October 2021

Strategic advantages of Information Technology The Role of It In Strategic Management Strategic Management Is the way an organization maps the strategy of its future operations. The term strategic points to the long-term nature of this mapping exercise and to the large magnitude of advantage the exercise is expected to give an organization. Information Technology contributes to strategic management in many ways (see Kemerer, 1997 and Callon 1996). Consider these eight. Innovative applications IT creates innovative applications that provide direct strategic advantage to organizations. For example, Federal Express was the first company in its industry to use IT tracking the location of every package in its system. Next, FedEx was the first company to make this database accessible to its customers over the internet. Ted Ex has gone on to provide e-fulfilment solutions based on IT and is even writing software for this purpose (Bhise et al. 2000) 2. Competitive Weapons Information systems themselves have long been recognized as a competitive weapon dvcs and learnmouth, 1984 and Callon, 1996). Amazon, com‘s one-click shopping system is considered so significant and important to the company‘s reputation for superior customer service that it has patented the system. Michael Dell, founder of Dell Computer puts it bluntly: The internet is like a weapon sitting on the table, ready to be picked up by either you or your competitor‖ (Dell 1999) Changes in processes IT supports changes in business processes that translate to strategic advantage (Davenport, 1993) For example, Berri is Australia‘s largest manufacturer and distributor of fruit price products. The principal goal of its enterprise resource planning system implementation was ‗to turn its branch-based business into a national organization with a single set of unified business processes‖ in order to achieve millions of dollars in cost-savings(J.D. Edwards, 2002a) other ways in which IT can change business processes include better control over remote stores or offices by providing speedy communication tools, streamlined product design time with computer-aided engineering tools and better decision-making processes by providing managers with timely information reports. Links with Business Partners. IT links a company with its business partners effectively and efficiently. For example, Rosenbluth‘s Global Distribution Networks allows it to connect agents, customers and travel service providers around the globe, an innovation that allowed it to broaden its marketing range (Glemons and Hann, 1999) Other examples, of inter organizational strategic information systems are presented later in this chapter. Cost reduction IT enables companies to reduce costs. For example, a Booz Allen & Hamilton study found that : a traditional bank transaction costs $1.07 whereas the same transaction over the Web costs about 1 cent; a traditional airline ticket costs $8 to process, an e-ticket costs $1 (lbm.coml.partnerworld/pwhome.nsf/vAssetLookuplad2.pd/sfile/ad2.pdf). In the customer service area, a customer call handled by a live agent costs $33, but an intelligent agent can handle the same request for less than $2(Schwartz, 2000) Relationships with suppliers and customers IT can be used to lock in suppliers and customers, or to build in switching costs (making it more difficult for suppliers or customers to switch to competitors) For example, Master Builders sells chemical additives that improve the performance characteristics of concrete. The company offers customers Master Trac, a tank monitoring system that automatically notifies Master Builders when additive inventories fall below an agreed-on level. Master Builders then resupplies the tanks on a just-in-time basis. The customer benefits from an assured supply of product, less capital tied up in inventory and reduced inventory management time and processing. Master Builders benefits because company competitors face a more difficult task to convince concrete companies to switch to them (Vandenbosch and Dawar 2002) New products A firm can leverage its investment in IT to create new products that are in demand in the marketplace. Federal express‘s package-tracking software is one example. In Australia, IGI Explosives no longer views its business model as just selling explosives; it now also writes contracts for broken rocks. IGI engineers developed computer models that specify drilling procedures and explosives use for different types of rockfaces to produce rock in the sizes that the customer needs. According to Vandenbosch and Dawar (2002), ―The redefinition of IGI‘s role not only generated much higher margins for the business‖ It also gave IGI a much more defensible competitive position‖381. Competitive Intelligence IT provides competitive (business) intelligence by collecting and analyzing information about products, markets, competitors and environmental changes (see Guimaraes and Armstrong, 1997). For example, if a company knows something important before its competitors, or it can make the correct interpretation of information before it‘s competitors, then it can act first. Gaining strategic advantage through first-mover advantage (the competitive advantage gained by being first to offer a competitive intelligence is such an important aspect of gaining advantage, we look at it in some detail next.  

