Co-operative Societies Act

Section 1. Short title Section This Act may be cited as the Co-operative Societies Act.

Section 2. Interpretation Section In this Act, except where the context otherwise requires— "agricultural produce" means any produce or article produced or obtained by the work or industry of members of a co-operative society or marketed by a cooperative society, whether the produce be of agriculture, animal husbandry, forestry, fisheries, handicrafts or otherwise; "apex society" means a society formed at the national level by the co-operative movement in Kenya and registered under this Act to promote co-operative development and represent the interests of co-operative societies locally and internationally; "bonus" in relation to a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative society , means that member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") 's share ("the amount represented by a member 's portion in the equity of a society...

Section 3.Commissionerand other officers Section 3(1) There shall be a Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") for Co-operative Development whose office shall be an office in the public service. Section 3(2) There shall be such number of officers, including deputy Commissioners, as may be necessary to assist the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") in the administration of the provisions of this Act. Section 3(3) The Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") shall be responsible for the growth and development of co-operative societies by providing such services as may be required by co-operative societies for their organization, registration, operation, advancement and, dissolution and for administration of the provisi...

Section 4. Registration of co-operative societies Section the promotion of the welfare and economic interests of it's members or adherence to the principles of Islamic law; and

Section 5. Essentials for registration of a Co-operative society Section in the case of a primary society ("a co-operative society whose membership is restricted to individual persons;") , consist of at least ten persons all of whom shall be qualified for membership of the co-operative society under section 14 , or;

Section 6. Procedure for registration Section 6(1)(a) in the case of a primary society ("a co-operative society whose membership is restricted to individual persons;") , by at least ten persons qualified for membership of the society under section 14 ; Section 6(1)(b) in the case of a secondary or apex society ("a society formed at the national level by the co-operative movement in Kenya and registered under this Act to promote co-operative development and represent the interests of co-operative societies locally and internationally;") , by a person duly authorized in that behalf by each co-operative society or co-operative union , as the case may be, who are members thereof. Section 6(2) The application shall be accompanied by four copies of the proposed by-laws of the society in English and the person or persons by whom or on whose behalf such application is made shall furnish such information with regard to the society as the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") may require. Section 6(3) If the Commissioner ("the Commissi...

Section 7. Provisional registration Section 7(1) If the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") is not satisfied that a society has complied with this Act and any rules made thereunder, or is not satisfied that its by-laws conform with this Act and any rules made thereunder, and is of the opinion that steps can be and will be taken with diligence by the persons by whom or on whose behalf the application for registration is made to comply with this Act and the rules made thereunder or to make the by-laws conform as aforesaid, the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") may in his discretion provisionally register the society for such period, not exceeding one year, and subject to its compliance with such terms and conditions and provisions, as the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of...

Section 8. Amendments ofby-laws Section 8(1) A co-operative society may, subject to this Act, amend its by-laws , including the by-law which declares the name of the society. Section 8(2) No amendment of the by-laws of a co-operative society shall be valid until the amendment has been registered under this Act, for which purpose a copy of the amendment shall be forwarded to the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") in the prescribed manner. Section 8(3) If the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") is satisfied that any amendment of the by-laws of the Co-operative society is not contrary to this Act and any rules made thereunder, he may register the amendment. Section 8(3A) The Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;")...

Section 9. Appeal against refusal to register Section 9(1) A co-operative society may appeal to the Cabinet Secretary ("the Cabinet Secretary for the time being responsible for co-operative development;") against the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") 's refusal to register the society and its by-laws or any amendments of it's by-laws under section 8 within thirty days of being notified of the refusal. Section 9(2) Any party aggrieved by the decision of the Cabinet Secretary ("the Cabinet Secretary for the time being responsible for co-operative development;") under subsection (1) may appeal against decision to the High Court within thirty days. [Act No. 2 of 2004 , s. 7 & Sch., Act No. 19 of 2015 , s. 98.]

Section 10. Protection of the name "Co-operative" Section 10(1) No society shall be registered under a name identical with that under which any other existing society is registered, or under any name likely, in the opinion of the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") , to mislead the members of the public as to its identity. Section 10(2) The word "Co-operative" shall form part of the name of every co-operative society , and the word "Limited" shall be the last word in the name of every co-operative society having limited liability ("limited by shares or limited by guarantee, according to the nature of the liability prescribed by the by-laws of the co-operative society;") . [Act No. 2 of 2004 , Sch.]

