Sacco Societies Act

Section 1. Short title Section This Act may be cited as the Sacco Societies Act.

Section 2. Interpretation Section its non-operating holding company or its subsidiary;

Section 3. Application Section 3(1)(a) every deposit-taking business; Section 3(1)(b) specified non-deposit taking business, in the manner specified in subsection (2). Section 3(2)(a) specifying the non-deposit taking business to which that subsection applies; and Section 3(2)(b) prescribing measures for the conduct of the specified business.

Section 4. Establishment of the Authority Section 4(1) There is established an Authority to be known as the Sacco Societies Regulatory Authority. Section 4(2)(a) suing and being sued; Section 4(2)(b) taking, purchasing or otherwise acquiring, holding, charging, and disposing of both movable and immovable property; Section 4(2)(c) borrowing or lending money; Section 4(2)(d) entering into contracts; and Section 4(2)(e) doing or performing all such other things or acts necessary for the furtherance of the provisions of this Act.

Section 5. Objects and functions of the Authority Section license Sacco societies to carry out deposit-taking business in accordance with this Act;

Section 6. Board of the Authority Section 6(1)(a) the Chairperson to be appointed by the Cabinet Secretary from amongst the members appointed under paragraph (e); Section 6(1)(b) the Principal Secretary to the Treasury or his representative; Section 6(1)(c) the Commissioner or his representative; Section 6(1)(d) the Governor of the Central Bank or his representative; Section 6(1)(e) four members, not being public officers, appointed by the Cabinet Secretary by virtue of their knowledge, and possession of a minimum of ten years experience, in co-operative practice and management, law, finance or economics; and Section 6(1)(f) the chief executive officer appointed under section 12 . Section 6(2) A member of the Board appointed under subsection (1)(e) shall hold office for a term of three years and shall be eligible for re-appointment for one more term of up to three years. Section 6(3) The members of the Board appointed under subsection (1)(e) shall be appointed at different times so that the respective expiry dates of their terms shall fall at different times. Section 6(4)(a) a Member of Parliament or a County Assembly; Section 6(4)(aa) one who does not meet the requirements of Chap...

Section 7. Powers of the Board Section supervise, control and administer the assets of the Authority in such manner and for such purposes as would best promote the objects and functions for which the Authority is established;

Section 8. Committees and delegation of powers Section 8(1) The Board may appoint committees from among its own members or otherwise, to carry out such general or special functions as may be specified by the Board. Section 8(2) The Board may, by resolution, either generally or in any particular case, delegate to any committee of the Board or to any member, officer, employee, or agent of the Authority, the exercise of any of the powers or the performance of any of the functions or duties of the Authority under this Act or under any other written law. Section 8(3) Except for purposes of the performance of his duties or the exercise of his powers under this Act, or where required under any other law to do so, any officer or any other employee or agent of the Authority shall not disclose any information which he has acquired in the course of the performance of his duties or the exercise of his powers in accordance with this Act. Section 8(4) Any person who contravenes subsection (3) commits an offence and is liable on conviction to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding one year, or to both such fine and imprisonment.

Section 9. Common seal of the Board Section 9(1) The common seal of the Authority shall be kept in such custody as the Board may direct and shall not be used except on the order of the Board. Section 9(2) The common seal of the Authority when affixed to a document and duly authenticated shall be judicially and officially noticed and unless and until the contrary is proved, any necessary order or authorization by the Board under this section shall be presumed to have been duly given. Section 9(3) The common seal of the Authority shall be authenticated by the signature of the chief executive officer and the chairperson of the Board or any one other officer authorized by the Board in that behalf. Section 9(4) All documents, other than those required by law to be under seal, made by, and all decisions of, the Authority may be signified under the hand of the chairperson, in the case of a decision taken at a meeting at which the chairperson is not present, under the hand of the person presiding at such meeting.

Section 10. Remuneration of the Board members Section The Authority, in consultation with the Cabinet Secretary, shall pay members of the Board such remuneration or allowances for their services and expenses as it may determine. [Act No. 16 of 2018 , s. 2.]