CO-OPERATIVE TRIBUNAL (PRACTICE AND PROCEDURE) RULES Saving of the inherent power of the Tribunal Nothing contained in these Rules shall limit or otherwise affect the inherent power of the Tribunal to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal. Disregard of technicalities The Tribunal shall have power and discretion to decide all matters before it with due speed and dispatch without undue regard to technicalities of procedure. Forms and fees The Tribunal may prescribe such forms and fees as it may deem necessary, for purposes of these Rules. The provisions of the Civil Procedure Rules (Cap. 21, Sub. Leg.) shall apply in respect of the proceedings of the Tribunal. Powers of chairman and deputy chairman The chairman or the deputy chairman shall have the power to give directions for— (a) furnishing of further particulars or supplementary statement; (b) filing and exchange of documents; (c) framing of issues, and and other directions as are necessary to enable the parties to prepare for the hearing or to assist the Tribunal to determine the issues. The chairman or the deputy chairman, in matters before the Tribunal, shall have the same power as is vested in the Registrar or Deputy Registrar where similar matters are before the High Court and shall exercise the power, mutatis mutandis, in accordance with the Civil Procedure Rules (Cap. 21, Sub. Leg.). Appeals Every appeal to the Tribunal shall be in the form of a memorandum of appeal signed in the same manner as a pleading. The memorandum of appeal shall set forth concisely and under distinct heads the grounds of objection to the decision appealed against, without any argument or narrative, and such grounds shall be numbered consecutively. At the time of filing the memorandum of appeal or before setting down the appeal for hearing, the Appellant shall file a record of appeal in five sets and serve all parties. The record of appeal, properly indexed and paginated, shall contain— (a) the memorandum of appeal; (b) the inquiry order; (c) the inquiry and/or inspection report; (d) the minutes of the general meeting whose decision is appealed against; (e) the notice of intention to surcharge; (f) the surcharge order; and (g) any other relevant documents. Statement of claim A claim, other than an appeal under the Act, shall be instituted by way of a statement of claim singed by the claimant or his advocate or other duly authorized agent, setting out concisely the nature of the claim and the grounds upon which it is based, supported by a verifying affidavit signed by the claimant.  Service of statement of claim (1) The statement of claim together with the verifying affidavit and summons to enter appearance shall be served on the respondent. (2) The respondent shall file a memorandum of appearance within fifteen days of service with the documents stated under sub-rule (1) and a statement of defence within a further fifteen days. Interlocutory applications (1) All interlocutory applications made to the Tribunal shall be by Chamber Summons or Notice of Motion signed by the claimant, his advocate or a duly authorized agent, supported by an affidavit. (2) A party served with a Chamber Summons or Notice of Motion may file a replying affidavit or grounds of opposition. However, any party who desires to be heard and appears to the Tribunal to be a proper party to be heard, may be heard, despite failure to file replying affidavit or grounds of opposition. Mode of service The mode of service shall, unless the Tribunal otherwise directs, be personal and in every case, an affidavit of service shall be filed as evidence of the service by an authorized process server. List of documents At the close of pleadings, every party to the claim shall within thirty days, or before setting down the suit for hearing, file with the Tribunal, five sets of all documents that the party intends to rely on and serve all the parties to the claim at least fourteen days before the hearing. Setting down claim for hearing The claimant may, at any time after close of pleadings, and upon giving reasonable notice to every respondent who has appeared, set the suit down for hearing. Substitution and addition of parties Subject to section 76 of the Act, the Tribunal shall have the discretion to add or strike out parties to the claim. Hearing of claims At the hearing, the evidence shall be in narrative form but the Tribunal shall be at liberty to take down questions and answers verbatim. Setting aside judgement, order or award A judgement, order or award made ex parte under this Rules may, on application, be set aside on such terms as may be just. Costs Subject to any provisions of any law for the time being in force, the Tribunal shall have the power to determine the party or person to bear costs, or out of which property and to what extent, the costs shall be paid: Provided that the costs of any claim or issue shall follow the event unless the Tribunal shall for good reason otherwise order. Interest Where and in so far as a decree is for the payment of money, the Tribunal may, in the decree, order interest at such rate as the tribunal deems reasonable to be paid on the principal sum adjudged from the date of filing the claim to the date of the decree, plus any interest accruing on the principal from the period before the institution of the suit, and on the aggregate sum so adjudged, such further interest from the date of the decree to the date of full payment or to such earlier date as the Tribunal thinks fit. Where such a decree is silent with respect to the payment of further interest on such aggregate sums as aforesaid from the date of the decree to the date of payment or other earlier date, the Tribunal shall be deemed to

CO-OPERATIVE SOCIETIES RULES Books to be kept by a registered society A co-operative society shall keep up-to-date and in proper businesslike manner such accounts and such books as the Commissioner may from time to time direct either generally or in respect of any particular society or class of societies. Notwithstanding the provisions of sub-rule (1), every co-operative society shall keep— (a) a register of members showing in respect of each member— (i) the name, age, date of application for membership, postal address and occupation; (ii) the date he was admitted to membership; (iii) the date on which he ceased to be a member; (iv) the appointment, if any, of his nominees in accordance with rule 32 of these Rules; (b) a minute book giving details of the proceedings at general meetings; (c) a minute book giving details of the proceedings at Committee meetings; (d) a cash book showing details of all moneys received and expended or paid out in any way by the society; (e) a ledger containing such accounts as are necessary to properly record the transactions of the business; (f) a personal ledger showing transactions of each member with the society including details of produce delivered to the society by each member and the payment made therefor; (g) an assets register; (h) a