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THE COOPERATIVE SOCIETIES ACT, 2003
ARRANGEMENT OF SECTIONS
Short title and commencement. 1 .
Cooperative Societies to be registered in accordance with this 3.
THE OBJECTS AND PROTECTION OF COOPERATIVE SOCIETIES
Societies which may be registered.
Duty of Government to cooperative societies.
Minister to encourage cooperative development.
Responsibilities of Minister. 4.
8 Information on cooperation.
Persons required to furnish information to the Minister.
APPOINTMENT OF REGISTRAR, DEPUTY REGISTRAR AND
Appointment of Registrar. 10.
11. Functions of a Registrar.
12. Appointment of Deputy Registrar.
Appointment of Assistant Registrars.
FORMATION AND ORGANIZATION OF SOCIETIES
Structure of the Cooperative Societies.
Formation of Societies. 14.
Societies may affiliate.
17. Registrar may advise primary societies.
2 No. 20 2003 Cooperative Societies
Objects of Primary Societies.
Objects and Functions of Secondary Societies and Apexes. 18.
Objects of the Federation. 20.
Societies may form joint enterprises.
Types of Societies. 21.
REGISTRATION OF SOCIETIES
Conditions for Registration.
Application for Registration. 23.
Refusal of Registration.
Certificate of Registration.
Evidence of Registration.
Societies to be body corporate. 26.
31. Cancellation of notice of deferment.
Appointment for pre-cooperative groups.
Recognition and Registration of pre-cooperative groups.
RIGHTS AND LIABILITIES OF MEMBERS
35. Restriction regarding members and societies liabilities.
Vote of members.
Rights of minors.
Contract with minors.
Restriction regarding shares.
Liability of a member.
Liability of past members.
42. Liability of the estates of deceased member.
43. Membership of companies.
DUTIES OF REGISTERED SOCIETIES
44. Duties of Registered Societies.
Power to make by-laws.
Amendment of the by-laws of registered society.
By-laws of a registered society to bind members.
No. 20 3 2003 Cooperative Societies
Accounts and Audit. 48.
Registrar may require bank to produce information. 49.
Communications of defects in the operations of a registered 50.
Returns to be made by registered societies. 51.
PRIVILEGES OF REGISTERED SOCIETIES
Defect in the constitution not to render act of a registered 52.
Disposal of produce to or through a registered society.
Creation of charges in favour of registered societies. 54.
Charges and set-off in respect of share or interest of members.
Shares or interest not liable to attachment.
Transfer of interest on death of a member. 55.
Proof of entries in societies books. 58.
Exemption from compulsory registration of instruments relating
to shares and debentures of registered society.
Power to exempt from duty or tax. 59.
MANAGEMENT OF REGISTERED SOCIETIES
Establishment of Board.
Constitution of the Board. 61.
Powers of the Board. 64.
Restriction relating to members of Board.
66. Suspension and election of the new Board. 65.
67. Powers of the Registrar.
68. Powers of persons appointed under section 67.
PROPERTY AND FUNDS OF REGISTERED SOCIETIES
Revenue of Registered Societies..
Management of the revenue and funds of registered societies.
Restriction on loans. 69.
4 No. 20 Cooperative Societies
72. Restriction on borrowing from non-members.
Investment of funds.
Dividends and Bonus.
78. Distribution of Balances.
Contribution for charitable, educational and medical purposes.
CREATION AND REGISTRATION OF CHARGES
Registration of charges. 80.
Duty of society to register charges created by society.
82. Duty of society to register charges existing on property
83. Register of Charges.
Endorsement of certificate of registration on debentures.
Entry of satisfaction and rectification of register.
Enforcement of Security.
87. Copies of instrument creating charges to be kept by society.
Society’s register of charges.
Right to inspect copies of instruments creating mortgages,
charges and society’s register of charges. 89.
INSPECTION OF AFFAIRS
90. Enquiry by Registrar.
Costs of Inquiry.
AMALGAMATION AND DIVISION
94. Amalgamation of Societies.
Defects or irregularity in notice, etc.
Division of Societies.
5 2003 No. 20 Cooperative Societies
DISSOLUTION OF SOCIETIES
Cancellation of registration of society.
Appeal against cancellation of registration.
Effects of cancellation of registration.
101. W i n d i n g u p .
Powers of the liquidator.
Powers of the Registrar to control liquidation.
Power to stay or restrain proceedings against society.
Avoidance of disposition of property, after cancellation.
Avoidance of attachment, etc.
107. Power of Registrar to assess damages against delinquent
108. Power to arrest absconding promoter, officer, etc.
Debts of all description may be proved.
Where society is insolvent.
Liabilities and Rights of certain fraudulent preferred persons.
Effects of floating charge.
Disclaimer of onerous property in case of society wound up.
Restriction of rights of creditor as to execution or attachment
in case of society being wound up.
117. Duties of court as to goods taken in execution.
Courts not to have jurisdiction in dissolution of societies.
Preservation of books and records.
Penalty for soliciting violation of contracts.
Offences by officer of society being wound up.
Prohibition of use of the word ”Co-operative” 121.
Code of conduct. 125.
6 No. 20 Cooperative Societies
Power to exempt societies from conditions of registration.
Appointment of special members to committees.
Terms of appointment and powers of special members. 126.
Recovery of sums due to Government.
Power of Registrar to make regulations.
Certain laws not to apply.
Transitional Provisions. 132.
2003 8 No. 20 Cooperative Societies
”agricultural society” means a society whose principal object is the business
of supplying inputs for agricultural crop production, the purchasing,
processing, marketing and distribution of agricultural produce;
”apex” means a society the membership of which is restricted to
secondary societies and which is established to facilitate the operations of
all primary and secondary societies;
” annual net surplus’ means such portion of the total income received
or accrued during any year, as remains after deductions have been
made from it in respect of all recurrent expenditure incurred during
that year and after adequate provisions have been made for bad
debts, depreciation, taxation and losses;
” annual net balance” means such portion of the net surplus for any year
as remains after deductions have been made from it in respect of the
reserve fund, the share transfer fund and such other appropriations
as it may be necessary or desirable to make for the proper conduct
of the society’s business, and after a dividend (if any) has been paid
on the share capital;
”the Bank” means the Bank of Tanzania established under the Bank of
Act No. 1of 1995 Tanzania Act;
”bank” means a cooperative bank registered at the secondary or tertiary
”basic units” means localities within the area of operation of a society
from which delegates to the General Meeting can be drawn;
”Board” means the governing body of a registered society to whom the
management of its affairs is entrusted;
”bonus” means such portion of the annual net balance as may be distributed
to members in consideration and on the basis of their ‘patronage of
the society’s business or their participation in such business;
”common need” means the need which is common to all members of
a registered society;
“company” means a company registered under the Companies
Ordinance any successor legislation;
”cooperative financial institution” means a society registered to render
”Cooperative College” means any Institution which offers cooperative
”cooperative society” means an association of persons who have voluntar-
ily joined together for the purpose of achieving a common need
through the formation of a democratically controlled organization and
who make equitable contributions to the capital required for the
No. 20 2003 9 Cooperative Societies
formation of such an organization, and who accept the risks and the
benefits of the undertaking in which they actively participate;
”Corporation” means the Cooperative Audit and Supervision Corporation
established under the Cooperative Audit and Supervision Act, 1982;
(a) in the case of a primary society in which the general meeting
of members is substituted by a meeting of delegates, the
representative of a specified number of individual members
who is elected or appointed to attend and vote at a meeting of
(b) in the case of a society which is itself a member of another
society, the representative of the former elected or appointed
to attend and vote at a meeting of the latter society;
”dividend” means the sum paid on the share capital invested in a society;
”economic viability” means the ability of society to conduct its affairs
as provided for in the rules;
”Federation” means a cooperative society whose members are apexes,
specialized primary and, secondary cooperative societies;
”Financial Cooperative” refers to a non bank financial institution
whose primary activity is to furnish secured or unsecured loans to
households, smallholder producers and small and micro-enterprises
of rural and urban sectors;
”Fund” means the Inspection Fund established under section 74 of this
”industrial society” means a registered society whose principal objectives
are manufacturing or making or servicing or assembling of industrial
goods and whose members are respectively manufacturers, craftsmen,
artisans, industrial workers and apprentices;
”joint enterprise” means an association of two or more societies which
join together for a purpose of operating an economic enterprise;
”member” includes a person or a registered society joining in the application
for the registration of a society, and a person or a registered society
admitted to membership after registration in accordance with the
by-laws and rules made under this Act;
”Microfinance companies” also known in its acronym MFCs means
non bank financial institutions with substantive core capital whose
primary activity is to furnish secured and unsecured loans to households,
smallholder producers and small and microenterprises both in rural
and urban areas;
2003 10 No. 20 Cooperative Societies
”Minister” means the Minister responsible for cooperatives;
”officer” means any officer of a society and includes chairman, vice-chairman, Cap. 185
secretary, treasurer, member of a committee, general manager, chief
accountant, or any other person empowered under the rules or the
by-laws to act on behalf of registered society;
”Pre-cooperative groups” means organizations of an economic and
social nature set up voluntarily by individuals having common interests
and working together as a society;
”primary society” means a registered society whose members are
individual persons or an association of such individual persons and
any cooperative body other than a body registered under the
Companies Act and includes a joint enterprise where all its members
are primary societies;
”probationary societies” means the cooperative society which has not
fulfilled the compliance of registration as specified under section.
30 of this Act;
”Prosecutor” means a government officer entrusted with duties of Act No. 9
prosecuting cases originating from cooperative societies;
“registered society” means a cooperative society registered or deemed
to have been registered under this Act and includes a probationary
”the Registrar” means the Registrar of cooperative societies appointed
under section 10 of this Act, and includes, where appropriate, the
Deputy Registrar or Assistant Registrars;
” savings and credit society” means a registered society whose principal
objects are to encourage thrift among its members and to create a
source of credit to its members at a fair and reasonable rate of interest;
” school society” means a society the membership of which is restricted
to the pupils of a school;
”secondary society” means a registered society whose membership is
open only to primary societies which are its members;
”society” means a cooperative society registered under this Act and
includes a primary society, a secondary society, apex and the
”specialized skills” means an expertise possessed by any person in
such particular field as may be described in the rules.
3. Cooperative Societies shall be registered in accordance with this
Act and the rules.
eties to be
No. 20 11 No. 10 Cooperative Societies
THE OBJECTS AND PROTECTION OF COOPERATIVE SOCIETIES
4.-(1) A society which has its objects in the promotion of the
economic and social interests of its members by means of common
undertaking, based upon mutual aid and which conforms to the cooperative
principles or a society which is established for the purpose of facilitating
operations of societies, may be registered as a cooperative society
under this Act with or without limited liability.
(2) Except as otherwise provided for in this Act, cooperative principles
and methods used in the operation and administration of a society shall be-
(i) voluntary organizations, open to all persons able to use their
services and willing to accept the responsibilities of membership,
without gender, social, racial, political or religious discrimination;
(ii) democratic organizations controlled by their members who
actively participate in setting their policies and making decisions,
men and women serving as elected representatives are
accountable to the membership. In primary cooperatives,
members have equal voting rights, and cooperatives, at other
levels are also organized in a democratic manner;
(iii) members contribute equitably to, and democratically control
the capital of their cooperative;
(iv) autonomous self help organizations controlled by their members,
if they enter into agreement with other organizations, including
governments, or raise capital from external sources, they do
so on terms that ensure democratic control by their members
and maintain their cooperative autonomy;
(v) the organizations provide education and training for their
members, elect representatives, managers and employees so
they can contribute effectively to the development of their
(vi) organizations inform the general public, particularly young
people and opinion leaders about the nature and benefits of
(vii) organizations serve their members most effectively and
strengthen the cooperative movement by working through
local, national and international structures;
(viii) organizations work for the sustainable development of their
communities through policies approved by their members.
12 No. 20 2003 Cooperative Societies
5. The Government shall provide and create conducive social,
economic and legal environment for the development and prosperity
of cooperative societies. Duty of
6. The Minister shall take such measures as he deems necessary for
the encouragement generally of cooperative development for economic,
social and cultural purposes and, human advancement on the basis of
self-help and in particular, for the encouragement of the organization
of cooperative societies as a means of-
(a) improving the economic situation of their members;
(b) contributing to the economy and increased measure of self- reliance
and democratic control of economic activity;
(c) increasing personal and national Capital sources by encouragement
of thrift, the prevention of usury and the wise Use of credit;
(d) raising the level of general and technical knowledge of members
7.-( 1) The Minister may for the purpose of encouraging cooperative
development under section 6, take such measures which are not detrimental
to the interests of the members as he deems necessary to-
(a) assist the Organization of cooperative societies among persons or
groups of persons who desire to provide themselves with, or
to market, commodities or services or both, on a cooperative
self help basis;
(b) facilitate the financing of societies, where necessary for their
establishment and operation;
(c) provide for such advice as may be necessary to assist officers
and members of societies to achieve their objects;
(d) institute inquiry into and collect, classify, analyse information
and statistics relating to societies and cooperative development;
(e) establish or facilitate the establishment of a research service
or services for enquiry generally into the operation of societies
and analysis of economic, social and other problems as may,
be deemed advisable to lead to the encouragement of new or
improved methods of cooperative development including-
(i) production of agricultural or natural products and the
processing and marketing of such products;
2003 13 No. 20 Cooperative Societies
(ii) industrial development, manufacturing and marketing and
sale by retail or wholesale;
(iii) credit, investment and business finance;
(iv) wholesaling and retailing of goods and services;
(v) community and welfare services on a cooperative basis;
(f) issue from time to time such reports and other publications
relating to societies and cooperative development as may be
(g) provide or authorize such other services as may be necessary
in carrying out the provisions of this Act; and
(h) give directions to the Registrar on matters relating to cooperative
(2) The Minister may –
(a) make consultation with the Minister responsible for Regional
Administration or Local Government as the case may be in
carrying out some of his responsibilities;
(b) delegate some of his powers in writing to a Regional
Commissioner or Regional Commissioners for specific matters
relating to cooperative societies.
(3) The Minister in consultation with the Minister responsible for
Higher Education may direct the Cooperative College to teach, conduct
research and offer consultancy services, and perform other relevant
duties pertaining to cooperative development in the country.
8. The Minister shall disseminate or arrange for the dissemination
of, information relating to cooperative and cooperative development in
such manner and form as may be found best suited to promote interest
in and understanding of cooperative principles and practices with a
view to encouraging of the organization of cooperative societies based
on self help.