Section 11. Meetings and procedure of the Board Section The conduct of the business of the Board shall be as provided in the Schedule, but subject thereto, the Board may regulate its own procedure.

Section 12. Appointment and remuneration of the chief executive officer Section 12(1) There shall be a chief executive officer who shall be appointed by the Board, in consultation with the Cabinet Secretary, and whose terms and conditions of service shall be determined by the Board in the instrument of appointment or otherwise in writing from time to time. Section 12(2) No person shall be appointed as the chief executive officer of the Authority unless he has at least ten years experience in financial management, co-operative practice and management, law, finance or economics. Section 12(3) The chief executive officer shall be an ex-officio member of the Board but shall have no right to vote at any meeting of the Board. Section 12(4) The term of office of the chief executive officer shall be four years but may be renewed for one more term of not more than four years. Section 12(5) The chief executive officer shall, subject to the general policy set by the Board, be responsible for the operations and management of the day-to-day affairs of the Authority. Section 12(6) In the event of the chief executive officer being absent or being incapacitated by reason of sickness or other cause...

Section 13. Appointment and remuneration of staff Section 13(1) The Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its duties and responsibilities. Section 13(2) The officers and employees appointed under subsection (1) shall be remunerated in such manner and at such rates, and shall be subject to such conditions of service, as may be determined by the Board. Section 13(3) Every officer or employee appointed under subsection (1) shall, subject to this Act, exercise such powers and functions and perform the duties and responsibilities assigned to him from time to time by the chief executive officer.

Section 14. Protection from liability Section 14(1) No matter or thing done by an officer or an employee of the Authority shall, if the matter or thing is done bona fide for executing the functions, powers or duties of the Authority, render the officer or employee so acting, personally liable for any action, claim or demand. Section 14(2) Subsection (1) shall not relieve the Authority from liability to pay compensation or damages to any person for any injury to that person, or other loss caused by the exercise of any power conferred by this Act or any other written law or by the failure of any works of the Authority.

Section 15. The Sacco societies levy Section 15(1) The Authority may by order published in the Gazette , impose a levy to be known as the Sacco societies levy on the deposits held in deposit-taking Sacco societies, or on such other base as the Authority may determine in the case of Sacco societies carrying out non-deposit taking business specified under section 3(2) . Section 15(2) A levy imposed under this section shall be payable at such rate as may be specified in the order. Section 15(3) An order under this section may contain provisions as to the time at which the amount payable by way of the levy shall become due. Section 15(4) All moneys received in respect of the levy shall be paid into the General Fund. Section 15(5) If a person fails to pay any amount payable by him by way of the levy on or before the date prescribed by the order under subsection (1), a sum equal to five per centum of the amount shall be added to the amount due for each month or part thereof during which the amount due remains unpaid. Section 15(6) If any moneys required to be paid within the time prescribed under subsection (3) is not paid on or before the date prescribed by the order, the amount due and...

Section 16. The Authority's General Fund Section 16(1) There is established a fund of the Authority to be known as the General Fund of the Authority which shall vest in the Authority. Section 16(2)(a) all proceeds of the levy; Section 16(2)(b) such moneys or assets as may accrue to or vest in the Authority in the course of the exercise of its powers or the performance of its functions under this Act; Section 16(2)(c) such sums as may be payable to the Authority pursuant to this Act or any other written law; Section 16(2)(d) such sums as may be granted to the Authority pursuant to subsection (3); and Section 16(2)(e) all moneys from any other source provided for or donated or lent to the Authority. Section 16(3) There shall be made to the Authority out of moneys provided by Parliament for that purpose, grants towards the expenditure incurred by the Board in the exercise of its powers of the performance of its functions under this Act Section 16(4) There shall be paid out of the General Fund such sums of money required to defray the expenditure of the Authority incurred by the authority in the discharge of its functions under this Act.

Section 17. Investment of funds of the Authority Section 17(1) The Authority may invest its funds in any securities which for the time being are authorized for trust funds or in any other securities which the Cabinet Secretary may, from time to time, approve. Section 17(2) The Authority may place on deposits with such bank or banks as it may determine, any moneys not immediately required for the purposes of the Authority. [Act No. 16 of 2018 , s. 2.]