stock control ledger; (i) a register of charges showing in respect of every charge created by the society the amount of the charge and the person entitled thereto; (j) a register of loans to members showing in respect of each loan the name of the borrower, the amount borrowed, the purpose of the loan, the due date of repayment, and the date the repayment is made; (k) a ledger showing deposits and withdrawals by members; and (l) such other books as the Committee may decide or the Commissioner may prescribe. Annual returns The annual return required to be filed pursuant to section 25 of the Act, shall be in Form IVA set out in the Schedule to these Rules and shall be filed with the Commissioner within four months after the closure of the financial year. Display of audited accounts Every co-operative society shall cause its audited accounts to be displayed in a conspicuous place at its registered office and branches at least two weeks before presentation of the accounts to its members at the general meeting. Approval of auditors A person qualified under the Accountants Act (Cap. 531) wishing to be considered to audit co-operative societies shall make an application in writing to the Commissioner and shall pay a fee of three thousand shillings and such application may be made annually. The Commissioner may cause the list of auditors approved to audit co-operative societies to be published in the Kenya Gazette. Submission of audited accounts to Commissioner The audited accounts required to be submitted to the Commissioner pursuant to section 25(7) of the Act shall be in six copies and shall— (a) have the following minimum disclosures— (i) correct name of the society as registered must appear on all accounts along with its registration number; (ii) share capital disclosed separately; (iii) statutory reserve computed separately; (iv) one total only disclosed for each main group of assets and liabilities; (v) specified loans as short term if repayment period is less than five years and long term if repayment period is more than five years; (vi) provision for dividends, bonus or honorarium disclosed under current liabilities; (vii) a detailed schedule of depreciation of fixed assets under “notes toaccounts”; (viii) details of all investments disclosed under “notes of accounts”; (ix) stocks and cash balances stated indicating whether verified or otherwise; (x) the balance sheet signed by the Chairman and two other Committee members; (xi) separate accounts prepared in respect of each activity; (xii) no material amount written off except with a resolution of the general meeting of the society accompanied by a satisfactory explanation; (b) include a statement of management responsibility; and (c) be submitted together with— (i) an extract of minutes of the general meeting in support of appointment of the auditor; and (ii) a banker’s cheque of the relevant audit and supervision fee. The audited accounts shall be read together with Commissioner’s comments thereon, if any. Establishment of the Fund There is hereby established a fund to be known as the Management and Supervision Fund and every registered society shall, unless exempted in writing by the Commissioner, pay into it annually an audit and supervision fee. The Commissioner shall administer the Fund and the balance of the Fund shall be kept with the accounting officer who shall be authorized to accept receipts and to make payments in accordance with the provisions of these Rules: Provided that the accounting officer shall not make any payment from the Fund unless he holds a cash balance on behalf of the Fund sufficient to cover the payment. The receipts to the Fund shall consist of— (a) fees under sub-rule (1) as fixed by the Commissioner for the better carrying out of the provisions and purposes of section 25 of the Act; (b) ten per centum of the audit fees paid by the society to the auditor in respect of the annual accounts in question; and (c) fees paid under rules 16 and 17(2). Expenditure charged to the Fund may include expenditure for— (a) purchases of specialized stationery, office machinery and equipment for use by the Commissioner in the administration of co-operative societies and the Fund; (b) repairs of office machinery and equipment purchased from the Management fund; (c) temporary extra clerical assistance, authorized by the Commissioner as necessary from time to time in connection with the audit and supervision of co-operative societies; (d) payment of professional audit fees which shall be subsequently recovered wholly or in part from co-operative societies concerned; (e) liquidation expenses including legal fees and costs where no moneys are available to the liquidator and where in the opinion of the Commissioner such expenditure should be incurred for the proper carrying out of the liquidation;

CO-OPERATIVE SOCIETIES RULES Register of co-operative societies The Commissioner shall keep or cause to be kept at his office a record called the register of co-operative societies wherein shall be entered particulars relating to the registration of societies and their by-laws and any amendments thereto. Every entry in the register shall be made by, or under the direction of, the Commissioner and shall be signed by him and every alteration, interlineation or erasure shall be initialed by the Commissioner. Application for registration An application for the registration of a society under section 6 of the Act shall be made to the Commissioner in Form I set out in the Schedule to these Rules and shall be accompanied by an appraisal in writing of the viability of the society and a non-refundable fee of five hundred shillings. Certificate of registration Upon registration of a society and payment of a fee of three thousand shillings, the Commissioner shall forward to the society— (a) a certificate of registration in Form IIA set out in the Schedule to these Rules or certificate of provisional registration in Form IIB, as the case may be; (b) a copy of the by-laws of the society as registered by him and certified under his hand as having been registered by him; (c) a copy of the Act and the Rules made thereunder; (d) a copy of the application for registration. Notification of refusal to register a society Where the Commissioner refuses to register a proposed society or its by-laws, he shall give the applicants his reasons in writing for such refusal within sixty days of the refusal. A person aggrieved by the Commissioner’s refusal under sub-rule (1) may appeal against the refusal to the Minister on paying a filing fee of one thousand shillings.  