9.-( 1) All officers of societies to which this Act applies shall upon
request by him furnish the Minister with such information as he may
from time to time require for the purposes of this Act. Personsrequiredto furnishinforma-
tion to the (2) An officer who fails to comply with a request of the Minister
under subsection (1), or who knowingly makes a false statement, in
relation to any material or information furnished to the Minister, shall
be guilty of an offence.
14 No. 20
2003 Cooperative Societies
APPOINTMENT OF REGISTRAR, DEPUTY REGISTRAR AND ASSISTANT
10.-(1) The President shall appoint a public officer to be the
Registrar of Cooperative Societies. Appoint-
(2) The Registrar appointed under subsection (1) shall have a seal or
such device as may be approved by the Minister.
Functions 11.-(1) The functions of the Registrar shall be- of the
(a) to register, promote, inspect and advise cooperative societies
in accordance with the provisions of this Act;
(b) to advice the Minister on any matter relating to cooperative
societies, and in particular in respect of any assistance,
financial or otherwise, which may be required by cooperative
(c) to encourage the establishment of cooperative societies in all
sectors of the economy and to assist cooperative societies to
increase their efficiency;
(d) to provide services designed to assist in the formation,
organization and operation of societies and to give advice on
cooperative management to all kinds of societies registered
under this Act;
(e) to perform such other functions in relation to the development
and well being of cooperative societies such as he may, be
directed by the Minister;
(t) to promote, or facilitate education and training of members
and staff of cooperative societies.
(2) The Registrar shall gradually delegate his duties of promoting,
advising, educating and training of cooperative societies to the cooperatives
on mutual agreement as provided for in the rules.
(3) The Registrar upon consultation with the Assistant Registrar in
the region shall collaborate with the Regional Administrative Secretary
on issues Pertaining to registration, de-registration and any other matters
relating to cooperative societies as prescribed in this Act.
No. 20 2003 15 Cooperative Societies
Appoint- 12.-( 1 ) There shall be a Deputy Registrar who shall be appointed
by the President from amongst public officers. ment ofDeputy
(2) The functions of the Deputy Registrar shall be-
(a) perform such functions and duties as may be directed by the
Registrar or as may be required under this Act; or
(b) upon due authorization exercise any of the functions of the
13.-( 1) There shall be such number of Assistant Registrars who
shall be appointed by the Minister from amongst Principal
(2) Assistant Registrars shall have the duty to assist the Registrar in
carrying out his duties and functions under this Act.
FORMATION AND ORGANIZATION OF SOCIETIES
Structure 14.-(1) The structure of cooperatives shall be made up of Primary
societies at the grass root level and the Federation at the top. of the
(2) Subject to the wishes of members, the structure may comprise
middle societies such as Secondary societies and Apexes.
Formation 15.-( 1) A Primary society may be formed by- ofSocieties
(a) fifty or more persons for agricultural societies; or
(b) twenty persons or more for savings and credit cooperatives; or
(c) ten persons or more for specialized skill societies; or
(d) ten persons or more for other types of cooperative societies.
(2) A person may not be a member of a Primary society unless he
has the following qualifications, namely-
(a) that he has attained the minimum age of eighteen years and
is of sound mind;
(b) that he is following a trade or occupation relevant to the society’s
object as defined in the by-laws;
(c) that he has a common need which the society seeks to satisfy;
(d) that he is capable of paying fees and acquiring shares.
16 No. 20
2003 Cooperative Societies
(3) Notwithstanding the provisions of sub-section (2), a person who has
the minimum age of fifteen years referred to as a minor may become a
member of a cooperative society-
Provided that, such a person shall not be eligible to act as a member
of a committee until he has attained the age of eighteen years.
(4) A person who has not attained the age of fifteen years but is
attending school may be a member of a school society established for
16.-(1) Primary societies may form Secondary societies and
Secondary societies may form Apex societies. A Federation may be
formed by Apex societies. Where a Primary or Secondary cooperative
society is unable to join into a Secondary or Apex society, due to its
nature and/or desire of its members, it may be allowed to become a
member of the Federation.
(2) A Financial cooperative society may be formed by savings and
credit societies and other types of cooperative societies.
Registrar 17. Where the Registrar considers that, a Secondary society or Apex
society in relation to any area is economically viable, he may advise
any Primary society or Secondary society or category of cooperative
societies operating within that area to join the Secondary society or
Apex society by notice in writing served on the society or category of
cooperative societies as the case may be. may
18. The objects of a Primary society shall be- Objects ofPrimarySocieties (a) to strive to raise the standard of living of its members;
(b) to facilitate the operations of the individual members;
(c) to provide services to its members, including supplying agricultural
inputs, collecting, processing and marketing of the products
of its members.
19.-(1) The objects of Secondary societies shall be-
(a) to facilitate the operation of member Primary societies; Secondary
(b) to provide services to Primary societies as will be provided Societiesand for in the by-laws of the Secondary societies; Apexes
2003 17 No. 20 Cooperative Societies
(c) to collect, process and sell products of member societies;
(d) to provide consultative services to member societies.
(2) The objects of Apex societies shall be-
(a) to facilitate the operation of Secondary societies which are its
(b) to provide services to Secondary societies as will be provided
for in the by-laws of the Apex societies;
(c) to collect, process and sell products of member Secondary
(d) to provide consultative services to member Secondary societies.
20 .-(1) Where the Federation is formed and registered, shall provide,
organize and supervise effective centralized services for the member
societies and for cooperative education and training and such other services
as may be necessary or expedient for its members.
(2) Without prejudice to the generality of subsection (1), the
Federation may perform any of the following functions-
(a) to render services designed to ensure efficiency and uniformity in
the business of its member societies;
(b) to print, publish and circulate any newspaper or other publication
designed to foster or increase interest in cooperative enterprises,
principles and practices;
(c) to coordinate the economic plans of the member societies and
to forward them to the Minister for the incorporation in the
(d) to carry on, encourage and assist educational and advisory
work relating to cooperative enterprise, and without limiting
the generality of the foregoing, to advice the government on
cooperative education and operating methods and for that
purpose may prepare and provide correspondence courses
regarding cooperative principles and operating methods and
may disseminate information on cooperative development,
principles and practices;
(e) to represent its member societies m international conferences;
(f) to do any other thing which in its opinion is connected with
or is ancillary to the above enumerated objects.
18 No. 20 2003 Cooperative Societies
21.-(1) Where it is necessary or desirable for the efficient operation
of a business or economic enterprise that it be operated by two or more
societies, such societies may join in an association and form a joint
enterprise, subject to the approval and such limitations as the Registrar
may generally or in relation to any association of societies or category
of them impose, for the purpose of operating and carrying on such a
business and the Registrar may register such a body under this Act. Societiesmay formjointenterpri-
(2) A cooperative society may join with private or public company
in the interest of the parties concerned provided that the Registrar shall
signify approval in writing; and the agreement shall be registered
under this Act.
(3) The societies which form an association for the purpose of
operating and carrying on a joint enterprise as provided for under subsection
(1), may form a joint Board for the purpose of managing that joint enterprise
but such an association shall have no right of separate representation
either in the Secondary society or the Federation.
22. The Registrar may register the following types of societies-
(a) agricultural cooperatives which are designed to deal with Societies
crop production, purchasing, processing, marketing, distribution,
and any such activity as may be provided for in the rules and
(b) savings and credit societies, Financial Cooperatives,
Microfinance Institutions, and Cooperative banks whose primary
activities are to mobilize savings and furnish secured and
unsecured loans or credit to households, smallholder
producers and market entrepreneur, micro-enterprises in
rural and urban areas;
(c) consumer cooperatives designed to deal with wholesale and
retail business amongst members;
(d) industrial cooperatives for production, manufacturing and
sale of goods;
(e) housing cooperative designed to deal with building, construction
and housing programmes for members;
(f) livestock cooperative societies designed to deal with the needs
of members in animal husbandry, livestock keeping and diary
(g) fisheries cooperative societies designed to deal with fishing,
processing and marketing of fish and other sea products;
(h) producers’ cooperatives for agricultural, forestry or other natural
2003 19 No. 20 Cooperative Societies
(i) mining cooperatives designed to deal with mining operations
and mineral marketing; and
0) such other society as may be established.
REGISTRATION OF SOCIETIES
23.-(1) No society other than a society of which a member is a
registered society shall be registered under this Act unless it consists
of at least the minimum number of persons each of whom is qualified
for membership as provided for under section 15 of this Act. Conditi-
(2) No Secondary society or Federation shall be registered under
this Act unless it consists of at least twenty or ten respectively
members as registered societies.
24.-(1) Application for registration shall be made to the Registrar in
the prescribed form and shall be accompanied by –
(a) four copies of the proposed by-laws of the society, signed by tion
(b) a report of a feasibility study or project write-up indicating
the viability of the society; and
(c) such other information in regard to the society as the Registrar
(2) The application forms shall be signed by-
(a) if the application is for Primary society registration, the forms
must be signed by fifty persons or such number of persons as the
Registrar may approve, who are qualified in accordance with
the requirement of section 15;
(b) if the application is for Secondary society registration, the
forms must be signed by authorized persons of at least twenty
registered Primary societies;
(c) if the application is for Apex society registration the forms
must be signed by authorized persons of at least five
Secondary societies and specialized primary societies;
(d) if the application is for registration of the Federation, the
forms must be signed by ten registered Secondary Apex or
specialized Primary societies.
25. -(l) The Registrar shall after receiving applications under section 24
consider and decide on an application for registration within ninety
days from the date of the application.
20 No. 20 2003 Cooperative Societies
(2) The Registrar may before effecting registration to any society or
its by-laws require the society to amend the by-laws so as to conform
with such directions as he may give in that behalf
(3) The society shall upon registration pay such registration fees as
may be prescribed by the Registrar.
(4) No society shall be registered unless the Registrar is satisfied
(a) the volume of business from members of the society is sufficient
to cover its costs;
(b) Proper provision has been made for the financing of the society;
(c) no society exists in the same locality performing similar
activities for people of the same class or occupation, and that
the registration of another society would serve no useful
26.-(1) The Registrar may, if he is satisfied that the society has failed
to meet the prescribed requirements for registration, refuse to register
(2) Any person who is aggrieved by the decision of the Registrar for
refusing to register a society under subsection (1) shall within sixty
days from the date of notification of the decision of the Registrar,
appeal to the Minister whose decision shall be final.
27. Where the Registrar approves registration he shall issue a
certificate of registration to the society, together, with the copy of the
by-laws certified by him as having been approved and registered.
28. A certificate of registration signed by the Registrar shall be conclusive
evidence that the society mentioned in that certificate is duly registered
unless it is proved that the registration of the society is cancelled.
29.-(1) The registration of a society shall render it a body corporate
by the name under which it is registered, with perpetual succession and
a common seal, and with power to hold property, to enter into contracts, to
institute and defend suits and other legal proceedings, to do all things
necessary for the purposes laid down in its constitution.
Societiesto bebody cor-
(2) All records or papers of the society, and seal shall not be
removed from the premises of the society except in the accordance
with the provisions of this Act.
No. 20 Cooperative Societies
30.-(1) Where by reason of non-compliance with any provision of
this Act or of the rules or any direction given by him, the Registrar, is
unable to register a society but is satisfied that measures can be taken
by the applicants to comply with such provision or direction, he may,
by notice in writing –
(a) defer the registration of that society pending compliance with
such provision or direction;
(b) transmit the notice of deferment to the persons by whom or on
whose behalf application of registration is made.
(2) A notice of deferment shall, subject to the provisions of this section
and any condition specified in that notice, entitle the society in respect
of which it is issued to operate as a registered society.
(3) A society entitled to operate as a registered society under the
shall be termed as Probationary society and shall,
while so entitled to operate, be deemed to be a body corporate with
perpetual succession and common seal, and with power to hold
movable and immovable property of every description, to enter into
contracts, to institute and defend suits and other legal proceedings and
to do all things necessary for the purpose for which it is constituted:
Provided that, no Probationary society shall be entitled to operate as
such society for a period exceeding two years and if after that period
the Registrar is satisfied that a society registered under this section has
failed to comply with any provision of this Act or any direction given
under subsection (1), he shall cancel a notice of deferment of that
(4) Where a Probationary society is duly registered under section
25, its certificate of registration shall supersede its notice of deferment
which shall thereafter cease to have effect and the society shall be
deemed for all purposes to have been registered from the date on which
the notice of deferment in respect thereof was issued by the Registrar.
31.-( 1) The Registrar may cancel a notice of deferment by notice in
writing to be addressed to the Probationary society concerned and such
cancellation shall from the date thereof, operate as a refusal to register
the society for the purpose of section 25.
22 No. 20
2003 Cooperative Societies
Provided that, such cancellation shall not affect the validity of any
transaction entered into by or with the society while notice of deferment
was in force.
(2) Where the notice of deferment of a Probationary society is cancelled
under subsection (1) of this section, the Registrar may appoint a competent
person to be a liquidator of the society.
(3) The Provisions of section 3, section 35 subsection (3) and 4,
section 23, 25, 28, subsection (2) and (3) of section 45,51,58,76,92,95,
96, and 98 shall not apply to a Probationary society.
(4) A Probationary society shall cause the fact that it is Probationary
society to be stated in legible Roman letters in all bill heads, letter
papers, notices, advertisements and other official publications of the
society and on a signboard in a conspicuous position outside any premises in
which it operates.
(5) A Probationary society which contravenes any of the provisions
of subsection (4) and every office of a Probationary society which
contravenes any such provisions, commits an offence and shall on
conviction be liable to a fine of ten thousand shillings and in the case
of a continuing offence, to a fine of one thousand shillings for each day
during which the default continues.
32.-(1) Pre-cooperative groups shall be formed by a declaration in
writing during a constituent meeting of at least five persons, which
shall be submitted to the Registrar.
(2) Pre-cooperative groups shall be the only representatives to act
for and on behalf of their members who shall have exclusive rights to
(3) Pre-cooperative groups shall adopt their by-laws, which shall be
in writing and shall have Provisions providing for-
(a) objects, main activities, area of jurisdiction, name, head
office and duration of the groups;
(b) duties, of its officials, duration of their term of office and
their mode of appointment;
2003 23 No. 20 Cooperative Societies
(c) conditions for the admission and withdrawal of members;
(d) the organization and functioning of the groups, in particular
the appointment of officials, how decisions on loan applications
are taken, investment decision, amendment of by-laws the
dissolution of the groups or its change of legal status;
(e) the extent of members’ activities with the groups;
(f) the liability of a member in respect of the debts of the groups
and the basis on which it is calculated.
