
• (b)may delegate any of its duties under this Act,the Regulations and the by-laws of the Cooperative to the chief executive officer or any officer of the Cooperative:

Provided that,nothing in this subsection shall absolve the board of directors from its responsibility to provide oversight over the affairsof the Cooperative.

Responsibilitiesof the board,

• (3)In the conduct of the affairs ofa Cooperative,the board of directors shall exercise the prudence and diligence ofordinary persons ofbusiness and the directors shall be held,jointly and severally liable for any losses sustained through any of their acts which are contrary to the Act, Regulations,by-laws or the directions of any general meeting of the Cooperative.
• (4)The board of directors may-
• (a)constitute such committees of the board as may be necessary to perform its functions;and
• (b)may delegate any of duties under this Act,the Regulations and the by-laws of the Cooperative to anyofthe committees.
• (5)Despite the generality of the provisions of
• subsection(4)the-
• (a)number of standing committees of the board shall not exceed four,and
• (b)terms ofreference of each committee shall be prescribed in the by-laws of the Cooperative.
• 65.(1)Every Cooperative shall have a supervisory board consisting of three members each clected at a general meeting fora period of three years and one member of the supervisory board shall retire annually and be eligible for re-election.
• (2)The dutiesof the supervisory board shall include-
• (a)verification of all transactions of the Cooperative:
• (b)writing periodicreports ofits findings to be tabled
• at board of director's meetings;
• (c)presenting its reports to the general meeting;
• (d)reviewing internal controls including the scope of the internal audit program,the intemal audit findings,and recommend action to be taken by the
• (e)reviewing internal audit reports and their overall effectiveness,the scope and depth ofaudit coverage,reports on internal control and any recommendations and confirm that appropriate
• action has been taken:

Supervisory board

and its duties.

• (f)ensuring that accounting records and financial operations and results;
• (g)reviewing management reports,and reports from the intemal and external auditors conceming deviations andweaknesses in accounting and operational controls:and
• (h)monitoring the ethical conduct of the Cooperative andconsideringthe developmentofethical standards and requirements,including-
• effectiveness of procedures for handling and reporting complaints;
• reviewing any related party transactions that
• (ii) may arise within the Cooperative:
• (ii) verifying that relevant plans,policies,and control procedures are established by the board of directors and properly administered;
• (iv)investigatingmembers' complaints and making recommendations for redress;and
• (A) considering any matter of significance raised by members during the general meetings or by the Commissioner or the County Director for Cooperatives or the Authority.as the case may be.
• (3)The supervisory board shall prepare and submit quarterly reports to be presented to a joint meeting with the board of directors within thirty days after the end ofeach quarter.
• (4)The supervisory board shall submit or cause to be submitted all quarterly reports of the supervisory board together with comments and actions made by the board of directors,within thirty days,after presentation to the board of directors tothe-
• (a) County Director for Cooperatives in case of primary and secondary Cooperatives:
• (b) Commissioner in case of Cooperative federation and the Apex Cooperatives:and
• (c)Authority in case of Cooperatives in respect of
• which the Sacco Societies Act,2008 apply.

No.14of2008.

• (5)The board of directors shall provide sufficient resources in the annual budgetary estimates to the supervisory board toenable it perform its functions including secretarial services.
• (6)The intermal auditor of the Cooperative shall report to andprovide technical support to the supervisory board.
• 66.(1)Thereshall be anomination committee consisting of not less than three and not more than five persons in every Cooperative whose responsibility shall be to vet andclear potential persons for professional or moral suitabilitylobeelectedtotheboardof directorsor supervisory board ofa Cooperative.
• (2)The nomination committee ofa Cooperative shall be approved annually by the general meeting from persons nominated for such approval in accordance with its by-laws and electoral policy for the ensuingyear.
• (3)A Cooperative shall.in constituting the nomination committee in its by-laws and electoral policy,ensure that the followingpersons'are represented-
• (a) CountyDirector for Cooperatives inwhose jurisdiction the Cooperative is situated,who shall be the chairperson:
• (b) Chief Executive Officer of the Cooperative who shall provide secretariat services:and
• (c)not more than three other persons drawn from any ofthe associations of professionalbodiesin Kenya.government officials,religious community within the areas of operation of the Cooperative.

PARTVIII-AMALGAMATIONANDDIVISIONOF

COOPERATIVES

• 67.(l) Any two or more Cooperatives hereinafter referred to as amalgamating Cooperatives may.by special resolution in this section referred to as the preliminary resolution,resolve to amalgamate as a single Cooperative hereinafter referred to as the amalgamated Cooperative.
• (2)A copy of the preliminary resolution shall be sent to the members and creditors of each of the amalgamating
• Cooperatives,and to other persons whose interests in any

Nominatioe

Committee.

Amalgamstion o

Cooperatives.

of the amalgamating Cooperatives will be affected by the amalgamation.

• (3)Any member of any of theamalgamating Cooperatives may,notwithstanding any by-law to the contrary,by notice in writing given to the Cooperative.at least one month before the date specified as the dateof amalgamation,intimate the intention not to become a memberof the amalgamated Cooperative.
• (4)Any creditor of any of the amalgamating Cooperatives may.despite any agreement to the contrary. by notice in writing given to such Cooperative at least one month before the datespecifiedasthedate of amalgamation.intimate the intention to demand the payment of any money due to the creditor.
• (5)Any other person whose interest will be affected by the amalgamation may,by notice in writing given to the concerned amalgamating Cooperative,not less than one month before the datespecified as the date of amalgamation,object to the amalgamation unless the person's 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 amalgamating Cooperative shall be held to consider the preliminary resolution and any notices received under this section.
• (7)At the specialgeneralmeeting held under subsection (6)provision shall be made by a further resolution of the Cooperative (in this section referred to as
• the secondaryresolution)for-
• (a)the repayment ofthe share capital ofany 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 oftheir claims in suchmanneras determined or directed by the Commissioner:

Provided that,a member,creditor or otherperson shall not be entitled to such repayment or satisfaction until the subsection (8).

• (8)Each amalgamating Cooperative may.by further resolution passed bya two-thirds majority of the members present and voting,confirm the preliminary resolution.
• (9)If,within such time as the Commissioner considers reasonable,theCommissioner issatisfiedthat the secondaryresolutionsof each ofthe Cooperatives amalgamating comply with the provision of this section,he may register the amalgamated Cooperative and its by-laws andthereupon-
• (a)each of the amaigamating Cooperative shall stand dissolved and itsregistration cancelled:
• (b)the registration of the amalgamated Cooperative shall be a sufficient conveyance to vest the assets andliabilitiesof the amalgamating Cooperativesin the amalgamated Cooperative;
• (c)the remaining members of the amalgamating Cooperatives shall become members of the amalgamated Cooperative and will be subjected to itsby-laws;and
• (d)any shareholders ofthe amalgamating Cooperatives or any other persons who have claims against the amalgamating Cooperatives and whose claims were not satisfied in accordance with the secondary resolution,may pursue such claimsagainst the amalgamated Cooperative.
• (O1) Wherethe Commissioner refuses the amalgamation of the amalgamating Cooperatives under subsection (9) such Cooperatives may appeal against such refusal to the Cooperative Tribunal.
• 68.(l)A Cooperative hereinafter referred to as the existing Cooperative may.by special resolution (in this section referred to as the preliminary resolution,resolve to divide itself into two or more Cooperatives hereinafter referred to as the new Cooperatives.

Divisionof

Cooperatives.

• (2)The preliminary resolution shall contain proposals for the division of assets and liabilities of the existing Cooperative among the new Cooperatives 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 Cooperatives.
• (3)A copy of the preliminary resolution shall be sent toall the membersandcreditorsoftheexisting Cooperative,and to all other persons whose interests will
• be affected by the division of the existing Cooperative.
• (4)Any member of the existing Cooperatives may. notwithstanding any by-law to the contrary.by notice in writing given to the Cooperative within two months of the receipt of the copy of the preliminary resolution,intimate the intention not to become amember ofany of the new
• Cooperatives.
• (5)Any creditor of the existing Cooperative may. despite any agreement to the contrary.by notice in writing given to the existing Cooperative within two months after receipt of the copy of the preliminary resolution,intimate the creditor's intention to demand the payment of any money due to the creditor.
• (6)Any other person whose interest will be affected by the division may,by notice in writing given to the existing Cooperative within two months ofthe 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 Cooperative shall be held to consider the preliminary resolution and any noticesreceived under this section.
• (8)At a further special general meeting held under subsection (7).provision shall be made by a further resolutionofthe Cooperative for-
• (a)the repayment of the share capital of any member
• who hasgiven 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 noticeunder subsection (5)or the securing of their claims as the Commissioner may determine,or direct:

Provided that a member,creditor or other person shall not be entitled to such repayment or satisfaction until the preliminaryresolutionisconfirmedasprovided in subsection (8).

• (9)The Cooperative may.by further resolution passed by a two-thirdsmajority of the members present and voting.confirm the preliminary resolution,with or without changes which in the opinion of the Commissioner are not substantial,and the decision of the Commissioner as to final.
• (10) If the Commissioner 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 Cooperatives into which the existing Cooperative has been divided and the by-lawsof such Cooperative and thereupon-
• (a)the registration of the existing Cooperative shall stand dissolved:
• (b)the registration of the new Cooperatives shall be sufficient to vest the assets and liabilities of the existing Cooperative in the new Cooperatives in the manner specified in the preliminary resolution, asconfirmed:
• (c)the remaining membersoftheexisting Cooperative shall becomemembersofone or other ofthe new Cooperatives.as is provided by the preliminary resolution,as confirmed:and
• (d)any shareholders or creditors of the existing Cooperative and any other persons who have claims against the existing Cooperative and whose claims were not satisfied in accordance with the secondary resolution,may pursue such claims against one or other of the new Cooperatives,as is providedby the preliminary resolution,as
• confirmed.

• (ll) Where the Commissioner refuses to approve the
• division of an existing Cooperative under subsection (9). the Cooperative may.in the prescribed form,appeal to the CooperativeTribunal withinthirtydaysofthe communication to itof the refusal.

PARTIX-RIGHTSAND OBLIGATIONSOF COOPERATIVES

• 69.(1)A Cooperative which has as one of its objects the disposal of any agricultural produce,may enter into a contract with its members.either in its by-laws or by a separate document binding the members to dispose of all their agricultural produce,or such amounts or descriptions ofthe same as may be stated therein.to or through the Cooperative.and the contract may bind the members to produce the quantities of agricultural producetherein specified.and the contractmay also provide forpayment of a specific sum per unit ofweight 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 Cooperative and shall be a charge upon the immovable property of the member (subject to registration of the charge under the lawunder which the property is registered)and all stock then being thereon.
• (2)Any such contract as is mentioned in subsection (1) shall have the effect of creating in favour of the Cooperative a charge upon the proceeds of sale of all
• produce mentioned therein,whether existing or future.
• (3)A Cooperative may.on the authority of a resolution passed in general meeting.pledge the produce deliverable by members under any such contract as is mentioned in subsection (l)as security for loans made to the Cooperative,in all respects as if it were the owner of
• the produce.
• (4)Acontract entered into under this section shall not be contested in any court ortribunal on the ground that it constitutes a contract in restraint of trade.
• 70.(1)The by-laws of a Cooperative may.subject to this Act and Regulations made thereunder.provide for the imposition of fines,not exceeding one hundredthousand
• shillings.on its members for any infringement of its by

Charge over miember's produce.

Fineslior violation ofby-laws laws,but no such fine shall be imposed upon any member until written notice of intention to impose the fine and the reason therefore has been served on the member and the member hashad an opportunity of showing cause why the fine should not be imposed and.if the member so desires. ofbeingheardwith orwithout witmesses

• (2)Any such fine shall be a civil debt due to the Cooperative.and shall.without prejudice to any other means ofrecovery.berecoverable summarily
• (3)The whole or any part of such fine may be set off against any monies due to such member in respect of produce deliveredby themember to the Cooperative.
• (4)A new member shall not be taken to have infringed the by-laws of a Cooperative by reason of the member having failed to deliver produce to such Cooperative,if the failure was due to the fact that,before becoming a member ofthe Cooperative.the-member had contracted to deliver such produce to some other person,and the contract had been disclosed in accordance with subsection (5)
• (5)It shall be the duty of every person applying for membership ofa registered Cooperative to disclose to the Cooperative particulars of allsuch contracts as are mentioned in subsection.
• 71.(1)Subject to any other written law as to priority ofdebtswherea Cooperative has-
• ormanure.orany animals.feeding stuff. agricultural or industrial implements or machinery or materials for manufacture or building:
• member.or
• (c)lent money to any member or past member to enable the member to buy any such things as aforesaid or to obtain any such services:

the Cooperative shall have a first charge upon such things or,as the case may be.upon any agricultural produce.animals orarticlesproducedtherewithor therefrom or with the aid of such money.

Fira chwrge over debtsand assets.

• (2)The charge shall subsist for such period as the loan
• or value of the services rendered by a Cooperative to a member shallremain unpaid
• 72.A Cooperative shall have a first charge upon the
• share or interest in the capital and on the deposits ofa member or past member,and upon any dividend,bonus or accumulated fundspayable to a member orpast member,in respect of any debt due from such member or past member to the Cooperative,and may set off any sum credited or payable to such member,or past member in or towards the payment ofany such debt.
• 73.(l) Where an employer of a person whoisa member of a Cooperative has,under the instructions of the employee,made adeductionfromthe employee's remuneration or payment for produce for remittance to the Cooperative 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 atarate ofnot less than fiveper cent permonth
• (2)The Commissioner may,on behalf of the Cooperative,institute legal proceedings in the Tribunal for recovery ofthe sum owing under subsection (l) without prejudice to any other mode ofrecovery and such sum shall be a civil debtrecoverable summarily.
• (3)The Commissioner may.by written notice,appoint any person,bank or institution to be an agent of the Cooperative forthe purposesof collection and recovery of
• a debt owed to theCooperative.
• (4)The agent shall pay the amount specified in the notice issued under subsection (3) out of any monies which may,at any time during the twelve months following the date of the notice,be held by the agent for the employer or
• are due from agent 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 monies held by or due from agent,the agent shall give a written notification to the Commissioner stating the reasons
• for the agent's inability and the Commissioner may-

First charge over members'share.

Failure toremit the sum deducted.

• (a)accept the notification and cancel or amend the notice accordingly:or
• (b)if not satisfied with the reasons,reject the notification in writing.
• (6)Where an agent fails to notify the Commissioner or the notification is rejected,it shall be presumed that the agent has sufficient monies 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 monies come into the agent's hands for or become due to the agent 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 nol be a defence for the agent to claim lack of the monies
• (9)This section shall apply despite that the failure under subsection (l),to remit the sum deducted may constitute an offence under some other law for which the employerhas 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 forproduce of a member ofa Cooperative;and"employee"includes any person who receives remuneration or payment for produce from such persons or firm or organization.

• 74.(1) Subject to section 70.the share or interest of a member in the capital ofa Cooperative shall notbe liable to attachment or saleunder any decreeor order ofa Tribunal inrespect ofany debtorliability incurredby such member. and a trustee in bankruptcy under the law relating to bankruptcy shall not have any claim on such share or
• interest.
• (2)Despite subsection (1).where a Cooperative is dissolved.the share or interest of any member who is adjudged abankrupt under such law shall vest in the trustee in bankruptcy in accordance with such law.

Prohibition ofmember's share.

• 75.(1)A member may at any time withdraw from a Cooperative by giving at least sixty days written notice to the board of directorsofa Cooperative.
• (2)Upongivingnoticeofwithdrawalfrom membership ofa Cooperative,the member shall-
• (a)be refunded any deposit held by the Cooperative on the member's behalf or any accrued interest on such deposits:
• (b)be paid any accrued dividends to the member prior to the date ofnotice of withdrawal:
• (c)have his shares continue to earn dividends in favour of the member or the members'nominee or transferee,whenever such dividends are declared; and
• (d)be refunded any other sums of money held by the Cooperativeonthemember'sbehalfafter deduction ofany sum owed to the Cooperative in
• accordance with the Cooperatives by laws.
• (3)A member who has given notice of withdrawal from membership ofa Cooperative shall continue beinga member of the Cooperative,until the members'share is transferred to another member or otherwise purchased by the Cooperative as an institutional capital.
• (4)Where a Cooperative fails tomake arefund of members'deposits or any other dues as provided in this section,the Cooperative shall be liable to pay a compound interest on the outstanding deposits or other dues to the member at the rateoffiveper centum per month for every month that the deposit orother duesremain unpaid.
• (5)Where a Cooperative fails to refund a members deposits or other dues,the Commissioner may,at the request of any such aggrieved member,issue an agency notice to the bankers of the defaulting Cooperative to recover any such outstandingrefunds or other dues together
• with any interest accrued thereon.
• 76.(1)The liabilityofa pastmember ofa Cooperative shall be in respect of the debts of the Cooperative as they existed at the date when the member ceased to be a member and proceedings in respect thereof may be commenced
• within aperiod of twoyearsfrom such date.

Rightsof

withdrawingfrom

Lisbility of past members.

• (2)If the first audit of the accounts of such Cooperative after the member has ceased to bea member discloses that the Cooperative is solvent,the financial
• 77.(1)The estate of a deceased member shall be liable for the debts of the Cooperative as they existed at the time of the member's death,and proceedings in respect thereof may be commenced within one year of the death.
• liability ofsuchpastmember shall cease forthwith
• (2)Despite subsection (1)-
• (a)the first audit of the accounts of the Cooperative after the death disclosesa credit balance in favour ofthe Cooperative,the financial liability of the
• (b)a personalrepresentative shall not be liable except in respect of assets in the member's possession or
• estate shall cease forthwith:and
• under member's control.
• 78.(1) On the death ofa member,a Cooperative may transfer the share or interest of the deceased member to-
• or any Regulations made thereunder:
• (a)the person nominated in accordance with this Act
• (b)if there is no person so nominated,such person as may be granted letters of administration orprobate
• bya court of law;or
• (c)in case (a)and (b)are not applicable.the share or interest of the deceasedmember shall be transferred toUnclaimedFinancialAssets Authority established under section 39 of the
• (2)A Cooperative shall pay allother monies due to the deceased member from the Cooperative to such nominee or personal representative,as the case may be.
• Unclaimed Financial Assets Act,20l1.
• (3)All transfers andpayments made by a Cooperative in accordance with this section shall be valid and effectual
• otherperson.
• 79.(1)A register or list ofmembers or of shares which is kept by a Cooperative shall be prima facie evidence of any of the following particulars entered
• therein-

Liability of deceased s

Transfer of share or interest of deceased members.

