CHAPTER 211
CO-OPERATIVE SOCIETIES ACT

[PRINCIPAL LEGISLATION]

ARRANGEMENT OF SECTIONS

   Section

Title

PART I
PRELIMINARY PROVISIONS

   1.   Short title.

   2.   Interpretation.

   3.   Co-operative societies to be registered in accordance with this Act.

PART II
THE OBJECTIVE OF CO-OPERATIVE SOCIETIES AND PROTECTION OF CO-OPERATIVE SOCIETIES

   4.   Objects of co-operative societies.

   5.   Protection of co-operative societies.

   6.   Application of Penal Code to employees and property of society.

PART III
RESPONSIBILITIES OF THE MINISTER

   7.   Encouragement of co-operative development.

   8.   Responsibilities of Minister.

   9.   Information on co-operation.

   10.   Persons required to furnish information to Minister.

PART IV
REGISTRAR

   11.   Appointment of Registrar, Deputy Registrar and Assistant Registrars.

   12.   Functions of a Registrar.

PART V
FORMATION AND ORGANISATION OF SOCIETIES

   13.   Structure of the co-operative societies.

   14.   Formation of societies.

   15.   Societies may affiliate.

   16.   Registrar may advise primary societies to join a co-operative union.

   17.   Objects of primary society.

   18.   Objects and functions of secondary societies.

   19.   Objects of apex societies.

   20.   Societies may form joint enterprise.

   21.   Object of the Federation.

   22.   Kinds of societies not restricted.

PART VI
REGISTRATION OF SOCIETIES

   23.   Societies which may be registered.

   24.   Restrictions on members of society holding share capital.

   25.   Conditions for registration.

   26.   Rights of minor.

   27.   Contracts with minors.

   28.   Powers of general meeting to decide certain questions.

   29.   Membership subject to Registrar's permission in certain cases.

   30.   Application for registration.

   31.   Registration.

   32.   Certificate of registration.

   33.   Probationary societies.

   34.   Registrar to decide on registration within ninety days.

   35.   Evidence of registration.

   36.   Societies to be bodies corporate.

PART VII
RIGHTS AND LIABILITIES OF MEMBERS

   37.   Member not to exercise right till due payment is made.

   38.   Restriction on membership in society with limited liability.

   39.   Vote of members.

   40.   Restriction on transfer of share or interest.

   41.   Liability of a member.

   42.   Liability of past member.

   43.   Liability of the estates of deceased member.

PART VIII
DUTIES OF REGISTERED SOCIETIES

   44.   Address of societies.

   45.   Copy of Act, the rules and by-laws to be free for inspection.

   46.   Power to make by-laws.

   47.   Amendment of the by-laws of the registered society.

   48.   By-laws of the society to bind members.

   49.   Accounts and audit.

   50.   Registrar may require bank to produce information, etc.

   51.   Communications of defects in the working of the registered societies.

   52.   Returns to be made by societies.

PART IX
PRIVILEGES OF REGISTERED SOCIETIES

   53.   Defect in the constitution not to render act of a registered society invalid.

   54.   Disposal of produce to or through a registered society.

   55.   Creation of charges in favour of registered societies.

   56.   Charges and set-off in respect of shares or interest of members.

   57.   Shares or interest not liable to attachment.

   58.   Transfer of interest on death of a member.

   59.   Register of members.

   60.   Proof of entries in societies' books.

   61.   Exemption from compulsory registration of instruments relating to shares and debentures of registered society.

   62.   Power to exempt from duty or tax.

PART X
MANAGEMENT OF REGISTERED SOCIETIES

   63.   General meeting.

   64.   Constitution of committee.

   65.   Power of the committee.

   66.   Restriction relating to members of committee.

   67.   Dissolution of the committee of society.

   68.   Powers of persons appointed under section 65.

   69.   Committee to comply with any directions contained in reports.

PART XI
PROPERTY AND FUNDS OF REGISTERED SOCIETIES

   70.   Revenue of registered society.

   71.   Rules to govern the maintenance of the revenue and funds of a registered society.

   72.   Restriction on loans.

   73.   Restriction on borrowing from non-members.

   74.   Restriction of transactions with non-members.

   75.   Investment of funds.

   76.   Central Co-operative Fund.

   77.   [Repealed.]