33 .-(l) Each pre-cooperative group shall appoint a delegate in
charge to represent it in all civil matters within the limits of the
powers conferred on him by the regulations and discussions of the
(2) Officials of each pre-cooperative group shall keep simplified
accounts to permit the periodic assessment of the reserves of the said
groups and justify any changes. The intervals between such assess-
ments shall not exceed two years;
(3) Officials of each. pre-cooperative group shall keep a register of
the members and accounts of individual contributions to the reserves
of the said groups.
34.-(1) The Registrar shall upon being satisfied of the fulfillment of
the conditions under section 33, issue a letter of recognition of the pre-
cooperative group formation and register the pre-cooperative group for Recogni-
tion andRegistra-tion of a term not exceeding three years. pre-
(2) A pre-cooperative group may become a cooperative society after
fulfilling conditions of registration of a cooperative society- coopera-
Provided that, if the pre-cooperative group fails to fulfill conditions
of registration within three years, the letter of recognition shall be cancelled.
(3) For the purpose of this Act, Savings and Credit Associations
(SACAS) are recognized as pre-cooperative groups.
RIGHTS AND LIABILITIES OF MEMBERS
35.-(1) No person shall exercise the rights of a member unless or Restricti-
on regard-ing mem-
24 No. 20
2003 Cooperative Societies
until he has made such payment to the society in respect of shares,
entry fees and any other dues as may be prescribed by the rules or
By-laws of the society.
(2) No person other than a registered society shall be a member of
more than one registered society with similar objectives except with
the sanction of the Registrar.
(3) The liability of a Primary society, joint venture, Secondary society,
Apex and Federation shall be limited.
36. Every member of a registered society shall have one vote only
as a member in the affairs of the society and shall be entitled to attend
the general meeting of the society and to record his vote in regard to
any matter for decision of such meeting.
Provided that, the by-laws of a Secondary society or a Federation
may provide for the attendance at general meetings of delegates from
the member societies or other bodies who are members of such
societies or Federation and the member societies and such other bodies
shall each be entitled to such number of votes and to vote in such manner,
as may be prescribed by the rules and the by-laws of such societies or
37.-(1) A society may receive money on share account, or on deposit
account, from or for the benefit of a minor, and it shall be lawful for the
society to pay such minor dividend or interest which may become due
on such shares of deposits.
(2) Any payment or deposit made on behalf of a minor pursuant to
subsection (1) may, together with any dividend or interest, be paid to
the guardian of that minor for the use of the minor.
(3) The receipt of any minor or guardian for money paid to him
under this section shall be sufficient discharge of the liability of the
society in respect of that money.
(4) The Minister may make rules prescribing the rights that a minor
may have in a society.
38. Notwithstanding the provisions of this Act or of any other written
law to the contrary that, any person being a minor who has been admitted
as a member of a society shall not be prevented from executing any
instrument or giving any acquaintance necessary to be executed or
given under this Act or the rules, and any contract entered into by such
2003 25 No. 20 Cooperative Societies
person with the society, whether as principal or as surety, shall be
enforceable at law as against such person.
39.-( 1) No member other than a registered society shall hold more
than one fifth of the share capital of any cooperative society.
(2) A member of a registered society shall not transfer any share
held by him or his interest in the capital of the society or any part thereof
(a) such a member has held such share or interest for not less
than five years;
(b) the transfer is made to the society or to a member of the society
or to a person whose application for membership has been
accepted by the committee; and
(c) such a person has ceased to have any of the qualification laid
down in section 15.
(3) No transfer of a share or other interest shall be valid and effective
(a) such transfer and the name of the transferee has been registered on
the directions of the committee of the society;
(b) the valuation thereof has been done.
40.-(1) Except as provided for in subsection (2)
of this section,
the liability of a member, if any, unpaid on the shares held by him, and
his liability shall be known as liability limited by shares. Liability
(2) Where in the by-laws of the society the amount of liability of a
member is expressed to be greater than the nominal value of the share
held by him and such amount is expressly stated that the liability of
such a member shall extend to such greater amount, and his liability
shall be known as liability by guarantee.
41 . The liabilities of a past member for the debt of a registered society
as they existed at the time when he ceased to be a member shall,
Liabilityof pastmember notwithstanding the provisions of any written law to the contrary, continue
for such period as the by-laws of the society shall provide from the
date of his ceasing to be a member.
Provided that, in the case of a cooperative society with limited
liability, if the first audit of the accounts of such society after ceasing
to be a member discloses that the society is solvent, the financial
liability of such past member shall cease forthwith.
26 No. 20 2003 Cooperative Societies
42. The estate of a deceased member, shall, notwithstanding the
provisions of any written law to the contrary be liable for a period of
one year from the time of his death for the debt of the registered society
as they existed at the time of his death; Liability
Provided that, in the event a society is wound up immediately after
a period of two years, the liability of such estates of the deceased or
past member shall continue until the liquidation proceedings of the
society are completed but such liability shall extend only to the debt of
the society as at the time of his death or of his ceasing to be a member.
43 .-(1) No company incorporated or registered under the
Companies Ordinance and no unincorporated or registered body of
persons shall be entitled to become a member of a registered society
except with the written permission of the Registrar and subject to such
rules as may be made under this section.
(2) A company registered under the Companies Ordinance may, by
a special resolution as defined in that Ordinance, and with the prior ap
proval of the Registrar, determine to convert itself into a cooperative
DUTIES OF REGISTERED SOCIETIES
44. Every registered society shall – Duties of
(a) have an address registered in accordance with the rules, to societies
which all notices and communications shall be sent, and
shall send to the Registrar a notice of every change thereof;
(b) keep a copy of this Act, Rules and its by-laws open to
inspection free of charge, at all reasonable times at the
registered address of the society;
(c) maintain a register of its members in such manner as may
be prescribed by the rules and shall enter therein any
particulars as prescribed by the rules.
45.-(l) Every registered society shall have power to make by-laws
for any such things as are necessary or desirable for the purpose for
which such a society is established.
2003 27 No. 20 Cooperative Societies
(2) Without prejudice to the generality of subsection (1), every
registered society may make by-laws prescribing –
(a) the name and registered address of the society;
(b) the area of the operation of the society;
(c) the object for which the society is established;
(d) the purpose to which the funds of the society may be applied
and the mode of custody and investment of such funds;
(e) the qualifications for membership of the society, the terms of
admission of members shares, the entrance fees, and the
mode of election;
(f) the nature and extent of the liability of members;
(g) the withdrawal and expulsion, suspension of members and
the payment, if any to be made to such members;
(h) the transfer of shares or interest of members;
(i) the manner of conducting meetings of the society and the
powers of such meetings;
the appointment, suspension and removal of members of the
Board and officers and the powers and duties of the Board
(k) the authorization of an officer to sign documents and to use
the seal on behalf of the society.
(3) Where the objects of the registered society include the creation
of funds to be lent to the members, additional by-laws shall be made in
respect of –
(a) conditions on which loans may be made to members which
(i) the rate of interest;
(ii) the maximum period which can be granted for the re-
payment of a loan;
(iii) the maximum amount of money which may be lent to a
(iv) the purpose of loans;
(v) security for payment;
(vi) the consequences of default in payment of any sum due
on account of shares or deposits or loans and the conse-
quences of failure to use a loan for the purpose for which it
(b) the disposal of the annual net surplus;
28 No. 20 2003 Cooperative Societies
(c) other matters consonant with regulations pertaining to
Microfinance Companies and Financial Cooperatives.
(4) A by-law made under this section may empower a registered
society to impose a fine upon a member of the society for the breach
of the by-law which fine shall be recoverable by the society as a civil
Provided that, no fine may be imposed under the by-laws, on any
(a) the member on whom the fine is intended to be imposed has
been served with a notice, in writing, of the intention to
impose the fine; and
(b) the member has failed to show cause within the time
prescribed in the notice as to why the fine may not be im-
posed on him.
Amend- 46.-(1) Any registered society may, subject to the provisions of this
section amend its by-laws and submit the amendments to the Registrar
for registration. ment of
laws of a
society (2) The Registrar shall –
(a) if he is satisfied that the amendments of the by-laws are not
contrary to this Act, register the amendments; or
(b) refuse to register the amendments and notify the society
(3) Where the Registrar registers an amendment of the by-laws of a
registered society, he shall issue to the society a copy of the amendments
certified and scaled by him, and such copy so certified and sealed shall
be conclusive evidence of the fact that the amendments have been duly
(4) An amendment which changes the name of the society shall not
affect any right or obligation of the society or any of its members or
past members, and any legal proceedings pending may be continued by
or against the society under its new name.
(5) No amendment of the by-laws of a registered society shall be
valid until that amendment has been registered under this Act.
2003 29 No. 20 Cooperative Societies
(6) A society may, within two calendar months from the date of
notification to it by the Registrar of his refusal to register an amendment of
any by-laws appeal to the Minister against that refusal.
47. -(1) Every by-laws of a registered society shall upon registration be
binding upon the society and the members thereof to the same extent
as if the by-law was signed by each member of the society and
contained covenant by each such member to observe the provisions of
By-lawsof a regis-
(2) Any dispute arising out of the interpretation of a by-law of registered
society shall be referred to the Registrar.
48.-(1) Every registered society other than a Primary society shall,
with the approval of the general meeting, employ an Internal Auditor
or such number of Internal Auditors as are necessary for the efficient
checking of the accounts of the society.
(2) Every registered society shall, keep proper accounts and other
records in relation thereto and shall within three months prepare in
respect of every year a statement of accounts in a form which
conforms to the best accounting standards.
(3.) The accounts of every registered society shall be audited at least
once in a year by the corporation or any such competent and registered
auditor appointed by the general meeting and approved by the
(4) As soon as the annual accounts of a registered society have been
audited the society shall cause to be sent to the Registrar a copy of the
audited balance sheet and statement of income and expenditure
prepared in respect of that year together with any report made by the
(5) The auditor’s report referred to under subsection (4) shall include
an examination of the balance sheet and related income statement and
a valuation of assets and liabilities of the registered society.
(6) Where the accounts of a society have been audited and adopted
by the general meeting of the society and approved in accordance with
30 No. 20 2003 Cooperative Societies
sub- section (3), they shall be conclusive, except as regards any
error discovered therein within six months following the date of such
approval and except as regards any allegation of fraud, and whenever
any such error is discovered within that period the accounts shall forth-
with be corrected with the approval of the Registrar and thereafter shall
(7) In the event a society fails to prepare a statement of accounts
within a period of three months in respect of the business of its previous
financial year, the members of the relevant committee of the society
shall lose their membership of the committee and shall not be eligible
for re-election to the committee for the next six years.
(8) Without prejudice to the generality of subsections (1), (2),(3),
(4), (5) and (6), the management board shall be held responsible for
any loss occasioned to the society and every officer who is a part to the
loss commits an offence and shall be liable on conviction to a fine not
exceeding one hundred thousand shillings and in addition shall be
required to compensate the loss so occasioned.
49. Notwithstanding anything in any other written law, the Registrar
may, if he considers it necessary to do so require any bank-
(a) to furnish any information regarding the transactions of any, produce
registered society with the bank; informa-tion (b) to produce a copy showing the accounts of the society with
the bank from the ledger kept by the bank;
(c) to produce any cheques paid to the credit of the society or
endorsed by the society.
Commu- 50 .-(1) If any audit, inquiry or inspection made under this Act discloses
any defect in the working of a registered society, the Registrar shall
bring such defect to the notice of the society and if the society is affiliated
to another registered society he shall bring such defect to the notice
that other society as well.
of a regis-
(2) The Registrar may make an order directing the society or its officers
to take such action as shall be specified in the order and within such
time as he may direct in that order as will remedy any defect disclosed
in the audit, inquiry or inspection and the society shall comply without
2003 31 No. 20 Cooperative Societies
51.-(1) The registered society shall submit an annual return to the
Returns tobe madeby regis-tered soci-
(2) The Registrar may prescribe the returns to be submitted by registered
societies to the Registrar and the persons who have to submit those
returns and the form in which those returns are to be made.
PRIVILEGES OF REGISTERED SOCIETIES
52. No act of a registered society or of any persons purporting to act
on behalf of the society in good faith, shall be deemed to be invalid by
reason only of the existence of any defect in the constitution of the
registered society or of a committee of such registered society or in the
appointment or election of an officer of such a society on the ground
that such officer was disqualified for his appointment. Defect inthe consti-
act of a
53 .-(1) A registered society which one of its objectives is the
disposal of any article which is the produce of agriculture or animal
husbandry, shall provide in its by-laws-
duce to or
(a) that every such member who produces any such articles has society
entered into an implied contract to dispose of the whole or
any specified amount, proportion or description thereof to or
through the society; and
(b) that any member who is proved or adjudged to be guilty of a
breach of by-laws shall pay to the society as liquidated damages a
sum ascertained or assessed in such manner as may be
prescribed by the by-laws.
(2) A contract implied in the by-laws of a registered society under
subsection (1)(a) shall create in favour of the registered society a first
charge upon all articles as referred to under subsection (1) whether
these articles have been produced or are about to be produced.
(3) In any legal proceedings arising out of a contract implied in the
by-laws of a registered society under subsection (1)(a), it shall not be a
defence that the contract is in restraint of trade.
(4) A member of a registered society shall be deemed not to have
contravened the by-laws of the society which requires him to deliver
any produce to the society if the failure to deliver such produce to the
society was due to the fact that he had, prior to becoming a member of
the society, contracted to deliver the produce to some other person.
32 No. 20 2003 Cooperative Societies
(5) Every person who applied for membership of a registered society shall,
if required so to do, disclose in his application particulars of all
contracts made by him for the delivery of any produce to any other person.
54.-(1) Subject to any prior claim of the government on the property
of the debtor and to the lien or of claim of a landlord in respect of rent
or any money recoverable as rent and in the case of immovable property
to any prior registered charge thereon-
(a) any rent or outstanding demand payable to a registered society
by any member or past member shall be a first charge on all
produce of agriculture, animal husbandry, fisheries or any
industry and generally all produce of labour and things used
in connection with production raised, purchased or produced
in whole or in part from any loan whether in money or in
goods given to him by the society:
Provided that, nothing herein contained shall affect the claim
of any bonafide purchaser or transferee without notice;
(b) any outstanding demands or dues payable to a registered
housing society by any member or past member in respect of
rent, shares, loans or purchase money or any other rights or
amounts payable to such society shall be first charge upon his
interest in the immovable property of the society.
(2) No person shall transfer any property which is subject to a
charge under subsection (1) except with the previous permission in
writing of the cooperative society which holds the charge.