No.40of2011.

Evidence of member'sinterest in Cooperative

• (a)the date on which the name of any person was
• entered in such register orlist.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)Acopy of any entry in a bookofa Cooperative regularlykept in the course of its business,shall,if certified in accordance with the Regulations made under this Act,be sufficient proof in anyproceedingsof the existence of such entry.and of the matters,transactions,and accounts,therein recorded.
• 80.In any legal proceedings in which a Cooperative or liquidator is not a party.an officer of the Cooperative shall not be compelled to produce any of the Cooperative's bookswhere the contents can be proved under section 79or to appear as a witness to prove the matters,transactions. and accounts therein recorded,unless the court or tribunal, for special cause,otherwise orders.

PARTX-PROPERTYANDFUNDSOF COOPERATIVES

• 81.Theproperty and funds of a Cooperative shall only be applied for the benefit of the Cooperative andits members,in accordance with the provisions of this Act.the Regulations made hereunder and the by-laws of the Cooperative:
• 82.A Cooperative shall not give a loan or allow any credit,to any person other than a member,unless the bylaws of the Cooperative provide for giving a loan subject to aresolution passedat the generalmeeting of the Cooperative to that effect.
• 83.A Cooperative may receive loans from persons who are not members only to such extent and under such Regulations made under this Act.and for the purposes of this section a deposit ofmoney under a hire-purchase agreement shall be deemed tobea loan.
• 84.Subject to the approval at a General Meeting,a Cooperative may invest or deposit its funds only-

Restnetion on peoduetion of Cooperative books.

Application of property and funds

Resiriction on

giving loans:

Restriction on borrowing.

Investment of

Cooperative's funds.

• (a)in the shares of any other Cooperative:
• for the time being authorized for the investment of Cap 488 trust funds under the Capital Markets Act:
• (b)in and upon such investments and securities as are
• (c)with any bank licensed under the Banking Act:
• (e)in its subsidiaries;or
• (d)in government securities;
• (f)stock of any statutory body established in Kenya orin any limited liability company licensed and regulated under the Capital Markets Act,1989.
• members'deposits in non-core activities,beyond any limits asmay beprescribed.
• 85.A Cooperative shall not invest its funds or
• 86.(l) A Cooperative may acquire or invest in the majority shares ofone ormore companiesprovided that-
• meeting is passed to authorise the acquisition or the investment;
• (a)a special resolution ofmembers in a general
• (b)the acquisition or the investment is approved by the Commissioner;
• represented in the company by directors appointed by the board of the directors of the Cooperative: and
• (c)the interestsof the Cooperative shall be
• (d)the Cooperative shall financial statements incorporating the operations prepareconsolidated ofall itssubsidiaries.
• incorporate procedures and criteria for appointment of subsidiaries shall directors of its subsidiaries in itsby-laws and in the articles
• (2)ACooperative having ofassociationsofthe subsidiaries.
• (4)The Cabinet Secretary shall develop Regulations onoperations ofholding Cooperatives.
• (3)ACooperative ehaving subsidiariesshall incorporate reporting procedures of its subsidiaries in its bylaws and in thearticles ofassociations of the subsidiaries.

No.17of1989

Na.17of1989

Investmen in noli-core activities

lnvestnent in conspanses.

declare each year all bonuses due to members,but where

Cooperative forcapital development,or forthe redemption

of bonus certificates,the Cooperative shall issue bonus

• 87.(I) Subject to this section,every Cooperative shall the bonusesare required forre-investment bythe certificates to its members in lieu of cash payments. redeemable from a revolving fund established by the Cooperativeforthatpurpose.
• (2)A Cooperative shall not pay a dividend,bonus or distribute any part of its accumulated funds without a balance sheet and audited accounts and report disclosing the surplus funds out of which the dividend,bonus or distribution is to be made.
• (3)A Cooperative shall pay a dividend at such rate as may be recommended bythe board of directors and approved by the annual general meeting of the Cooperative.
• 88.(l)Every Cooperative which derives surplus from its transactions shall maintain areserve fund.
• (2)A Cooperative may carry to the reserve fund such portion of the net surplus in each year as may be prescribed by Regulations made under this Act or by the by-laws of the Cooperative.
• (3)A proportion of the reserve funds of a Cooperative as may be prescribed,shall be invested in liquid assets including cash and government securities.
• (4)The reserve fund set up under this section shall be specific share ofit.
• (5)Upon the dissolution of a Cooperative,the assets under the reserve fund shall be applied in the discharge of the liabilitiesof the Cooperative
• 89.Subject to provisions of this Act,the net balance ofeach year with,any sum available for distribution from previous years,may be distributed in the manner prescribed by Regulations made under this Act or by the by-laws of the Cooperative.

Declaration and

payment ofbonus

Maintenance of reserve fand

Distribution of net balance.

PARTXI-CHARGESBYCOOPERATIVES

• 90.A Cooperative may from time to time,charge the
• whole or any part of its property.if its by-laws expressly empower it to do so,subject to a special resolution by the generalmeeting.
• 91.A charge created by a Cooperative in accordance with section90 ofthis Act shall comply with theprovisions of the law applicable to theparticular type of charge.
• 92.(1)Every Cooperative shall register with the Commissioner,every chargecreated by it and the
• particulars thereofprovided that-
• (a)registration of a charge may be effected on the
• application ofany person interested therein:or
• (b)where registration is effected on the application of aperson other than the Cooperative.such person shall be entitled to recover from the Cooperative the amount of any feesproperly paid by the person to the Commissioner for such registration.
• (2)Ifany Cooperative failstosendtothe Commissioner 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,the board of directors and the Chief Executive Officer of the Cooperative commits an offence and shall be liable to a fine not exceeding fifty thousand shillings for every day during which the default continues.
• 93.(1) The Commissioner shall,with respect to each Cooperative.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 followingparticulars-
• (a)if the chargeis a charge createdbythe Cooperative.the date of its creation,and if the charge was a charge existing on property acquired by the Cooperative,the date of the acquisition of the property:
• (b)the amount secured by the charge:

Creating charge over Cooperative property.

Compliance af applicable law.

Registation of charges by the

Commissioner

Register of charges.

• (c)summary of particulars of the property charged;
• and
• (d)the personsentitled to the charge.
• (2)The Commissioner shall issue a certificate under his hand of the registration of any charge registered under this Act,stating the amount secured and the certificate shall be conclusive evidence that the requirements of this Act as toregistration of chargeshave been complied with
• (3)The register kept in pursuance of this section shall be open for inspection by any interestedperson onpayment ofthe prescribed fee.
• (4)The Commissioner shall keep a chronological index in the prescribed form and containing the prescribed particulars,of the charges entered in the register.
• 94.The Commissioner may.on evidence being given to his satisfaction that the debt for which any registered charge was given has bcen paid or satisfied,order that a memorandum of satisfaction be entered on the register,and shall if required,furnish the Cooperative concerned with a copy thereof.
• 95.(1) If any person obtains an order for the appointment ofreceiver or manager of the property of a Cooperative,or if the Commissioner appoints such a 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 Commissioner and the Commissioner shall enter the notice in the register of charges.
• manager of theproperty of Cooperatives under the powers ormanager,he shall.on so ceasing.give written notice of the fact to the Commissioner and the Commissioner shall
• enter the notice in the register of charges.
• (3)Any person who defaults in complying with the requirements of this section,commits an offence and shall be liable,on conviction,to a fine not exceeding twenty
• thousand shillings for every day during which the default continues.

Certificate of sntisfnction of charges.

Receiver togive

noticeof appointmens

• 96.Every Cooperative shall causea copy ofevery
• instrument of a charge which is required by thisAct to be registered,to be kept at the registered address of the Cooperative.
• 97.(1) Every Cooperative shall keep.at its registered address a register ofcharges in which shall be entered all charges specifically affectingthepropertyofthe Cooperative and all floating charges on the property or assets of the Cooperative,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 officerof a Cooperativeknowingly omits,or permits the omission of,any entry required to be made in any register in pursuance of this section,the officer commits an offence and shall,on conviction be liable to a
• fine not exceeding fifty thousand shillings.
• 98.(1) The copies of the instruments creating charges and the register ofcharges shall be open to inspection by any creditor or member of the Cooperative,without a fee. subject to such reasonable conditions as the Cooperative mayimpose.
• (2)A person who fails to comply with subsection (1) commits an offence and shall be liable upon conviction to-
• (a)a fine not exceeding twenty thousand shillings for every day during which the refusal ofpermission
• continues;
• (b)to imprisonment for a term not exceeding one
• year;or
• (c)to both (a)and (b).

PARTXII-INQUIRY,INSPECTIONAND SURCHARGES

• 99.(1) The Commissioner, may on Commissioner's own accord,and shall on request by the County Director for Cooperativesor theAuthority or on the application of aliquidator or of anycreditor ornot less than one-third of the memberspresent andvotingat a meeting of the Cooperative which has been duly convened,hold an
• inquiryor direct anypersonauthorizedbythe

Right of members inspect register of charges.

q Commissioner

Cooperative lo keep copyof instrumentsof charge at registered office

Registerof

particulars.of charges.

Commissioner in writing to hold an inquiry,into the bylaws,working and financial conditions of any Cooperative registered in Kenya.

• (2)All officers and members of the Cooperative shall produce such cash.accounts,books,documents and securities of the Cooperative,and furnish such information in regard to the affairs of the Cooperative,as the person holding the inquiry may require
• (3)The Commissioner shall-
• (a)report the findings of the inquiry at a general meeting of the Cooperative:
• (b)give directions for the implementation of the recommendations of theinquiry report;
• (c)provide a copy of the report to therelevant County Director for Cooperatives in case the inquiry relates toa Cooperative within the jurisdiction of a particular county:and
• (d)provide a copy of the report to the Authority in case the inquiry relates to a Cooperative in respect ofwhich the SaccoSocietiesAct,2008 applies.
• (4)Where the Commissioner is satisfied,after due inquiry.thatthe board of directorsor the supervisory board ofa Cooperative is not performing its duties properly.the Commissioner may
• (a) dissolve the board of directors or the supervisory board as the case may be:and
• (b)cause to be appointed an interim board of directors consisting of not more than five members from among the members of the Cooperative for a period not exceedingninety days.
• (5)Aperson who contravenes subsection (2)commits an offence and shall be liable,on conviction,to a fine not exceeding twenty thousand shillings for each day during which the offence continues.
• (6)Despite subsection (5).where an officer or member of a Cooperative fails toproduce recordsas required by the Commissioner without any reasonable cause,the Commissioner may suspend or remove such

No.14of2008.

officerfrom the service of the Cooperative or such member from membership of the Cooperative.

• 100.(1)Where it is established in an inquiry held under section 99 that any person who has taken part in the organization or management of a Cooperative,or any past orpresent officer ormember of the Cooperative-
• (a)has misapplied,retained or become liable or accountable for any money or property of the Cooperative;or
• (b)commits an offence of misfeasance or breach of
• trust in relation to the Cooperative,

the Commissioner may,if he considers it appropriate, make an orderrequiring the person to repay orrestore the together with interest at such rate as the Commissioner thinks just or to contribute such sum to the assets of the Cooperative by way of compensation as the Commissioner

deemsjust.

• (2)This section shall apply despite that the act or default by reason of which the order is made may constitute an offence under another law for which the person hasbeen prosecuted,or is being or islikely to be prosecuted.
• 101.(1) Any person aggrieved by an order of the
• Commissioner under section 1o0 may.within thirty days, appeal to the Cooperative Tribunal.
• (2)Apartyaggrieved bythe decisionofthe
• Cooperative Tribunalmay within thirty days'appeal to the High Courton matters of law.
• 102.(1)Subject to section 100,anorder made
• pursuant to section 99 for any monies to be repaid or contributed to aCooperative shallbe filedwiththe Cooperative Tribunal and shall,without prejudice to any other mode of recovery,be acivildebt recoverable summarily.
• (2)Without prejudice to the powers by the board of directors ofa Cooperative to take action for recovery of the sum surcharged under section 99,the Commissioner,may on behalf of the Cooperativeinstitute such action.

Power to surchunge officers of a Cooperative.

Appeal against

Recoveryof

surcharge.

• 103.(1)The Commissioner or the County Director for Cooperatives,may,if they deem fit,on the application ofa creditor ofa Cooperative,inspect,or direct some persons authorized by the Commissioner or the County Director for Cooperatives in writing to inspect,the books of the Cooperative,if-
• (a)the creditor satisfies the Commissioner or the CountyDirector for Cooperatives that the debt is a sum then due,and has demanded payment thereof andhasnot received satisfactionwithin a reasonable time;and
• (b)the applicant deposits with the Commissioner or County Director for Cooperatives such sum as security for the expenses of the inspection as the Commissioner orthe CountyDirector.for Cooperativesmay require.
• (2)The Commissioner or the County Director for Cooperatives shall inform the creditor of the results of the inspection.
• (3)Despite the generality of subsection (1),the-
• (a) Cooperatives inrespect of which the Sacco Societies Act,2008 shallbeinspectedin accordance with the provisions ofthe Sacco
• Societies Act,2008;
• (b)powers of the Commissioner under this section shall apply with respect to the Apex Cooperative and Cooperative federations:and
• (c)powers of the County Director for Cooperatives shallapply with respect to the primaryand secondary Cooperativeswithin their respective jurisdictions.
• 104.(1)Where an inquiry.or an inspection is held or made under this Act,the Commissioner or the County Director for Cooperatives may.by a certificate under the Commissioner's hand,make an order apportioning the expenses,or such part of the expenses as the Commissioner or the County Director for Cooperatives considers proper, betweenthe Cooperative,themembersorcreditor demanding the inquiry or inspection,and the officers or

books of indebted

Inspection of Cooperative.

No.14of2008

Expenses of inquiry and inspection.

former officers of the Cooperative and the decision of the Commissioner or the County Director for Cooperatives thereon shall be final.

• (2)Any sum awarded by way of expenses under subsection (l)shall bea civil debt recoverable summarily onproduction ofthe certificate referredtointhat subsection.
• 105.(1)Despite sections 99 and 103.the Commissioner or County Director for Cooperatives may from time to time carry out impromptu inspection into the affairsofa Cooperative.
• (2)The inspection reports prepared pursuant to
• subsection (l)may be presented to a joint meeting of the board of directors and supervisory boardof the Cooperative for deliberation and implementation.

PARTXIII-DISSOLUTION

• 106.(1) If the Commissioner,after holding an inquiry under section 99 or receiving an application made by at least three fourths of the members ofa Cooperative or receivingrecommendations from theAuthorityora County Director for Cooperatives is of the opinion that the Cooperative ought to be dissolved,the Commissioner may, in writing,order the dissolution of the Cooperative and subsequent cancellation ofregistration.
• (2)Any member ofa Cooperative who feels aggrieved by an order under subsection (l)may.within two months after the making of such order,appeal against the order to the Cooperative Tribunal with further appeal to the High Court.
• (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 appeal shall not operate as a stay of the decision of the Commissioner,unless theHigh Court directs otherwise.
• (4) Where the Commissioner makes an order under subsection (l),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 Cooperative.

Routine inspection.

Procedure for

dissolution.

• (5)A Cooperative shall not be dissolved or wound up
• exceptby anorder ofthe Commissioner.
• 107.(1)The Commissioner may.where a Cooperative has-
• (a) less than the prescribednumber of members:
• (b)failed to file returns with the Commissioner or the County Director for Cooperatives for a period of
• three years:
• (c)fortwelve consecutive months failed to undertake theobjectsand purposesfor which itwas registered:or
• (d)deviated from undertaking the core mandate or
• business for which it was registered,

in writing.order the cancellation of itsregistration and dissolution of the Cooperative and the order shall take effect immediately.

• (2)Aperson aggrieved by an order of the Commissioner under subsection (l)may appeal against such order to the Cooperative Tribunal within thirty days of the order.

108.Wherethe registration ofaCooperative is cancelled,the Cooperative shall cease to exist asa

• corporate body from the date the ordertakeseffect.
• 109.The procedure for liquidation ofa Cooperative whoseregistrationhasbeen cancelled under section 106or 107 isprovided forunder the First Schedule.
• 110.(l)If the registration ofaCooperative is appoini one or more persons to be the liquidator or
• cancelled under section 106 or 107.the Commissioner may liquidatorsofthe Cooperative.
• (2)The property of the Cooperative vests in the liquidator fromand including the date on which the cancellation ofregistration tookeffect.
• 111.Subject to section 110.a person shall be qualified toserve as a Liquidator if that person is-
• (a)amember ofa professional body for Cooperative practitioners.or any other professionalbody

Cancellation of registation.

Erfectsof cancellation.

Cooperative whoseregistration

Liquidation.od is cancelled

Appointment of a liquidator.