Power to make by-laws A co-operative society shall make by-laws in respect of the following matters— (a) its name; (b) its registered office and postal address; (c) its area of operation and membership common bond; (d) the objects of the society; (e) the purposes to which its funds may be applied; (f) the disposal of its accumulated funds; (g) the qualification for membership, the terms of admission of members and the mode of their admission; (h) the withdrawal and expulsion of members and the payment, if any, to be made to such members and the time within which such payment shall be made; (i) the rights, liabilities and obligations of members, including the minimum share-holding and produce delivery; (j) the transfer of the shares or interests of the members; (k) the manner of raising funds, including the maximum rate of interest on deposits; (l) its general meetings, the procedure and quorum of such meetings, power of such meetings and representation and voting at such meetings; (m) the appointment, suspension and removal of members of the Committee and officers and the powers and duties of the Committee and officers; (n) the period of its financial year; (o) the authorization of officers to sign documents on its behalf; (p) the settlement of disputes; and (q) such other matters as may be expedient for the better carrying out of the provisions of these Rules. If the objects of the society include the creation of funds to be lent to its members, by-laws shall also be made in respect of the conditions and other requirements on which loans and advances may be made to members including— (a) the rate of interest; (b) the maximum amount which may be lent to a member; (c) the extension, renewal and recovery of loans; (d) the period and purpose of loans; (e) the security for loans; and (f) the consequences of default in the repayment of any sum due. Amendment of by-laws Any amendment of the registered by-laws of a co-operative society under section 8 of the Act shall be made by a resolution of members at general meeting in respect of which at least fifteen clear days notice of the proposed amendment shall have been given to the members of the society. No resolution under sub-rule (1) shall be valid and effective unless— (a) in the case of a co-operative society with unlimited liability, half of the members of the society are present at the meeting and three quarters of them vote in favour of the resolution; or (b) in the case of a co-operative society with limited liability, a majority of the members of the society present at the meeting or in writing vote in favour of the resolution: Provided that when written votes are used, the following conditions shall apply— (i) all members of the society shall have been sent by the secretary or manager of the society voting papers to enable the members within reasonable time before the meeting to record their votes and return them to the secretary or manager; and (ii) the votes shall have been examined, counted and the results notified to members by the Committee. When in pursuance of the provisions of section 8(2) of the Act, amendment is sent to the Commissioner, it shall be accompanied by a certification in Form III set out in the Schedule to these Rules together with a copy of the amendment in quadruplicate. Upon registration of such amendment of by-laws, the Commissioner shall issue a copy duly signed by him on payment of a fee of one thousand shillings. Membership of society No co-operative society shall fix any limit to the number of its members. Any member of a co-operative society who ceases to qualify for membership of the society under section 14 of the Act, or under these Rules or the by-laws of the society, shall forthwith cease to be a member of the society and the Committee shall direct the secretary or manager to strike his name off the register of members. Transfer of shares Subject to the provisions of section 20 of the Act and sub-rule (3) of this Rule, and subject to the approval of the Committee, a member may transfer his

SETTLEMENT OF DISPUTES Appeal to High Court Any party to the proceedings before the Tribunal who is aggrieved by any order of the Tribunal may, within thirty days of such order, appeal against such order to the High Court: Provided that the High Court may, where it is satisfied that there is sufficient reason for so doing, extend the said period of thirty days upon such conditions, if any, as it may think fit. (2) Upon the hearing of an appeal under this section, the High Court may— (a) confirm, set aside or vary the order in question; (b) remit the proceedings to the Tribunal with such instructions for further consideration, report, proceedings or evidence as the court may deem fit to give; (c) exercise any of the powers which could have been exercised by the Tribunal in the proceedings in connection with which the appeal is brought; or (d) make such other order as it may deem just, including an order as to costs of the appeal or of earlier proceedings in the matter before the Tribunal. (3) The decision of the High Court on any appeal shall be final. 82. Power to appoint co-operative assessors The Chairman of the Tribunal may appoint any person with special skills or knowledge on co-operative issues which are the subject matter of any proceedings or inquiry before the Tribunal to act as an assessor in an advisory capacity, in any case where it appears to the Chairman that such special skills or knowledge are required for proper determination of the matter. Contempt of Tribunal It shall be an offence for any person to engage in acts or make omissions amounting to contempt of the Tribunal and the Tribunal may punish any such person for contempt in accordance with the provisions of this Act. Remuneration of members of Tribunal There shall be paid to the Chairman and members of the Tribunal such remuneration and allowances as the Minister shall, from time to time determine. Appointment of secretary to Tribunal The Minister shall appoint a public officer to be the secretary to the Tribunal who shall be paid such allowances as the Minister shall determine. No person shall be appointed under subsection (1) unless he holds the qualification specified under sections 12 and 13 of the Advocates Act (Cap. 16). Powers to establish benches of Tribunal The Minister may establish one or more benches of the Tribunal in any part of Kenya as he deems appropriate and shall for that purpose provide for the constitution and jurisdiction of such benches, in consultation with the Chairman of the Tribunal. Right of parties before Tribunal Any person who is a party to the proceeding before the Tribunal may appear in person or be represented by an Advocate. 88. Immunity (1) The Chairman or other members of the Tribunal shall not be liable to be sued in a civil court for an act done or omitted to be done or ordered to be done by them in the discharge of their duty as members of the Tribunal, whether or not within the limits of their jurisdiction: Provided they, at the time, in good faith, believed themselves to have jurisdiction to do or order the act complained of. No officer of the Tribunal or other person bound to execute the lawful warrants, orders or other processes of the Tribunal shall be liable to be sued in any court for the execution of a warrant, order or process which he would have been bound to execute if within the jurisdiction of the Tribunal issuing it.