55 . A registered society shall have a charge upon the shares or interest
in the capital and on the deposit of a member or past member and upon
any dividend, bonus, or accumulated funds payable to or due from
such member or past member to the society and may set off any sum
credited or payable to a member or past member or towards payment
of any such debt.
56. Subject to the provisions of section 55, the share or interest of a
member in the capital of a registered society shall not be liable to
attachment or sale under any decree or order of a court in respect of Shares orinterestnot liable
2003 33 No. 20 Cooperative Societies
any debt or liability incurred by such member, and the official receiver
under the law relating to bankruptcy for the time being in force shall
not be entitled to or have any claim on such share or interest.
57 .-(1) On the death or declaration of permanent insanity of a member, a
registered society may transfer the share or other interest of the member to
the person nominated in accordance with the by-laws of the society or
if there is no person so nominated, to such person as may appear to the
committee to be the heir or legal representative of the member or may
pay to such nominee, heir or legal representative as the case may be, a
sum representing the value of such member’s share or interest, as
ascertained in accordance with the rules or by-laws.
Transferof intereston deathof a mern-
(a) in the case of a registered society with unlimited liability
such nominee, heir, or legal representative, may require payment
by the society of the value of the shares or interest of the
deceased member ascertained as aforesaid;
(b) in the case of a society with limited liability, the society may
transfer the share or interest of the member to such nominee,
heir or legal representative, as the case may be, being qualified in
accordance with the rules and by-laws for member ship of the
society, or on his application within six months of the date of
the death or declaration of permanent insanity to any person
specified in the application who is so qualified.
(2) Any registered society shall pay other moneys due to the
deceased member from the society to such nominee, heir or legal rep-
resentative, as the case may be.
(3) All transfer and payment made by a registered society in accordance
with the provisions of this section shall be valid and effective against
any demand made upon the society by any other person.
(4) The Registrar shall be consulted for arbitration in case of misun-
derstanding between a member and a society under this section.
58 .-(1) A copy of any entry in a book of a registered society
regularly kept in the course of business shall, if certified in such
manner as may be presented by the rules, be received in any suit or
legal proceedings civil or criminal as prima facie evidence of the
existence of such entry and shall be admitted as evidence of the matters,
Proof ofentries insocietiesbooks
2003 34 No. 20 Cooperative Societies
transactions and accounts therein recorded in every case where and to
the same extent as, the original entry is admissible.
(2) No officer of any registered society shall, in any legal proceedings to
which the registered society is not a party be compelled to produce any
of the society’s books the contents of which can be proved under
subsection (1) or to appear as a witness to prove any matter, trans-
action or accounts therein recorded unless the court for special reasons
59. Subject to the provisions of Part XI, nothing in any written law
requiring registration of instruments relating to shares and debentures
shall apply to-
(a) any instrument relating to shares in a registered society, instru-
notwithstanding that the assets of such society consist in relating to whole of any part of immovable property; or shares and
(b) any endorsement upon or transfer of any debentures issued deben-
tures of by any such society; or registered (c) any debentures issued by such society and not creating, society
declaring, assigning, limiting or extinguishing any right, title,
or interest to or an immovable property except in so far as
instrument whereby the society has mortgaged, conveyed or
otherwise transferred the whole or part of its immovable
property or any interest there in to trustees upon trust for the
benefit of the holders of such debentures.
60.-(1) Notwithstanding the provisions of any law to the contrary,
the President may, by notice in the Gazette, in the case of any registered
society or class of registered societies reduce or remit-
(a) the duty, tax or value added tax which under any laws for the
time going in force may be payable in respect of the accumu-
lated funds of the society or of the dividends or other pay-
ments received by the members of the society on account of
the accumulated funds;
(b) the stamp duty payable under the Stamp Duty Act, on instru-
ments executed by or on behalf of a registered society or by
an officer or member and relating to the business of such
society of any class of such instruments, are respectively
(c) any registration fee payable under any law.
No. 20 2003 35 Cooperative Societies
(2) Nothing, in subsection (1) shall be construed as restricting or
limiting any power conferred on any authority to grant exemption from
any tax duty, stamp duty, value added tax or fee by the written law
imposing the tax, duty, stamp duty, value added tax or fee.
MANAGEMENT OF REGISTERED SOCIETIES
61. -(1) The control of the affairs of a registered society shall be vested
in the general meeting summoned in accordance with the by-laws of
the society and the rules.
(2) Without prejudice to the generality of the provisions of subsection (1),
the general meeting shall have the following functions-
(a) the election, suspension or removal of members of the Board
(b) the consideration and adoption of the annual balance sheet;
(c) the disposal of sums available for distribution;
(d) determining the amount of honoraria, if any, for unsalaried
officers and Board members;
(e) receiving the report from the Board;
(f) the acquisition or disposal by the society of all immovable
property and of movable property of such value as provided
for in the rules.
(3) Every society shall hold a general meeting at least once in a year.
(4) The Registrar or any other person authorized by him may summon a
special general meeting of the society in such a manner and at such a
time and place as he may direct. The Registrar may also direct what matters
shall be discussed at the meeting. Such meeting shall have all the powers
and subject to the same rules as meeting called in accordance with the
by-laws of the society.
(5) A special general meeting shall be held by a society where –
(a) at least one third of members signify in writing their intention
to hold such meeting;
(b) the Board may cause to be convened a Special General
Provided that, where the procedure to hold a special general meeting
under paragraph (b) above fails, an application to hold such a meeting
shall be lodged to the Registrar.
2003 36 No. 20 Cooperative Societies
(6) Notwithstanding the provisions of this Act, a registered society
may owing to its size and scope provided in its by-laws for a constitution of
a meeting of delegates in place of general meeting through the creation
of basic units to attend general meeting of that society for and on
behalf of members.
(7) Where for the purpose of this Act any question arises as to
(a) a person is following a relevant trade to the society;
(b) a person is a resident in the area of operation;
(c) two or more societies be considered to form a joint venture;
(d) a person has attained the apparent age of eighteen years;
shall be decided by the members at a general meeting.
(8) Any person aggrieved by a decision of the members at a general
meeting as given under subsection (7), may in writing appeal to the
Registrar. If the party is not satisfied with the decision of the Registrar,
he shall in writing appeal to the Minister whose decision shall be final.
62. Every registered society shall establish a Board to manage its
day to day activities.
Constitu- 63.-(l) Every Board of a registered society shall consist of not less
than five members and not more than nine members including the
chairman and vice chairman. tion of theBoard
(2) The members of the Board shall be elected by the general meeting
of the society and shall hold office for a period of up to nine years provided
that, in the case of those of members of the Board elected at the first
general meeting of the society, one third of such members shall be
voted out at the general meeting after the expiration of a period of 3
years from the date of their election, and one half of the remaining
members shall be voted out after expiration of a period of 6 years from
the date of election, and the remaining half shall leave office at the end
of a period of nine years.
(3) For the purpose of the proviso to subsection (2), the general
meeting shall vote one third of new Board members at the end of a
period of 3, 6 and 9 years.
(4) For the purpose of the proviso to subsection (2), the expression
”one third” shall mean, where the number of members is not three or
multiple of three the nearest whole number below one third and the
expression ”one half ‘shall mean, where the number of the members is
not an even number the nearest whole number below one half.
No .20 2003 37 Cooperative Societies
(5) Where any person is elected to the Board to fill a vacancy caused
by death, resignation or removal of a member of the Board, such person
shall hold office for the remainder of the term of office of his predecessor.
(6) No member of the Board shall serve for more than three consecutive
terms but may be eligible for re-election after the expiration of one
term of three years during which such member was not part of leadership.
64.-(1) The Board shall exercise all powers necessary to ensure the
full and proper administration of the society subject to the by-laws of
the society, the rules and any resolutions passed at the general meeting.
(2) The Board may, appoint a suitable person to administer and manage
affairs of the society and may employ such number of persons as the
may think fit to assist such person in the discharge of his functions:
Provided that, such person shall not have a record of previous
conviction on a criminal charge involving dishonesty or by a person
who has in the past been dismissed from public service on ground of
mismanagement or on any disciplinary ground.
(3) Where a person employed under subsection (2) is not performing
his functions satisfactorily, the Board shall terminate the employment
of that person subject to any law for the time being regulating termination
65.-( 1) No member of the Board of a registered society shall hold
any office of profit under the society.
(2) A member of the Board of a registered society may receive an membersof the honorarium from the society as determined and authorized by the general Board
meeting, subject to the provision of subsection (4).
(3) A member of the Board or who is in the employment of a registered
society other than the society to which he is a member and is in receipt
of emoluments for such employment shall not be entitled to receive
any honorarium as a member of the Board.
(4) The honorarium if any may be paid only by Primary and Secondary
2003 38 No. 20 Cooperative Societies
(5) No member shall be elected as a member to the Board if owns,
controls or influences businesses or activities like that of the
Suspensi- 66. -(1) Where the Registrar after giving consideration to the inspection
and audit report or after giving an order under section 50 is of the opinion
that the Board of a registered society is not performing its duties properly
he shall cause to be held a special general meeting by notice in writing
and advise it as appropriate.
(2) Where the special general meeting resolves to suspend members
of the Board, it shall-
(a) elect a caretaker Board from amongst the delegates to admin-
ister the affairs of the society;
(b) require the suspended member to state there objections if any
in writing jointly and severally in the next general meeting.
(3) Where after giving an opportunity to the Board to state its objections,
if any, of its suspension in the general meeting and the latter disapproves the
objections, then a new management Board shall be elected to that
effect by the general meeting. The Registrar shall publish in the
Gazette the decision in favour any change made by the general meeting.
(4) Subject to subsection (1) where the special general meeting resolves
to disagree with the advise of the Registrar on financial malpractices
the effects of which the society is rendered unable to settle its liabilities the
members shall be liable for the payment of the debts.
67.-(1) Subject to the provisions of sections 66, where the Registrar
after consultation with the Minister is satisfied that it is in the interest
of the members and the public, he shall remove the Board and appoint
a care taker Board which shall have the duty to manage the affairs of a
registered society and to comply with the directions which the special
general meeting may give and the appointed caretaker Board shall,
serve for the period of not exceeding three years.
(2) Where the Registrar removes the Board under subsection (1), the
member of the Board so removed may appeal to the Minister and the
decision of the Minister shall be final.
2003 39 20 Cooperative Societies
(3) Nothing in this section shall be deemed to affect the power of the
Registrar to cancel the registration of the society under section 98.
68 . Subject to the general direction and control of the special general
meeting any person or persons appointed under section 67 to assume
the functions of the Board of any registered society shall have all the
powers’ rights and privileges of a duly constituted Board of the society.
PROPERTY AND FUNDS OF REGISTERED SOCIETIES
69.-( 1) The funds of registered society shall include – Revenueof
(a) all money derived from fees or charges specified by the by-laws of Registe-
red the society; Societies
(b) all moneys derived from Payment of subscription where this
(c) all moneys derived from issue of shares;
(d) all revenue accruing to the registered society from deposits
and loans from persons who are not members as provided for
under the by-laws of registered society;
(e) all revenue accruing to the registered society from savings
and deposits made by its members;
(f) all moneys derived from the sale of any produce of the registered
(g) all moneys which a registered society may borrow from lending
institutions or any other source under its general powers of
raising money by borrowing;
(h) all moneys derived from fines imposed in respect of contravention
of any by-law made by a registered society.
(2) Any other money lawfully derived by a registered society from
source not mentioned specifically in subsection (1) shall be and
shall form part of the revenue and funds of that registered society.
(3) All revenue of a registered society shall be paid into the general
fund of the registered society.
Provided that, any receipt derived from any trade, industry. works,
service or undertaking carried on or belonging to registered society
may, be paid either in whole or in part into a separate fund.
70.-( 1) A registered society shall for the purpose of managing its
revenues and funds ensure that –
2003 40 No. 20 Cooperative Societies
(a) an admission fee is not refundable except in the case where
an application for membership has been rejected;
(b) a regular obligatory deposit is made in accordance with the
by-laws of the society and is not withdrawn except for purposes
and in accordance with conditions specified in the rules or on
termination of membership, or for the purposes of securing a
loan taken by or a guarantee given by a member, voluntary
deposits may be withdrawn, subject to any conditions or
restriction specified in the by-law of the registered society;
(c) deposit or loans from persons who are not members of the
registered society are subject to the provisions of this Act and
of the by-laws of the society;
(d) a share shall not be redeemed except in accordance with the
provisions of by-laws of the society where such by-laws allow
such redemption and in which case the said by-laws shall
also specify the minimum number of shares, a member shall
hold while is a member.
(2) A society shall not issue bonds or debentures without the authority of
the Registrar and shall in any such issue comply with any conditions
prescribed by the general meeting.
(3) A registered society which under this Act is required to maintain
a reserve fund shall maintain the fund in accordance with the provisions of
this Act and of the by-laws of the registered society.
71.-( 1) A registered society shall not make a loan to any person
other than a member.
Provided that, subject to the provisions of its by-laws a registered
society may with the approval of the Registrar and in accordance with
any conditions which the Registrar may prescribe, allow normal
business credit to bona-fide persons to whom goods have been sold or
services rendered by the registered society.
(2) Except with the permission of the Registrar, a society shall not
tend money on the security of any movable property other than produce or
goods in which the society is authorized to deal.
(3) The Registrar may by a general or special order, prohibit or restrict
the lending of money by any society or class of societies on the security of
No. 20 2003 41 Cooperative Societies
(4) A registered society whose main object is to supply commodities
to its members shall not make any loan nor allow any credit without
the sanction of the Registrar who may impose such limits on loans or
credit as he thinks fit.
(5) A registered society which markets the agricultural produce or
handicrafts or mineral products of its members may make advances
only up to a limit not exceeding 75 per centum of the local value as
estimated by the committee of agricultural products or handicrafts or
mineral products delivered to the society for marketing.
(6) A registered society may with the approval of the general meeting,
make loans to another registered body.
72 . A registered society shall receive deposits and loans from persons
who are not members only to such extent and under such conditions as
may be prescribed by the rules or by this Act.
73.-(1) A registered society may invest its funds-
(a) in interest bearing deposit in a cooperative financial institution,
or any financial institution as may be approved by the Registrar;
(b) in the shares of any other registered society;
(c) in government bonds and other securities; or
(d) in such other investments as the Registrar may by order with
approval of the Minister published in the
Gazette declare to be
authorized investments for the purpose of this section.
(2) The Registrar may advise any registered society to invest its
funds or any portion of its funds in any one or more of the investments
authorized by or under subsection (1).