Qualification ofa

liquidator

• designated by the Cabinet Secretary through Regulations;or
• (b)a serving Cooperative technical officer or has at
• leastfiveyears' experience inCooperative management andpractice.
• 112.The liquidator shall,subject to this Act,have the
• followingpowers-
• (a)to appoint a day.in the prescribed manner,before which the creditors whose claims are not already recorded in the books of the Cooperative shall state their claims for admission,or be excluded from any distribution made before they have proved them;
• (b)to institute and defend suits and other legal proceedings by.and on behalf of,the Cooperative in the liquidator's name or office,and to appear before the relevant Tribunals as litigant inperson onbehalfofthe Cooperative:
• (c) toappointprofessionalorsubject matter specialist to assist the liquidator inthe performance ofthe liquidator's duties:
• (d)to refer disputes to the relevant Tribunals in the prescribed manner,
• (e) to determine from time to time the contributions tobe made by the members and past members and by the estates of deceased members of the Cooperative,to the funds of the Cooperative;
• to investigate all claims against the Cooperative. and subject to this Act.to decide questions of priority arising between claimants:
• (g) to call such meetingof members and creditors as may benecessary for the proper conduct of the liquidation:
• (h) to sell themovable and immovable property and rights of action of the Cooperative,by public auction orprivate contractwith power to transfer the whole thereof to any person,Cooperative or company or to transfer the same in parcels:

Powebofa liquidater

• to carry on thebusiness of the Cooperative as far as may be necessary for the proper liquidation of the affairsof the Cooperative:
• 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 Cooperative;
• (I to arrange for the distribution of the assetsof the Cooperative in a convenient manner when a scheme of distribution has been approved by the
• Commissioner:
• (m)to give such directions in regard to the disposal of the books and documents of the Cooperative as may appear to the liquidator to be necessary for winding up the affairs of the Cooperative:
• (n) tocompromise,withtheapprovalof the Commissioner,any claim by.or against,the Cooperative;and
• (o) to apply to the Commissioner for 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 ofa Tribunal under the Civil Procedure Act and Rules. in so far as such powers are necessary for carrying out the purposesof this section.
• 113.An account,to be called the Cooperatives
• Liquidation Account,shall be kept by the Commissioner with such bank as may be prescribed and shall be administered in the prescribed manner as may be provided for in Regulations.
• 114.(l)The liquidator shall exercise the powers subject to the guidance and control of the Commissioner and to any limitations imposed by the Commissioner.and
• the Commissionermay-

Cap.21.

Liquidmion account of Cooperatives.

Powersof Comnissioner during liquidation

• (a)rescind or vary any order made by the liquidator andmake anynew order he thinksproper,
• (b)remove the liquidator from office and appoint a new liquidatorin place of the removed liquidator;
• (c)call for all books,documents and assets of the
• Cooperative;
• (d)by order in writing,in any particular case,limit the powersof theliquidator conferred by section 112:
• (e)exercise discretion torequire accounts to be rendered to the Commissioner by the liquidator;
• (f)procure the auditing of the liquidator's accounts and authorize the distribution of the assets of the Cooperative:
• (g)makean order forthe remuneration of the liquidator:
• (h)grant a discharge to the liquidator on application bytheliquidatoraftercompletionofthe liquidation proceedings;
• (i)require any member or past member of the Cooperative and any trustee,banker,receiver. agent or officer of the Cooperative or any person whatsoever to pay,deliver,convey.surrender or transfer forthwith.or within such time as the Commissioner shall direct,to the liquidator,any money.property.books or papers in such person's hands to which the Cooperative appears to be entitled:
• (j)refer any dispute between a liquidator and any third party to the Cooperative Tribunal;and
• (k)require the indemnification of the liquidator.
• (2)The decision of the Cooperative Tribunal on any matter referred to it under subsection(l)(j) shall be binding upon the parties and shall be exercisable similar to an order made by the Commissioner under subsection (I)(a).
• (3)Where any matter is referred to the Cooperative Tribunal under subsection (l)(j).the cost of the reference and award shall be in the discretion of the Cooperative Tribunal,who may direct to and by whom.and in what

manner,those costs or any part thereof shall be paid,and

party thereof.

• 115.A person aggrieved by any order or decision of
• the Commissioner or the liquidator under section 112 or section ll4 as the case may be,may appeal against the order or decision to the Cooperative Tribunal within thirty daysof the order or decision.
• 116.Subject to sections114 and 115,any order or decision made under section 112or section 114onbeing filed in the Cooperative Tribunal may be enforced in the Cooperative Tribunal in the same manner asif the order or decision were an order or decision of the Tribunal.
• 117.(1) The Third Schedule to this Act prescribes offences relating to conduct before and during liquidation and provides for criminal proceedings relating to those offences.
• (2)Ifthe liquidator of aCooperativewhose registration has been cancelled reasonably suspects that an offence specified in the Third Schedule has or may be committedduringorbefore the liquidation of the Cooperative,the liquidator shall report the matter to the Commissioner.
• (3)As soon as practicable after a suspected offence is reportedinaccordance with subsection (2).the Commissioner shall take such action as the Commissioner considers appropriate which may include prosecution of the
• offence.

PARTXIV-SPECIALPOWERSOFTHE

COOPERATIVETRIBUNALTOSETASIDE CERTAINTRANSACTIONS

118.(1)In this section-

"relevant time"has the meaning given by section 120 CooperativeTribunal" means theTribunal established under section 124.

• (2)This section applies to a Cooperative that is under liquidation.
• (3)If the liquidator reasonably believes that the
• Cooperative has at arelevant time entered into a transaction

Appeal against order ofliquidator or Commissioner.

Enforcement of

orders.

Offencesrelating to liquidation of a Cooperative.

Power of the Cooperative Tribunsl to set aside transaction that is under value.

with a person at an undervalue,the liquidator may apply to the Tribunal for an order under subsection (4).

• (4)If,on the hearing of an application made under subsection (3).the Tribunal finds that the transaction was undervalued,it shall make an order setting aside the transaction and restoring the position to that which would have existed if the Cooperative had not entered into the transaction.
• (5)For the purposes of this section and section 119,a Cooperative enters into a transaction with a person at
• undervalueif-
• (a)the Cooperative makes a gift to the person or otherwise enters into a transaction with the person on terms that provide for the Cooperative to receive no consideration;or
• (b)the Cooperative enters into a transaction with the person for a consideration the value of which,in money or money's worth,is significantly less than the value,in money or moneys worth,of the
• consideration provided by the Cooperative.
• (6)The Tribunal may not make an order under subsection (4)in respect of a transaction at an undervalue if itis satisfied-
• (a)that theCooperative thatentered intothe transaction did soingood faith and for the purpose of carrying on its business;and
• (b)that at the time when the Cooperative did so there were reasonable grounds for believing that it
• would benefit from the transaction.
• 119.(l) In this section,"relevant time"has the
• meaning asprovided by section 120.
• (2)Ifa Cooperative has at a relevant time given a preference to a person,the Commissioner may apply to the Tribunal for an orderunder subsection (3).
• (3)Upon the hearing of an application made under subsection (2),and the Tribunal being satisfied that the Cooperative has at a relevant time given a preference to a person,it shall make an order voiding the act constituted by

Cooperative Tribumal to void

Power of the preference.

giving the preference and restoring the position that which would have existed if the preference had not beengiven.

• (4)For the purposes of this section and section 119.a Cooperative gives apreference to aperson if-
• (a)that person is one of the Cooperative's creditors or a surety or guarantor for any of the Cooperative's debts or other liabilities:and
• (b)the Cooperative does any act or allows an act to be done that (in either case)has the effect of placing the person in a position that,if the Cooperative were in insolvent liquidation,is better than the position the person would have been in had that act not been done.
• (5)The Tribunal maynot makean order under subsection (3) in respect of a preference given to a person unless it is satisfied that the Cooperative that gave the preference was influenced in deciding to give it by a wish toproduce inrelation to thatperson the effectreferred to in subsection(4)(b).
• (6)A Cooperative that has given a preference to a being its employee)at the time when the preference was given is presumed,in the absence of evidence to the
• person connected with the Cooperative (otherwise than by contrary.to have been influenced in deciding to give it by such a wish as isreferred to in subsection (5).
• (7)The fact that action has been taken in accordance with the order of a Tribunal does not,without more. prevent the doing or suffering of that action from constituting the giving of a preference.
• 120.(1) Subject to subsection (2).the time at which a Cooperative enters into a transaction at an undervalue or gives a preference is a relevant time if the transaction is
• entered into,or the preference isgiven-
• (a)in the case ofa transaction at an undervalue or of a preference that is given to a person who is connected with the Cooperative (otherwise than through being its employee),at a time during the two years immediately preceding the appointment oftheliquidator:or

'relevant timein section 118and

Meaning of 119.

• (b)in the case of a preference that is not such a
• transaction and is not sogiven,at a time during the sixmonths immediately preceding that appointment.
• (2)Ifa Cooperative enters into a transaction atan
• undervalue,or gives a preference at a time referred to in subsection (l)(a)or (b),that time is a relevant time for the purposesofsections118and119onlyif theCooperative
• (a)is at that time unable to pay its debts; or
• (b)becomes unable to pay its debts in consequence of
• the transaction or preference.
• (3)The conditions in subsection (2)are.in the absence ofevidence to the contrary.presumed to exist in relation to a transaction at undervalue that is entered into by the Cooperative with a person who is connected with it.
• 121.(1)An order under section 118or119 with respect to a transaction or preference entered into or given bya Cooperative may,subject to subsection (2)-
• (a)require propertytransferred aspart of the transaction,or in connection with the giving of the preference,to be vested in the Cooperative;
• (b)require the property to be so vested if it represents the application either of the proceeds of sale of property so transferred orofmoney so transferred:
• (c)release or discharge (in whole or in part) any security given by the Cooperative:
• (d)require any person to pay,in respect of benefits received from the Cooperative,such amounts to
• the liquidator as theTribunal may specify:
• (e)provide for any suretyor guarantor whose obligations to apersonwerereleased or discharged (in whole or in part) under the transaction,or by the giving of the preference,to be subject to such new or revived obligations to the person as the Tribunal considers appropriate:
• (f)provide-
• (i)for security to be provided for the discharge

Orders under section 118and 119 ancillary provisions,

• ofan obligation imposed byor arising under the order.
• (i) or such an obligation to be charged on specified property:and
• (ii) the security or charge to have the same priority asa security or charge released or discharged (in whole or in part) under the transaction or by the giving of the preference; pue
• (g)provide for the extent to which a person whose property is vested by the order in the Cooperative. oron whom obligations are imposed by the order isto be able to prove in the liquidation of the Cooperative for debts or other liabilities that arose from or were released or discharged (in whole or in part) under or by,the transaction or the giving of the preference.
• (2)An order under section 118or 119may affect the or not the person is the one with whom the relevant Cooperative entered into the transaction,or the person to whom thepreference was given.
• (3)However,such an order-
• (a)may not detrimentally affect an interest in property that-
• (i)was acquired from a person other than the
• Cooperative;and
• (ii)was acquired in good faith and for value,or detrimentally affect any interest that is derived
• from such an interest.
• (b)may not require a person who receivedabenefit from the transaction or preference in good faith and for value to pay an amount to the liquidator,
• unless-
• (i)the person was a party to the transaction;or
• (i) the payment is to be in respect of a preference given to that person at a time when theperson wasa creditor of the Cooperative.
• (4)Ifa person has acquired an interest in property

from a person other than the relevant Cooperative,or has

received a benefit from the transaction orpreference and,at the time of the acquisition or receipt,the person-

• (a)had noticeofthe relevant Supunouns circumstances and of the relevant proceedings;or
• (b)was connected with,or was an associate of,either therelevant Cooperative or the person with whom that Cooperative entered into the transaction or to whom that Cooperative gave the preference,

then,for the purposes of paragraph (a)and (b)of

subsection (3).the interest is presumedto have been acquired.or the benefit to have been received,otherwise than in goodfaith.

• (5)For the purposes of subsection (4)(a),the relevant surrounding circumstances.in relation to a Cooperative,are
• (a)the fact that the Cooperative entered into the transaction at an undervalue;or
• (b)the circumstances that amounted to the giving of
• the preference by that Cooperative,and subsection (6)has effect to determine whether,for those purposes,aperson has notice ofthe relevant proceedings.
• (6)For the purposes ofsubsection (5),a person has notice of the relevant proceedings if the person has notice of the fact that a liquidator hasbeen appointed inrespect of
• the Cooperative.
• (7)Nothing in this section or sections 118 to 120
• affects the availability ofany other remedy.even in relation to a transaction or preference that the Cooperative had no power to enterintoorgive.
• (8)Nothing in subsection (I)limits the Cooperative
• Tribunal'spowers under sections 118(4)and 119(3).
• 122.(1)This section applies to a transaction to which a Cooperative is.orhas been,a party to a transaction for,or
• involving.theprovision ofcredit to the Cooperative.
• (2)The Commissioner may apply to the Tribunal for

Power of the Tribunal to set aside certain extortionate transactions an order under subsection(3)if the Commissioner believes that such a transaction-

• (a) is or was extortionate;and
• (b)was entered intoduringthe three years liquidator was appointed inrespect of the
• immediatelypreceding thedate on which the Cooperative entered administration or on which a Cooperative.
• (3)If,on the hearing of an application made by the Commissionerundersubsection (2).theTribunal is satisfied that the transaction is or was extortionate and was entered into within the period referred to in section (b)of that subsection,it shall make one or more of the following
• orders-
• (a)an order setting aside the whole or part of an obligation created by the transaction;
• (b)an order otherwise varying the terms of the transaction or varying the terms on which any security for thepurposes of the transaction isheld;
• (c)an order requiringa person who is or was a party to the transaction to pay to the Commissioner any amounts paid to that person by the Cooperative in accordance with the transaction;
• (d)an order requiring a person to surrender to the Commissioner property held by the person as security for the purposes of the transaction;or
• (e)an order directing accounts to be taken between
• the specified persons.
• (4)For the purposes of this section,a transaction is extortionate if,having regard to the risk accepted by the person providing the credit-
• (a)the terms of it are or were,such as to require grossly exorbitant payments to be made(whether unconditionally or in certain contingencies)in respect of the provision of the credit:or
• (b)itotherwisegrossly ordinary
• contravened principles of fair dealing.
• (5)A transaction with respect to which an application

is made under subsection (2)is,in the absence ofevidence tothe contrary.presumed to be or to have been

extortionate.

• exercisable in relation to a transaction concurrently with any powers exercisable in relation to the transaction as one
• at an undervalue.
• 123.(l)Except as otherwise provided for by this section,a floating charge on a Cooperative's undertaking or property created at a relevant time is invalidexcept to the extent of the aggregate of
• (a)an amount equal to the value of somuch of the consideration for the creation of the charge as consists ofmoney paid,or goods or services supplied,to the Cooperative at the same time as,or
• after,the creation of the charge;
• (b)an amount equal to the value of so much of that reduction,at the same time as,or after,the creation
• consideration as consists of the discharge or of the charge.of any debt of the Cooperative;and
• (c)the amount of such interest (if any) as is payable on the amount referred to in clause (a)or (b)in accordance with an agreement under which the supplied or the debt was so discharged orreduced.
• (2)Subject to subsection (3),the time at which a
• floating charge is created by a Cooperative is a relevant time for the purposes of this section if the charge is created-
• (a)in the case of a charge which is created in favour ofapersonwhoisconnectedwiththe Cooperative.within the two years immediately preceding the appointment of a liquidator in respectof the Cooperative:or
• (b) in the case of a charge that is created in favour of any other person-at a time within the period of twelve months ending with the date ofthat appointment.
• (3)If a Cooperative creates a floating charge at a time

Circumstances in which floating Cooperative property lo be

charge on a undertaking or invalid.

referred to in subsection (2)(b)and the person in favour of whom the charge is created is not connected with the Cooperative,that time is not a relevant time for the purposes of this section unless the Cooperative-

• (a)is at that time unable to pay its debts:or
• (b)becomes unable to pay its debts in consequence of the transaction under which the charge is created.
• (4)For the purposes of subsection (1)(a).the value of any goods or services supplied as consideration for a floating charge is the amount in money that,at the time they were supplied,could reasonably have been expected to be obtained for supplying the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were supplied to the Cooperative.

PARTXV-SETTLEMENTOFDISPUTES

• 124.(1) There is established a tribunal to beknown as the Cooperative Tribunal.
• (2)The CooperativeTribunal shall consist-
• (a)a chairperson;
• (b)a deputy chairperson;and
• (c)not less than five other members.
• 125.(1) The chairperson and deputy chairperson of the Cooperative Tribunal shall be appointed by the Judicial Service Commission.
• (2)The members of the Cooperative Tribunal shall be ofpersons nominated for such appointment by the Cabinet
• appointed by the Judicial Service Commission from a list Secretary.
• (3)Aperson shall not bequalified for nomination as a member of the Cooperative Tribunal pursuant to subsection (2),unlessthat person-
• (a)has a minimum experience of not less than ten years in cooperative management,law or practice;
• (b)is a member in good standing of the professional bodyresponsible for theregulation of Cooperative professionals;and
• (c) satisfies the requirements of Chapter Six of the

Establishment of the Cooperative Tribunal.

Appoinment of members of the Cooperative Tribunal.

Constitution.

• (4)Despite the generality ofsubsection (3),a person shall not bequalified for nomination asa member if that person is-
• (a)a serving public or state officer:or
• (b) an official of a political party.
• 126.(I) The chairperson and the deputy chairperson shall be remunerated on such terms and conditions of service applicable to judicial officers or as may be set by
• the Salaries and Remuneration Commission.
• (2)The members of the CooperativeTribunal shall-
• (a)be appointed for a term of three years'renewable
• once;
• (b) serve on a part time basis:and
• (c)be paid allowances at such sums and at such rates as may be determined by the Judicial Service Commission,in consultation with the Salaries and
• Remuneration Commission.
• 127.All appointments to the Cooperative Tribunal shall be by notice in the Gazete issued by the Judicial Service Commission.
• 128.The office of a member of the Cooperative
• Tribunal shall become vacant if the member-
• (a)accepts any office the holding of which would make the member ineligible for the appointment or nomination tothe office ofamember ofthe Cooperative Tribunal;
• (b)is removed from membership of the Cooperative Tribunal by the Judicial Service Commission after dueinquiryfor failure to discharge the functions of the office(whether arising from infirmity of body ormindorfrom any other cause)or for
• misconduct:or
• (c)fails to attend three consecutive sittings of the Cooperative Tribunal without reasonable cause.
• 129.(1)A dispute shall be referred to the Cooperative Jurisdiction of the

Remuneration and Cooperative

term of office for members of the Tribunal.

members of the Cooperative Tribunal

Vacaney in the office of Cooperative Tribunal Tribunal if it concerns thebusiness,management. governance,activities or operations of a Cooperative and arises-

• (a)between the Commissioner and a Cooperative:
• (b)between the Commissioner and an officer ofa Cooperative;
• (c)between the County Director for Cooperatives and aCooperative;
• (d)between the County Director for Cooperativesand anofficerofaCooperative:
• (e)between the Authority and a Cooperative:
• ()between the Authority and an officer ofa
• Cooperative;
• s
• claiming through members,past members and deceased members:
• (h) between members.past members or deceased members,and the board of directors of the Cooperative,or any officer ofthe Cooperative;
• (i)between the Cooperative and another Cooperative;
• (j)between a Cooperative and an employer within the
• definition of this Act;
• (k)between a liquidator and past members,creditors orother thirdparties:or
• (l)between a Cooperative and any other third-party entities that are not a Cooperative concerming the Cooperative business.
• (2)A dispute for the purpose of this section shall
• include-
• (a)a claim in respect of a surcharge imposed againstNo.14af 20os.
• anyperson pursuant to this Act:
• (b)a claim bya Sacco against a refusal to grantora revocation of licence or any other matter with the Authority pursuant to the provisions of the Sacco
• SocietiesAct,2008:
• (c)a claim by the Commissioner or County Director

Cooperative Tribunal.