SETTLEMENT OF DISPUTES IN CO-OPERATIVE SOCIATIES Disputes If any dispute concerning the business of a co-operative society arises— (a) among members, past members and persons claiming through members, past members and deceased members; or (b) between members, past members or deceased members, and the society, its Committee or any officer of the society; or (c) between the society and any other co-operative society, it shall be referred to the Tribunal. (2) A dispute for the purpose of this section shall include— (a) a claim by a co-operative society for any debt or demand due to it from a member or past member, or from the nominee or personal representative of a deceased member, whether such debt or demand is admitted or not; or (b) a claim by a member, past member or the nominee or personal representative of a deceased member for any debt or demand due from a co-operative society, whether such debt or demand is admitted or not; (c) a claim by a Sacco society against a refusal to grant or a revocation of licence or any other due, from the Authority. Establishment of the Tribunal (1) There is hereby established a tribunal to be known as the Co-operative Tribunal which shall consist of the following members— (a) a chairman and deputy chairman appointed by the Minister on the nomination of the Judicial Service Commission; (b) an advocate of the High Court of Kenya appointed by the Minister on the nomination of the Law Society of Kenya; (c) a lawyer with experience in co-operative law appointed by the Minister; and (d) three persons with at least ten years experience in the field of cooperative management and practice appointed by the Minister in consultation with the apex society. No person shall be qualified for appointment as chairman or deputy chairman of the Tribunal unless he holds, and has held for a total period of not less than five years, the qualifications specified in sections 12 and 13 of the Advocates Act (Cap. 16). All appointments to the Tribunal shall be by notice in the Gazette issued by the Minister and shall be for a period of three years, provided that no one shall serve for more than two consecutive terms. The office of a member of the Tribunal shall become vacant— (a) if he accepts any office the holding of which, if he were not a member of the Tribunal, would make him ineligible for the appointment to office of a member of the Tribunal; (b) if he is removed from membership of the Tribunal by the Minister after due inquiry for failure to discharge the functions of his office (whether arising from infirmity of body or mind or from any other cause) or for misconduct; or if he fails to attend three consecutive sittings of the Tribunal without reasonable cause. Proceedings of Tribunal The Tribunal shall not be bound by the rules of evidence. The Tribunal shall, upon an application made to it in writing by any party or a reference made to it by the Commissioner or any Committee or officer of a co-operative society on any matter relating to this Act, the rules made thereunder or the by-laws of the society, inquire into the matter and make an award thereon, and every award made shall be notified by the Tribunal to the parties concerned. The Tribunal shall sit at such times and in such places as it may decide. The proceedings of the Tribunal shall be open to the public save where the Tribunal, for good cause, otherwise directs. Except as expressly provided in this Act or any rules made thereunder, the Tribunal shall regulate its own procedure. Award of Tribunal The Tribunal may— (a) make such orders for the purposes of securing the attendance of any person at any place, the discovery or production of any document or the investigation of contravention of this Act as it deems necessary or expedient; (b) take evidence on oath and may for that purpose administer oaths; or (c) on its own motion summon and hear any person as a witness. Any person who— (a) fails to attend to the Tribunal after having been required to do so under subsection (1)(a); (b) refuses to take oath before the Tribunal or to answer satisfactorily to the best of his knowledge and belief any question lawfully put to him in any proceedings before the Tribunal or to produce any article or document when required to do so by the Tribunal; (c) knowingly gives false evidence or information which he knows to be misleading; (d) at any sitting of the Tribunal— (i) wilfully insults any member or officer of the Tribunal; or (ii) wilfully interrupts the proceedings or commits any contempt of  the Tribunal, shall be guilty of an offence under this Act. Where the Tribunal enters judgment in terms of the award together with costs, it shall issue a decree which shall be enforceable as a decree of a court. If, after making an order, the Tribunal discovers that the order was based on a misrepresentation or a concealment of a material fact by either party to the dispute, the Tribunal may order the party guilty of the misrepresentation or concealment to pay the other party such sum as is, in the opinion of the Tribunal, sufficient compensation for any damage or loss suffered by the party as a result of the misrepresentation or concealment. The Tribunal shall have unlimited geographical and pecuniary jurisdiction in matters of co-operative disputes. Quorum for Tribunal For the purposes of hearing and determining any cause or matter under this Act, the Chairman and two members of the Tribunal shall form a quorum: Provided that where for any reason either or both of the members is or are not present for any part of the hearing, the jurisdiction of the Tribunal may be exercised by the Chairman, sitting either with one such member or alone as the case may be. A member of the Tribunal

CHARGES BY CO-OPERATIVE SOCIETIES Creating charge over society’s property 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 by the general meeting. Charge to comply with applicable law A charge created by a co-operative society in accordance with section 49 of this Act shall comply with the provisions of the law applicable to the particular type of charge. Charges to be registered with the Commissioner It shall be the duty of every co-operative society to register with the Commissioner, every charge created by it and the particulars thereof: Provided that registration of a charge may be effected on the application of any person interested therein: Provided further that where registration is effected on the application of a person other than the co-operative society, such person shall be entitled to recover from the co-operative society the amount of any fees properly paid by him to the Commissioner for such registration. If any co-operative society fails to send to the Commissioner for registration the particulars of any charge created by it within a period of thirty days, then unless the registration has been effected by some other person within that period, every officer of the society shall be guilty of an offence and shall be liable to a fine not exceeding two thousand shillings for every day during which the default continues. Register of charges The Commissioner shall, with respect to each co-operative society, register in such form as may be prescribed by or under this Act, all charges requiring registration and shall enter in the register, with respect to every charge, the following particulars— (a) if the charge is a charge created by the society, the date of its creation, and if the charge was a charge existing on property acquired by the society, the date of the acquisition of the property; (b) the amount secured by the charge; (c) short particulars of the property charged; and (d) the persons entitled to the charge. (2) The Commissioner shall issue a certificate under his hand of the registration of any charge registered under this Act stating the amount secured and the certificates shall be conclusive