(3) Where there is any loss occasioned, every officer who is a part
to the loss commits an offence and shall be liable on conviction to a
fine not exceeding one hundred thousand shillings and in addition shall
be required to compensate the loss so occasioned.
74. Every society shall contribute to a fund established by the Public
Finance Act and be administered by the Registrar for the purpose of meeting the
expenses of inspection and promotion of cooperative societies.
No. 6 of
2003 42 No. 20 Cooperative Societies
75 .-(1) The by-laws of a registered society shall provide for the raising
of funds to finance its activities either by the issue of shares or by imposing
a cess or levy on agricultural or other produce or handicraft marketed
through the society or by other means as may be approved by the
(2) A registered society shall where its funds to finance its activities
are obtained by the issue of shares, ensure that –
(a) the share capital shall not be reduced without the consent of
(b) unless the Registrar otherwise in writing directs, a fund
which shall be known as the share transfer fund shall be
formed and maintained to meet expenditure which may be
incurred by the society in purchasing the share of members
whose membership has terminated with the consent of the
(c) no payment from the share transfer funds shall be made for
the purchase of the share of any member who has terminated
his membership without the consent of the committee;
(d) no purchase of the shares of a member whose membership
has been terminated by reason of any causes other than death
shall be made except with monies then available in the share
(e) the amount standing to the credit of a share transfer fund shall
not exceed ten per centum of the subscribed share capital;
(f) where the share of a member is purchased by the society under
the foregoing provisions, the amount paid therefore shall not
exceed the par value of the share, and it shall be lawful for
the society to pay such less sum than the par value as it considers
reasonable, regard being made to the financial position of the
society at the time of purchase;
the shares of members purchased as aforesaid shall be re-issued
before any new allocation of shares is made.
76.-(1) No society shall pay a dividend or bonus or distribute any
part of its accumulated funds before the balance sheet has been audited
by a duly authorized auditor and approved by the general meeting.
(2) No society with unlimited liability which advances money or
goods to any member in excess of the money or the value of the goods
deposited by him shall pay a dividend during the period of ten years
from the date of its registration.
2003 43 20 Cooperative Societies
77.-( 1) Every society which derives a profit from its transaction
shall maintain a reserve fund.
(2) A society with unlimited liability, which advances money or
goods to any member in excess of the money or the value of goods
deposited by him, shall carry one fourth of the annual net surplus to the
(3) All other societies shall carry to the reserve fund such portion or
annual net surplus as may be prescribed by the rules and by-laws.
78. Subject to the provisions of this Act and of any rules made there
under, a registered society may apply the annual net balance together
with any sum available for distribution from previous years to payment
of bonus and to any staff incentive bonus scheme in such manner and
in such proportion as may be prescribed by the rules or its by-laws.
79. A registered society may, by resolution in general meeting
appropriate from its funds and expend on any charitable, educational
or medical purposes or such other objects.
CREATION AND REGISTRATION OF CHARGES
80.-(1) A cooperative society 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 approval by the annual general meeting.
(2) Subject to the provisions of this Part, every charge to which this
section applies created by a registered society, shall so far as any security
the society’s property is thereby conferred, be void against the liquidator
and any creditor of the society unless the prescribed particulars of the
charge, together with the instrument if any, by which the charge is created or
evidenced, or a copy thereof verified in the prescribed manner, are
delivered to the Registrar for registration within thirty days after the
date of the creation of the charge, but without prejudice to any contract
or obligation for payment of the money thereby secured, and when the
charge becomes void under this section, the money secured thereby
shall immediately become payable.
2003 44 No. 20 Cooperative Societies
(3) This section applies to the following charges-
(a) a charge for the purpose of securing any issues of debentures;
(b) a charge created or evidenced by an instrument which, if executed
by an individual, would require registration under the
Chattels Transfer Ordinance;
(c) a charge on immovable property, wherever situate, or any
(d) a charge on book debt of the society;
(e) a floating charge on the property of the society;
(f) any other document which may be used as a security.
(4) Where a negotiable instrument has been given to secure the payment
of any book debts of a registered society, the deposit of the instrument
for the purpose of securing an advance to the society shall not for the
purpose of this section be treated as a charge on those book debts.
(5) The holding of debentures entitling the holder to a charge on
immovable property shall not for the purposes of this section be
deemed to be an interest in immovable property.
(6) Where a series of debentures containing or giving by reference
to any other instrument, any charge to the benefit of which the debenture
holders of the series are entitled
pari passu is created by registered society,
it shall, for the purposes of this section be sufficient if there are delivered to
or received by the Registrar, within forty five days after the execution,
of the deed containing the charge, or, if there is no such deed after the
execution of any debentures of the series, the following particulars-
45 Cooperative Societies No. 20
(a) the total amount secured by the whole series;
(b) the date of any resolution authorizing the issue of the series
and the date of the covering deed, if any by which the secu-
rity is created or defined;
(c) a general description of the property charged; and
(d) the names of the trustees, if any of the debenture holders
together with the deed containing the charge, or, if there is
no such deed, one of the debentures of the series;
Provided that, where more than one issue is made of debentures in
the series, there shall be sent to the Registrar for entry in the register
particulars of the date and amount of each issue but an omission to do
this shall not affect the validity of the debentures issued.
(7) In this and the succeeding provisions of this Part ”charge” includes
a mortgage and a letter of hypothecation, and references to the property
and assets of a registered society include property and assets which the
registered society is authorized to charge.
81.(1) It shall be the duty of the registered society to send to the Duty ofsociety to Registrar the particulars of every charge created by the society to which
section 80 applies, but registration of any such charge may be effected
on the application of any person interested therein. registerchargescreated bysociety
(2) Where registration is effected on the application of some person
other than the society, that person shall be entitled to recover from the
society the amount of any fees properly paid by him to the Registrar on
(3) Where any registered society makes default in sending to the Reg-
istrar the particulars of any charge for registration to which section 80
created by the society then unless the registration has been ef-
fected by some other person, the society and every officer thereof who
is knowingly party to the default shall be liable, on conviction to a fine
not exceeding ten thousand shillings for every day during which the
82.- (1) Where a registered society acquires any property which is
subject to a charge to which section 80 would apply if the charge had
been created by the society after the acquisition of the property, the so- Duty ofsociety to
ciety shall cause the prescribed particulars of the charge, together with a
certified copy of the instrument, if any, by which the charge was
46 2003 Cooperative Societies
created or is evidenced to be delivered to the Registrar for registration
within forty-five days after the date of which the acquisition is com-
(2) Where the default is made in complying with the provisions of
this section, the society and every officer thereof who is knowingly a
party to the default, commits an offence and shall be liable on conviction
to a fine not exceeding ten thousand shillings for every day during
which the default continues.
83.-(l) The Registrar shall keep, with respect to each registered soci-
ety a register in the prescribed form of all charges requiring registration
under the provisions of this Part, and shall on payment of the prescribed
fee, enter in the register with respect to any such charge the following
(a) in the case of a charge to the benefit of which the holders of
a series of debentures are entitled, such particulars as are
specified in subsection (6) of section 80;
(b) in the case of any other charge-
(i) if the charge is a charge created by the society, the date of
its creation, and if the charge was a charge existing on
the property acquired by the society, the date of the ac.
quisition of the property;
(ii) the amount secured by the charge;
(iii) short particulars of the report charged; and
(iv) the persons entitled to the charge.
(2) The Registrar shall issue a certificate of registration of any charge
registered in pursuance of the provisions of this Part, stating the amount
thereby secured, and the certificate shall be conclusive evidence that the
requirements of this Part as to registration have been complied with.
(3) The register kept in pursuance of this section shall be open to
inspection by any person on payment of the prescribed fee, as may be
determined from time to time by the Registrar.
(4) The Registrar shall keep a chronological index, in the prescribed
form and containing the prescribed particular, of the charges entered in
2003 47 Cooperative Societies
84.- (1) Every registered society shall cause a copy of every certifi-
cate of registration given under section 84 to be endorsed on every de- Endorse-
benture certificate of debenture stock which is issued by the society, ofregistra- and the payment of which is secured by the charge so registered- tion of
Provided that, nothing in this subsection shall be construed as requir- debentures
ing a society to cause a certificate of registration of any charge so given
to be endorsed on any debenture or certificate of debenture stock issued
by the society before the charge was created.
(2) If any person knowingly and willfully authorizes or permits the
any debenture or certificate of debenture stock which under
the provisions of this section is required to have endorsed on it, a copy
of a certificate of registration without the copy being so endorsed on it,
commits an offence and shall without prejudice to any other liability, be
liable on conviction to a fine not exceeding ten thousand shillings.
85.- (1) The Registrar may, on evidence being given to his satisfac-
tion that, the debt for which any registered charge was given has been
paid or satisfied, or that a memorandum of satisfaction be entered on the
register, and shall, if required, furnish the society with a copy thereof.
(2) The Registrar, on being satisfied that, the omission to register a
the time required by this Part, or that the omission or mis-
statement of any particular matter with respect to any such charge or in
a memorandum of satisfaction, was accidental or due to inadvertence or
to some other sufficient cause, or is not of a nature to prejudice the
position of creditors or members of the society or that on other grounds
it is just and equitable to grant relief may, on the application of the reg-
istered society or any person interested and in such terms and conditions
as seen to him just and expedient, order that the time for registration
shall be extended, or, as the case may be, that the omission or mis-state-
ment shall be rectified..
86.-(1) If any person obtains an order for the appointment of a re-
ceive or manager of the property of a registered society or appoints
such a receiver or manager under any powers contained in any instru-
ment, he shall, within seven days from the date of the order or of the
appointment nt under the said powers, given notice or the fact to the Reg-
istrar and the Registrar shall, on payment of the prescribed fee, enter the
fact in the register of charge.
No. 20 Cooperative Societies 2003
(2) Where any person appointed receiver or manager of the property
of a registered society under the powers, contained in any instrument
ceases to act as such receiver or manager, he shall on so ceasing, give
the Registrar notice to that effect, and the Registrar shall enter the notice
in the register of charges.
(3) Where any person makes default in complying with any of the
requirements of this section, he shall be liable on conviction to a fine not
exceeding five thousand shillings for every day during which the default
87.-( 1) Every registered society shall cause a copy of every instru-
ment Creating any charge requiring to be registered under the provisions
of this part to be kept at the registered address of the society.
charges tobe kept by
(2) Where any registered society fails to comply with the provisions
of subsection (I ), the society and every officer thereof who is knowingly
a party to the default shall be liable on conviction to a fine not exceeding
one thousand shillings for every day during which the default continues.
Society’s 88.-(1 ) Every registered society shall keep at registered address of
the society a register of charges and enter therein all charges specifically
effecting property of the society and all floating charges on the property
or assets of the society giving in each case a short description of the
property charged, the amount of the charge and the names of the persons
(2) Where any officer of the society knowingly and willfully autho-
rizes or permits the omission of any entry required to be made in pursu-
ance of this section in any such register he shall be guilty of an offence
and shall be liable on conviction to a fine not exceeding ten thousand
89.-(1) The copies of the instrument creating any charge required to
be registered with the Registrar under the provisions of this Part and the
registered society in pursuance of section 83 shall be open during busi-
ness hours subject to such reasonable meeting restrictions as the society
in general meeting may impose, for the inspection of any creditor or
members of the society without fee, and the register of charges shall
also be open to the inspection of any other person on payment of such
fee as may be determined by the general meeting.
(2) Where inspection of the said copies or register is refused, any
officer of the society refusing inspection or who knowingly and willfully
2003 Cooperative Societies
permits such refusals commits an offence and shall be liable on conviction
to a fine not exceeding one hundred thousand shillings for every day
during which such refusal continues and any court may by order, compel
an immediate inspection of the copies or register.
INSPECTION OF AFFAIRS
90.-(1) The Registrar may, in his own motion, or, on the application
of the majority of the members of the Board of not less than one-third
direct and authorize some persons in writing to hold an inquiry into the
constitution , activities and financial affairs of the registered society.
(2) All officers and members of the society shall produce such books
and documents of the society and furnish such information in regard to
the affairs of the society, as the person authorized by the Registrar may
(3) The general meeting may decide to hold an enquiry into the affairs
of their registered society.
91.- (1) The Registrar shall make or cause to be made a continuous
inspection on the constitution, activities and financial affairs of a regis-
(2) Without prejudice to the generality of subsection (1), the Registrar
shall, on the application of a creditor of a registered society, inspect or
direct some person authorized by him by order, in writing in his behalf
to inspect the books of the society-
Provided that, no inspection under subsection (2) shall be carried out
or directed unless-
(a) the creditor satisfies the Registrar that the debt is a sum then
due, and that he has demanded payment thereof and has not
received satisfactory explanation within a reasonable time;
(b) the creditor deposits with the Registrar such sum as security
for costs of the proposes inspection as the Registrar may re-
(3) The Registrar shall communicate the results of any inspection
carried out under subsection (2) to the creditor.
No. 20 50 Cooperative Societies 2003
92.-(1) Where an inquiry is held under section 90 or an inspection is
made under section 91, the Registrar may, by a certificate under his
hand and sea], make an award apportioning the costs, or such part of the
costs as he may think right, between the society, the members or creditor
de- manding an inquiry or inspection, and the officer or former officers
of the society.
(2) The Registrar may lodge a certified copy of a certificate issued by
him under subsection (1) In a Court of a Resident Magistrate or a District
Court and upon being so lodged such certificate shall be deemed to be a
decree passed by such Court for the payment by the person named in the
certificate to the Registrar of the sum specified in the certificate and
such sum may be recovered in any manner prescribed by the Civil Pro-
cedure Act, for the enforcement of decrees and the provisions of that
Act relating to executions of decrees shall apply,
mutatis mutandis, to
proceedings for the recovery of costs awarded under this Act.