   78.   Secondary societies to contribute to the Fund.

   79.   Financial provision.

   80.   Voluntary division.

   81.   Reserve Fund.

   82.   Distribution of net balances.

   83.   Contribution for charitable, educational and medical purposes.

PART XII
REGISTRATION OF CHARGES

   84.   Registration of charges.

   85.   Duty of society to register charges created by society.

   86.   Duty of society to register charges existing on property acquired.

   87.   Register of charges.

   88.   Endorsement of certificate of registration of debentures.

   89.   Entry of satisfaction and rectification of register.

   90.   Enforcement of security.

   91.   Copies of instrument creating charges to be kept by society.

   92.   Society's register of charges.

   93.   Right to inspect copies of instruments creating mortgages and charges and society register of charges.

PART XIII
INSPECTION OF AFFAIRS

   94.   Inquiry.

   95.   Inspection.

   96.   Costs of inquiry.

   97.   Surcharge.

PART XIV
AMALGAMATION AND DIVISION

   98.   Voluntary amalgamation.

   99.   Defect or irregularity in notice, etc.

   100.   Registered society may resolve to form new societies, etc.

   101.   Compulsory amalgamation.

   102.   Compulsory division.

PART XV
DISSOLUTION OF SOCIETY

   103.   Dissolution.

   104.   Cancellation of registration of society.

   105.   Appeal against cancellation.

   106.   Effect of cancellation of registration.

   107.   Winding up.

   108.   Powers of liquidator.

   109.   Power of Registrar to control liquidation.

   110.   Power to stay or restrain proceedings against society.

   111.   Avoidance of disposition of property, etc., after cancellation.

   112.   Avoidance of attachment, etc.

   113.   Power of Registrar to assess damage against delinquent promoters, etc.

   114.   Power to arrest absconding promoter, officer, etc.

   115.   Debts of all description may be proved.

   116.   Where society is insolvent.

   117.   Preferential payments.

   118.   Fraudulent preference.

   119.   Liabilities and rights of certain fraudulent preferred persons.

   120.   Effect of floating charge.

   121.   Disclaimer of onerous property in case of society being wound up.

   122.   Restriction of rights of creditor as to execution or attachment in case of society being wound up.

   123.   Duties of court as to goods taken in execution.

   124.   Courts not to have jurisdiction in dissolution of societies.

   125.   Preservation of books and records.

PART XVI
RULES AND REGULATIONS

   126.   Rules.

   127.   Power of Registrar.

   128.   Fees.

   129.   Recovery of sums due to Government.

PART XVII
OFFENCES

   130.   Offences.

   131.   Penalty for soliciting violation of contracts.

   132.   Offences by officer of society being wound up.

   133.   Prohibition of the use of word "co-operative", etc.

PART XVIII
MISCELLANEOUS PROVISIONS

   134.   Power to exempt societies from conditions as to registration.

   135.   Power to exempt registered societies from provision of the Act.

   136.   Appointment of special members to committees.

   137.   Terms of appointment and power of special members.

   138.   Savings.

PART XIX
REPEAL AND TRANSITIONAL PROVISIONS

   139.   [Omitted.]

   140.   [Repeal.]

   141.   [Repeal.]

   142.-143.   [Transitional provisions.]

CHAPTER 211
THE CO-OPERATIVE SOCIETIES ACT

An Act to make better provision for the formation, constitution, registration and operation of co-operative societies; and for other matters incidental to those purposes.

[4th September, 1991]
[G.N. No. 385 of 1991]

Acts Nos.
15 of 1991
5 of 1997

PART I
PRELIMINARY PROVISIONS (ss 1-3)

1.   Short title

   This Act may be cited as the Co-operative Societies Act.