Section 11. Evidence of registration Section 11(1) A certificate of registration or of a provisional registration signed by the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") shall be conclusive evidence that the society therein mentioned is duly registered or provisionally registered, unless it is proved that such registration of the society has been canceled or has been terminated. Section 11(2) The certificate of registration bearing the number and date of registration shall be displayed at the head office of every co-operative society . Section 11(3) Deleted by ActNo. 2 of 2004, s. 8.] Section 11(4) A copy of the by-laws of a co-operative society or of an amendment of such by-laws certified by the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") shall be prima facie evidence for all purposes of the registration of such by-laws or such amendment. Section 11(5) A document purporting to b...

Section 12. Co-operative Society to be body corporate Section Upon registration, every society shall become a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold movable and immovable property of every description, to enter into contracts, to sue and be sued and to do all things necessary for the purpose of, or in accordance with, its by-laws .

Section 13. By-laws to bind members of co-operative societies Section The by-laws of a co-operative society , shall, when registered, bind the co-operative society and the members thereof to the same extent as if they were signed by each member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") and contained covenants on the part of each member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") for himself and his personal representatives to observe all the provisions of the by-laws .

Section 31. Society to have charge over members' produce Section 31(1) A co-operative society which has as one of its objects the disposal of any agricultural produce ("any produce or article produced or obtained by the work or industry of members of a co-operative society or marketed by a cooperative society, whether the produce be of agriculture, animal husbandry, forestry, fisheries, handicrafts or otherwise;") , may enter into a contract with its members, either in its by-laws or by a separate document binding the members to dispose of all their agricultural produce ("any produce or article produced or obtained by the work or industry of members of a co-operative society or marketed by a cooperative society, whether the produce be of agriculture, animal husbandry, forestry, fisheries, handicrafts or otherwise;") , or such amounts or descriptions of the same as may be stated therein, to or through the society, and the contract may bind the members to produce the quantities of agricultural produce ("any produce or article produced or obtained by the work or industry of members of a co-operative society or marketed by a cooperative society, whether the produce be of agriculture, a...

Section 32. Fines for violation ofby-laws Section 32(1) The by-laws of a co-operative society may, subject to this Act and rules made thereunder, provide for the imposition of fines, not exceeding twenty thousand shillings, on its members for any infringement of its by-laws , but no such fine shall be imposed upon any member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") until written notice of intention to impose the fine and the reason therefore has been served on him and he has had an opportunity of showing cause why the fine should not be imposed and, if he so desires, of being heard with or without witnesses. Section 32(2) Any such fine shall be a civil debt due to the co-operative society , and shall, without prejudice to any other means of recovery, be recoverable summarily. Section 32(3) The whole or any part of such fine may be set off against any moneys due to such member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admi...

Section 33. Society to have first charge over debts, assets, etc. in certain cases Section 33(1)(a) supplied to any member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") or past member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") any seeds or manure, or any animals, feeding stuff agricultural or industrial implements or machinery or materials for manufacture or building; or Section 33(1)(b) rendered any services to any member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") or past member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;")...

Section 34. Society to have first charge over members’share Section A co-operative society shall have a first charge upon the share ("the amount represented by a member 's portion in the equity of a society as a co-owner;") or interest in the capital ("the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings, grants or donations;") and on the deposits of a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") or past member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") , and upon any dividend , bonus or accumulated funds payable to a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") or past member ("a person or a co-operative society joi...

Section 35. Failure to remit the sum deducted Section 35(1) Where an employer of a person who is a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative society has, under the instructions of the employee, made a deduction from the employee's emoluments for remittance to the co-operative society concerned but fails to remit the deductions within seven days after the date upon which the deduction was made, the employer shall be liable to pay the sum deducted together with compound interest thereon at a rate of not less than five percent per month. Section 35(2) The Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") may, on behalf of the society, institute legal proceedings in court for recovery of the sum owing under subsection (1) without prejudice to any other mode of recovery and such sum shall be a civil debt recoverable summarily. Section 35(3) The Commis...

Section 36. Member’ssharenot subject to attachment Section 36(1) Subject to section 34 , the share or interest of a member in the capital of a co-operative society is not liable to attachment or sale under a judgment or order of a court in respect of a debt or liability incurred by the member. Section 36(2) if such a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") is adjudged bankrupt under the Insolvency Act, 2015, the bankruptcy trustee appointed in respect of the member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") 's estate does not have a claim on the member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") 's share ("the amount represented by a member 's portion in the equity of a socie...