evidence that the requirements of this Act as to registration of charges have been complied with. The register kept in pursuance of this section shall be open for inspection by any interested person on payment of the prescribed fee. The Commissioner shall keep a chronological index in the prescribed form and containing the prescribed particulars, of the charges entered in the register. Certificate of satisfaction of charges The Commissioner may, on evidence being given to his satisfaction that the debt for which any registered charge was given has been paid or satisfied, order that a memorandum of satisfaction be entered on the register, and shall if required, furnish the co-operative society concerned with a copy thereof. Receiver to give notice of his appointment (1) If any person obtains an order for the appointment of receiver or manager of the property of a co-operative society, or if the Commissioner appoints such a receiver or manager under any powers contained in any instruments, he shall, within seven days from the date of the order of the appointment under the said powers, give written notice of the fact to the Commissioner and the Commissioner shall enter the notice in the register of charges. (2) Where any person appointed receiver or manager of the property of a co-operative society under the powers contained in any instrument ceases to act as such receiver or manager, he shall, on so ceasing, give written notice of the fact to the Commissioner and the Commissioner shall enter the notice in the register of charges. (3) If any person makes default in complying with the requirements of this section, he shall be guilty of an offence and shall be liable to a fine not exceeding two thousand shillings for every day during which the default continues. Society to keep copy of instruments of charge at registered office Every co-operative society shall cause a copy of every instrument of a charge which is required by this Act to be registered, to be kept at the registered address of the society. Society to keep register of particulars of charges Every co-operative society shall keep, at the registered address of the society, a register of charges in which shall be entered all charges specifically affecting the property of the society and all floating charges on the property or assets of the society, giving in each case a short description of the property charged, the amount of the charge, and the name of the person entitled thereto. If any officer of a co-operative society knowingly omits, or permits the omission of, any entry required to be made in any register in pursuance of this section, he shall be guilty of an offence and shall be liable to a fine not exceeding ten thousand shillings.  Right of members and creditors to inspect register of charges The copies of the instruments creating charges which are required by this Act to be registered and the register of charges kept by the co-operative society under section 52 shall be open, during business hours, to inspection by any creditor or member of the society, without fee, subject to such reasonable restrictions as the society, in general meeting, may impose. Provided however, that not more than two hours in each day shall be allowed for inspection, and the register of charges shall also be open to inspection by any other person on payment of the prescribed fee. Any officer of a co-operative society who refuses to allow inspection of the register of charges or copies of the instruments creating charges in accordance with subsection (1) of this section, or who permits such refusal, shall be guilty of an offence and shall be liable to a fine not exceeding two thousand shillings for every

PROPERTY AND FUNDS OF CO-OPERATIVE SOCIETIES Application of society’s property and funds 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. Restriction on giving loans A co-operative society shall not give a loan nor allow any credit, to person other than a member, unless the by-laws of the society provide for giving a loan subject to a resolution passed at the general meeting of the society to that effect. Restriction on borrowing 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 of money under a hire-purchase agreement shall be deemed to be a loan. Investment of society’s funds A co-operative society may invest or deposit its funds only— (a) in the Post Office Savings Bank; (b) in and upon such investments and securities as are for the time being authorized for the investment of trust funds; (c) in the shares of any other co-operative society; (d) with any bank licensed under the Banking Act (Cap. 488); (e) in the stock of any statutory body established in Kenya or in any limited liability company incorporated in Kenya or in any other manner approved by a resolution at a general meeting of the said society. Declaration and payment of bonus 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 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. 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. 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.  Maintenance of reserve fund Every co-operative society which does or can derive surplus from its transactions shall maintain a reserve fund. 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. The reserve fund shall be invested in the manner provided for under section 45 of this Act. The reserve fund set up under this section shall be indivisible and no member shall be entitled to claim a specific share of it. 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.  Distribution of net balance 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.  

RIGHTS AND OBLIGATIONS OF CO-OPERATIVE SOCIETIES Society to have charge over member’s produce A co-operative society which has as one of its objects the disposal of any agricultural produce, may enter into a contract with its members, either in its by laws or by a separate document binding the members to dispose of all their agricultural produce, or such amounts or descriptions 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 therein specified, and the contract may also provide for payment of a specific sum per unit of weight or other measure as liquidated damages for any breach of the contract, and any such sum on becoming payable shall be a debt due to the society and shall be a charge upon the immovable property of the member (subject to registration of the charge under the law under which the property is registered) and all stock then being thereon. Any such contract as is mentioned in subsection (1) shall have the effect of creating in favour of the co-operative society a charge upon the proceeds of sale of all produce mentioned therein, whether existing or future. A co-operative society may, on the authority of a resolution passed in general meeting, pledge the produce deliverable by members under any such contract as is mentioned in subsection (1) as security for loans made to the society, in all respects as if it were the owner of the produce. No contract entered into under this section shall be contested in any court on the ground that it constitutes a contract in restraint of trade. Fines for violation of by-laws 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 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. 