Section 18. Financial year Section The financial year of the Authority shall be the period of twelve months ending on the thirtieth of June in each year.

Section 19. Annual estimates Section 19(1) The Authority shall, at least three months before the commencement of the financial year, prepare estimates of revenue and expenditure for that year. Section 19(2)(a) salaries, allowances and other charges in respect of the officers and staff of the Authority; Section 19(2)(b) pensions, gratuities and other charges in respect of the retirement benefits which are payable out of the funds of the Authority; Section 19(2)(c) the maintenance, repair and replacement of the assets of the Authority; Section 19(2)(d) funds to meet future or contingent liabilities; Section 19(2)(e) authorized payments to members of the Board; and Section 19(2)(f) any other matter that the Authority may, with the approval of the Cabinet Secretary deem appropriate. Section 19(3) The estimates prepared under this section shall be submitted by the Authority to the Cabinet Secretary for approval before the start of the financial year. [Act No. 16 of 2018 , s. 2.]

Section 20. Accounts and audit Section 20(1) The Authority shall cause to be kept proper books and records of accounts of the income, expenditure, assets and liabilities of the Authority. Section 20(2)(a) a statement of income and expenditure during that period; Section 20(2)(b) a statement of the assets and liabilities of the Authority on the last day of that year. Section 20(3) The accounts of the Authority shall be audited and reported upon in accordance with the Public Audit Act ( Cap. 412B ). [Act No. 16 of 2018 , s. 4, Act No. 34 of 2022 , s. 4.]

Section 21. Submission and publication of annual reports Section 21(1) The Authority shall within four months of the closure of the financial year, submit to the Cabinet Secretary a report on the operations of the Authority during that year. Section 21(2) The Authority shall, after submission of the report to the Cabinet Secretary under subsection (1), publish the report in the Gazette and in at least one newspaper of national circulation. [Act No. 16 of 2018 , s. 2.]

Section 22. Preparation etc. of Sacco societies performance report Section The Authority shall within four months of the closure of the financial year prepare and submit to the Cabinet Secretary a report on the operations and performance of the Sacco societies under this Act during that year. [Act No. 16 of 2018 , s. 2.]

Section 23. Carrying out of deposit-taking business Section 23(1)(a) is a Sacco society registered under the Co-operative Societies Act ( Cap. 490 ); and Section 23(1)(b) holds a valid licence issued under this Act. Section 23(2) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding five hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both such fine and imprisonment. Section 23(3) The Cabinet Secretary may, in consultation with the Authority, make regulations providing for the licensing and supervision of co-operative societies carrying out deposit taking business in compliance with Islamic law. [Act No. 15 of 2017 , s. 53.]

Section 24. Application for licence Section 24(1) A Sacco society intending to transact the deposit-taking business in Kenya shall, before commencing such business, apply in writing, to the Authority for a licence, in the prescribed form. Section 24(2)(a) a copy of the certificate of registration and the by-laws of the Sacco society; Section 24(2)(b) evidence that the Sacco society meets the minimum capital requirements prescribed in the regulations; Section 24(2)(c) information relating to the place of business, indicating that of the head office, and branches, if any; Section 24(2)(d) the prescribed fees; Section 24(2)(e) objectives of the deposit-taking Sacco society business; Section 24(2)(e)(i) objectives of the deposit-taking Sacco society business; Section 24(2)(e)(ii) membership and share capital; Section 24(2)(e)(iii) economic and financial environment; Section 24(2)(e)(iv) organisational structure and management; and Section 24(2)(e)(v) financial and risk analysis. Section 24(2)(f) such other requirements as the Authority may prescribe. Section 24(3) A Sacco society may appeal to the Cabinet Secretary in reference to refusal to grant a licence within thirty days after rec...