2.   Interpretation

   In this Act, unless the context otherwise requires–

   "agricultural inputs" means supplies needed for agricultural production and includes building materials, fertiliser, dip, veterinary preparations, seed, animal feeding stuffs, breeding stock, draft animals, planting material, farm implements, land tools, fencing material, petroleum products, and other supplies and equipment normally used in agricultural production;

   "agricultural produce" means the produce of farms, gardens, orchards and forests, poultry, beekeeping and other animal products, and includes dairy produce and all the products of fish and fishing;

   "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;

   "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;

   "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 provision has been made for bad debts, depreciation, taxation and losses;

   "apex society" mean 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;

   "bank" means a co-operative bank registered at the secondary or tertiary level;

   "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;

   "by-law" means the by-laws made by a society in the exercise of the power conferred by this Act, and duly registered amendment of such by-laws;

   "committee" means the governing body of a registered society to whom the management of its affairs is entrusted;

   "common need" means the need which is common to the majority of the members of a registered society;

   "company" means a company registered under the Companies Act *;

   "co-operative financial institution" means a society registered to render banking activities and any other financial service.

   "co-operative society" means an association of persons who have voluntarily joined together for the purpose of achieving a common need through the formation of a democratically controlled organisation and who make equitable contributions to the capital required for the formation of such an organisation, and who accept the risks and the benefits of the undertaking in which they actively participate;

   "Corporation" means the Co-operative Audit and Supervision Corporation established under the Co-operative Audit and Supervision Act *;

   "delegate" means–

   (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 delegates; and

   (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 later 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 in the rules;

   "federation" means an association formed by apex societies and may include secondary societies which are not members of apex societies and primary societies which are not members of secondary societies;

   "Fund" means the Central Co-operative Fund established under section 74 of this Act;

   "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;

   "Minister" means the Minister responsible for matters relating to co-operative societies;

   "officer" means any officer of a society and includes chairman, vice-chairman, secretary, treasurer, member of a committee or any other person empowered under the rules or the by-laws to act on behalf of a registered society;

   "primary society" means a registered society all of whose members are individual persons or an association of such individual persons and any co-operative body other than a body registered under the Companies Act * and includes a joint enterprise where all its members are primary societies;

   "registered society" means a co-operative society registered or deemed to have been registered under this Act;

   "the Registrar" means the Registrar of co-operative societies appointed under section 11 of this Act, and includes, where appropriate, the Deputy Registrar or an Assistant Registrar;

   "rules" means rules made under this Act;

   "rural areas" means any area which is not part of an urban area;

   "savings and credit society" means a registered society whose principal object is 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 co-operative society registered under this Act and includes a primary society, a secondary society, an apex society and a federation;

   "specialised skills" means an expertise possessed by any person in such particular field as may be described in the rules;

   "urban area" means any area within the jurisdiction of a city council, a municipal council, a town council or within a township established or deemed to have been established under the Local Government (Urban Authorities) Act *, or the Local Government (District Authorities) Act *, as the case may be;

   "village" means a village registered or deemed to have been registered under the Local Government (District Authorities) Act, and includes an Ujamaa village designated as such under that Act.

3.   Co-operative societies to be registered in accordance with this Act

   (1) Co-operative societies shall be registered in accordance with this Act.

   (2) Any reference in this Act to compliance with or contravention of this Act or any of its provisions or to any matter being subject to or being in accordance with this Act or any of its provisions, and any equivalent reference, shall include a reference to compliance with or contravention of any regulations or rules made under this Act and to the matter being subject to or in accordance with any such regulations or rules.

PART II
THE OBJECTIVE OF CO-OPERATIVE SOCIETIES AND PROTECTION OF CO-OPERATIVE SOCIETIES (ss 4-6)

4.   Objects of co-operative societies

   A co-operative society is an association of persons who have voluntarily joined together with an object of promoting the economic and social welfare of its members. The society shall be operated democratically on the basis of the principles, methods and procedures of co-operation. It shall thus strive, in accordance with the co-operative principles–

   (a)   to improve the material living conditions of its members;

   (b)   to satisfy the cultural needs of its members as well as to increase their social and political awareness; and

   (c)   to promote co-operative education among its members.

5.   Protection of co-operative societies

   The state shall protect the co-operative societies by offering support, guidance and advice.

6.   Application of Penal Code to employees and property of society

   When applying the Penal Code * and the punishments provided for in this Act, the property of the society shall be deemed to be public property, its employees shall be deemed public servants and the papers of the society, its records and seal shall not be removed from the premises of the society except in accordance with the provisions of this Act.