• for Cooperatives or the Authority or liquidator againstaCooperativeoranofficer ofa Cooperative in respect of any surcharges,fines,or financial penalty imposed under this Act or any other written law;
• (d)any claim by a Cooperative against the Authority inrespect ofany administrative action commenced orinstituted orimposed by the Authority pursuant to the Sacco Societies Act or any other written
• law;
• (e)any claim by a Cooperative or an officer ofa Cooperative in respect ofany administrative action commenced or institutedor imposedby the Commissioner or theCountyDirector for Cooperatives under this Act;
• (f)claims by members.past members and persons
• claiming through members,past members and deceased membersarisingfrom breach orviolation ofcontractualobligations;
• (g)claims for any debt or refunds or deposits or any
• other due:
• (h)a claim by a Cooperative against an employer for non-remitted deductions arising from an agreement between the Cooperative and the employer on remittance of deductions:and
• (i)a claim by a Cooperative against a member,past members and persons claiming through members, past members and deceased members in respect to a breach orviolation of contractual obligations.
• 130.(l)TheChief Justice shall establish a Cooperative Tribunal registry in such number of counties, as the exigencies of the cases may demand from time to time;and in establishing such registries the Chief Justice may cluster a group ofcounties to be served by one registry.
• (2)The Cooperative Tribunal shall hold its sittings in
• every place where the Cooperative tribunal registry is situated.
• (3)Despite the generality of subsection (2),the

Registries and sittings of the Cooperative Tribunal.

Cooperative Tribunal shall sit on such days as shall be designated by the Deputy Registrar of the Cooperative Tribunal considering the number of cases filed in or pending before in each registry.

• 131.(1)The Cooperative Tribunal shall not be bound
• by the rulesofevidence.
• (2)The Cooperative Tribunal shall,upon an applicalionmade toit inwritingbyanyparty or areference made to it by the Commissioner.County Director for Cooperatives or the Authority or any member of the board Cooperative.on any matter relating to this Act,the Regulations made thereunder or the By-laws of the Cooperative,inquire into the matter and make an award thereon,and every award made shall be notified by the Cooperative Tribunal to the parties concermed.
• (3)The proceedings of the Cooperative Tribunal shall be open to the public except where the Cooperative Tribunal,for good cause.otherwise directs
• (4)The Chief Justice shall makerules ofprocedure of the Cooperative Tribunal.
• 132.(1)The CooperativeTribunalmay-
• (a)make such orders for the purposes of securing the attendance of any person at any place.the discovery or production of any document or the investigation of contravention of this Act as it deemsnecessary orexpedient;
• (b)take evidence on oath and may for that purpose administer oaths:or
• (c)on its own motion may summon and hear any person as a witness.
• (2)Where the Cooperative Tribunal enters judgment in terms of the award together with costs,it shall issue a decree which shall beenforceable asa decree of a Tribunal.
• (3)If,after making an order,the Cooperative Tribunal discovers that the order was based on a misrepresentation ora concealment ofa material fact by either party to the dispute.the Cooperative Tribunal may order the party

Proccedings of Cooperative

Tribunal.

Orders by the Cooperative Trbunal.

convicted for the misrepresentation or concealment to pay the other party such sum as is.in the opinion of the Cooperative Tribunal,sufficient compensation for any damage or loss suffered by the party as aresult of the misrepresentation or concealment.

• 133.(l)A person who-
• (a)fails to attend to the Cooperative Tribunal after having been required to do so under section 131 (1(a):
• (b)refuses totake oath before the Cooperative Tribunal or to answer satisfactorily to the best of hisknowledge and beliefanyquestion lawfully put tothe person in any proceedings before the Cooperative Tribunal or to produce any article or document when requiredtodoso bythe Cooperative Tribunal;
• (c)knowingly gives false evidence or information
• which he knows to be misleading:or
• (d)at any sitting of the Cooperative Tribunal-
• (i)wilfully insults any member or officer of the Cooperative Tribunal:or
• (ii)wilfully interrupts the proceedings or commits any contempt of the Cooperative Tribunal,

commits an offence and shall be liable toa fine not exceeding fifty thousand shillings.

• 134.The Cooperative Tribunal shall have unlimited geographical and pecuniary jurisdiction inmatters of Cooperative disputes.
• 135.(1) For the purposes of hearing and determining any cause or matter under this Act,the chairperson or vice chairperson and other two members of the Cooperative Tribunal shall form a quorum.
• (2)Despite subsection (1),the chairperson or vice
• chairperson of the Cooperative Tribunal acting alone shall have the exclusive jurisdiction to dealwith temporary injunctions and any other interlocutory proceedingsfiled or commenced before the tribunal.
• 136.(1) The chairman in consultation with the Deputy Benches of the

General offences a eCooperutive Tribunal

Uelmited jurisdhction of he Cuoperative Tribunal

Quorum for the Cooperative Tribunal Registrar in charge of tribunals shall form benches of the filedat each ofthe CooperativeTribunalregistry Cooperative Tribunal which shall sit and preside over cases established under thisAct.

• (2)Inestablishing benches of the Cooperative Tribunal,the chairman in consultation with the Deputy Registrar may-
• (a)consolidate cases registered in one Cooperative registry to be heard and determined in another registry takingintoaccountthegeographical locations and proximities of the registries:or
• (b)direct one bench or more of the benches formed to sit in one or more places where the Cooperative registry is established guided by the principles of efficiency,ease of access and effective delivery of judicial services.
• 137.A member of the Cooperative Tribunal whohasa
• direct interest in any matter which is the subject of the proceedings before the Cooperative Tribunal shall not take partin those proceedings.
• matterconsidered bythe Cooperative Tribunal shall be decided by the votes of the majority of the members constituting the Cooperative Tribunal and voting. and the person presiding shall have a casting as well as a
• 138.Any deliberative vote.
• under this Act on the chairperson may.unless a contrary intention appears,be exercised or performed byvice chairperson of the Cooperative Tribunal designated as such by the Judicial Service Commission,if the chairman is unable toexercise or perform that poweror duty owing to illness or absence.
• 140.(1)Any party to the proceedings before the Cooperative Tribunal who is aggrieved by any order of the Cooperative Tribunal may,within thirty days of such order. appeal against such order to the High Court.
• (2)Upon the hearing of an appeal under this section, theHigh Court may-

Cooperative Tribunal.

Cooflictof inlerest at ihe Cooperative Tribunal.

Voting atte Cooperative Tribunal

chairperson exercised by ve

Powers ofthe chairperson

Appeal to High Coun from the Cooperative Tribunal

• (a)confirm,set aside orvary the order in question;
• (b)remit the proceedings to the Cooperative Tribunal with such instructions for further consideration. report,proceedings or evidence as the Tribunal may deem fit togive;
• (c)exercise any of the powers which could have been exercised by the Cooperative Tribunal in the proceedingsin connection with which the appeal is brought:or
• (d)makesuch other order as it may deem just, including an order as to costs of the appeal or of carlier proceedings in the matter before the Cooperative Tribunal
• (2)Any party to the appeal before the High Court who is aggrieved by any order of the High Court may.within thirty days of such order,appeal against such order to the Court ofAppeal.
• (3)Exceptas providedintheConstitution,the decision of the Court of Appeal arising from an appeal from theHigh Court shall be final.
• 141.The Chairperson of the Cooperative Tribunal may appoint any person with special skillsorknowledge on Cooperative issues which are the subject matter of any proceedings or inquiry before the Cooperative Tribunal to whereit appears to the Chairman that such special skills or knowledge are required for proper determination of the
• matter.
• 142.(l)It shall be an offence for any person to engage inacts or make omissions amounting to contempt of the Cooperative Tribunal and the Cooperative Tribunal may punish any such person for contempt in accordance with the provisions of this Act or any other written law.
• (2)Despite the generality of subsection (l),the provisions of the Contempt of Tribunal Act.20i6 shall apply in respect to contempt of the Cooperative Tribunal.in the same manner as if the Cooperative Tribunal wasa
• Tribunal.

Power to appoint Cooperative assesorthe Cooperative

Trbunal.

Coetempt of Cooperative Tribunal.

No.46 of2016.

• 143.(l)The Judicial Service Commission shall
• appoint a person qualified to serve a Deputy Registrar under the Judicial Service Act,2011 to serve as the Deputy Registrar of the Cooperative Tribunal,on such terms and conditions of service as are applicable to judicial officers.
• (2)The Deputy Registrar shall be responsible to the Judiciary for-
• (a)proper day to day administration,management.
• functioning,operations and activities of the CooperativeTribunalregistries;
• (b)formation of the benches of the Cooperative
• Tribunal;and
• other writtenlaw.
• 144.Any person who isa party to the proceeding
• before the Cooperative Tribunal may appear in person or be represented byan Advocate.
• 145.(l) The Chairman or other members of the
• CooperativeTribunal or officer of the Cooperative Tribunal shall not beliable tobe sued in a civil Tribunal for an act done oromitted tobe done orordered to bedone by them inthe discharge of their duty as members of the Cooperative Tribunal,whether or not within the limits of their jurisdiction.
• (2)A officer of the Cooperative Tribunalor other person bound to execute the lawful warrants.orders or other processes ofthe tribunal shall not beliable to be sued in any Tribunal for the execution of a warrant,order or process which would have been bound to be executed if within the jurisdiction of the Cooperative Tribunal issuing it.
• 146.(1) The Cooperative Tribunal may refer any matter filed or pending before it for alternative dispute resolution inaccordance with Article 159(2)(c)of the Constitution.
• (2)For purposes of subsection (l),theDeputy qualified to serve as the Cooperative Tribunal annexed
• Registrar shall prepare and maintain a list of persons mediators.

Appointment of Deputy Registrar of the Cooperative

Tribunal.

Right of parties before Cooperative Tribunal

Iemunity of officers of the

Cooperative Tribunal

Altemative Dispute Cooperative

Mechanism at the Tabunal,

PARTXVI-GENERALPROVISIONS

• 147.(l) When a Cooperative contracts for goods or
• services or works;or contracts for the disposal of goods: the Cooperative shall do so in accordance with a system that is fair,equitable,transparent,competitive and costeffective.as shall be enshrined in the Cooperative's bylaws.
• (2) The Commissioner shall prescribe minimum guidelines on the standards and codes of conduct for purposes of procurement in Cooperatives taking into account the size and the complexity of businesses of the Cooperative.
• 148.(1) Officers of a Cooperative shall be required to
• declare income,assets and liabilities as provided for in the Regulations.
• (2)Cooperatives shall develop a code of conduct to set
• and maintain standards for acceptable behaviour in the cooperative business.
• (3)Officers of a Cooperative shall not seek or occupy political office without exemption by the Cabinet Secretary.
• 149.(1) Subject to the provisions of this Act and any other written law,the Apex Cooperative,Cooperative federations or secondary Cooperatives may.with approval ofthe Commissioner,develop and implement-
• (a)a procedure and appropriate system or mechanism ofexercising self-regulation over its members or
• affiliates;
• (b)a code of conduct for its members:
• (c)procedure for alternative dispute resolution in
• Cooperatives;
• (d)mechanism for sector shared common services; and
• (e)guidelines on provision of services through virtual
• platforms.
• (2)The Cabinet Secretary shall make Regulations for the implementation ofthe provisions of this section.

Procuremem and

disposal in Cooperatives.

Enforcenenof Ethicsand

integrity in Cooperatives.

Cooperative self-

regulation.

• 150.(l)A Cooperative registered under this Act for purposes of undertaking any credit business shall,in the extent as may for the time being be prescribed under any legislation governing credit information sharing in Kenya, exchange such credit information as prescribed in such legislation.
• (2)No duty to which aCooperative or any ofits officers may be subject,shall be breached by reason only of the disclosure or sharing in good faith of any credit
• information under thissection.
• 151.(1)A Cooperative may borrow orlend to another
• Cooperative for purposes ofcovering temporary liquidity short falls or foron lending to itsownmembers
• (2)Despite the generality of the provisions of subsection(l)
• (a)aCooperative shall notborrow fromanother Cooperative in such sums as may exceed its
• borrowing powersor theprescribed limit for external borrowing:
• (b)the board of directors ofthe both the borrowing and the lending Cooperatives shall approve the
• terms and conditions for the intended borrowing: and
• (c)the terms and conditions of the borrowing or lending shall be approved by the Commissioner. County Director for Cooperatives or the Authority. as the case maybe.
• (3)The Commissioner. County Director for Cooperatives or the Authority as the case may be shall before approving an inter-Cooperativeborrowingensure-
• (a)that the borrowing Cooperative has sufficient security tocoverfortheborrowing:and
• (b)theborrowingisfor the intended purpose
• (4) Subject to approval by the Commissioner or the Authority as the case may be,the Apex Cooperative or a Cooperative federation or a secondary Cooperative may

Credit information sharing.

Inter-Cooperative borrowing.

• establish aplatformtofacilitate inter-Cooperative
• borrowing.
• (5) The Cabinet Secretary shall make Regulations for
• the better implementation of the provisions of this section.
• 152.Subject to this Act and any other written law,a
• Cooperative shall have the capacity to issue,trade in, purchase or sell capital raising instrument in its own name.
• 153.(l)No electedofficeror member ofa
• Cooperative shallreceive anyremuneration,salary. commission or any otherpayment from the Cooperative for servicesrendered to the Cooperative unless the Cooperative has,by a resolution passed at a general meeting:approved the payment ofsuch remuneration,salary.commission or otherpayment.
• (2)No officer ormember of a Cooperative shall receive any remuneration,salary.commission or other payment from any person orbody or association other than the Cooperative in respect of any business or transaction entered into by the Cooperative:
• (3)Anyofficer or member of a Cooperative who receives any remuneration,salary.commission or other payment in contravention of this section commits an offence and shall on conviction be liable upon to a fine not exceeding fifty thousand shillings or to imprisonment for a term not exceeding one year,or to both such fine and such imprisonment: and shall.if the offence is the contravention of subsection(l) ofthis section.be ordered to repay the amount of the remuneration,salary.commission orother payment received from the Cooperativein addition to or in lieu ofany other punishment,and default in such payment shall be dealt with in the same manner as
• default in paying a fine imposed by a Tribunal.
• 154.(l) There is established a fund known as the Cooperative Development Fund,in accordance with the Regulations prescribed by the Cabinet Secretary.
• (2)Thesource ofthe Fundshall consistof contributionsmade by Cooperativesin the sums and rate as
• the Cabinet Secretary may prescribe.

Cooperative capialraising

instruments.

Remunerahion io

officersand memberso Cooperative.

Cooperative

Development Pund.

• (3)The objectivesof the Fund shall be to promote the education, training. research,innovation,emerging technology and other related activities in the Cooperative sector in Kenya.
• 155.(1) The Cabinet Secretary may make Regulations
• for the better carrying out of the provisions and purposes of this Act.
• (2)In particular,and withoutprejudice to the
• generality of subsection (I),the Regulations may-
• (a)prescribe the forms to be used and conditions to
• be complied with in making application for the registration ofa Cooperative and the procedure to be followed:
• of services linked to
• (b) providefor procedure for digitization Cooperative registration counties:
• (c) provide for the ration applicable in sharing of revenues arising from registration of Cooperatives betweenthetwolevelsof government:
• (d) prescribe the matter inrespect of which a Cooperative 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 bylaws:
• (e) 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 exerciseof the
• right of membership:
• prescribe the manner in which funds may be raised whetherby meansofshares ordebentures
• or otherwise:
• (g) prescribe the manner in which primary and secondary Cooperatives operating in more than one county shall be supervised by the relevant counties;

Regulations.