Section 25. Issuance of licence Section 25(1) The Authority shall consider every application made under section 24 and may, if satisfied that the applicant meets the requirements of this Act, grant a licence to the applicant upon payment of the prescribed fee. Section 25(2) The Authority shall upon the payment by the applicant of the prescribed fee, issue a licence to a Sacco society to carry out deposit-taking Sacco society business. Section 25(3) The licence referred to in subsection (2) shall, where the other requirements of this section are fulfilled, be issued within fourteen days from the date of payment of the prescribed fee. Section 25(4) Every Sacco society shall be required to pay an annual licence fee of such amount and within such time as may be prescribed by the Authority. Section 25(5) A Sacco society which fails to pay the annual fee by the date on which such payment is due shall in addition to any action by the Authority under section 27 be liable to pay such penalty as the Authority may prescribe. Section 25(6) A Sacco society which fails to commence deposit-taking Sacco business within twelve months of the grant of a licence under this Act shall, if it still propo...

Section 26. Conditions of a licence Section 26(1) The Authority shall endorse on a licence granted under this Act such conditions as it considers necessary and may from time to time add, vary or substitute such conditions as it deems appropriate. Section 26(2) Where it appears to the Authority that there are reasonable grounds for the revocation of a licence, but that the circumstances are such as that the revocation would not be expedient or would be unjust to the members, the Authority may restrict the licence in accordance with subsection (3). Section 26(3)(a) a limit on the duration of the licence for a period not exceeding one year; or Section 26(3)(b) such additional conditions for the protection of depositors as the Authority may deem necessary.

Section 27. Revocation of licence Section 27(1)(a) ceases to carry on deposit-taking business in Kenya or goes into liquidation or is wound up or is otherwise dissolved or deregistered under the Co-operative Societies Act ( Cap. 490 ); Section 27(1)(b) fails to comply with this Act, or any rules, regulations, orders or directions issued under the Act or any condition of the licence; Section 27(1)(c) fails to pay the annual license fee as required under section 25(3) ; Section 27(1)(d) does not hold at least fifty percent of the capital requirements as may be prescribed in the regulations; Section 27(1)(e) has knowingly engaged in serious criminal or fraudulent acts that are likely to cause insolvency, substantial dissipation of assets or earnings or may otherwise weaken the deposit-taking Sacco society's condition or seriously prejudice the interests of the deposit-taking Sacco society's members. Section 27(2) The Authority shall, before revoking a licence, give to the Sacco society not less than fourteen days' notice in writing of its intention and shall consider any representations made to it in writing by the Sacco society within that period before revoking the licence. Section...

Section 28. Publication of Sacco societies Section The Authority shall cause the list of all Sacco societies to be published once every year in the Gazette and at least in one newspaper of national circulation.

Section 29. Minimum capital requirements Section All Sacco societies shall comply with and maintain at all times the minimum capital requirements as may be prescribed by the Authority.

Section 30. Minimum liquid assets Section 30(1) A Sacco society shall maintain such minimum holding of liquid assets of its members' deposits and borrowings as may be prescribed by the Authority. Section 30(2) Every Sacco society shall calculate the average monthly balance of its deposits and borrowings at the close of business on such day as may be prescribed by the Authority. Section 30(3) A Sacco society which does not comply with the requirements of subsection (1), within such period as the Authority may prescribe, shall be liable to pay, on being called upon to do so by the Authority, a penalty interest charge not exceeding one percent or the amount of the deficiency, for every day during which the offence continues.

Section 31. Prohibited business Section A Sacco society shall engage only in such business as the Authority shall prescribe.

Section 32. Place of business Section 32(1) No Sacco society may open in Kenya a branch or a new place or business or change the location of a branch or the existing place of business in Kenya without the approval of the Authority. Section 32(2) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.

Section 33. Application for loan or credit facility Section 33(1) Any member of a Sacco society may apply to the Sacco society for a loan or credit facility in writing. Section 33(2) A person who applies for a loan or credit facility under subsection (1) shall provide evidence of his or her ability to repay the loan or credit facility. Section 33(3)(a) a loans policy and procedures manual specifying the criteria and procedures applicable in the evaluation, processing, approval, documentation and release of loans or credit facilities; Section 33(3)(b) an asset review system, which shall accurately identify risk and assure the adequacy of the provisions for losses account; Section 33(3)(c) a system of reviewing the entire asset portfolio including contingent accounts or off balance sheet items and adequate provisioning for losses at periodic monthly intervals. Section 33(4) Where security is required with respect to a loan, the Sacco society may accept as security against any loan, an endorsement by a guarantor or co-guarantor, assignment of an interest in real or personal property, deposits or wages of the borrower or any collateral as may be prescribed by the Authority. Section 33(...