93.-( 1) Where upon an inquiry under section 90 or upon an inspec-
tion under section 91 or upon audit under section 48 the Registrar is
satisfied that a past or present officer or member has made or authorized
an unlawful payment or has by negligence or misconduct caused a defi-
ciency or a loss or failure to bring to account or has by negligence or
misconduct caused loss of or damage to any property of the registered
society, the Registrar shall surcharge such person with the unlawful pay-
ment, deficiency or loss, or the sum which ought to have brought to
account or the value of the property lost or damaged or portion of such
unlawful payment, deficiency, loss, sum, value or cost as the Registrar
may consider reasonable having regard to all the circumstances of the
(2) The Registrar shall give notice in writing to every person sur-
charged under the provision of subsection (1) of the amount surcharged
and the ground upon which the surcharge is made and every such person
may, not later than thirty days from the receipt of such notice, appeal to
(3) Where a person surcharged-
(a) fails to pay such amount within thirty days after the service
of the notice upon him in accordance with subsection (2); or
(b) has appealed to the Minister and he fails to pay the amount
of the surcharge, if any, decided upon by the Minister on
appeal within fifteen days from the date of the decision of
Cooperative Societies 2003 51
the Registrar shall issue a certificate under his hand and seal specifying
the name and address of the person who has been surcharged and the
amount of the surcharge and such certificate or a certified copy thereof
shall be lodged in a Court of Resident Magistrate or a District Court and
upon being so lodged it shall be deemed to be a decree passed by such a
Court be for the payment by the person named in the certificate to the
Registrar of the sum specified in the certificate and such sum shall be
recovered in any manner prescribed by the Civil Procedure Act, for the
enforcement of decree and the provisions of that Act relating to execution
of decrees shall apply,
mutatis mutandis. to proceedings for the recov-
ery of such amount specified in the certificate.
AMALGAMATION AND DIVISION
94. -(1) Any two or more registered societies may, resolve, by a reso-
lution approved at a general meeting of each of the societies at which
not le ss than two thirds of the members or delegates of the society are
present and held after reasonable notice given of the place and time of
the meeting and of the intention to move such resolution thereto, to
amalgamate as a single society.
(2) Where the Registrar is satisfied that-
(a) two or more registered societies have resolved to amalgamate
as a single society in accordance with the provisions of
(b) the proposed by-laws of the proposed amalgamated society
are unobjectionable; and
(c) the proposed amalgamation is not against the interest of the
members of the societies proposing to amalgamate or against
the public interest, he may, by order published in the
amalgamate the societies.
(3) Every order made under subsection (2), shall specify-
(a) the date on which the societies shall amalgamate (hereinafter
referred to as ”the effective date”);
(b) the names of the amalgamating societies; and the name of the
amalgamated society and may contain such directions as the
Registrar may consider necessary for the purpose of giving effect
to the amalgamation or for safeguarding the interests of any
No. 20 Cooperative Societies 2003 52
(4) Where an order is made under subsection (2)-
(a) all the assets and liabilities of the amalgamating societies shall,
by virtue of such order and without further assurance, vest in
the amalgamated society;
(b) the Registrar shall cancel the registration of the amalgamating
societies and such cancellation shall be effective as from the
effective date; and
(c) the Registrar shall, notwithstanding the provisions of sections
24 and 25, register the amalgamated society and the by-laws of
the amalgamated society.
(5) Notwithstanding subsection (1), the Registrar may by notice in
writing advise to amalgamate two or more societies if he is satisfied
that, it is in the interest of the societies to do so:
Provided that, where the society does not agree with the advice of the
Registrar on amalgamation, the Registrar may dissolve that society un-
der section 99.
95. No amalgamation of registered societies or division of a regis-
tered society shall be invalid by reason only of defect or irregularity in
any notice or order required to be given or made under this Part.
96 .-(1) An existing registered society (hereinafter referred to as “existing society”) may, resolve, by a resolution approved at a general
meeting at which not less than two thirds of the members or delegates of
the society are present and held after reasonable notice given of the
place and time of the meeting and of the intention to move such resolu-
tion thereat, to divide itself into two or more registered societies (here-
inafter referred to as ”new societies”). societies
(2) A resolution passed under subsection (1) shall contain proposals
for the division of the assets and liabilities of the existing society among
the proposed new societies, and may prescribe the area of operation of,
and specify the members who shall constitute each of the proposes new
(3) The Registrar may by notice in writing advise on voluntary division
if is satisfied that-
(a) an existing society has resolved to divide itself into two or
more new societies in accordance with subsection (1);
Cooperative Societies 53 2003
(b) such resolution complies with the provisions of subsection
(c) the proposed new societies shall be economically viable when
(d) the proposed division is not against the interests of the mem-
bers of the existing society or against the public interest, he
may, by order published in the
Gazette, divide the existing
society into the proposed new societies.
(4) Every order made under subsection
(3) shall specify-
(a) the date on which the existing society shall be divided into
the new societies (hereinafter referred to as ”the effective
(b) the name of the existing society and the names of the new
societies into which it is divided;
(c) the manner in which the assets and liabilities of the existing
society shall be divided among the new societies; and
(d) where necessary, the area of operation of each of the new
societies, and may contain such directions as the Registrar
may consider necessary for the purpose of giving effect to
the division or for safeguarding the interests of any person.
(5) Where an order is made under subsection (3)-
(a) the assets and liabilities of the existing society subsisting on
the effective date shall, by virtue of such order and without
further assurance, vest in the new societies in the manner
specified in such order;
(b) the Registrar shall cancel the registration of the existing so-
ciety and such cancellation shall be effective as from the ef-
fective date; and
(c) the Registrar shall, notwithstanding the provisions of sections
24 and 25, register the new societies and their respective
Provided that, where the society does not agree with the advice of the
Registrar on division, he may dissolve that society under section 97.
No. 20 Cooperative Societies 54
DISSOLUTION OF SOCIETIES
97. Where the Registrar after an inquiry has been held under section
90 or after an inspection has been made under section 91 or on receipt of
an application made by three-fourths of the members of a registered
society or failure to comply with the proviso of sections
94 and 96, is of
the opinion that, the society ought to be dissolved he may, by order in
writing and after notifying the general meeting of the Federation if any,
cancel the registration of the society.
Cancellation 98.-(1) Where it is a condition of the registration of a society that it
should consist of at least required minimum members, the Registrar may,
by order in writing, cancel the registration of the society if at any time it
is proved to his satisfaction that, the number of the members has been
reduced to less than the required minimum as per section
15 of this Act.
(2) Where the Registrar has reasonable cause to believe that a regis-
tered society has not commenced within six months of registration, or
has ceased to carry on business, he may, after the expiry of three months
from the date of publishing a notice to that effect in the
order in writing, cancel the registration of such society and such
cancellation shall be Gazetted.
(3) The Registrar shall cancel the registration of any savings and credit
societies that fail to comply with the requirement to present audited
accounts as required by section 48 of the Bank of Tanzania Act, unless
sufficient evidence is given to the effect that, any such savings and credit
societies have established a technical and financial assistance linkage
with a professionally managed financial services institution or program.
Act No. 1of 1995
99.-(1) Where the registration of a society is cancelled under the pro-
visions of section 97 or 98, any member of the society the registration of
which is cancelled may, within thirty days from the date of the order
canceling the registration, appeal against such order to the Minister. A p pea lagainstcancella-
(2) Where no appeal is presented within thirty days from the making
of an order canceling the registration of a society, the order shall take
effect on the expiry of that period.
No. 20 2003 Cooperative Societies 55
(3) Where an appeal is presented within thirty days, the order shall
not take effect until it is confirmed by the Minister.
(4) Where an appeal has been presented within thirty days,
the Minister may proceed to consider the same and confirm the order
notwith- standing that thirty days have not elapsed and where an order is
so con- firmed no further appeal shall be allowed against such order.
100. -(1) Where the registration of a society is cancelled, the cancel la-
Effect ofcancella- tion shall take effect and the society shall, except for the purposes of the tion of
winding-up of its affairs, cease to exist as a corporate body from the date registra-
when the order of cancellation takes effect. tion
(2) Where the Registrar cancels the registration of a society under
any of the provisions of this Act, he shall make such order as he may
deem fit respecting the custody of the books and documents and for the
protection of the assets of the society until the order canceling the regis-
tration of the society takes effect.
101. Where the registration of a society is cancelled under any of the
sections 97 or 98, the Registrar shall-
(a) appoint by order in writing a custodian of assets and liabili-
ties of the society immediately after cancellation is effected;
(b) within forty days appoint a competent person or persons to
be liquidator of the society’s assets and liabilities;
Provided that, the persons appointed under paragraph (a) and (b) shall
102.-(1) A liquidator appointed under section 101 shall have the power, Powers of
subject to the guidance and control of the Registrar, and to any limita- he liqui-dator tions imposed by the Registrar-
(a) to institute and defend suits and other legal proceedings by
his name or office and to appear in Court as a litigant in per-
son on behalf of the society;
(b) to refer disputes to arbitration;
(c) to determine the contribution to be made by the members
and past members and by the estates of deceased members
of the society respectively to the assets of the society;
2003 No. 20 Cooperative Societies 56
(d) to investigate all claims against the society, and, subject to
the provisions of this Act, to decide questions of priority
aris- ing between claimants;
(e) to determine by what persons and in what proportion the
costs of the liquidation are to be borne;
(f) to examine and investigate any claim which the society may
have against any person;
(g) to take possession of the books, documents and assets of the
(h) to give such directions in regard to the collection and distri-
bution of the assets of the society and the disposal of the
books and documents of the society as may appear to him to
be necessary for winding-up the affairs of the society.
(2) Subject to any rules made under section 130, a liquidator appointed
under this section shall, in so far as such powers are necessary for carry-
ing out the purpose of this section, have power to summon and enforce
the attendance of witnesses and to compel the production of documents
by the same means and in the same manner as is provided in the case of
a Court under the Civil Procedure Act.
(3) The rules may provide for an appeal to a court of a resident mag-
istrate having jurisdiction over the area in which the headquarters of the
society are situated from any decision made by a liquidator under this
section and may provide for further appeal to the High Court.
103. -(1) A liquidator shall exercise his powers subject to control and
revision by the Registrar, who may-
Powers oftheRegistrarto control (a) rescind or vary any order made by a liquidator and make
whatever new order is required; liquidation
(b) remove a liquidator from office;
(c) call for all books, documents and assets of the society;
(d) by order in writing limit the powers of the liquidator under
the provisions of the foregoing section;
(e) require accounts to be rendered to him by the liquidator;
57 Cooperative Societies 2003
(f) procure the auditing of the liquidator’s accounts and autho-
rize the distribution of the assets of the society;
(g) make or order for the remuneration of the liquidator;
(h) refer any subject of dispute between a liquidator and any
third party to settlement if that party shall have assented in
writing to be bound by the decision to be given on the dispute.
(2) Decisions made under this section may be enforced as follows-
(a) when made by a liquidator, by any Court of Resident Magis-
trate having jurisdiction in the same manner as the decree of
(b) when made by High Court or a Court of Appeal, in the man-
ner of any such appeal as aforesaid in the same manner as a
decree of such Court in any suit pending therein.
104. At any time after the cancellation of a registered society takes
effect, the liquidator, or any creditor member of the society, may, where
Power tostay orrestrain any suit or proceedings against the society is pending in any court, apply proceed-
to the court in which the suit or proceedings is pending for a stay of ingsagainst proceedings therein and the court to which such application is made
may stay the proceedings accordingly on such terms as it thinks fit. society
105. Any disposition of the property including things in action of a Avoidance
registered society and any transfer of shares or alteration in the status of of dispo-
sition of the members of the society made after the cancellation of the registered
society takes effect shall, unless such disposition, transfer or alteration
is made by the liquidator, be void. property,after
106. Where, the registration of a society is cancelled, any attachment, Avoidance
distress or execution put in force against the assets of the society after ofattach- such cancellation takes effect, shall be void. ment, etc
107.-(1) Where, in the case of the winding-up of a society, it appears
that any person who has taken part in the organization or management
of the society or any past or present chairman, secretary member of the
committee or other officer of the society has disapplied or retained or
become liable or accountable for any money or property of the society
or has been guilty of misfeance or breach of trust in relation to the society,
No. 20 2003 58 Cooperative Societies
the Registrar may, on the application of the liquidator or of any creditor
or contributor, investigate the conduct of such person and make an
order requiring him to repay or restore the money or property or any
part thereof as the case may be with interest at such rate as the Registrar
thinks just or to contribute such sum to the assets of the society by way
of compensation in regard to the misapplication, retainer, misfeance
or breach of trust as the Registrar thinks just.
(2) Where the Registrar has ordered payment of any money or de I iv-
ery of any property under subsection (1), such money or property may
be recovered on production of such order to the District Court or the
Court of a Resident Magistrate having jurisdiction over the person from
whom the money or property is claimable in the same manner as if such
order were the decree of that Court.
108. Any Court of a Resident Magistrate may, on the application of
the Registrar or of the liquidator and on proof of probable cause for
believing that any person or officer of the society mentioned in subsection
(1) of section 107 is about to quit the United Republic or otherwise to
abscond or remove any of his property for the purpose of evading calls
or of avoiding investigation of his conduct or of avoiding examination
by the liquidator or by the Registrar respecting the affairs of the society
or of avoiding compliance with any order made by the Registrar under
the said subsection (1) of section 107, cause him to be arrested and his
books and papers and movable property to be detained until such time as
the court may order.
109. In every winding-up of a registered society, all debts payable
on a contingency, and all claims against the society, present or future,
certain or contingent, ascertained or sounding only in damages, shall
be admissible to proof against the society, a just estimate being made
so far as possible, or the value of such debts or claims as may be
subject to any contingency or sound only in damages, or for some
other reason do not bear a certain value.
110. In the winding-up of a registered society which is insolvent the
same rules shall prevail and be observed with regard to the respective
rights of secured and unsecured creditors and to debts provable and to
the valuation of annuities and future and contingent liabilities as are in
force for the time being under the law of bankruptcy with respect to the
estates of persons adjudged bankrupt, and all persons who in any such
case would be entitled to prove for and realize dividends out of the as- Where
No. 20 2003 59 Cooperative Societies
sets of the society may come in under the winding upon and make such
claims against the society as they respectively are entitled to by virtue of
111.-(l) In the winding-up of a registered society there shall be paid
in priority to all other debts-
(a) all government taxes and local rates due from the society at
the relevant date and having become due and payable within
twelve months next before that date not exceeding in the
whole one year’s assessment;
(b) all government rents not more than one year in arrears;
(c) all wages or salary (whether or not earned wholly or in part
by way of commission) of services rendered to the society
during four months next before the relevant date and all
wages (whether payable for time or for piece work) of any
workman or labourer in respect of services so rendered;
(d) unless the society has, immediately prior to the relevant
date, under any contract with insurers, rights capable of
being transferred to and vested in the workman, all amounts
due in respect of any compensation under any law for the
time being in force in Tanzania relating to compensation of
workman. being amounts which have accrued before the
(2) Notwithstanding anything in paragraph (c) of subsection (1), the
sum to which priority is to be given under that paragraph shall not, in the
case of one claimant, exceed one hundred thousand shillings:
Provided that, where a claimant under the said paragraph (c) is a
labourer in husbandry who has entered into a contract for the payment
of a portion of his wages in a lump sum at the end of the year of hiring,
he shall have priority in respect of the whole of such sum, a part thereof,
as the liquidator may decide to be due under the contract, proportionate
to the time of service up to the relevant date.