Section 37. Liability of past members Section The liability of a past member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-perative society shall be in respect of the debts of the society as they existed at the date when he ceased to be a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") and proceedings in respect thereof may be commenced within a period of two years from such date: Provided that, in the case of a co-operative society with limited liability ("limited by shares or limited by guarantee, according to the nature of the liability prescribed by the by-laws of the co-operative society;") , if the first audit of the accounts of such society after his ceasing to be a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after r...

Section 38. Liability of deceased members Section in the case of a co-operative society with limited liability ("limited by shares or limited by guarantee, according to the nature of the liability prescribed by the by-laws of the co-operative society;") , if the first audit of the accounts of the society after the death discloses a credit balance in favour of the society, the financial liability of the estate shall cease forthwith; and

Section 39. Transfer ofshareor interest of deceased members Section 39(1)(a) the person nominated in accordance with this Act and any rules made thereunder; or Section 39(1)(b) if there is no person so nominated, such person as may appear to the Committee ("the governing body of a co-operative society to whom the management of its affairs is entrusted, and includes a board of directors;") of the society to be the personal representative ("any person who, under law or custom, is responsible for administering the estate of a deceased person;") of the deceased member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") ; or Section 39(1)(c) if either of such persons is not qualified under this Act and any rules made thereunder or the by-laws of such society for membership, such person, specified by the nominee or personal representative ("any person who, under law or custom, is responsible for administering the estate of a deceased person;") , as the case may be, who is so qualified, or may pay to such nominee or personal repres...

Section 40. Evidence ofmember’s interest in society Section 40(1)(a) the date on which the name of any person was entered in such register or list, as a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") ; Section 40(1)(b) the date on which any such person ceased to be a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") ; and Section 40(1)(c) the number of shares held by any member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") . Section 40(2) A copy of any entry in a book of a co-operative society regularly kept in the course of its business, shall, if certified in accordance with the rules made under this Act, be prima facie evidence in any proceedings of the existence of such entry, and...

Section 41. Restriction on production of society’s books Section No officer ("a chairman, vice- chairman, secretary, treasurer, committee member, employee or any other person empowered under any rules made under this Act, or by-laws of a co-operative society, to give directions in regard to the business of the society;") of a co-operative society shall in any legal proceedings to the society or liquidator ("a liquidator appointed under;") is not a party may be compelled to produce any of the society's books where the contents can be proved under section 40 or to appear as a witness to prove the matters transactions, and accounts therein recorded, unless the court, for special cause, otherwise orders.

Section 14. Qualifications for membership Section he has attained the age of eighteen years,

Section 15. Limitation of holdingsharecapital Section No member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") , other than a co-operative society , shall hold more than one-fifth of the issued and paid-up share ("the amount represented by a member 's portion in the equity of a society as a co-owner;") capital ("the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings, grants or donations;") of any co-operative society .

Section 16. Membership subject to authorisation by annual general meeting Section No company incorporated or registered under the Companies Act ( Cap. 486 ) and no unincorporated body of persons shall be entitled to become member of a co-operative society, except with a written authorisation through a resolution by a meeting of that co-operative society. [Act No. 2 of 2004 , s. 9, Act No. 19 of 2015 , s. 99.]

Section 17. Membership ofco-operative society Section No member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative society shall exercise any of the rights a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") unless he has made such payment to the society in respect of membership, or has acquired such interest in the society as may be prescribed under this Act or under the by-laws of the society.

Section 18. Limitation of membership to one society Section is a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative society ; and

Section 19. Voting rights of members Section Each member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative society shall have one vote only in the affairs of the society, irrespective of the number of shares he holds: Provided that a co-operative society which is a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative union or an apex society ("a society formed at the national level by the co-operative movement in Kenya and registered under this Act to promote co-operative development and represent the interests of co-operative societies locally and internationally;") shall have as many votes as may be prescribed by the by-laws of the co-operative union or apex society ("a society formed at the national level by the co-operative movement in Kenya and registered under this Act to promote co-operative development and represent...

Section 20. Transfer of shares Section 20(1) The transfer or charge of the share ("the amount represented by a member 's portion in the equity of a society as a co-owner;") or interest of a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") in the capital ("the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings, grants or donations;") of a co-operative society shall be subject to such conditions as to maximum holding as are laid down in section 15 . Section 20(2)(a) he has held such share ("the amount represented by a member 's portion in the equity of a society as a co-owner;") or interest for at least one year; and Section 20(2)(b) the transfer or charge is in favour of the society or a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of the society.