Section 34. Limits on loans and credit facility Section 34(1) No Sacco society shall grant a loan or credit facility to a member where the loan or credit facility, in the aggregate, exceeds such limit of the society's core capital as the Authority may prescribe. Section 34(2) No Sacco society shall grant a loan or credit facility against the security of the core capital of the society. Section 34(3) Any person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding two years, or to both such fine and imprisonment.

Section 35. Insider lending Section 35(1) A Sacco society may make loans to its employees and members of its board of directors. Section 35(2) The conditions for the grant of a loan or credit facility to an employee or board member shall comply with all requirements under this Act with respect to loans to other members and shall not be made on terms more favourable than those extended to other members. Section 35(3) A person who has applied for a loan or credit facility to which this section applies shall not be present nor participate in the consideration of the application. Section 35(4) No director, officer, employee or a member of the board of a Sacco society shall act as a guarantor of any person with respect to a loan advanced or credit facility granted to a person by that society. Section 35(5) A Sacco society may lend to its staff and officials an amount in the aggregate not exceeding such proportion of its total assets as prescribed by the Authority.

Section 36. Charge against shares and savings deposits Section 36(1) A Sacco society shall have a first charge against deposits and share capital and upon any dividend or interest payable to a member for any debt due to the society from the member, either as a guarantor or endorser of a loan or credit facility or for any other obligation. Section 36(2) A Sacco society may refuse to allow withdrawals from any deposit account operated by a member where the member is in arrears on a debt owed to the society.

Section 37. Dormant accounts Section The treatment of members' dormant accounts shall be in such manner as may be prescribed by the Authority.

Section 38. Investment by Sacco societies Section 38(1)(a) securities, obligations or, other debt instruments issued or guaranteed by the government or any agency of the government; Section 38(1)(b) deposits, obligations or other accounts of deposit-taking institutions under the Banking Act ( Cap. 488 ); Section 38(1)(c) shares, stocks, deposits in, loans to or other obligations of any Sacco society or co-operative society. Section 38(2) An investment made under this section shall not in the aggregate, exceed such proportion of the total core capital and deposits of a Sacco society as the Authority may prescribe. Section 38(3) A Sacco society shall not purchase or acquire any land or any interest or right therein except as may be reasonably necessary for the purpose of conducting its deposit-taking business and where such investments do not exceed such proportion of the total assets of the society as the Authority may prescribe.

Section 39. Financial year Section The financial year of a Sacco society shall be the period of twelve months ending the thirty-first December in each year.

Section 40. Form of accounts Section 40(1) Every Sacco society shall keep proper books of accounts. Section 40(2)(a) show a true and fair state of affairs; and Section 40(2)(b) explain all transactions and financial position to enable the Authority determine whether the Sacco society has complied with the provisions of this Act and the regulations made under this Act. Section 40(3) The accounts and other financial records of a Sacco society shall be denominated in Kenya shillings and shall comply with the international financial reporting standards and such other requirements as the Authority may prescribe. Section 40(4) The board of directors shall cause the accounts of the Sacco society to be audited within three months after the close of each financial year.

Section 41. Submission of accounts to the Authority Section 41(1)(a) an audited balance sheet, showing its assets and liabilities; Section 41(1)(b) an audited profit and loss account; and Section 41(1)(c) a copy of the auditor's report; Section 41(2) A person who contravenes the provisions of this section commits an offence.

Section 42. Disclosure requirements Section members, if any, who hold more than twenty percent of the share capital and deposits in the Sacco society;

Section 43. Appointment of internal auditor Section 43(1) Every Sacco society shall appoint an internal auditor who shall report to the board of directors on the internal control systems and financial matters of the society. Section 43(2) No person shall be appointed as an internal auditor under this section unless the person holds such professional qualifications in accounting and has such experience in deposit-taking business, as may be prescribed by the Authority.