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. The whole or any part of such fine may be set off against any moneys due to such member in respect of produce delivered by him to the co-operative society. A member shall not be taken to have infringed the by-laws of a cooperative society by reason of his having failed to deliver produce to such society, if the failure was due to the fact that, before becoming a member of the society, he had contracted to deliver such produce to some other person, and the contract had been disclosed in accordance with subsection (5). It shall be the duty of every person applying for membership of a registered society to disclose to the society particulars of all such contracts as are mentioned in subsection (4). Society to have first charge over debts, assets, etc. in certain cases  (1) Subject to any other written law as to priority of debts where a co-operative society has— (a) supplied to any member or past member any seeds or manure, or any animals, feeding stuff, agricultural or industrial implements or machinery or materials for manufacture or building; or (b) rendered any services to any member or past member; or (c) lent money to any member or past member to enable him to buy any such things as aforesaid or to obtain any such services, the society shall have a first charge upon such things or, as the case may be, upon any agricultural produce, animals or articles produced therewith or therefrom or with the aid of such money. The charge shall subsist for such period as the loan or value of the services rendered by a co-operative society to a member shall remain unpaid. Society to have first charge over members’ share A co-operative society shall have a first charge upon the share or interest in the capital and on the deposits of a member or past member, and upon any dividend, bonus or accumulated funds payable to a member or past member, in respect of any debt due from such member or past member to the society, and may set off any sum credited or payable to such member, or past member in or towards the payment of any such debt. Failure to remit the sum deducted Where an employer of a person who is a member 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 per cent per month. The Commissioner 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. The Commissioner may, by written notice, appoint any person, bank or institution to be an agent of the society for the purposes of collection and recovery of a debt owed to the society. The agent shall pay the amount specified in the notice issued under subsection (3) out of any moneys which may, at any time during the twelve months following the date of the notice, be held by him for the employer or are due from him to the employer. Where an agent claims to be or to have become unable to comply with subsection (3) by reason of lack of moneys

AMALGAMATION AND DIVISION OF CO-OPERATIVE SOCIETIES Amalgamation of co-operative societies Any two or more co-operative societies (hereinafter referred to as amalgamating societies) may, by special resolution (in this section referred to as the preliminary resolution), resolve to amalgamate as a single society (hereinafter referred to as the amalgamated society). A copy of the preliminary resolution shall be sent to all the members and creditors of each of the amalgamating societies, and to all other persons whose interests in any of the amalgamating societies will be affected by the amalgamation. Any member 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 of the amalgamated society. Any creditor of any of the amalgamating societies may, notwithstanding any agreement to the contrary, by notice in writing given to such society at least one month before the date specified as the date of amalgamation, intimate his intention to demand the payment of any money due to him. Any other person whose interest will be affected by the amalgamation may, by notice in writing given to the concerned amalgamating society, not less than one month before the date specified as the date of amalgamation, object to the amalgamation unless his claim is satisfied. Not less than three months after the date of the meeting at which the preliminary resolution is passed, a further special general meeting of each of the amalgamating societies shall be held to consider the preliminary resolution and any notices received under this section. At the special general meeting held under subsection (6) provision shall be made by a further resolution of the society (in this section referred to as the secondary resolution) for— (a) the repayment of the share capital of any member who has given notice under subsection (3); (b) the satisfaction of any claims by creditors who have given notice under subsection (4); and (c) the satisfaction of the claims of such other persons who have given notice under subsection (5) securing of their claims in such manner as determined or directed by the Commissioner. Provided that no member or creditor or other person shall be entitled to such repayment or satisfaction until the preliminary resolution is confirmed as provided in subsection (8). Each amalgamating society may, by further resolution passed by a two thirds majority of the members present and voting, confirm the preliminary resolution. If, within such time as the Commissioner considers reasonable, the Commissioner is satisfied that the secondary resolutions of each of the societies amalgamating comply with the provision of this section, he may register the amalgamated society and its by-laws and thereupon— (a) each of the amalgamating societies shall stand dissolved and its registration cancelled; (b) the registration of the amalgamated society shall be a sufficient conveyance to vest the assets and liabilities of the amalgamating societies in the amalgamated society; (c) the remaining members of the amalgamating societies shall become members of the amalgamated society and will be subjected to its bylaws; (d) any share holders of the amalgamating societies or any other persons who have claims against the amalgamating societies and whose claims were not satisfied in accordance with the secondary resolution, may pursue such claims against the amalgamated society. Where the Commissioner refuses the amalgamation of the amalgamating societies under subsection (9) such societies may appeal against such refusal to the Minister. Division of co-operative societies (a) A co-operative society (hereinafter referred to as the existing society) may, by special resolution (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). (b) 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. 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. Any member of the existing society may, notwithstanding any by-law to the contrary, by notice in writing given to the society within two months of the receipt of the copy of the preliminary resolution, intimate his intention not to become a member of any of the new societies. Any creditor of the existing society may, notwithstanding any agreement to the contrary, by notice in writing given to the existing society within two months after his receipt of the copy of the preliminary resolution, intimate his intention to demand the payment of any money due to him. Any other person whose interest will be affected by the division may, by notice in writing given to the existing society within two months of the receipt of the preliminary resolution, object to the division. After the expiry of three months after the date of the preliminary resolution, a further special general meeting of the existing society shall be held to consider the preliminary resolution and any notices received under this section. At the special general meeting held under subsection (6), provision shall be made by a further resolution of the society for— (a) the repayment of the share capital of any member who has given notice under subsection (3); (b) the satisfaction of any claims by creditors who have given notice under subsection (4); (c) the satisfaction of the claims of such other persons who have given notice under subsection (5) or the securing of their claims as the Commissioner may determine, or direct: Provided that no member or creditor or other person shall be entitled to such repayment or satisfaction until the preliminary resolution is confirmed as provided in subsection (8). The society may, by further