• (h)provide for general meetings of the members and for the procedure at such meetings and the powers to be exercised by such meetings:
• D provide for the role of the nomination committee
• inthe appointment of presiding persons for Cooperative elections;
• D provide for the appointment,suspension and removal of the board of directors,supervisory board and other officers,and for the procedure at meetings of boardof directors'supervisory board,and for the powers to be exercised and the dutiestobeperformedbythe of board of directors,supervisory board and other officers:
• (k) prescribe the accounts and books to be kept by a Cooperative:
• (1) provide for the form of the financial statements to be prepared annually and any other statements and schedules relating thereto:
• (m)provide for a criterion and issuance of annual compliance certificate to federation and the Apex
• Cooperatives by the Commissioner;
• (n) provide for a criterion and issuance of annual compliance certificate to primary and secondary Cooperatives bytheCounty Director for
• Cooperatives:
• (o)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 theliabilities ofpast members:
• (P) provide for the persons by whom and the form in which copiesofentries in books of Cooperatives may be certified:
• (q) provide for the inspection of documents and registers at the office of the Commissioner and County Director of Cooperatives,and prescribe the fees to be paid thereof and for the issue of
• copies of such documents orregisters:

• ()provide for the formation and maintenance ofa register for members and,where the liability of members is limited by shares,of the register of
• shares:
• (s) provide for the order in which the value ofa deceased member's interest shall be ascertained and subject to the provisions of this Act.for the nomination ofa person to whom such interest may bepaid or transferred:
• 中 provide for the mode in which the value of the interest ofamemberwhohasbecome ofunsound mind or.incapable ofmanaging such member's affairs shall beascertainedand forthe nomination of any person to whom such interest may be paid or transferred:
• (u) provideforthe mannerofformationand maintenance ofreserve funds and the objects to which such funds may be applied and for the investments of any funds under the control ofa Cooperative:
• (v) prescribe the returns and other reports to be submittedbyaCooperative tothe County Executive Committee Members,with a copy to
• the Commissioner,
• (w)prescribe the fees to be paid on applications, registrations and other functions done by the
• Commissioner under thisAct:
• (x) prescribe the procedures to be followed in the liquidation of Cooperatives:
• (y) prescribe procedures for appointment and operations ofthe receiver manager in Cooperatives;
• (z)provide for Cooperatives that become insolvent tobe placedunder administrationinsteadof liquidation if it appears that it maybepossiblefor them to recover from their insolvency,which may include extension of the applications ofsuch provisions of the Insolvency Act,relating to the administration of insolvent companies as the

Cabinet Secretary considers appropriate and.in applying those provisions for that purpose,may make such modifications to them as may be necessary;

• (aa)prescribe procedures for division of commodity Cooperatives with more than one bulking centre:
• (bb)prescribe procedures tobe followed in establishment of Cooperative companies and appointment of directors representing Cooperatives in these companies;
• (cc)prescribe procedures for operations of holding
• Cooperatives;
• (dd)develop prudential standards and market conduct for different categories of Cooperatives as per their sizes,types,sub sector.business line or any other classification:
• (ee)providefor establishment,fundingand management of the Cooperative information and research centre:
• prescribe guidelines for use of collaterals for
• securing loans and mortgages in Cooperatives;
• (gg)prescribe Regulations for operationalization of a
• body for Cooperatives'professional practitioners:
• (hh)in any case where the Cabinet Secretary is
• satisfied that a substantial number ofmembers of anyCooperative are unacquaintedwith the English language.the Cabinet Secretary may cause any Regulationsmade 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 membersbelong including braille and sign language,provided that on any matter of interpretation the English version of the rules shall prevail.
• provide procedure for establishment Lof
• Cooperative management and supervision fund:
• 三 provide for operationalization,and management
• of the Cooperative Development Fund:

• (kk)providefor protocols for provision Jo Cooperative services through virtual platforms including meetings through webinar,and
• prescribe other Regulations which under this Act
• may beprescribed.
• 156.(1) Despite the provisions of this Act,the Cabinet Exemption. Secretary may.by notice in the Gazelte
• (a)exempt any Cooperative from anyof the provisions of this Act,subject to such conditions, exceptions orqualifications as the Cabinet Secretary may consider appropriate;or
• (b)apply to any Cooperative any of the provisions of this Act subject to such modifications as the Cabinet Secretary may consider appropriate.
• (2)The Cabinet Secretary shall cause to be published in the Gazette thirty days'notice of the intention togrant an exemption under subsection (l).
• (3)Any person with an objection regarding an intended exemptionunderthis section may make representations to the Cabinet Secretary within the period of the notice.
• (4)The Cabinet Secretary 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 may be appropriate.
• 157.(1) The Cabinet Secretary mayat any time and on
• anymatter direct the Commissioner as to the exercise of the powers and duties conferred upon the Commissioner for the better carrying out of the provisions of this Act.
• (2)The County Executive Committee member may at any time and on any matter direct the County Director for Cooperatives as to the exercise of the powers and duties conferred upon the County Director for Cooperatives for the better carrying out of the provisions of this Act with regard to the Cooperatives within the County's respect jurisdictions.

Powers of the Cabines Secretary and County Executive Commitee

Member.

• this Act the Commissioner may-
• (a) call for elections in any Cooperative;
• (b)attend meetings of a Cooperative and require every
• Cooperative to send to the Commissioner at a proper time,notice and agenda of every meeting and all minutes and communications in respect thereof:
• (c)issue circulars and guidelines for the better administration ofthisAct:
• (d)require that Cooperatives update their by-laws: and
• (e)exercise such other powers consistent with thisAct as may be prescribed in Regulations.
• (2)The Commissioner may in writing delegate any of
• his powers conferred upon him to an officer or any other person.
• 159.Without prejudice to any otherpowers under this Act the County Director for Cooperatives may-
• (a) call for elections in any primary and secondary Cooperativewithin the geographical jurisdiction of
• the county:
• (b)attend meetings of Cooperatives within their area
• of jurisdiction and require every Cooperative within their area to send to at a proper time.notice and agenda ofevery meeting and all minutes and communications im respect thereof:
• (c)issue circulars and guidelines for the better
• administration of this Act with respect to primary and secondary Cooperatives under their jurisdiction:and
• (d)exercise such other powers consistent with this Act as may beprescribed.
• 160.(I) It shall be an offence under this Act if
• (a)a Cooperative 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 Regulations made thereunder to be done:

Other powersof the Commissioner

osod the County Directar for Coopenatives

Offences

• (b)a Cooperative,or an officer or a member thereof does anything which isprohibited by or under this Act or any Regulations made thereunder:
• (c)a Cooperative,or an officer or a member thereof. wilfully neglects or refuses to do any act or to furnish any information required for the purposes of this Act by the Commissioner or the County Director for Cooperatives,or any person duly authorized in that behalf,by the Commissioner or the County Director for Cooperatives;
• (d)a Cooperative or an officer or member thereof wilfully makes a false return or furnishes false informationwithrespecttoanyreturnor information in or which isrequired by or under this Act or any Regulations made thereunder;
• (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 them by a person authorized to do so,or which they are required to furnish,by or under this Act or any Regulations made thereunder,or
• (f)any person acts or purports to act as an officer of a
• Cooperativewhen not entitled to do so.
• (2)Where a person contravenes any of the provisions of this Act orRegulations made under this Act-
• (a) if it is a body corporate,commits an offence it shall be liable upon conviction to a fine not exceedingfive hundred thousand shillings:and
• (b)everydirector,member of supervisoryboard. employeeor agentorotherofficerofa Cooperative or person commits an offence and liable upon conviction to a fine not exceeding one hundred thousand shillings or to imprisonment for a term of not less than twelve months or to both such fine and imprisonment.
• 161.A Cooperative shall not be taken to be a trade union or operate as a trade union.

• 162.(1)A person who commits an offence under this
• Act for which no specific penalty is provided or who otherwise contravenes this Act shall,on conviction,be liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding five years,or to both.
• (2)In addition to any penalty referred to in subsection
• (1),the Court may order or prohibit the doing of any act to stop a continuing contravention.

PARTXVII-TRANSITIONALPROVISIONS

• 163.(1) The Co-operative Societies Act,1997 is herebyrepealed.
• (2)Despite the repeal of the Co-operative Societies Act,No.12of1997-
• (a)every Cooperative,andallBy-laws ofa
• Cooperative and any amendments thereof, registered under the repealed Act shall be deemed tohave been registered under this Act:
• (b)any registerkept inpursuance of the repealed Act shall be deemed to bepart of theregister tobekept in pursuance of this Act:
• (c)any document referring to a provision of the repealed Act shall be construed as referring to the correspondingprovision of this Act;and
• (d)any orders,directions,appointments and other acts lawfully made or done under any of theprovisions ofthe repealed Act 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.
• (3)Despite the generality ofsubsection (2).if
• anything is required to be done,performed or undertaken by any existing Cooperative or an officer of an existing Cooperative to secure compliance with this Act,then that thing will be done,performed or undertaken,within eighteen months after the commencement date.

General penaty.

Repeal of the

Cooperative Societies Act. No.12of1997.

• (4)The Commissioner or the County Director for Cooperatives as the case may be, shall issues circulars or guidance notes from time to time for the better carrying out of the provisions of subsection (3).

164.Upon the commencement of this Act-

• (a)paragraph 7of the Public Officer Ethics Regulations,2003 shall stand repealed within
• twelve months:
• (b) the persons serving as members of the Ethics Commission for Cooperativesestablished pursuant toparagraph 7 ofthe Public Officer Ethics Regulations. 2003 shall cease being members thereofwithin twelve months or upon the expiry of their tenure.whichever is earlier:a
• (c)any actions or proceeding initiated or pending or
• commenced by or before the Ethics Commission for Cooperatives establishedpursuantto paragraph 7of the Public Officer Ethics Regulations,2003, shall continue before the responsible Commissions asprovided in this Act.

165.Upon the commencement of this Act-

• (a)the person appointedby Public Service Commission to serve in the national govermment as the Commissioner for Cooperative Developmentshallbedeemed to bethe Commissioner for Cooperative Development for purposes ofthis Act;and
• (b)the person appointed by a County Public Service Board to serve within a county as the County Director for Cooperatives or as the technical head of Cooperative affairs within the county or by any other name called.shall be deemed to be the County Director for Cooperatives for purposes of thisAct.
• 166.(1)The.County Assemblies may enact Cooperative legislations in respect of primaryand secondary Cooperatives within the respective county jurisdictions,which is consistent with this Act.

Amendment of Publie Officer Erhies Regulations, 2003.

L.N6af2003.

Traesition ta fhe Office ofIhe and County Comnsissioner Director for Cooperatives,

Coumy Assembly

legislations,

• (2)This Act shall prevail in case of any inconsistency between this Act andlegislation enacted by a County Assembly in accordance with-Article 191(3)(b) of the Constitution.
• I67.Upon the commencement of this Act-
• (a) the person serving as the Chairperson or the Vice-
• Chairperson of.the Cooperative Tribunal established under the repealed Act.may continue toserve as such provided,that thcy meet the criteria and qualifications for appointment as such in accordance with this Act;and
• (b)any proceedings that had commenced or pending before the Cooperative Tribunal established under the repealed Act prior to the commencement of this Act and every document prepared or issued shall continue in force as if it is pending before:or was commenced.prepared or issued under the Cooperative Tribunal established in this Act,only tothe extent that the Cooperative Tribunal has jurisdiction asprovided in this Act.
• 168.Any notices,orders,directions,appointments or
• any other act lawfully made or done under section 58.59. 60A,65.72.73.74.75.76.78and79of therepealed Act and in force immediately before the commencementof this Act shall be considered to have been done under this Act and shall continue to have effect until received,cancelled orterminated.

Transition of the membeof.und ihe Cooperaive Tribnral.

Transition of directs and appointments.

SCHEDULE

FIRSTSCHEDULE

LIQUIDATIONOFCOOPERATIVES

• 1.In this schedule,unless the context otherwise tnterpretation. requires,-

"contributor",in relation to a Cooperative in respect of which a liquidator is appointed,means a member or past member of the Cooperativein respect ofwhom the liquidator hasmade a determination that thememberor past member is liable to make a contribution to the funds of the Cooperative;

"deliver",in relation to documents or other property.

includes surrender and transfer;

"inability to pay its debts",in relation to a Cooperative has the meaning given by paragraph 2;and

"past member"includes a deceased member.

• 2.(l)For purposes of this schedule a Cooperative is unable topay its debts-
• (a)if a creditor (by assignment or otherwise) to whom leaving it at the Cooperative's registered office,a
• the Cooperative is indebted for hundred thousand shillings or more has served on the Cooperative,by written demand requiring the Cooperative to pay the debt and the Cooperative has for twenty-one days afterwards failed to pay the debt or to secure or compound for it to the reasonable satisfaction of the creditor;
• (b) if execution or other process issued on a judgment, decree or order ofany Tribunalin favour ofa creditor of the Cooperative is returmed unsatisfied in whole or in part;or
• (c)if it is proved to the satisfaction of the Cooperative Tribunal that the Cooperative is unable to pay its debts as they fall due.
• (2)A Cooperative is also unable to pay its debts for the purposes of this Schedule ifit isproved to the satisfaction of

(s.109)

AedoAgeu debts.

the Cooperative Tribunal that the value of the Cooperative's assets is less than the amount of its liabilities (including its contingent and prospective liabilities).

• (3)The Regulations may increase or reduce the amount specified in subparagraph(1)(a).
• 1the
• 3.After the Commissionerhas cancelled registration ofa Cooperative under section 106or 107-
• (a)any disposition of the Cooperative's property:
• (b)any transfer of shares,or alteration in the status of the Cooperative'smembers:and
• (c)made after the cancellation is void,unless he
• Cooperative Tribunal otherwise orders.
• 4.After the registration of a Cooperative is cancelled under section 106 or 107,any attachment,sequestration distress or execution instigated against the assets of the Cooperative isvoid.
• 5.(1)When a liquidator is appointed in respect of a Cooperative,the liquidator may require' some or all of the persons to whom this paragraph applies to make out and submit to the liquidator a statement concerning the affairs of the Cooperative.
• (2)The persons required to submit such a statement
• shallverify it by statutory declaration and shall include in it
• (a)such particulars of the Cooperative's assets,'debts and liabilitiesas are prescribed by the Regulations for thepurposes of thisparagraph;
• (b)the names and addresses of the Cooperative
• creditors:
• (c)the securities (if any)held by them respectively;
• (d)the dates when the securities were respectively given;and
• (e)such further or other information as the liquidator may reasonably require.
• (3)This paragraph applies to the followingpersons-
• (a)thosewho areor have been officersof the
• Cooperative:

Disposition of Kqfuadoud Cooperative after commencement of liquidation.

Artachment, sequestration, distress.or execution insligated against the assets.

Liquidator may require Cooperative to submit statement of affairs.

• (b)those who have taken part in the formation of the Cooperative at any time during the twelve months before the cancellation ofthe Cooperative's registration:
• (c)thosewho-
• (i)are in the Cooperative's employment,or have
• been in itsemployment during that period;and
• (ii) are in the liquidator's opinion capable of giving the information required
• (4)A prescribed person who is required under this paragraph to submit a statement ofaffairs to the liquidator shall,subject to subparagraph (5),do so within twenty-one days from and including the date on which notice of the requirement wasgiven to the person by theliquidator.
• (5)Theliquidatormay-
• (a)at any time release a person from an obligation imposed on the person under subparagraph (l)or
• by subparagraph (2);or
• (b)either when giving the notice referred toin subparagraph (4)or subsequently,extend the period referred to in that subparagraph.
• (6)If the liquidator has declined to exercise a power conferred by subparagraph (5),the Cooperative Tribunal may.on the application of the Attorney General or a person
• who is dissatisfied with the liquidator's decision,exercise the power if it considers it appropriate to do so.
• (7)A person who,without reasonable excuse,fails to comply with an obligationimposed byor under this paragraph commits an offence and on conviction is liable to
• a fine not exceeding five hundred thousand shillings.
• (8)If.after being convictedof an offence under subparagraph (7),aperson,without reasonable excuse. continues to fail to comply with the relevant obligation,the person commits a further offence on each day on which the failure continues and on conviction is liable to a finc not exceedingfifty thousand shillingsfor each such offence.
• (9)Inthis paragraph,"employment"includes employment under acontract for services.

• 6.As soon as practicable after cancelling the
• registration of a Cooperative,the.Commissioner shall conduct an investigation
• (a)if the Cooperative has failed,to discover why the Cooperative failed:and
• (b)generally.to investigate the promotion,formation
• business,dealings and affairs of the Cooperative.
• 7.(1)When a liquidator is appointed in respect of a co-operative,the liquidator may apply to the Cooperative
• Tribunal for the public examination of any person who-
• (a) is or has been an officer of the Cooperative:
• (b)has acted as provisional liquidator.liquidator or
• administrator of the Cooperative;or
• (c)not being a person referred to in paragraph (a) or
• (b),

is or has been concerned,or has taken part,in the promotion,formation ormanagement of the Cooperative.

• (2)Unless the Cooperative Tribunal otherwise orders, the liquidator shall make an application under subparagraph
• (1)onreceivingawritten request to do so from-
• (a)creditors of the Cooperative holding not less than one-half in valueof the total amount of the Cooperative's debts;or
• (b)contributor of the Cooperative holding not less than
• three-quarters of the votingrights at general meetings of the Cooperative.
• (3)If,on the hearing of an application made under subparagraph (1),the Cooperative Tribunal is satisfied that a public examination ofthe person to whom the application relates is warranted,it shall make an order directing such an examination to be held on a date andata time and place specified in the order.
• (4)On being served with a copy of an order made under subparagraph (3),the person concerned shall attend on the date and at the time and place specified in the order and bepubliclyexamined-
• (a)about the promotion,formation or management of
• the Cooperative;or

Duty of the Commissioner to conducr investigations into fallure of Cooperalives,

Pubfie exnmination of officers andpest officer of Coopemative.

• (b)about the conduct of its affairs,or conduct or dealings in relation to the Cooperative.
• (5)The persons specified in subparagraph (6)may-
• (a)participate in the public examination of a person under this paragraph:or
• (b)may question the person concerning the matters referred to in subparagraph (4).
• (6)The following persons are specified for the purpose
• ofsubparagraph(5)
• (a)the Commissioner;
• (b)the liquidator of the Cooperative;
• (c)the Authority:
• (d)any person who has been appointed as special manager of the Cooperative'sproperty or business;
• (e)any creditor of the Cooperative who has submitted aproof;or
• (f)any contributor of the Cooperative.
• 8.(l)A person who without reasonable excuse,fails at any time to attend the person's public examination under paragraph 7 commits an offence ofcontempt on the Tribunal and is liable to be punished accordingly (in addition to any other punishment to which the person may be subject).
• (2)If a person fails without reasonable excuse to attend the person's examination under paragraph 7,or there are reasonable grounds for believing thataperson has absconded,or is about to abscond,with a view to avoiding or delaying the examination,the Cooperative Tribunal may issueawarranttobe issuedtoapolice officer ora prescribed officer of that Tribunal-
• (a)for the arrest of that person;and
• (b)for the seizure of any documents or property in that person'spossession.
• (3)In such a case,the Cooperative Tribunal may authorise the person arrested under the warrant to be detained in custody,and anything seized under it to be kept,

failing to attend public

examinmion.

in accordance with the directions of that Tribunal,until such

time as that Tribunal orders.