PART III
RESPONSIBILITIES OF THE MINISTER (ss 7-10)

7.   Encouragement of co-operative development

   The Minister shall take such measures as he deems necessary for the encouragement generally of co-operative development for economic, social and cultural purposes and human advancement on the basis of self-help and in particular, but without limiting the generality of the foregoing for the encouragement of the organisation of co-operative societies as a means of–

   (a)   improving the economic situation of their members;

   (b)   contributing to the economy an increased measure of self-reliance and democratic control of economic activity;

   (c)   increasing personal and national capital sources by the encouragement of thrift, the prevention of usury and the wise use of credit;

   (d)   increasing incomes and employment by fuller utilisation of resources, including the bringing of new land into productive use, the marketing and processing of agricultural and natural products, the development of local industries, and processing raw materials;

   (e)   improving social and cultural conditions and, where appropriate, providing supplementary services in housing, health, education and communications;

   (f)   raising the level of general and technical knowledge of members of societies.

8.   Responsibilities of Minister Act No. 5 of 1997 s. 3">

   In encouraging co-operative development and in carrying out the provisions of this Act, the Minister may take such measures which are not detrimental to the interests of the members as he deems necessary to–

   (a)   assist the organisation of co-operative societies among persons or groups of persons who desire to provide themselves with, or to market, commodities or services or both, on a co-operative 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 and classify analyses, information and statistics relating to societies and co-operative development;

   (e)   establish or facilitate the establishment of a research service or services for enquiry generally into the operation of societies and for investigation and analysis of economic, social and other problems as may be deemed advisable to lead to the encouragement of new or improved methods of co-operative development including–

      (i)   production of agricultural or natural products and the processing and marketing of such products;

      (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 co-operative basis;

   (f)   issue such reports, circulars and other publications relating to societies and co-operative development as may be deemed advisable;

   (g)   provide or authorise 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 co-operative development.

9.   Information on co-operation

   (1) The Minister shall disseminate, or arrange for the dissemination of, information relating to co-operatives and co-operative development in such manner and form as may be found best suited to promote interest in and understanding of co-operative principles and practices with a view to the encouragement of the organisation of co-operative societies based on self help.

10.   Persons required to furnish information to Minister

   (1) All officers of societies to which this Act applies shall upon a request by him furnish the Minister with such information as he may from time to time require for the purposes of this Act.

   (2) An officer who fails to comply with a request of the Minister under subsection (1), or who knowingly makes statement, false in any material particular, in any information furnished to the Minister, shall be guilty of an offence.

PART IV
REGISTRAR (ss 11-12)

11.   Appointment of Registrar, Deputy Registrar and Assistant Registrars

   (1) The President shall appoint public officers to be Registrar of Co-operative Societies and Deputy Registrar, and the Minister shall appoint such number of Assistant Registrars as may be required to assist the Registrar in carrying out his duties and functions under this Act.

   (2) The Deputy Registrar and the Assistant Registrars shall act under the direction and control of the Registrar and may subject to this Act or upon due authorisation exercise any of the functions of the Registrar.

   (3) The Registrar shall have a seal of such device as may be approved by the Minister.

12.   Functions of a Registrar

   (1) The functions of a Registrar shall be–

   (a)   to register, promote, inspect and advise co-operative societies in accordance with the provisions of this Act;

   (b)   to advise the Minister on any matter relating to co-operative societies, and in particular in respect of any assistance, financial or otherwise, which may be required by co-operative societies;

   (c)   to encourage the establishment of co-operative societies in all sectors of the economy and to assist co-operative societies to increase their efficiency;

   (d)   to provide services designed to assist in the formation, organisation and operation of societies and to give advice on co-operative 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 co-operative societies such as he may be directed by the Minister;

   (f)   to promote or facilitate education and training of members and staff of co-operative societies.

   (2) The Registrar shall gradually delegate his duties of promoting, advising, educating and training of co-operative societies to the co-operatives on mutual agreement as provided in the rules.

PART V
FORMATION AND ORGANISATION OF SOCIETIES (ss 13-22)

13.   Structure of the co-operative societies

   The structure of co-operatives shall be determined by the members, and subject to the wishes of the members, may comprise of–

   (a)   the primary society;

   (b)   the secondary society;

   (c)   the Apex society;

   (d)   the Federation.