(3) Where any compensation under any law for the time being in
force in Tanzania relating to compensation of workmen is a weekly
payment, the amount due in respect thereof shall, for the purpose of
No. 20 Cooperative Societies 60
paragraph (d) of subsection (1) be taken to be the amount of the lump
sum for which the weekly payment could, if redeemable, be redeemed if
the employer made an application for that purpose under such law.
(4) Where any payment has been made to any clerk, servant, work-
man or labourer in the employment of the society, on account of wages
or salary out of money advanced by some person for that purpose, the
person by whom the money was advanced shall in a winding-up have a
right of priority in respect of the money so advanced and paid up to the
amount by which the sum in respect of which the clerk, servant, work-
man or labourer, would have been entitled to priority if the winding-up
has been diminished by a reason of the payment having been made.
(5) The debts referred to in subsection (1) shall-
(a) rank equally among themselves and be paid in full unless the
assets are insufficient to meet them in which case they shall
abate in equal proportions, and
(b) so far as the assets of the society available for payment of
general creditors are insufficient to meet them, have priority
over the claims of holders of debentures under any floating
charge created by society, and be paid accordingly out of
any property comprised in or subject to that charge.
(6) For the purposes of this section-
(a) any remuneration in respect of a period of absence from work
through sickness or other good cause shall be deemed to be
wages in respect of services rendered to the society during
(b) the expression ”the relevant date” means the date on which
the cancellation of the registration of the society takes effects.
112 .-( 1) Any transfer, conveyance, mortgage, charge, delivery of good,
payment, execution or other act relating to property made or done by or
against a registered society within six months before the date on which
the cancellation of its registration takes effect which had it been made or
done by or against an individual within six months before presentation
of bankruptcy petition on which he is adjudged bankrupt, would be
deemed in his bankruptcy a fraudulent preference, shall in the
61 Cooperative Societies 2003 No. 20
event of the society being wound-up be deemed fraudulent preference
of its creditors and be void accordingly.
(2) Any transfer, conveyance or assignment by a society of all its
property to trustees for the benefit of all its creditors shall be void to all
113.-(l) Where anything made or done is void under section 112 as a
fraudulent preference of a person interested in property mortgaged or
charted to secure the society’s debt then without prejudice to any rights
or liabilities arising apart from this provision the person preferred shall
be subject to the same liabilities, and shall have the same rights, as if he
had undertaken to be personally liable as surety for the debt to the extent
of the mortgage or charge on the property or the value of his interest,
whichever is the less. Liabilities
and Rightsof certain
(2) The value of the said person’s interest shall be determined as at
the date of the transaction constituting the fraudulent preference, and
shall be determined as if the interest were free of all encumbrances other
than those to which the mortgage or charge for the society’s debt was
(3) On any application made to the liquidator with respect to any
payment on the ground that the payment was a fraudulent preference of
a surety or guarantor, the liquidator shall have jurisdiction to determine
any questions with respect to the payment arising between the person to
whom the payment was made and the surety or guarantor and to grant
relief in respect thereof, not withstanding that it is not necessary so to do
for the purpose of the winding-up.
(4) Subsection (3) shall apply, with the necessary modifications, in
relation to transactions other than the payment of money as it applies in
relation to such payments.
114. Where a registered society is being wound-up, a floating charge
on the undertaking or property of the society created within six months
of the cancellation of the registration of the society taking effect shall,
unless it is proved that the society immediately after the creation of the
charge was solvent, be invalid, except to the amount of any cash paid to
the society at the time of or subsequently the creation of, and in consid-
No. 20 62 2003 Cooperative Societies
eration, for the charge, together with interest on that amount at the rate
of six percent per annum or such other rate as may be prescribed.
115.-(1) Where any part of the property of a registered society which
is being wound up consists of land of any tenure burdened with onerous
convents, of shares or stock in companies of profitable contracts or of
any property that is un saleable or not readily saleable, by reason of its
binding the possessor thereof to the performance of any onerous act or
to payment of any sum of money, the liquidator, notwithstanding that he
has endeavored to sell or has taken possession of the property or exer-
cised any act of ownership in relation thereto, may, with the leave of the
Registrar and subject to the provisions of this section, by writing signed
by him, at any time within twelve months after the cancellation of the
registration of the society taking effect or such extended period as may
be allowed by the Registrar, disclaim the property.
(2) The disclaimer shall operate to determine, as from the fate of dis-
claimer, the rights, interest and liabilities of the society in or in respect
of the property disclaimed but shall not, except so far as is necessary for
the purpose, of releasing the society and the property of the society from
liabilities of any other person affect the rights or the liabilities of any
(3) The Registrar, before or on granting leave, to disclaim, may require
such notices to be given to persons interested, and impose such terms as
a condition of granting leave, and make such other order in the matter as
he thinks just.
(4) The liquidator shall not be entitled to disclaim any property under
this section in any case where an application in writing has been made to
him by any person interested in the property requiring him to decide
whether he will or will not disclaim and the liquidator has not, within a
period of twenty eight days after the receipt of the application or such
further period as may be allowed by the Registrar, given notice to the
applicant that he intends to apply for leave to disclaim, and, in the case
of a contract, if the liquidator, after such an application or such further
period as may be allowed by the Registrar, given notice to the applicant
that he intends to apply for leave to disclaim, and, in the case of a contract,
if the liquidator, after such an application as aforesaid, does not within
the said period or further period disclaim the contract, he shall be deemed
to have adopted it.
2003 63 Cooperative Societies
(5) Any person injured by the operation of a disclaimer under this
section shall be deemed to be a creditor of the society to the amount
of the injury, and may accordingly prove the amount as a debt in the
116.-(1) Where a creditor has issued execution against the movable
or immovable property of registered society or has attached any debt
due to the society, and the society is subsequently wound up, he shall
not be entitled to retain the benefit of the execution or attachment against
of rights of
creditor astoexecutionor attach- the liquidator in the winding up of the society unless he has completed ment in
the execution or attachment before the fate on which the cancellation of case ofsociety the registration of the society takes effect: being
(a) a person who purchases in good faith under a sale by bailiff
on an order of a court any movable property of a society of
which an execution has been levied shall in all cases acquire
a good title thereto against the liquidator; and
(b) the rights conferred by this subsection on the liquidator may
be set aside by the Registrar in favour of the creditor to such
extent and subject to such terms as the Registrar may think
(2) For the purpose of this section, the execution against movable
property shall be taken to be completed by seizure and sale, and an at-
tachment of a debt shall be deemed to be completed by receipt of the
debt, and an execution against immovable property shall be deemed to
be completed by seizure and, in the case of an equitable interest, by the
appointment of a receiver.
(3) In this section and in section 113, the expression ”movable prop-
erty” includes all chattels personal, and the expression ”bailiff’ includes
any officer charged with the execution of a writ or other process.
(4) The right conferred upon the liquidator by this section may be
enforced by him by a civil suit in any court of competent jurisdiction.
117.-(1) Where any movable property of a registered society is taken
in execution and, before the sale thereof or the completion of the execu-
tion by receipt of recovery of the full amount of the levy, notice is served
upon the court which issued the execution that the registration of the
society has been cancelled, the court shall require the bailiff to deliver
court as to
No. 20 Cooperative Societies 64
the movable property including any money seized or received in part
satisfaction of the execution to the liquidator and the bailiff shall
forth-with comply with such requirement.
(2) Where the bailiff on being required by the court under subsection
(1) delivers the movable property including the money, if any, seized or
received by him, the costs of the execution shall be a first charge on the
goods or money so delivered and the liquidator may sell the goods, or a
sufficient part thereof, for the purpose of satisfying that charge.
118 . Save so far as is expressly provided for in this Act, no court shall
have any jurisdiction in respect of any matter connected with the disso-
lution of a registered society.
119. On the completion of his duties, the liquidator shall hand over to
the Registrar all the books and records of the society, and the Registrar
may after the period of two years from the removal of the name of the
society from the register cause such books and records to be preserved
in an archive. Preserva-
120.-(1) It shall be an offence under this Act if- Offences
(a) a registered society or an officer or a member thereof will-
fully neglects or refuses to do any act or to furnish any
information required for the purpose of this Act by the
Minister, the Registrar or any other person duly authorized
in that behalf by the Minister or the Registrar, as the case
may be; or
(b) a registered society or an officer or member thereof willfully
‘false return or furnishes false information; or
(c) any person willfully or without any reasonable excuse
disobeys any summons, requisition or lawful written
order issued under the provisions of this Act or does not
furnish any information lawfully required from him by a
person authorized to do so under the provisions of this
65 Cooperative Societies No. 20 2003
(d) any person acts or purports to act as a board member when
not entitled to do so; or
(e) a registered society, or an officer or a member thereof, will-
fully performs any act which requires the consent or approval
of the Registrar without first having obtained such consent
(f) a registered society, or an officer or a member thereof will-
fully omits to do or to cause to be done an act or thing which
is required by or under this Act to be done;
(g) a registered society or an officer or a member thereof will-
fully does or causes to be done any act or thing prohibited by
or under this Act.
(2) Every registered society, officer or member of a society or other
person guilty of an offence under this section shall, on conviction be
liable to a fine not exceeding one hundred thousand shillings and, where
such offence has been committed by an individual, to imprisonment for
a term not exceeding six months in addition to or in lieu of such fine.
121.-( 1) Any person, firm or company having knowledge or notice
of the existence of a registered society which has one of its objects the
disposal of any article as party of its business, who solicits or persuades
any person to sell or deliver produce in violation of the by-laws of that
cooperative society, shall be liable to a fine not exceeding five hundred
thousand shillings for an person and one million shillings for a firm or
company for each offence, and shall in addition pay to the society
concerned the market price of such produce as at the date of such offence.
(2) Any person, firm or company, as aforesaid, shall be deemed to
have knowledge or notice of the existence of such cooperative society if
the said society has notified the existence of such cooperative society
and the relevant by-laws thereof in the
Gazette or a registered society
which has one of its objects the disposal of any article which is the
product of agriculture or animal husbandry, in any newspaper circulating
No. 20 Cooperative Societies 66
122. Where any person, being a past or present officer or member of
a registered society the registration of which has been cancelled and in
respect of which a liquidator has been appointed- Offences
(a) does not, to the best of his knowledge and belief, fully and
truly disclosed to the liquidator all the property, movable
and immovable, of the society;
(b) does not deliver to the liquidator, or as he directs all such
part of the movable or immovable property of the society as
is in his custody or under his control;
(c) does not deliver up to the liquidator or as he directs, all books
and papers belonging to the society; or
(d) fraudulently, parts with, conceals, destroys, falsifies, mutilates
or alter or is privy to the fraudulent parting with, concealment,
destruction, falsification, mutilation or alteration, any book
or paper relating to or affecting the property or affairs of the
commits an offence and shall be liable on conviction to imprisonment
for a term not exceeding five years.
123.-(1) No person other than a registered society shall trade or carry
on business under any name or title of which the word ”Cooperative” or
its equivalent in any other language is part without the sanction of the
of use of
(2) No person other than a bonafide savings and credit society shall
trade or carry on business under any name or title of which the words
”Saving and Credit Society” or their equivalent in any other language is
part without the sanction of the Registrar.
(3) Every person who contravenes any of the provisions of this
section shall be guilty of an offence and shall, on conviction be liable to
a fine not exceeding forty thousand shillings and in the case of a
continuing offence to a further one thousand shillings for each day on
which the offence is continued after conviction thereof.
2003 No. 20 67 Cooperative Societies
Prosecu- 124. The Director of Public Prosecutions shall, by notice, published
in the Gazette appoint Prosecutors who shall be responsible for
prosecution of cases involving cooperative societies.
125 .-(1) There shall be a code of conduct of for management of Code of
cooperative societies provided under the schedule to this Act, subject to conduct
the amendments by the Minister from time to time;
(2) The appointment and performance of duties by society employees,
committee members shall be subject to the code of conduct.
126. Notwithstanding anything contained in this Act, the Minister
may, in the interest of members, by order published in the Gazette and societies
subject to such conditions, if any, as he may impose, exempt any society from
from any of the requirements of this Act as to registration. conditionsofregistration
127 .-(1) Notwithstanding any other provisions of this Act, the Registrar Appoint-ment of may, subject to the provisions of this section, appoint special members special
to the board of any registered society in receipt of financial assistance members
from the government or if the Registrar considers such appointments to to
be necessary in the public interest or in the interest of the society. committees
(2) The number of special members appointed to a committee under
this section shall not exceed one third of the number of ordinary members,
including the Chairman and Vice-Chairman (if any) of the committee.
(3) For the purposes of this section-
(a) a society shall be deemed to be in receipt of financial
assistance from the Government-
(i) if within the immediately proceeding two years the society
has received any grant of money from the Government;
(ii) if any money has been lent to the society by the
Government and the loan has not been repaid; or
(iii) if any loan made to the society has been guaranteed by
the Government and either the guarantee is still outsta
nding or the guarantee has been honoured by the
2003 Cooperative Societies No. 20 68
Government and the society has not paid to the Government
all sums (including interests, if any, thereon) paid by the
Government under the terms of the guarantee; and
(b) the expression ”one-third” shall mean, where the number of
members is not three or a multiple of three, the nearest whole
number below one-third.
128.-(1) A special member of a board appointed under section 127
shall remain a member of the committee until his appointment is
determined by the Registrar.
ment andpowers ofspecial
(2) Where the Registrar has appointed special members to a board
any such special member may require that any decision taken by such
board shall not have effect until the approval of the Registrar has been
obtained and, where any such requirement is made in respect of any
such decisions, the decision shall be of no force or effect and shall not in
any way be acted upon until the Registrar has signified approval thereof.
(3) In exercising powers conferred by subsection (2), a special member
appointed to a board shall, unless the Registrar otherwise directs, have
all the powers of an ordinary member of that board.
129.-(1) Fees as may be prescribed shall be charged in respect of the
(a) Issue of registration certificate and by-laws;
(b) the registration of amendments to by-laws;
(c) a search in the registration register;
(d) inspection of documents;
(e) certified or uncertified copies of documents;
(f) the registration of charges;
(g) the inspection of registers of charges;
(h) any other matter in respect of which a fee is chargeable
under the provisions of this Act.
Provided that, the Registrar may in his discretion vary or waive any
of the said fees in the case of a Primary society.