• 9.(1) When a liquidator is appointed in respect of a

Powers of the Cooperative Tribunal tohalt Llquidation.

• co-operative,the liquidator,the Commissioner or any creditor or contributor of the Cooperative,and on proof to the satisfaction of the Cooperative Tribunal that all proceedings inthe liquidation ought to be halted,that Tribunalmay make an order halting the liquidation proceedings,either permanently or fora specified period,on such terms as that Tribunal considers appropriate.
• (2)Before making an order under subparagraph (1),the Cooperative Tribunalmay require the liquidator to provide itwith a report on any factsormatters that appear to the liquidator to berelevant to the application.
• (3)The liquidator shall 1complywithsucha requirement within such period as the Cooperative Tribunal specifies.
• 10.(l)If in the case of a Cooperative in respect of which aliquidator is appointed,the assets of the Cooperative are insufficient to satisfy its liabilities,the liquidator--
• (a)may direct the expenses incurred in the liquidation to bepaid out of the Cooperative's assets:and
• (b)may direct that that payment be given such of
• priority as the liquidator considers appropriate.
• (2)A direction under subparagraph (l) has effect
• irrespective of the provisions of this Act relating to preferential debts.
• 11.(l)This paragraph applies when the Commissioner has cancelled theregistration of a co-operative.
• (2)On the application of the Commissioner made either before or after the registration of the Cooperative is cancelled,the Cooperative Tribunal may,if satisfied on reasonable grounds that a contributor-
• (a)is about to exit Kenya or otherwise to abscond;or
• (b)has concealed orremoved,or is about to conceal or remove,any of the contributor's property for the purpose ofevading payment of calls,

Payment of expensesof

liquidation.

Power toarrest

absconding contributor.

issue awarrant authorizing the contributor to be arrested and the contributor's documents and moveable personal property to be seized.

• (3)In such a case,the Cooperative Tribunal may authorize the person arrested under the warrant tobe detained in custody,and anything seized under the warrant tobe kept,in accordance with thedirections of the Cooperative Tribunal,until such time as that Tribunal orders.
• 12.(1)The liquidator of a Cooperative shall distribute the assets of the Cooperative available for the payment of creditors in accordance with the Second Schedule.
• (2)Subparagraph (1) is subject to the provisions of this
• Schedule.
• (3)This paragraph applies to a Cooperative in respect
• ofwhich a liquidator is appointed.
• (4)Ifaperson (whether or not a landlord or person entitled to rent) has distrained on the property of the preceding the date onwhich aliquidator was been appointed,that property,or the proceeds of its sale,is charged for the benefit of the Cooperative with thc preferential debts of the Cooperative to the extent that the Cooperativesassets are for the time being insufficient to satisfy them.
• (5)If,because ofa charge under subparagraph (2),a person surrenders property to the Cooperative or pays money to the Cooperative,theperson ranks,in respect of the amount of the proceeds of sale of the propertyby the liquidator,or the amount money paid,as a preferential creditor of the Cooperatives,except as against so much of the Cooperative's property asis available for the payment of preferential creditors because of the surrender or payment.
• (6)This paragraph does not limit the effect of
• paragraph4.
• 13.(1)The expenses of liquidating a co-operative,so far asthe assets of the Cooperative available forpayment ol general creditors are insufficient to meet those expenses, have priority over any claims to property comprised in or

General provisions on Preferentinl debts

Expenses of liqaidation to hive pnority over claims under floating charge.

subject to any floating charge created by the Cooperative

• (2)In subparagraph (1),the reference to claims to property comprised in or subject to a floating charge is to the claimsof
• (a) the holders of debentures secured by.or holders of. the floating charge:and
• (b)any preferential creditors entitled to be paid out of
• that property inpriority to them.
• 3)Provision may be made restricting the application prescribed by the Regulations,to expenses authorised or
• ofsubparagraph (l).in such circumstances as may be approved-
• (a)by the holders of debentures secured by.or holders
• of.the floating charge and by any preferential creditors entitled to be paid in priority to them:or
• (b)by the Cooperative Tribunal.
• (4)References in this paragraph to the expenses of the liquidation are to all expenses properly incurred in the liquidation,including the remuneration of liquidator.
• 14.(l) The liquidator of a Cooperative may.by the giving such notice asmay be prescribed by the Regulations, disclaim any onerous property and may do so even if the liquidator has taken control of it,tries to sell it.or otherwise exercised rights ofownershipinrelation to it.
• (2)The following is onerous property for the purposes of this paragraph-
• (a)an unprofitable contract:or
• (b)any other property of the Cooperative that is
• unsalable or not readily saleable or is such that it maygive rise to a liability to pay money or perform any other onerous act.
• (3)A disclaimer under this paragraph-
• (a)operates so as to determine,as from the date of the disclaimer,the rights,interests and liabilities of the Cooperative in or in respect of the property
• disclaimed;but

liquidatorlo disclain onerous

Powerof property

• (b) does not,except so far as is necessary for the purpose of releasing the Cooperative from any liability.affect the rights or liabilities of any other person.
• (4)A notice of disclaimer may not be given under this paragraph in respect of any property if-
• (a)a person interested in the property has applied in writing to the liquidator,or a predecessor of the liquidator,requiring the liquidator or liquidator's predecessor to decide whether the property will be disclaimed ornot:and
• (b)twenty-eight days from and including the date on which that application,was made or such extended period as the High Court may allow,has expired without a notice of disclaimer having been given under this paragraph in respect of the property.
• (5)A person who has sustained loss or damage in consequence of the operation of a disclaimer under this paragraph is a creditor ofthe Cooperative to the extent of the loss or damage and accordingly may prove for the loss ordamage in the liquidation.
• 15.The disclaimer under paragraph 14 ofany property comprising a leasehold interest does not take effect unless a copy of the disclaimer has been served (so far as the liquidator is aware of their addresses)on every person claimingunder the Cooperative as under-lessee or mortgagee andeither-
• (a)an application under paragraph 18(general powers oftheCooperative Tribunalinrespect of disclaimed property) has not been made with respect to that property within fourteen days from and including the date on which the last notice served under this subparagraph was served;or
• (b)if such an application is made that Tribunal makes an order directing the disclaimer to take effect.
• 16.(1) If the Cooperative Tribunal makes an order it may also,instead of or in addition to any order it makes under paragraph 18,make such orders with respect to fixtures,tenant's improvements and other matters arising out ofthe lease asit considers appropriate.

Spepial provisions relatingto disclaimerof leaseholds.

Orderson fixtures,tenant's

improvement etc.

• (2)If,as a result of the disclaimer under paragraph 15
• ofland subject to a rent charge,the land vests by operation oflaw in aperson,the person is not subject to any liability in respect of amounts becoming due under the rent charge except amounts that become due after the proprietor (or some person claiming under or through the proprietor)has taken possession or control of theland or has occupied it.
• 17.(1)The reference in sub-paragraph (l) to a person includes the State and to any a successor in title to the person.
• (2)This paragraph and paragraph 19 apply to property that the liquidator of a Co-operative has disclaimed in
• accordance with paragraph 15.
• (3)An application to the Cooperative Tribunal for an
• (a) any person who claims an interest in the disclaimed property:or
• disclaimedproperty,other than aliability discharged by the disclaimer.
• (4)On the hearing of an application made under subparagraph (2),the Cooperative Tribunal may make an order,on such terms as it considers appropriate,for the vesting of the disclaimed property in,or for itsdelivery to-
• (a)a person entitled to it or a trustee for such a person; or
• (b)a person subject to such a liability as is referred to in subparagraph (2)(b)or a trustee for such a person.
• (5)The Cooperative Tribunal may make an order under subparagraph (3)(b)only if it appears to that Tribunal that it
• person subject to the liability in respect of the disclaimer.
• (6)The effect of an order made under this paragraph is paragraph 15(6) the extent of any loss or damage sustained
• to be taken into account in assessing for the purpose of by a person in consequence of the disclaimer.

General Powers ofthe Cooperative Tnbunal in disclaimed property.

• (7)It is not necessary for an order under this paragraph
• 18.(l) The Cooperative Tribunal may not make an order under paragraph 17 vesting a leasehold interest in a person claiming under the Cooperative as under lessee or
• mortgagee except on terms making the person
• (a)subject to the same liabilities and obligations as the Cooperative was subject to under the lease at the time of the liquidators appointment;or
• (b)if that Tribunal considers appropriate subject to the same liabilities and obligations as the person would be subject to if the lease had been assigned to the person at that time.
• (2)For the purposes of an order under paragraph 18 relating only to the part of the property comprising a lease, the requirements of subparagraph (1) apply as if the lease was the only property to which the orderrelates.
• (3)If subparagraph (1) applies and no person claiming under the Cooperative as under lessee or mortgagee is willingto acceptan order under paragraph 18 on the terms required under that subparagraph.the Cooperative Tribunal may make an order vesting the Cooperative's interest in the the Cooperative) to perform the lessee's covenants under the
• lease in any person who is liable(whether personally or in a lease.
• (4)The Cooperative Tribunal may vest that estate and interest in such a person frecd and discharged from all estates,encumbrances and interests created by the Cooperative,if subparagraph (l)applies andaperson claimingunder the Cooperative as under lessee or mortgagee declines Io accept an order under paragraph 18 that person is excluded from all interest in the property.

19.(1)If-

(a)a creditor-

• (ihas issued execution against the property ofa
• Cooperative:or
• (ii)has attached any debt due to it:and

Powers of the Cooperative Tribunalin opodsat leascholdsheld byaCooperative in liquidation,

Execution by

creditor etc.

• (b)a liquidator is subsequently appointed in respect of
• the Cooperative,

the creditor is not entitled to retain the benefit of the creditor has completed the execution or attachment before

execution or attachment against the liquidator unless the the commencement of theliquidation.

• (2)However-
• (a)a person who,under a sale conducted by the enforcement officer or other officer charged with the execution ofthe writgoods of a co-operative on which execution has been levied,purchases the goods ingood faith acquires agood title to them as against the liquidator;and
• (b)the Cooperative Tribunal may set aside the rights conferred on the liquidator by subparagraph (1)in favour ofthe creditor to such extent and subject to such terms as it considers just.
• (3)For purposes of this Act-
• (a)an execution against goods is completed by seizure and sale;
• (b)an attachment ofa debt is completed byreceipt of
• the debt:and
• (c)an execution against land is completed by its seizure or by any other event prescribed by the Regulations for thepurposes of this paragraph.
• 20.(l)This paragraph applies if-
• (a)a Cooperative'sgoods are taken in execution:and
• (a)before their sale or the completion of the execution (whether by the receipt or recovery ofthe full amount of the levy) notice is served on the judicial enforcement officer charged with execution of the writ or othcr process that a liquidator has been appointed in respect of
• the Cooperative.
• (2)If so required,the judicial enforcement officer concerned shall deliver the goodsand any money seized or received inpart satisfaction of the execution to the liquidator.

Dutes of judicial enforcement withexecution of writs and s involving Cooperative in liquidation

• (3)However,the costs of execution are a first charge on the goods or money so delivered,and the liquidator may sell the goods,or a sufficient part of them for the purpose of satisfying the charge.
• (4)If,under an execution in respect of a judgement for amount exceedingfifty thousand shillings.a Cooperative'sgoods are sold or money ispaid in order to avoid sale,thejudicialenforcement shall-
• (a)deduct the costs of the execution from theproceeds of sale or themoney paid;and
• (b)retain the balance for not less than fourteen days.
• (5)If,within that fourteen-day period-
• (a)notice is served on the judicial enforcement officer to the effect that-
• (i)an application for the liquidationof the Cooperative has been made been made:
• (ii) a meeting has been convened at which there is proposed a resolution for voluntary:
• (b)an order is made ora resolution passed,

that officer shall pay the balance to the liquidator,who is entitled to retain it,as against the execution creditor.

• (6)The rights conferred by this paragraph on the liquidator may be set',aside by the Cooperative Tribunal in favour of the creditor to such extent and subject to such terms as that Tribunal considers appropriate.
• (7)The Regulations may provide for the amount
• specified in subparagraph (4) to be increased or reduced.
• 21.(1) A person who is as against,the liquidator of a Cooperative entitled to the benefit or subject to the burden ofa contract made with the Cooperative,may make an application for an order under subparagraph (2).
• (2)On the hearing of an application made under subparagraph (l).the Cooperative Tribunal may make an orderrescinding the contract on such terms as to payment by or toeither party ofdamagesfor thenon-performance of the contract,orotherwise,asthatTribunal considers appropriate.

Powerofthe Cooperative Tnbunal to rescind contracts cntered into by Cooperative in liqaidation.

• (3)Damages payable to a person under the order are provableby the person as a debt in the liquidation.
• 22.(l)A Cooperative in respect ofwhich a liquidator is appointed shall ensure that-
• (a)every invoice,order for goods or services,business letter or order form(whether in hard copy. electronic or any other form) issued by or on behalf ofthe Cooperative,or aliquidator,ofthe Cooperative or areceiver ormanager ofthe Cooperative'sproperty:and
• (b)each of the Cooperative's websites,states that the Cooperative is in liquidation.
• (2)If the Cooperative failsto comply with a requirement under subparagraph (l),the Cooperative,and each officer of the Cooperative who is in default,commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings.
• (3)If,after a Cooperative or any of its officers is convicted of anoffenceunder subparagraph (2),the Cooperative continues to fail to comply with the relevant requirement,the Cooperative,and each officer of the Cooperative who is in default,commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.
• 23.(1) When a liquidator is appointed in respect of a
• Cooperative,interest is payable in accordance with this paragraph on any debt proved in the liquidation of the Cooperative's assets,including so much of any such debt as represents interest on the remainder.
• (2)The liquidator shall,before applying any surplus remaining after the payment of the debts proved in the liquidation for any other purpose,apply the surplus in paying interest on those debts in respect of the periods during which they have been outstanding since the liquidator was appointed.
• (3) All interest under this paragraph ranks equally whether or not the debts on which it ispayable rank equally

Cooperative in liquidation required to state that it is in Hiquidations in all invoices, lerters and other commuaications.

Interest on debts to be payableif

surplus permits.

• (4)The rate of interest payable under this paragraph in respect of a debt is the rate for the time being prescribed by
• the Regulations for the purposes of thisparagraph
• 24.When a liquidator is appointed in respect ofa Cooperative,the following documents are exempt from stamp duty-
• (a)everytransferrelating solely tofreeholdor
• leasehold property.or to any interest in,any real or personal Iproperty,that forms part of the Cooperative's assets and that,after the execution of the transfer.either at law of in equity,is or remains part of those assets:and
• (b)every writ,order or other document relating solely to the property of the Cooperative,or to any
• proceedingrelatingto its liquidation.
• 25.When a Cooperative is in liquidation.all records of the Cooperative and of the liquidator are evidence of the truth of all matters purporting to be recorded in them,until
• the contrary is proved.
• 26.(1)If the liquidation ofa Cooperative is not completed within twelve months after its commencement: liquidator shall,at such intervals as may be prescribed by the Regulations and until the liquidation is completed,lodge withthe Commissioner a statement containing the particulars so prescribed with respect to the proceedings in, and position of.the liquidation.
• (2)A liquidator who fails to lodge a statement as
• required by subparagraph (l) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.
• (3)If,after being convicted of an offence under subparagraph (2),a liquidator continues to fail to lodge a statement as required by subparagraph (l),the liquidator commits a further offence on each day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand shillings for each such offence.
• 27.(l)The Cooperative Tribunal may-
• (a)as to allmatters relating to the liquidation ofa
• Cooperative.have regard to the wishes of the

Certain documents relaringto Cooperative in liquidation to be exempt from slamp duty

Records ofa Cooperative in liqaidation tobe evidenee.

Liquidator to pouad apo stalements with the Commissioner withrespeet to cutrent position ofliqaidation.

Tribunal may order meetings to be held to

Bscertain wisbes sp

• creditors or contributors (as proved to it by any contributors, sufficient evidence);and
• (b)if it considers appropriate,for the purpose of
• ascertaining those wishes-
• (i)direct meetings of the creditors or contributors to be convened,held and conducted in such
• manner as that Tribunal directs;and
• such meeting and report the result of it to that
• Tribunal.
• (2)In the case of creditors,the Cooperative Tribunal shall take into account the value ofeach creditor's debt.
• (3)In the case of contributories:the Cooperative
• Tribunal shall take into account the number of votes conferred oncach contributor.
• 28.In all proceedings under this Schedule,all tribunals.
• all judges and persons acting judicially,and all officers of a tribunal,or employed in enforcing the process of a Tribunal or tribunal,are required to take judicial notice of
• (a)the signature of an officer of the Cooperative
• Tribunal:and
• (b)the official seal or stamp of thatTribunal affixed to
• or impressed on any document made.issued or signed under a provision of this Act,or any official copy of such a document.
• 29.(1)An Affidavit required to be sworn under or for thepurposes of this Schedule may be sworn inKenya-
• (a)before any tribunal, judge or person lawfully
• authorised to take and receive affidavits:or
• (b)before any of anydiplomat representing the
• Government of Kenya in any place outsideKenya.
• (2)All courts,tribunals,judges and other persons acting judicially are required to take judicial notice of the seal or stamp or signature of any such Tribunal,tribunal. judge.person or diplomat affixed to,impressed on,or subscribed to any such affidavit,or to any other document to
• be used for the purposes of this Schedule.

Jadicial notice to be takenof documentsof Cooperative Tnhunpl

Affidavits purposes ofthis

reqired to be: soornfor Schedule.