Section 21. Rights of members Section attend and participate in decisions taken at all general meetings of the society and vote;

Section 22. Member's rightsvis-a-vistheco-operative society Section observe and comply with all the society by-laws and decisions taken by the relevant organs of the co-operative society in accordance with the by-laws of that society;

Section 23. Registered address ofco-operative society Section Every co-operative society shall have a registered address to which notices and communications may be sent and shall send to the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") notice of every change of address within one month of the change. [Act No. 2 of 2004 , Sch.]

Section 24. Society to keep a copy of the Act andby-lawsat registered office Section Every co-operative society shall keep a copy of this Act and of the rules made thereunder and of its own by-laws and a list of its members (excluding details of nominees and shareholdings) at its registered office and shall keep them open for inspection by any person, free of charge, at all reasonable times during business hours.

Section 25. Account and audit Section 25(1)(a) be prepared in accordance with International Accounting Standards; Section 25(1)(b) reflect the true and fair state of the co-operative society 's affairs; and Section 25(1)(c) all sums of money received and paid by the co-operative society and the reasons thereto; Section 25(1)(c)(i) all sums of money received and paid by the co-operative society and the reasons thereto; Section 25(1)(c)(ii) all sales and purchases of goods and services by the co-operative society ; and Section 25(1)(c)(iii) all assets and liabilities of the co-operative society . Section 25(2) The books of accounts shall be kept at the registered office of the co-operative society or at such other place as may be determined by the co-operative society and shall at all times be available for inspection by members of its supervisory committee and the auditor. Section 25(3) It shall be the duty of every co-operative society to cause its accounts to be audited at least once in every financial year by an auditor appointed under subsection (4). Section 25(4) The auditor shall be appointed at the annual general meeting from a list of auditors approved by the Commissioner ("...

Section 26. Production of books and other documents Section Any officer ("a chairman, vice- chairman, secretary, treasurer, committee member, employee or any other person empowered under any rules made under this Act, or by-laws of a co-operative society, to give directions in regard to the business of the society;") , agent, servant or member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of a co-operative society who is required by the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") , or by a person authorized in writing by him so to do shall, at such place and time as the Commissioner ("the Commissioner for Co-operative Development appointed underand includes any person on whom any of the powers of the Commissioner have been conferred in accordance with this Act;") may direct, produce all moneys, securities, books, accounts and documents belonging to or relating to the a...

Section 24A. Estimates of income and expenditure Section For each financial year, the Committee ("the governing body of a co-operative society to whom the management of its affairs is entrusted, and includes a board of directors;") of a co-operative society shall cause to be prepared estimates of the society's income and expenditure including recurrent and capital ("the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings, grants or donations;") estimates for approval by the general meeting at least three months before the end of the preceding financial year. [Act No. 2 of 2004 , s. 11.]

Section 27. General meetings Section 27(1) The supreme authority of a co-operative society shall be vested in the general meeting at which members shall have the right to attend, participate and vote on all matters. Section 27(2) Subject to subsection (3) a co-operative society shall hold an annual general meeting within four months after the end of each financial year. Section 27(3)(a) elect the co-operative society 's office bearers for the ensuing year; Section 27(3)(b) determine the maximum borrowing powers of the co-operative society ; Section 27(3)(c) consider and approve estimates of income and expenditure for the ensuing financial year or part thereof; Section 27(3)(d) appoint the co-operative society 's bankers and auditors; and Section 27(3)(e) receive reports and decide upon such other matters as may be necessary for the conduct of the co-operative society 's business. Section 27(4) A general meeting of a co-operative society shall be convened by giving at least fifteen days written notice to the members. Section 27(5)(a) consider and confirm the minutes of the last general meeting; Section 27(5)(b) consider any reports of the Committee ("the governing body of a co-opera...

Section 28. Membership and powers of theCommittee Section 28(1) Every co-operative society shall have a Committee ("the governing body of a co-operative society to whom the management of its affairs is entrusted, and includes a board of directors;") consisting of not less than five and not more than nine members. Section 28(2) The members of the Committee ("the governing body of a co-operative society to whom the management of its affairs is entrusted, and includes a board of directors;") shall elect a chairman and a vice chairman from among their number. Section 28(3)(a) enter into contracts; Section 28(3)(b) institute and defend suits and other legal proceedings brought in the name of or against the co-operative society ; and Section 28(3)(c) do all other things necessary to achieve the objects of the co-operative society in accordance with its by-laws . Section 28(4)(a) is not a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of the co-operative society ; Section 28(4)(b) is under eighteen years of age; Section...