Section 44. Appointment of external auditors Section 44(1)(a) a person qualified under section 45 ; Section 44(1)(b) approved by the annual general meeting of that society; and Section 44(1)(c) appointed as such by the Authority. Section 44(2) A Sacco society shall not remove or change its external auditors in the course of the year of the appointment of such auditors except with the prior approval of the Authority. Section 44(3) An external auditor shall, not less than four months after the end of each financial year, submit his report to the Authority, on the financial conditions of the deposit-taking business of the Sacco society for which he has been appointed. Section 44(4)(a) solvency of the Sacco society's business and any concerns with respect to the financial condition of the society's business; Section 44(4)(b) any violation of prudential standards or a condition of the licence; and Section 44(4)(c) any other contravention of this Act. Section 44(5) Where for any reason a casual vacancy occurs in the appointment of the external auditor in the course of the year of that appointment, the board of directors of the Sacco society shall, with the approval of the Authority and s...

Section 45. Qualifications of external auditors Section is qualified as an auditor under the Companies Act (Cap. 486);

Section 46. Display and publication of audited financial statements Section 46(1) A Sacco society shall display, throughout the year, in a conspicuous position in every place of business, a copy of its last audited financial statements in the prescribed format. Section 46(2) A Sacco society which does not comply with the provisions of this section shall be liable to pay to the Authority such penalty, not being less than one hundred thousand shillings, as may be prescribed by the Authority.

Section 47. Annual general meeting to be supreme organ Section The annual general meeting of a co-operative society as established under the Co-operatives Societies Act ( Cap. 490 ) shall be the supreme organ of a Sacco society.

Section 48. Regulation and supervision of Sacco societies Section 48(1) The Authority shall be responsible for the regulation and supervision of Sacco societies to which this Act applies. Section 48(2)(a) prescribe prudential standards to be adhered to by Sacco societies; Section 48(2)(b) undertake inspections or require a Sacco society to submit information and reports on its financial affairs of the deposit-taking business to enable the Authority to evaluate the society's financial condition; Section 48(2)(c) require or oversee Sacco societies' workout plan to avert or alleviate financial difficulties; Section 48(2)(d) prescribe the maximum number of years an external auditor may serve the same Sacco society; Section 48(2)(e) exercise such incidental powers as may be necessary or requisite to enable it to effectively carry out its functions under this Act.

Section 49. Powers of the Authority to inspect Section 49(1) The Authority may, at any time and from time to time, and shall, if so directed by the Cabinet Secretary, cause an inspection to be made by any person authorized by the Authority in writing of any Sacco society and of its books, accounts and records. Section 49(2) The Authority shall assist any investigative authority regarding matters of suspected fraud or malpractice in Sacco societies either by identification of such matters for referral or at the request of such authority. Section 49(3) Where an inspection is made under subsection (1), the society concerned and every officer or employee thereof shall produce and make available to the person making the inspection, all books, accounts, records and other documents of the Sacco society and such correspondence, statements and information relating to the society as the person making the inspection may require, and within such period as he may direct in writing. Section 49(4) A person who fails to produce any books, accounts, records, documents, correspondence, statements or the information required under subsection (2), within the period specified in the relevant direction,...

Section 50. Powers of the Authority to advise and direct Section 50(1)(a) the business of a Sacco society is being conducted in a manner contrary to or not in compliance with the requirements of this Act or of any regulations made thereunder or in any manner detrimental to or not in the best interest of its members or members of the public, or Section 50(1)(b) give advice and make recommendations to the Sacco society with regard to the conduct of its business generally; Section 50(1)(b)(i) give advice and make recommendations to the Sacco society with regard to the conduct of its business generally; Section 50(1)(b)(ii) issue directions regarding measures to be taken to improve the management or business methods of the society or to secure or improve compliance with the requirements of this Act, any regulations made thereunder or any other written law or regulations; Section 50(1)(b)(iii) in any case to which paragraph (b) applies, issue directions to the Sacco society, officer or other person to cease such practice; Section 50(1)(b)(iv) appoint a person, suitably qualified and competent in the opinion of the Authority, to advise and assist the Sacco society generally or for the pu...