• 30.(1) This paragraph applies to a Cooperative in
• respect of which a liquidator is appointed.
• (2)If a person has control over money.documents or other property towhich the Cooperative appears to be entitled,the Cooperative Tribunal may require that person immediately,or within such period as that Tribunal may direct,to pay the money or deliver the documents or other property documents to the liquidator.
• (3) Subparagraph(4) applies if the liquidator-
• (a)seizes or disposes of property that is not property of
• the Cooperative;and
• (b)at the time of seizure or disposalbelieves on reasonable grounds that the liquidator is entitled
• (whether under an order of that Tribunal or otherwise) to seize or dispose of that property.
• (4)When this subparagraph applies,the liquidator-
• (a)is not liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the liquidator's own negligence;and
• (b)has a lien on the property,or the proceeds of its sale,for such expenses aswere incurred in connection with the seizure or disposal.
• 31.(l)When a liquidator is appointed in respect of a
• Cooperative,this paragraph applies to the following persons
• (a) those who are or have at any time been officers of theCooperative:
• (b)those who have taken part in the formation of the Cooperative at any time within the twelve months
• immediately preceding the effective date;
• (c)thosewho are inthe employment of the Cooperative,or have been in its employment (including employment under acontract for services)within that period,and are in the liquidator's opinion capable of giving the required information;

Realising jofuadoud aliquidator is

Coopenative in appointed.

Duty of certain persons to cooperale with liquidator.

• (d) those who are,or have within that period been. officers of,or in the employment of,another Cooperative that is,or within

period was,an officer of the relevant Cooperative.

• (2)A person to whom this paragraph applies shall-
• (a)give to the liquidator such information concerning the Cooperative and its promotion,formation, affairs or property as the liquidator may reasonably require;and
• (b)appear before the liquidator at such times as the liquidator may reasonablyrequire.
• (3)A person who,without reasonable cause ,fails to comply witha requirement imposed by this paragraph commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.
• (4)If,after being convicted of an offence under subparagraph (3),the person continues to fail to comply with the relevant requirement,the person commits a further offence on each day on which the failure continues and on conviction is to fine not exceedingfifty thousand shilling for each such offenice.
• "employment"includes (5)Inthis paragraph, employment under a contract for services.
• 32.(1) This paragraph applies to a Cooperative in
• respect ofwhich a liquidator is appointed.
• (2)A lien or other right to retain possession ofany of the documents of the Cooperative is unenforceable to the extent that its enforcement would denypossession ofany of the documents to the liquidator.
• (3)Subparagraph (2)does not apply toa lien on documents that confera title to property and are held as such
• 33.(1) This paragraph applies to a Cooperative in respect of which a liquidator is appointed.
• (2)If a request is made by or with the consent of the liquidator for thegiving.after the date onwhichliquidator is

Lien or right in respeet of the documenbcf Cooperstive in documents.

Supply of utility servicesto

Cooperatives in liquidation or under administration.

appointed,of any of the supplies specified in subparagraph

(3),the supplier-

• (a)may make it a condition of the giving of the supply
• that the liquidator personally guarantces the payment of any charges in respect of the supply; but
• (b)may not make it a condition for providing the supply.or take any action that has the effect of making it a condition for providing the supply,that any outstanding charges are to be paid in respect of a supply provided to the Cooperative before the effectivedate.
• (3)The supplies referred to in subparagraph (2)are-
• (a)a supply of gas bya gas supplier;
• (b)a supply ofelectricity by an electricity supplier:
• (c)a supply of water bya water supplier,and
• (d)a supply ofcommunications services by aprovider ofapublictelecommunication or electronic communications service.

SECONDSCHEDULE

PREFERENTIALDEBTS

• 1.The debts of a cooperative in respect of which a liquidator is appointed are payable in the orderofpriority in which they are listed in paragraphs 2,3 and 4.
• 2.(l) The expenses of the liquidation have first priority and are payable inthe order in which they are listed in subparagraph (2)(a)to (c).
• (2)For the purposes of subparagraph (l),those
• expensesare as follows-
• (a) the remuneration of the liquidator,and the fees and expenses properly incurred by the liquidator in performing out the duties imposed,and exercising
• the powers conferred,by or under this Act;
• the Cooperative for the benefit of the creditors of the Cooperative by the payment of money or the giving of an indemnity-
• (i) the amount received by the liquidator by the realisation of those assets,up to the value of
• that creditor's unsecured debt;and
• (i) the amount of the costs incurred by that creditor in protecting and preserving those
• assets.
• 3.(1)After the claimsreferred to in paragraph 2have cen paid,claims in respect of the following debts have econd priority to the extent that they remain unpaid-
• (a)all wages or salaries payable to employees in respect of services provided to the Cooperative during the four months before the date of appointment of the liquidator:
• (b)anyholiday payable toemployees onthe termination of their employment before that
• appointment or during the liquidation;
• (c)anycompensation for redundancy owed to employees that accrues before that appointment or during the liquidation;

Priority of paymeetslo preferential creditors.

First priority

claims.

Second priority claims.

• (d)amounts deducted by the Cooperative from the wages or salaries of employees in order to satisfy their obligations to other persons (including amounts payable to theKenya Revenue Authority in accordance with Income Tax Act):
• (e)any reimbursement or payment provided for,or ordered by the Industrial Tribunal under the Labour Institutions Act,2007 to the extent that the reimbursement or payment does not relate to any matter specified in the Labour Relations Act 2007 in respectofwages or other moneyor remuneration lost during the four months before that appointment or during theliquidation;
• (f)all amounts that are by any other written law required to be paid in accordance with the priority established by this sub-clause paid by the buyer to a seller on account of the purchaseprice ofgoods.
• (2)The total amount to which priority is to be given under any.or all,of subparagraphs(1)(a) to (e)may not,in the case of any one employee,exceed two hundred thousand shillings as at the commencement of the liquidation.
• (3)The amount specified in subparagraph (2)is
• subject to adjustment as follows-
• (a) subject to sub-clause (d)the Cabinet Secretary shall,by order published in the Gazete,make an adjustment that has effect for the three-year period from and including 1st July 2015 and for each subsequent three-year period;
• (b)subject to sub-clause (d)the Cabinet Secretary shall make such an order within three months after the end of an adjustment period;
• (c)each adjustment is required to reflect any overall percentage increase,over the relevant adjustment period,in average weekly earmings.calculated by reference to the last Employment Survey or similar employment index published byKenya Bureau of Statistics or,if that survey ceases to be published a survey certified by the Government Statistician

• asan equivalent to that survey within the relevant

adjustment period;

• (d)if,in an adjustment period,there is no change,or an overall decrease,in the percentage movement in average weekly earmings (total,private sector),as so calculated,the Cabinet Secretary may not make an adjustment for that adjustment period:
• (e)if,inaccordance with sub-clause (d),no
• adjustment is made,the Cabinet Secretary shall ensure that the next adjustment made for any later adjustment period reflects any overall percentage increase in average weekly earnings (total,private sector) between the date of thelast adjustment and the end of the adjustment period for which the subsequent adjustment is tobe made;
• (f)alladjustments are cumulative and are to be rounded to the nearest shilling with fifty cents beingrounded toone shilling:and
• (g)any correctionto the Quarterly Employment Survey on which an adjustment is based is to be disregarded until the adjustment that takes effect in the subsequent adjustment period,which must reflect the corrected information in the calculation of that adjustment and must otherwise be made in accordance with this subparagraph
• (4)The amount specified in subparagraph (2),or that amount as adjusted under subparagraph (3),on the date of commencement of the liquidation,continues to apply to that is prescribed after the date of commencement of the liquidation.
• (5)In this paragraph-

"adjustment period"means the three-year period beginning on 1July 2012 and each subsequent three-year period;

for wages or a salary under a contractof service:and includes a home worker specified in of the Employment

Act,2007,but does not include a person who is,or was at any time during the twelve months before the appointment ofthe liquidator of the Cooperative,a member of the committee of the Cooperative,or a nominee or relative of. ora trustee for,such a member:

"wages or salaries"in relation to an employee, includes--

• (a)remunerationin the form of commissionor
• payable for time or forpiece work:and
• (b)remunerationpayable to an employee asholiday or sickness pay or in respect of absence from work
• for any other goodreason.
• 4.After the claims referred to in paragraphs 2and3 have been paid,the claims in respect of the following debts have thirdpriority to the extent that theyremain unpaid-

Third priority

claims.

• (a)tax deductions made by the Cooperative under the

Cap470.

• pay as you earm rules of the income Tax Act;
• (b)non-resident withholding tax deducted by the Cap470. Cooperative under then Income Tax Act:
• (c)resident withholdingtaxdeductedby the
• Cap470. Cooperative under the Income Tax Act;and
• (d)duty payable within the meaning of section 2(l) ofCap.472.
• the Customs and Excise Act.
• 5.Claims having the same priority rank equally among themselves and,subject to any maximum payment levelprescribed by orunder any written law,arepayable in full,unless the property of the Cooperative is insufficient to
• meet them,in which case they abate in equal proportions.

Unsatisfied claims ofthesame priority to abate equally.

THIRDSCHEDULE

(s.117)

OFFENCESRELATINGTO CONDUCTBEFORE ANDDURINGLIOUIDATIONANDCRIMINAL PROCEEDINGSRELATINGTOTHOSEOFFENCES

• 1.(l)This paragraph applies inrelationto a Cooperative in respect ofwhich a liquidator is appointed.
• (2)An officer or past officer of the Cooperative commits an offence if,within the twelvemonths immediately preceding the appointment of the liquidator. the-officer orpast officer-
• (a)concealed any part of the Cooperative's property to
• the value of fifty thousand shillings or more;or concealedanydebtdue toorfrom the Cooperative;
• (b)fraudulently removed any part of the Cooperative's property to the value of fifty thousand shillings or more:
• (c)concealed.destroyed,mutilated or falsified any document affecting or relating to the Cooperative's affairs or property:
• (d)made any false entry in any document affecting or relating to the Cooperative's affairs or property;
• (e)fraudulently parted with,altered or made any
• omission in any document affecting or relating to the Cooperative's affairs or property:or
• (f)pawned,pledged or disposed of any property of
• the Cooperative that has been obtained on credit and has not beenpaid for.
• (3)Subparagraph (3)(f) does not apply if the pawning pledging or disposal was done in the ordinary course of the Cooperative'sbusiness.
• (4)An officer or past officer of the Cooperative also commits offence-
• (a)if,within the twelve months'period referred to in subparagraph (2).the officer or past officer has been privy to the doingby othersof any of the acts

Offence involving commission of fradulent acts in anticipation of liquidation.

• referred to in clauses (c),(d) and (e)of that subparagraph;or
• (b)if,at any time after the commencement of the liquidation,the officer or past officer-
• (i)does any of the acts referred to in clauses(a)to ()of that subparagraph;or
• (ii)is privy to the doing by others of any of the acts referred to in clauses (c)to (e)of that subparagraph.
• (3)In a prosecution for an offence under-
• (a)clause (a)or(f)of subparagraph (2);or
• (b)subparagraph (4) in respect of an act referred to in either of those two clauses,it is a defence to prove that the officer or past officer had no intention to
• defraud.
• (4)If property is pawned,pledged or disposed of in cireumstances that constituteanoffence under subparagraph (2)(f),a person who takes in pawn or pledge or otherwise receives,the property knowing it to have been pawned,pledged or disposed of in such circumstances. commits an offence.
• (5)A person who commits an offence under this paragraph is liable on conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceedingfiveyears,or toboth.
• (6)The Regulations may increase or reduce the
• amounts specified in subparagraph (2)(a) and (b).
• 2.(l)This paragraph applies in relation toa Cooperative in respect of which a liquidator is appointed.
• (2)An officer or past officer of the Cooperative commits an offence if the officer or past officer-
• (a)has made or caused to be made a gift or transfer of,or charge on,or has caused or connived at the

Offences involving transactions to defraad creditors of Cooperative in liquidator is appninted.

• levying of execution against,the Cooperative's property:or
• (b)has concealedor removed any part of the Cooperative's property since,or within the two
• months preceding.the date of any unsatisfied obtained against the Cooperative.
• (3)A person is not liable to be charged with an offence under subparagraph (2)if the conduct allegedto constitute the offence occurred more than five years before the commencement of theliquidation.
• (4)In a prosecution for an offence under subparagraph (2)(a),it is a defence to prove that the officer or past officer did not,at the time of the alleged offence,have any intent to defraud the Cooperative'screditors.
• (5)An officer or past officer of Cooperative who commits an offence under this paragraph is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding two years,or to
• both.
• 3.(1)This paragraph applies in relation to a Cooperative for which a liquidatoris appointed.
• (2)An officer or past officer of the Cooperative commits an offence if the officer or past officer-
• (a)does not to the best of the officer's or past officer's knowledge and belief fully and truly disclose to the liguidator all of the Cooperative'sproperty.and how and to whom and for what consideration and when the Cooperative disposed of any part of that property (except such part as has been disposed of in the ordinary courseofthe.Cooperative's business);
• (b)does not deliver up to the liquidator,or in accordance with the directions of the liquidator,all such part of the Cooperative's property as is under the control of the officer or past officer,and that the liquidator is required by law to deliver up:

Offences involving misconduct commited in course of liquidation of.a

Cooperative.

• (c)fails to deliver up to the liquidator (or as the liquidator directs)all documents under the control ofthe officer or past officer that belong to the Cooperative and that the officer or past officer is
• required by law to deliver up:
• (d)knowing or believing that a false debt has been proved by any person in the liquidation,fails to inform theliquidator of thatknowledgeorbelief as soon as practicable;or
• (e)after the appointment of the liquidator,prevents the production of anydocument affectingor
• relating to the Cooperative's affairs or property.
• (3)An officer or past officer also commits an offence officer attempts to account for any part of the Cooperative's
• if,after the liquidator is appointed,the officer or past property by means of fictitious losses or expenses.
• (4)An officer or past officer is presumed,in the
• absence ofevidence to thc contrary.to have committed an offence under subparagraph (3) if the officer orpast officer hasmade an attempt of the kind referred to in that subparagraph ata meeting of the Cooperative's creditors held within the twelve months immediately preceding the appointmentof theliquidator.
• (5)In a prosecution for an offence under subparagraph (2)(a).(b)or (c).it is a defence to prove that the officer or
• past officer hadno intention to defraud.
• 4.(l) This paragraph applies in relation to a
• Cooperative in respect ofwhich a liquidator is appointed.
• (2)An officer or contributor of the Cooperative commits an offence if,during the liquidation,the officer or contributor,withintenttodefraud ordeceive the Cooperative or any other person-
• (a) destroys, damages,alters or falsifies a security or
• other document of the Cooperative;or
• (b)makes or is privy to the making ofa false or fraudulent entry in any record or other document
• of the Cooperative.

Offence to falsify documents in relation to 4.(1) Cooperative in respectofwhich liquidator is appointed.

• (3)Apersonwhocommitsan offenceunder subparagraph (l)is liable on conviction to a fine not exceeding two million shillings or to imprisonment for a term not exceeding five years,to both.
• 5.(l)This paragraph applies to a Cooperative in
• respect of which a liquidator is appointed.
• (2)An officer or past officer of the Cooperative commits an offence if,while theliquidatoris appointed,the officer or past officer makes a material omission from a statement relatingto the Cooperative's affairs.
• (3)An officer orpast officer of the Cooperative is also taken to have committed an offence under subparagraph (2) if,before the appointment of the liquidator,the officer or past officer has made any materialomission from a statement relating to the Cooperative's affairs.
• (4)In a prosecution for an offenceunderthis paragraph,it is a defence to prove that the officer or past officerhad no intention to defraud
• (5)A person who commits an offence under this paragraph is liable on conviction to a fine not exceeding onemillion shillings or toimprisonment for twelvemonths,
• or toboth.
• 6.(l)This paragraph applies to a Cooperative in respect of which a liquidator is appointed.
• (2)An officer or past officer of the Cooperative commits an offence if
• (a)the officer or past officer makes afalse representation;or
• (b)does any other fraudulent act,for the purpose of obtainingthe consent of the Cooperative's creditors or any of them to an agreement relating to the Cooperative's,affairs or to itsliquidation.
• (3)An officer or past officer of the Cooperative is also tobetakentohave committedanoffence under subparagraph (2)if.before the commencement of the liquidation.the officer orpast officer-

Offence tomake matenal omission of Cooperative in

from statement liquidation.

Oftence to make faslse representations to creditors of Cooperative in Liquidation.

• (a)made any false representation;or
• (b)did any other fraudulent act,for the purpose of obtaining that consent.
• (4)An officer or past officer who commits an offence under this paragraph is liable on conviction to a fine not exceeding two million shillings and to imprisonment for a term not exceeding five years,or to both.
• 7.(1)This paragraph applies to the following
• persons-
• (a)an officer or past officer of a Cooperative,that is in liquidation (whether by the Commissioner or voluntarily);
• (b)a person who is or has acted as the liquidator of
• such a Cooperative;
• (c)not being a person referred to in paragraph (a)or
• (b),a person who has been concerned in the promotion,formation or management of such a Cooperative.
• (2)If,during the course of the liquidation of a Cooperative,it appears that a person to whom this
• paragraphapplieshas ormayhave-
• (a)misapplied or retained,or become accountable for,
• money orproperty of the Cooperative;or
• (b)commited misfeasance or abreach of any fiduciaryor other duty inrelation to the Cooperative,the Commissioner,the liquidator of the Cooperative or a creditor or contributor of the Cooperative may make an application to that Tribunaltoconductan examination under subparagraph (6).
• (3)The reference in subparagraph (2) to misfeasance orabreach ofany fiduciary orother duty in relation to the Cooperative includes,in the case of a person who has acted as liquidator of the Cooperative,any misfeasance or breach of any fiduciary or other duty in connection with the carrying out of theliquidators functions as liquidator of the Cooperative.

Power of the Cooperative Tribunal to make orders committee members,

liquidasors.