2003 Cooperative Societies No. 20
(2) Different fees may be prescribed for different types or kind of
(3) The fee provided for under subsection (I) may be used by the Registrar
for regulatory purposes under the law for the time being in force.
130. All sums due from a registered society or from an officer or
member or past member of a registered society as such to the Government
and other recognized financial organization may be recovered in the
manner provided for the recovery for debts due to the Government under
the law for the time being in force.
Recoveryof sumsdue toGovern-
131.-(1) The Minister may after consultation with the Registrar make
rules in relation to any registered society for proper implementation of
(2) Without prejudice to the generality of subsection (1), the Minister
may make rules –
(a) prescribing the maximum number of shares or portion of
the capital of a society which may be held by a member;
(b) prescribing the forms to be used and the conditions to be
complied with in the making of applications for the
registration of society and the procedure in the matter of
(c) prescribing the matters in respect of which a society may or
shall make by-laws and for the procedure to be followed in
making, altering and abrogating by-laws, and the payment
to be made and the interest to be made and the interest to be
acquired before the exercise of the right of membership and
to provide for the termination of membership;
(d) prescribing the conditions to be complied with by persons
applying for admission or admitted as members and provide
for the election and admission of members, and the payment
to be made and the interest to be acquired before the exercise
of the right of membership and to provide for the termination
(e) regulating the manner in which funds may be raised by means
of shares or debentures or otherwise and the form in which
No. 20 70 Cooperative Societies 2003
any application for financial assistance from Government,
any bank or any financial institutions shall be made;
(f) providing for general meetings of the members and for
the procedure at such meetings and the powers to be
exercised by such meetings and for the methods of
summoning members to such meetings and giving notice
of such meetings to members;
(g) providing for the appointment, remuneration and terms of
service of employees of a society;
(h) providing for the suspension and removal of members of
society, committee members and supervisory committee and
other relevant officers, and describe procedure of meetings
of the committee and supervisory committee, and define the
powers to be exercised and the duties to be performed by
the committee and supervisory committee and other relevant
officers, and provide for the delegation of the powers of the
committee and supervisory committee;
(i) providing for the submission of annual estimates for the
approval of the Registrar;
(j) providing for the periodical publication, of a balance sheet
showing the assets and liabilities of a society;
(k) providing for the persons by whom and the form in which
copies of entries in books of societies may be certified;
(l) providing for the form of the register of members and for the
particulars to be entered therein;
(m) providing for procedures for dispute settlement;
(n) providing for the withdrawal and expulsion of members
and for the payments, if any, to be made to members who
withdraw or are expelled and for the liabilities of past
(o) providing for the mode in which the value of a deceased
members interest shall be ascertained and for the nomina-
tion of any person to whom such interest may be paid or
(p) providing for the mode in which the value of the interest of
a member who has become of unsound mind and incapable
2003 71 No. 20 Cooperative Societies
of managing his affairs shall be ascertained and for the
nomination of any person to whom such interest may be
paid or transferred;
(q) prescribing the payments to be made and the conditions to
be complied with by members applying for loans; the period
for loans, the period for which loans may be made and
amount which may be lent, to an individual member and the
manner in which such loans shall be repaid;
(r) providing for the formation and maintenance of reserve
funds, and the objects to which such funds may be applied,
and for the investment of any funds under the control of
(s) prescribing the extent to which a society may limit the number
of its members;
(t) prescribing the conditions under which accumulated
funds may be distributed to the members of a society
with unlimited liability and the maximum rate of
dividend which may be paid by societies;
(u) prescribing the procedure for amalgamation and division of
societies and conditions subject to which such amalgamation
or division may be affected;
(v) prescribing the procedure to be followed by a liquidator
appointed under section 101 and the case in which an
appeal shall lie from any order of such liquidator;
(w) providing for the powers to be exercised and the duties to
be performed by and the remuneration and other terms of
service of a supervising manager;
(x) providing for the audit of the accounts of registered
societies and for the charges, if any, to be made for such
audit and provide for the levy of contributions from all
or any registered societies to a fund to be used for the
audit and supervision of existing societies and prescribe
for the administration for such a fund; and
(y) prescribing anything that may be, or is required to be
prescribed under this Act.
No. 20 72 Cooperative Societies 2003
(3) In any case, where the Registrar is satisfied that a substantial
number of members of any society are unacquainted with the English,
language he shall cause such rules to be translated into Swahili, and
additionally to be made known in such manner as is customary for the
community concerned, but in the event of any dispute the English version
shall be deemed to be the correct version.
(4) The rules made by Minister, as well as the Registrar in accordance,
with this Act for savings and credit societies and banks incorporated
under section 22(b) shall as much as possible be similar to regulations
pertaining to Microfinance Companies and Financial Cooperatives.
132. The Registrar after consulting the chief executive of the
federation shall make regulations prescribing-
(a) the accounts and books to be kept by a society;
(b) the returns to be submitted by a society to the Registrar and
the persons by whom and the form and language in which
such returns shall be submitted;
(c) the maximum amount which a society may without the prior
consent of the Registrar borrow either from members or from
(d) any form to be used for any purpose under this Act;
(e) anything for ensuring the proper administration of the affairs
of registered societies.
133. The provisions of the Companies Act and the Business Names
(Registration) Act, shall not apply to societies registered under this Act.
laws not to
Transi- 134.-( 1) The Cooperatives Societies Act, 1991 is hereby repealed.
(2) Notwithstanding the provisions of section 127- tionalprovisions
Act No. 15
(a) every society, and all by-laws of a society and any amend- of 1991
repealed ments thereof, deemed to have been registered under this
(b) every board of a registered society lawfully constituted under
the provisions of the Act shall be deemed to have been
constituted under this Act;
73 Cooperative Societies 2003 No. 20
(c) any register kept in pursuance of the Act shall be deemed to
have been kept, and shall continue to be kept in accordance
with the provisions of this Act;
(d) any document referring to provisions of the Act shall be
construed as referring to the corresponding provisions of
(e) all orders, directions, appointments and other acts and things
lawfully made or done under any of the provisions of the
Act and in force immediately before the commencement of
this Act shall be deemed to have been made or done under
the corresponding provisions of this Act and shall continue
to have effect accordingly;
(f) all rules and regulations made under the Act and in force
immediately prior to the date upon which this Act comes
into operation shall remain in force as if they had been
made under this Act.
(3) Subject to this Act, where the registration of any society was
cancelled, any immovable property which prior to the cancellation of
that society vested in that society, and where subsequent to the
cancellation of that society another society with similar objects is formed
in the area of operation of the society which is so cancelled; then such
immovable property as has not been disposed off as at the time when
that other society is formed, shall vest in that other society:
Provided that, where any property so vested in that other society is
subject of any mortgage, charge liability or any encumbrance whatsoever,
then the liability to satisfy the mortgage, charge, liability or the
encumbrance as the case may be, shall vest in that other society, and the
name of that other society shall be substituted for that of the former
society or for that of the liquidator in any contract or instrument where
the property is the subject matter and such contract shall continue as if it
has been entered into between that other society and the other party to
Provided further that, any vesting of property under this paragraph
shall be subject to any directions that the Minister may give under this
No. 20 Cooperative Societies 74
(4) The Minister may, by notice published in the Gazette, at any time
before the expiry of twelve months from the commencement of this Act,
make such consequential, transitional or supplementary provisions as
he may consider necessary consequent upon the enactment of this Act.
(Made under section 125)
CODE OF CONDUCT
1. This Code shall be known as ”A Code of Conduct for Management of Cooperative Societies”
2.-(I) In this Code of Conduct, unless the context otherwise requires:
Interpre- ”Act” shall mean the Cooperative Societies Act;
”active member” means a member of the cooperative society who is fulfilling his or her obligations tation
as a member as provided for in the Act, Cooperative Rules, By-laws and other cooperative
guidelines as they may be issued, from time to time, by the cooperative general meeting;
”Cooperative rules” shall mean cooperative societies rules made under the Act;
”management board” means the governing body of a registered society, elected by members at the
General Meeting to whom the management of its affairs is entrusted;
11 election supervising officer” means a cooperative officer or any other officer designated by the
Registrar under section 23 of this Code;
”executive Staff” means officers of a society appointed by the management board and vested with
powers to manage and supervise the day to day affairs of the society and shall include the
general manager or secretary, accountant or treasurer, heads of departments and cashier;
”ICA” means International Cooperative Alliance;
”vetting” means conducting an investigation with a view of scrutinizing the integrity of applicants
to a post in the management of Cooperative Societies in accordance to section 17(3) of this
Code of Conduct.
(2) All words not specifically defined shall have meanings as defined in the Act, Cooperative
Rules and By-laws.
PART II GENERAL PROVISION
Manage- 3. In managing cooperative societies, provisions in the Act and cooperative rules concerning
cooperative management shall be strictly observed.
75 No. 20 Cooperative Societies
4. Cooperative Societies shall be managed according to the ICA Cooperative principles which Coopera- are-
Principles (a) voluntary and open membership;
(b) democratic -ember control;
(c) member economic participation;
(d) autonomy and independence;
(e) education training and information;
(f) cooperation among cooperatives;
(g) concern for community.
5. A cooperative member aspiring to become a member of the management board or a person Member of
applying for a post in the executive staff shall have to prove to the satisfaction of the appointing or the
electing body or authority, as the case may be, that, he understands and is prepared to enforce the manage-
Act and the Cooperative rules.
6. cooperative leadership shall be of a high integrity and any cooperative member aspiring. to Coopera-
become a member of the management board or any person applying for a post in the executive tive
staff shall have to prove to the satisfaction of the appointing or electing body or authority that-
(a) has good education, sufficient to enable that person to handle the relevant responsibilities;
(b) has ability to manage the affairs of the cooperative society;
(c) has records of honesty of the highest level;
(d) is participating fully in cooperative society’s membership affairs;
(e) has never been disqualified from cooperative leadership at any level of the cooperative system .
7 -(1) The cooperative general meeting, being the highest decision making body of a cooperative Manage- ment to society, shall be respected and given its appropriate importance.
(2) The cooperative management shall make efforts to ensure that all members are informed of members
the General Meeting, as required by the Act, Cooperative rules and by-laws and also shall facilitate attendance
the attendance of members to that meeting.
cooperative PART III general COOPERATIVE MANAGEMENT BOARD
8.-(1) All members of the management board shall be elected by the members at the general Manage-
meeting. to be
2. Members elected under subparagraph (1) shall be, accountable to the members in accordance account-
able to the to the Act, cooperatives rules and by-laws. general
9.-(1) Subject to the provisions of this Act and Cooperative rules, the election of members to Election to
the management board shall be free and democratic and no member shall be elected to the the
management board through illegal means.
(2) Every election of the management board, shall be made in the presence of the election supervising officer. board
Cooperative Societies No. 20
(3) The election supervising officer shall immediately report to the Registrar any irregularity or
suspicion thereof in the manner of which members to the management board were elected.
(4) For the purpose of this section words-
”illegal means”, means acts of corruption, coercion, intimidation or nepotism.
10. Every member aspiring to be elected to the management board shall have to fill a relevant
form disclosing the following information –
to fill (a) personal details or personal history and experience in cooperative leadership; forms
(b) cooperative membership records indicating performance, records in fulfilling
membership obligations provided in the Act, rules and by-laws;
(c) anticipated contribution to the development of the cooperative society after becoming
a cooperative leader;
(d) level of education;
(e) cooperative education (if any) already acquired;
M type of business or activities being undertaken by that member;
(g) any other information deemed relevant for being elected as a management board
and shall submit forms to the election supervising officer.
Forms to 11. -(1) Every member of the management board shall, for each year he or she is in the
management board, fill relevant forms to be submitted to Registrar declaring property or business
he or she owns or controls. indicate
(2) The forms filled under sub-paragraph (1) of this paragraph shall be read at the annual
General Meeting by the Registrar or his/her representative.
12. Subject to the relevant provisions in this Act and Cooperative rules, no member shall be
elected as a member to the management board if she or he owns, controls or influences businesses
or activities like that of the cooperative society. Noconflict
No 13. Committee members shall observe their roles and responsibilities provided in this rules and by-laws and no committee member shall interfere with responsibilities reserved for the executivestaff of the cooperative society. duplicity of Roles
Members 14. Before assuming the responsibilities of a committee, every elected committee member
shall attend a seminar on cooperative management, which shall be organized by the Cooperative
Society concerned. to attend
PART IV COOPERATIVE EXECUTIVE STAFF
15. Cooperative Executive Staff are appointed by the management board, and shall be
accountable to the management board in accordance to the Act, Cooperative rules and by- laws. Staff to be
able to the
15. Cooperative Executive Staff are appointed by the management board, and shall be
accountable to the management board in accordance to the Act, Cooperative rules and by- laws.
2003 Cooperative Societies No. 20
Executive 16.-(1). Executive staff of cooperatives shall be appointed on the basis of their competence in
running day to day activities of the cooperative society and no executive staff shall be appointed
for other reasons-
staff to be
(2) The following reasons or grounds shall not be considered when appointing an executive
(a) relation with some of the members of the management board (nepotism);
(b) colour or tribe;
(d) illegal means to induce a decision for appointment;
(e) any other reason which under the provisions of the Act, Rules and by-laws warrant
such an appointment to be null and void.
Executive 17. -(1). Subject to provisions of section 170), Cooperative rules and by-laws the vacancy for
the executive staff shall be made known to the public thirty days before holding on interview. Staff to be
(2) Every appointment for filling any vacancy for executive staff, shall be done on the basis of and vetted
the highest points or marks scored in any interview conducted for such purposes.
(3) In addition to an interview, officers seeking for appointments in executive staff positions in cooperatives of the secondary and other upper levels, shall be vetted through the Registrar.
18. Subject to the relevant provisions in the Act, cooperative rules and by-laws, no member No shall be elected as a member to the executive staff position if he or she owns, controls or commands conflict ofinfluence of businesses or activities like that of the cooperative society. interest
19. Application for an executive staff position, shall be accompanied by relevant forms which
shall indicate the following details-
A. Executive staff of the Primary Society:
(i) level of education;
(ii) understanding of both Kiswahili and English languages;
(iii) capacity to be trained (trainability);
(iv) names and addresses of at least two referees;
(v) names and addresses of at least two guarantors;
(vi) type of business or activities being undertaken by the applicant;
(vii) any other information deemed relevant.
B. Executive Staff of the Secondary and Upper Level Societies:
(i) academic qualification relevant for the position applied for;
(ii) knowledge and experience of cooperative society movement and its relevance to
(iii) knowledge and understanding of the culture and norms of the society or community
of the members of the relevant cooperative society;