Section 29. Amalgamation of co-operative societies Section 29(1) Any two or more co-operative societies (hereinafter referred to as amalgamating societies) may, by special resolution ("a resolution passed by two thirds of the members present and voting at a general meeting of a society;") (in this section referred to as the preliminary resolution), resolve to amalgamate as a single society (hereinafter referred to as the amalgamated society). Section 29(2) A copy of the preliminary resolution shall be sent to all the members and creditors of each of the amalgating societies, and to all other persons whose interests in any of the amalgamating societies will be affected by the amalgamation. Section 29(3) Any member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") of any of the amalgamating societies may, notwithstanding any by-law to the contrary, by notice in writing given to his society at least one month before the date specified as the date of amalgamation, intimate his intention not to become a member ("a person or a c...

Section 30. Division of co-operative societies Section 30(1) A co-operative society (hereinafter referred to as the existing society may, by special resolution ("a resolution passed by two thirds of the members present and voting at a general meeting of a society;") (in this section referred to as the preliminary resolution), resolve to divide itself into two or more co-operative societies (hereinafter referred to as the new societies). Section 30(2) The preliminary resolution shall contain proposals for the division of assets and liabilities of the existing society among the new societies in which it is proposed to be divided and may prescribe the area of operation of, and specify the members who will constitute, each of the new societies. Section 30(3) A copy of the preliminary resolution shall be sent to all the members and creditors of the existing society, and to all other persons whose interests will be affected by the division of the existing society. Section 30(4) Any member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the b...

Section 42. Application of society’s property and funds Section The property and funds of a co-operative society shall only be applied for the benefit of the society and, its members, in accordance with the provisions of this Act, the rules made hereunder and the by-laws of the society.

Section 43. Restriction on giving loans Section A co-operative society shall not give a loan nor allow any credit, to person other than a member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") , unless the by-laws of the giving loans society provide for giving loan subject to a resolution passed at the general meeting of the society to that effect. [Act No. 2 of 2004 , s. 19.]

Section 44. Restriction on borrowing Section A co-operative society may receive loans from persons who are not members only to such extent and under such conditions as may be prescribed by its by-laws or by rules under this Act, and for the purposes of this section a deposit ("a sum of money paid on terms under which it shall be repaid, with or without interest or premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the society to receive it at the risk of the society receiving it;") of money under a hire-purchase agreement shall be deemed to be a loan. [Act No. 14 of 2008 , s. 70.]

Section 45. Investment of society funds Section in the Post Office Savings Bank:

Section 46. Declaration and payment ofbonus Section 46(1) Subject to this section, every co-operative society shall declare each year all bonuses due to members; but, where the bonuses are required for re-investment by the society for capital ("the permanent members equity in the form of common stock and includes all disclosed reserves, retained earnings, grants or donations;") development, or for the redemption of bonus certificates, the society shall issue bonus certificates to its members in lieu of cash payments, redeemable from a revolving fund established by the society for that purpose. Section 46(2) No co-operative society shall pay a dividend , bonus ; or distribute any part of its accumulated funds without a balance sheet and audited account and report disclosing the surplus funds out of which the dividend , bonus or distribution is to be made. Section 46(3) A co-operative society shall pay a dividend at such rate as may be recommended by the management committee and approved by the annual general meeting of the society.

Section 47. Maintenance of reserve fund Section 47(1) Every co-operative society which does or can derive surplus from its transactions shall maintain a reserve fund. Section 47(2) A co-operative society may carry to the reserve fund such portion of the net surplus in each year as may be prescribed by rules made under this Act or by the by-laws of the society. Section 47(3) The reserve fund shall be invested in the manner provided for under section 45 of this Act. Section 47(4) The reserve fund set up under this section shall be indivisible and no member ("a person or a co-operative society joining in the application for the registration of a society, and a person or co-operative society admitted to membership after registration in accordance with the by-laws;") shall be entitled to claim a specific share ("the amount represented by a member 's portion in the equity of a society as a co-owner;") of it. Section 47(5) Upon the dissolution of a co-operative society , the assets under the reserve fund shall be applied in the discharge of the liabilities of the society. [Act No. 2 of 2004 , s. 21.]

Section 48. Distribution of net balance Section Subject to sections 46 and 47 , the net balance of each year with, any sum available for distribution from previous years, may be distributed in the manner prescribed by rules made under this Act or by the by-laws of the society.

Section 49. Creating charge over society’s property Section A co-operative 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 a special resolution ("a resolution passed by two thirds of the members present and voting at a general meeting of a society;") by the general meeting. [Act No. 2 of 2004 , s. 22.]