• (4)An application under subparagraph (2)may be made in relation to a person who has acted asliquidator of the Cooperative only with the leave of the Cooperative Tribunal given after theperson has been released from the responsibilities ofliquidator.
• (5)Acontributor may makean application under subparagraph (2)only with the leave of the Cooperative
• Tribunal.
• (6)On the hearing of an application made under subparagraph (2),the Cooperative Tribunal may undertake anexamination into the conduct of the person inrelation to whom the application was made.
• (7)If,at the conclusion of the examination,the Cooperative Tribunal finds that the person examined has engaged in conduct ofa kind referred to in subparagraph (2),it may make an order compelling the person
• (a)to repay,restore or account for the money or property or any part of it,with interest at such rate as thatTribunal considers appropriate;or
• (b)to contribute such amount to the Cooperative's assets as compensation for the misfeasance,breach offiduciary or other duty as the Cooperative Tribunal considers fair and reasonable.
• 8.(1)Liquidator of aCooperative maymake an application to the Cooperative Tribunal for an order under subparagraph(2)if-
• (a) in the course of the liquidation of the Cooperative, the liquidator forms the view that a business of the any other person,or for any fraudulent purpose:
• Cooperative has been carried on with intent to defraud creditors of the Cooperative or creditors of pue
• (b)the liquidator believes that specifiedpersons participated directly or indirectly in the business with the knowledge that the business was being
• carried on in that manner.
• (2)If,onhearing an application made under subparagraph (l).the Cooperative Tribunal finds that the persons specified in the application did in fact participate

Powerofthe Cooperative Tribunal to mske ordersagaitst officersof Cooperative and otbers found to have participated infraudulem tradingby Cooperative.

(directly or indirectly)in a business of the Cooperativewith the knowledge that it was being carried on in the manner referred to in subparagraph (l)(a).it may order those persons (orany ofthem) to make such contributions to the Cooperative's assets as the Cooperative Tribunal considers fair and reasonable.

• (3)The persons specified in an application made
• under subparagraph (2)are entitled to be served with a respondents at the hearing of the application.
• (4)If the Cooperative Tribunal makes an order against disqualifyingtheperson from-
• (a)being or acting as a member of the committee of a
• Cooperative;
• (b)being or acting as aliquidator.provisional liquidator or administrator of a Cooperative:
• (c)being or acting as a supervisor of a voluntary
• arrangement approved by the Cooperative;or
• concemed inthepromotion. formationor management of a Cooperative.for such period,not exceeding fifteen years,as may be specified in the order.
• 9.(l)Thisparagraph applies-
• (a) to a Cooperative in respect of which a liquidator is appointed;and
• (b)to a person who.at a time before the liquidator
• was appointed,was an officer of the Cooperative.
• (2)For thepurposes of this paragraph-
• (a)a Cooperative is in insolvent liquidation if,at the time the liquidation commences,its assets are insufficient for the payment of its debts and other liabilities and the expenses of the liquidation:and
• (b)the person in respect of whom an application is made under subparagraph (3)is the respondent to the application.

Power of the Cooperative Tribunal to make orders againstofficersot Cooperative engaging in wrongful trading.

• (3)If,inthecourseof theliquidation of a Cooperative,it appears to the liquidator that a person to whom this paragraphapplies knew or ought tohave known that there was no reasonable prospect that the Cooperative would avoid being placed in liquidation,the liquidator may make an application to the Cooperative Tribunal for an orderundersubparagraph (5).
• (4)The Cooperative Tribunal may hear an application made under subparagraph (2) only if the person in respect ofwhom the application was made has been served with a copy of the application.
• (5)If,on the hearing of an application made under subparagraph(3).the Cooperative Tribunalmay,if satisfied that,at the relevant time,the respondent knew or ought tohaveknown that therewasno reasonable prospect that the Cooperative would avoid beingplaced in insolvent liquidation,make an order declaring the respondent to be liable tomake such contribution to the Cooperative's assets as that Tribunal considers appropriate.
• (6)However,the Cooperative Tribunal may not make such an order if satisfied that the respondent took such steps to avoid potential loss to the Cooperative's creditors as the respondent ought reasonably to have taken.
• (7)If the Cooperative Tribunal makes an order against aperson under subparagraph (5).it may also make an order disqualifyingtheperson from-
• (a)being or acting as a member of the committee of a Cooperative ora director of a company:
• (b)being or actingas aliquidator,provisional liquidator or administrator of a Cooperative;
• (c)being or acting as a supervisor of a voluntary arrangement approved by the Cooperative:or
• (d)in any way,whether directly or indirectly,being concernedinthe promotion, formationor management ofa Cooperative or a company.for such period,not exceeding fifteen years,as may be specified in the order.

• 10.(l) On the hearing ofan application under
• paragraph 8orparagraph 9 the liquidatormay personally give evidence or call witnesses.
• (2)If the Cooperative Tribunal makes an order under paragraph 8or 9.it may make such further orders as it considers appropriate for giving cffect to the order.
• (3) In particular,the Cooperative Tribunal may-
• (a)provide for the liability of any person under the order to be a charge-
• (i)on any debt or obligation due from the
• Cooperative to theperson:or
• (ii)on any mortgage or charge or any interest in a Cooperative held by or vested in the person,or
• mortgage orchargeonassetsofthe any other person on the person's behalf,or any other person who claims asan assignee from or through the person liable or any person acting on thatperson's behalf:and
• (b) from time to time make such further order as may
• be necessary for enforcing a charge imposed under paragraph (a).
• (4)For the purposes of subparagraph (3)(a)(i),

"assignee"-

• (a)includes a person to whom or in whose favour,by
• the directions of the person made liable,the debt. obligation,mortgage or charge was created,issued ortransferred or the interest created:but
• consideration not including consideration by way ofmarriage given in good faith and without notice ofany of the matters on the ground of which the orderis made.
• (5)If the Cooperative Tribunal makes an order under paragraph8or9 inrelation to apersonwho is acreditor of the Cooperative,it may direct that the whole or any part of any debt owed by the Cooperative to that person,and any
• interest on the debt,ranks in priority after all other debts

Suppkenentary provisionsrelating to proceedings under paragraphs 8and9.

• owed by the Cooperative and after any interest on those

debts.

• (6)The Cooperative Tribunal can make an order under paragraph 8or 9even if the person concernedmay be criminally liable in respect of matters giving rise to the makingofthe order.
• 11.(l) This paragraph applies to a person if
• (a)a Cooperative is in insolvent liquidation on or after
• the commencement of this paragraph:and
• (b)the person was a member of the committee of the Cooperative at any time during the twelve months immediately preceding the date on which the liquidation of the Cooperative commenced.
• (2)For the purposes of this paragraph,a name is a
• prohibited name in relation to such a person if
• (a)it is a name by which the Cooperative wasknown at any time during that period of twelve months;or
• (b)it is a name that is so similar to a name of the kind referred to in paragraph (a)as to suggest an association with the Cooperative.
• (3)Except with leave of the Cooperative Tribunal,or in such circumstances as may be prescribed by the Regulations,a person to whom this paragraph applies shall not at any time during the five years from and including the date on whichtheliquidation of the Cooperative commenced-
• (a)be amember of the committee of any other Cooperative that is known by aprohibited name;
• take part inthe promotion,formation or management of any such Cooperative;or
• (c)in any way directly or indirectly be concerned or take part in the carrying on of a business carried on otherwise than byaCooperativeundera prohibited name.
• (4)A person who contravenes this paragraph commits
• an offence and on conviction isliable to a fine not

Member of the commitee of Cooperative in liquidation being member of or being involved

insolvent prohibited from the commiltee of, with,any oer Cooperative that isknown bya prohibied mame exceeding one million shillings or to imprisonment for a termnot exceeding twelve months,or to both.

• (5)A reference in this paragraph,in relation to a time. toaname by which a Cooperative isknown isa reference to the name of the Cooperative at that time or to any name under which the Cooperative carried on business at that time.
• (6)For the purposes of this paragraph,a Cooperative isin insolvent liquidation if,at the time the liquidation commences,the Cooperative's assets are insufficient for the payment of its debts and other liabilities and the expenses of the liquidation.
• 12.(l) A person is personally responsible for all the relevant debtsof a Cooperativeif at any time the person-
• (a)is involved in the management of the Cooperative
• in contravention ofparagraph 1l;or
• (b)while is involved inthe management of the Cooperative, acts or iswilling to act on instructions given (without the leave of the Cooperative Tribunal by a person whom the person knows to be subject to a person to whom subparagraph (2)applies.
• (2)Subparagraph (l)applies tothe following persons-
• (a)a person who is involved in the management of the
• Cooperative in contravention ofparagraph 1l;
• (b)a person who is subject to a disqualification order ordisqualification undertaking,or toforeign restrictions,under Part X of the Companies Act,
• 2015,or
• (c)a person who is subject to any other restriction or disabilityof a kind prescribed by Regulations made for thepurpose of this section.
• (3)If,because of subparagraph (1),a person is personallyresponsibleforthe relevantdebtsofa Cooperative,the person is jointly and severally liable for those debtswith the Cooperative and any other person who, whether under this paragraph or otherwise,is so liable.

Circumstancesln whichpersonsare personally liable for debts of a Cooperative.

No.17 of2015.

• (4)For the purposes of this paragraph.the relevant debts ofa Cooperative are-
• (a)in relation to a person who ispersonally responsible under clause (a) of subparagraph (l), such debts and other liabilities of the Cooperative asare incurred at a time when the person was involved in the management of the Cooperative; and
• (b)in relation to a person who is personally responsible under clause (b)of that subparagraph, such debts and other liabilities of the Cooperative as are incurred at a time when the person was acting or was willing to act on instructions given asreferred to in thatparagraph.
• (5)For the purposes of this paragraph,a person is involved in the management of a co-operative if the person
• (a)is amember of the board of directorsor supervisoryboardor isanofficerofthe Cooperative;or
• (b) is concerned,whether directly or indirectly,or takes part,in the management of the Cooperative.
• (6)For the purposes of this paragraph,a person who, is involved in the managementofa Cooperative and has at any time acted on instructions given without the leave of the Cooperative Tribunal by another person whom the person knew at that time to be a persontowhom subparagraph(2) applies is presumed,unless the contrary is shown,to have been willing atany later time to acton any instructions given by that person.
• 13.(1)This paragraph applies to a Cooperative that is underinvestigation during liquidation.
• (2)Ifthe Cooperative Tribunalconcludesthat a person who was at the relevant time an officer or past
• officer,or member.of theCooperative mayhave committed an offence in relation tothe Cooperative for which the person is liable,the Cooperative Tribunal may either on the application of a person interested in the liquidation or on its own initiative direct the liquidator to report the matter to the Commissioner.

Investigations during liquidation

• (3)If,while the Cooperative is being liquidated,it
• appears to the liquidator that a person who,at the relevant time was an officer or past officer,or a member,of the Cooperative,may have committed an offence in relation to the Cooperative for which the person isliable,the liquidator shall report thematter to the Commissioner.
• (4)In making a report under subparagraph (2)or (3).
• theliquidator shall provide the Commissionerwith-
• (a)such information;and
• (b) such access to and facilities for inspecting and reasonably requires and the liquidator is able to
• taking copies of documents,as the Commissioner reasonably give or provide.
• (5)As soon as practicable after receiving a report under subparagraph (2)or (3)which establishes possibility of criminal liability,the Commissioner shall forward the report to the Directorate of Criminal Investigations for
• further investigation,together with-
• (a)the information and documents (if any)given or provided in accordance with subparagraph (4):and
• (b) such observations on the report,information and documents as the liquidator considers relevant.
• (6)On receiving areport under subparagraph (5),the Directorate of Criminal Investigations shall investigate the matter concerned and such other matters relating to the affairs of the Cooperative as appear to the Directorate of Criminal Investigations to require investigation,
• (7)For the purpose of an investigation under subparagraph (6).the Directorate of Criminal Investigations may exercise any of the powers conferred on inspectors byPart XXX of the Companies Act,2015 as if the Cooperative werea company.
• 14.(1) For the purpose of an investigation by the
• Directorate of Criminal Investigations under paragraph 13(6),a person has the same obligation to producc documents or give information,or otherwise assist the Directorate of Criminal Investigations,as the person would have in relation to an inspector appointed under Part XXX ofthe CompaniesAct,2015.

No.17of2015.

Investigation by Directorateof Criminal Investigations.

No.17ef2015.

• the person in exercise of the powers conferred by paragraph 13(7) may be used in evidence against the person.
• (3)However,in criminal proceedings in which that person is charged with an offence to which this paragraph applies--
• (a)evidence relating to the answer may not be
• (b)questions relating to it may not be asked,by or on behalf of the prosecution,unless evidence relating toit is adduced,or a question relating to it is asked,in the proceedings by or on behalf of that person.
• (4)This paragraph applies to all offencesother than an offenceunder sections107 and114of thePenal Code.
• (5)If criminal proceedings are begun by the Director of Public Prosecutions following an investigation under paragraph 13(6),the liquidator and every officerand agent, and past officer and agent,of the Cooperative,othcr than the defendant shallprovide the Director of Public Prosecutions and the Directorate of Criminal lnvestigations with such assistance in connection with the prosecution as the liquidator,officer or agent or past officer or agent is reasonably able togive.

(5)Insubparagraph (5)-

agent"includes anybank or advocate ofthe Cooperative and any person employed by the Cooperative asauditor,whether that person is or is not an officer of the Cooperative.

• (7)If a person fails to provide assistance as required bysubparagraph (5),the High Court may,on the application of the Director of Public Prosecutions or the Directorateof Criminal Investigations makean order directing theperson to comply with that subparagraph.
• (8)If the application ismade with respect to a liquidator,the High Court may also make an order directing
• the costs to be borne by the liquidator personally.
• (9)The High Court may not make such an order if it is established that the failure to complywas due to the liquidator having insufficient assets of the Cooperative to enable the liquidator to provide the required assistance.

MEMORANDUMOFOBJECTSANDREASONS

Statement ofobjectsand reasons

The principal object of this Bill is to provide for a legal framework that promotes a sustainable and competitive cooperative sector for sociocconomic developmcnt in a devolved system of governance.More specifically the Bill seeks to provide for mattersrelating to the promotion, constitution,registration,andregulation of Cooperatives and to give effect to Article186 and the Fourth Schedule to the Constitution of Kenya. Further.the Bill seeks to establish the Office of the Commissioner for Cooperative Development at the national level and the Office of the County Director for Cooperatives at the county govermment level and provide forinter-governmental Cooperativerelations.

Inparticular-

PART Iof the Bill provides for the preliminary issues including the

short title,the interpretation,the objects of the Act,the guiding principles and the application of the Act.

PART IIof the Bill provides for the establishment of the office of the Commissioner for Cooperative Development at the National level and the Director for Cooperatives at the county level.It further provides for the establishment for the Inter-Govermmental Cooperatives Relations Technical Forum and the administration of the Act.

PART Ill ofBill providesthe structure of Cooperalives inKenya as

follows primary Cooperatives,secondary Cooperatives,Cooperative federations and the Apex Cooperative.

PART IV of the Bill provides for registration of Cooperatives that

deals with procedures for registrations,amendment of by-laws and protection of Cooperative and Sacco identity.

PART Vof the Bill provides for rights and liabilities ofmembers. The provisions include qualification for membership,share capital and

transfer ofshares.

PART VI of the Bill provides for duties of Cooperatives which include the responsibilities to maintain actualphysical location,copies of this Act and by-laws and preparation of budget and books of accounts.

PARTVIl of theBill providesfor governance in Cooperatives which includes conduct ofmeetings,elections and duties ofboard of directors.

PARTVIlI of the Bill provides for theprocedures for amalgamation

and division inCooperatives including preliminary and secondary resolutions,notification to creditors,distribution of assets and liabilities and therole of the Commissioner in approvals.

• PART IX of the Bill provides for rights and obligations of Cooperatives including charge over a members'produces.shares and assets by a Cooperative.In addition,it dealswith withdrawalof membership,transfer ofshares.prohibition against attachment of members shares and non-remittances ofemployee emolument by employers.
• PART X of the Bill provides for application of Cooperative properties and funds which include restrictions on loans,borrowing and investments.lt also covers declaration of bonuses and maintenance of reservefund.
• PART XIof the Bill provides forcreating charges over Cooperativesproperties andregistration of charge with the commissioner,
• maintenance of register of charges and issuance of certificates.This part alsoprovides fortheright of membersandcreditors to inspect theregister ofcharges.
• PARTxll of the Bill provides for conduct ofinquiry and inspection ofCooperatives by the CommissionerandCountyDirector for Cooperativesrespectively.This part also provides for the procedures for recovery of surcharges and appeals.
• PART Xlll ofthe Bill provides for procedures for cancellation. dissolutions and liquidation of Cooperatives.This part also provides for therole of Commissionerin dissolution and appeal.

PART XIV of the Bill provides for special powers of the Tribunal to set aside certain transactions carried out within a Cooperative society during liquidation deemed injurious to the members'interest.

• PART XV of the Bill provides for settlement of disputes by transitioning the existing Cooperative Tribunal into the new legislative regime and the role of the Tribunal in adjudicating disputes in Cooperatives.It further provides for the role of the Chief Justice and Judicial Service Commission in providing administrative and regulatory guidance to the Tribunal

PART XVI of the Bill provides for general provisions relating to self-regulation,credit information sharing,inter-borrowing,remuneration ofofficers,Cooperative Development Fund.power of the Commissioner and CountyDirectors aswell as cxemption ofprovision of this Actby the Cabinet Secretary and County Executive Committee Member.

PART XVII of the Bill provides for transitional provisions which includes the repealofthe Cooperative Society Act12of 1997,transition ofthe offices of the Commissioner,County Director for Cooperatives members of the Cooperative Tribunal,and county assemblies'legislations.

Statementon the delegationsof legislativepowers

The Bill delegates, to the Cabinet Secretary and the County Executive Committee members.power to make Regulations necessary to operationalize theAct and for the better carrying out of its objects.

Statementon the limitation offundamental rights and freedoms

TheBill doesnot limit any of the fundamental rights offreedams

Statement that the Bill concerns the County Governments

The Bill concems the County Governments in terms of Article 110(l)(a)of the Constitution,in that it contains matters that affect the functions of the County Govermments as prescribed in the Fourth Schedule of the Constitution.

Statement that the Bill is a money Bill within the meaning of Article

114oftheConstitution.

The enactment of this Bill may occasion additionalexpenditure of public funds.

Dated the7thFebruary.2024.

KIMANIICHUNG'WAH. LeaderofMajority Party.