14.   Formation of societies

   (1) A primary society may be formed by ten or more persons except for co-operatives of specialised skills which can be formed by four or more persons.

   (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.

   (3) Notwithstanding the provisions of subsection (2) a person who has not attained the age of 18 years but has the minimum age of fifteen and is following a trade, or occupation relevant to the society's object who is in this section referred to as a minor may become a member of a co-operative society, but such person shall not be eligible to act as a member of a committee until he has attained the age of eighteen; and a person who has not attained the age of fifteen years but is attending school may be a member of a school society at his school.

15.   Societies may affiliate Act No. 5 of 1997 s. 4">

   (1) Primary societies may form secondary societies and secondary societies may form Apex Societies. Apex societies may join and form a Federation, but where a co-operative is unable due to its nature to combine with other of similar nature to form a secondary or Apex society it may be allowed to become a member of the Federation.

   (2) A banking co-operative society may be formed by savings and credit societies and other co-operative societies.

16.   Registrar may advise primary societies to join a co-operative union

   Where the Registrar considers that a co-operative union in relation to any area is economically viable, he may advise any primary society or category of co-operative societies operating within that area to join the co-operative union, by notice in writing served on the society or category of co-operative societies, as the case may be.

17.   Objects of primary society Act No. 5 of 1997 s. 5">

   The objects of a primary society shall be–

   (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, and processing and marketing of the products of its members.

[s. 16A]

18.   Objects and functions of secondary societies

   The objects of secondary societies shall be–

   (1)   to facilitate the operation of primary societies which are its members;

   (2)    to provide services to primary societies as will be provided for in the by-laws of the secondary societies;

   (3)   to procure, process and sell all their products.

[s. 17]

19.   Objects of Apex Societies Act No. 5 of 1997 s. 6">

   The objects of Apex Societies shall include–

    (i)   to represent member societies in collective bargaining;

   (ii)   to provide consultative services to member societies;

   (iii)   to do any other thing which in its opinion is connected with or is ancillary to the above enumerated objects.

[s. 18]

20.   Societies may form joint enterprise Act No. 5 of 1997 s. 7">

   (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.

   (2) A co-operative society may join with another private or public non-co-operative company or firm to form a joint venture or company for the interest of the parties concerned provided that the Registrar shall signify approval in writing.

   (3) The societies which form an association for the purpose of operating and carrying on a joint enterprise as provided under subsection (1), may form a joint committee 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 Apex Societies or Federation.

[s. 19]

21.   Object of the Federation Act No. 5 of 1997 s. 8">

   (1) The Federation, when formed and registered, shall provide, organise and supervise effective centralized services for the member societies and for co-operative 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, standardising their book-keeping, accounting and their procedures and providing audit services to those societies;

   (b)   to print, publish and circulate any newspaper or other publication designed to foster or increase interest in co-operative enterprises, principles and practices;

   (c)   to co-ordinate the economic plans of the member societies and to forward them to the Minister for incorporation in the national plan;

   (d)   to carry on, encourage and assist educational and advisory work relating to co-operative enterprise, and without limiting the generality of the foregoing, to advise the government on co-operative education and operating methods and for that purpose may prepare and provide correspondence courses regarding co-operative principles and operating methods and may disseminate information on co-operative principles and practices;

   (e)   to represent its member societies in international conferences;

   (f)   to do any other thing which in its opinion is connected with or is ancillary to the above enumerated objects.

[s. 20]

22.   Kinds of societies not restricted Act No. 5 of 1997 s. 9">

   (1) The kinds of societies which may be formed and registered under the provisions of this Act shall not be restricted in any manner.

   (2) Without prejudice to the generality of subsection (1) the Registrar may register the following types of societies–

   (a)   agricultural co-operatives which are designed to deal with crop production, purchasing, processing, marketing, distribution, and any such activity as may be provided in the rules and by-laws;

   (b)   savings and credit societies and banks which are designed to deal with the mobilisation of local savings and giving credit to members;

   (c)   consumer co-operatives designed to deal with wholesale and retail business amongst members;

This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.