MANAGEMENT OF CO-OPERATIVE SOCIETIES General meetings 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. Subject to subsection  a co-operative society shall hold an annual general meeting within four months after the end of each financial year. In the first year after registration of a co-operative society, the general meeting shall be held not later than one month after receipt of the certificate of registration of the co-operative society and during such meeting, the members shall— (a) elect the co-operative society’s office bearers for the ensuing year; (b) determine the maximum borrowing powers of the co-operative society; (c) consider and approve estimates of income and expenditure for the ensuing financial year or part thereof; (d) appoint the co-operative society’s bankers and auditors; and (e) receive reports and decide upon such other matters as may be necessary for the conduct of the co-operative society’s business. A general meeting of a co-operative society shall be convened by giving at least fifteen days written notice to the members. (5) At the annual general meeting of a co-operative society, the members shall— (a) consider and confirm the minutes of the last general meeting; (b) consider any reports of the Committee or the Commissioner; (c) consider and adopt audited accounts; (d) determine the manner in which any available surplus is to be distributed or invested; (e) elect the co-operative society’s office bearers for the ensuing year; (f) determine, where necessary, the maximum borrowing power of the society; (g) appoint an auditor for the ensuing year; and (h) transact any other general business of the co-operative society of which notice has been given to members in the manner prescribed in the by-laws of the co-operative society. A special general meeting of a co-operative society may be convened— (a) by the Committee for the purpose of approving annual estimates or discussing any urgent matter which in the Committee’s opinion is in the interest of the co-operative society; or (b) on receipt of a written notice for such meeting signed by such number of the members of the co-operative society as may be prescribed in the rules and stating the objects and reasons for calling the meeting. If the Committee fails to convene a meeting within fifteen days of receiving the notice under subsection (6)(b), the members demanding the meeting may themselves convene the meeting by giving notice to the other members of the co-operative society, stating the objects and reasons for the meeting and the fact that the Committee has failed to convene the meeting. The Commissioner may convene a special general meeting of a society at which he may direct the matters to be discussed at the meeting. The chairman or in his absence the vice-chairman or such other person as may be prescribed in the by-laws of the co-operative society shall preside at a general meeting of a co-operative society. The Commissioners may preside at any meeting convened under subsection (8). Membership and powers of the Committee Every co-operative society shall have a Committee consisting of not less than five and not more than nine members. The members of the Committee shall elect a chairman and a vicechairman from among their number. The Committee shall be the governing body of the society and shall, subject to any direction from a general meeting or the by-laws of the co-operative society, direct the affairs of the co-operative society with powers to— (a) enter into contracts; (b) institute and defend suits and other legal proceedings brought in the name of or against the co-operative society; and (c) do all other things necessary to achieve the objects of the co-operative society in accordance with its by-laws. No person shall be a member of a Committee if he— (a) is not a member of the co-operative society; (b) is under eighteen years of age; (c) is unable to read and write; (d) receives any remuneration, salary or other payment from the co-operative society save in accordance with this Act; (e) is a committee member in two other co-operative societies; (f) being a member of a co-operative society that lends money to its members, lends money on his own account; (g) being a member of a co-operative society which trades in goods or produce, trades either on his own account or some other person’s account in the same type of goods or produce; (h) has not, within thirty days of being appointed, declared his wealth to the Commissioner in the prescribed manner; (i) is an undischarged bankrupt; (j) is of unsound mind; (k) has been adversely named by the Commissioner in an inquiry report adopted by a general meeting for mismanagement or corrupt practices while a member of the Committee; (l) has been convicted of any offence involving dishonesty or is sentenced to imprisonment for a term exceeding three months; (m) has been convicted of any offence under this Act or rules made thereunder; (n) has any uncleared debt owing to a co-operative society at the end of its financial year other than in respect of a loan under the provision of any rules made under this Act; (o) is a person against whom any amount of money is due under a decree, decision or order or is pending recovery under this Act. The Committee may delegate any of its duties under this Act to an officer or officers of the co-operative society but, nothing in this subsection shall absolve the Committee from its responsibility to run the affairs of the co-operative society in a proper and businesslike manner. In the conduct of the affairs of a co-operative society the Committee shall exercise the prudence and diligence of ordinary men of business and the members shall be held, jointly and severally liable for any losses sustained through any of their acts which are contrary to the Act, rules, by-laws or the directions of any general meeting of the co-operative society.

DUTIES OF CO-OPERATIVE SOCIETIES Registered address of co-operative society Every co-operative society shall have a registered address to which notices and communications may be sent and shall send to the Commissioner notice of every change of address within one month of the change. Society to keep a copy of the Act and by-laws at registered office 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. Estimates of income and expenditure For each financial year, the Committee of a co-operative society shall cause to be prepared estimates of the society’s income and expenditure including recurrent and capital estimates for approval by the general meeting at least three months before the end of the preceding financial year.  Account and audit Every co-operative society shall keep proper accounts which shall— (a) be prepared in accordance with International Accounting Standards; (b) reflect the true and fair state of the co-operative society’s affairs; and (c) explain the co-operative society’s transactions including— (i) all sums of money received and paid by the co-operative society and the reasons thereto; (ii) all sales and purchases of goods and services by the co-operative society; and (iii) all assets and liabilities of the co-operative society. 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. 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). The auditor shall be appointed at the annual general meeting from a list of auditors approved by the Commissioner, in consultation with the Institute of Certified Public Accountants of Kenya. Where at an annual general meeting no auditor is appointed, the Commissioner may appoint a person to fill the vacancy and the remuneration of the person so appointed shall be borne by the co-operative society. The accounts referred to in subsection (3) shall— (a) conform with International Financial Reporting Standards; (b) include the following records— (i) a balance sheet; (ii) an income and expenditure account; and (iii) a cash flow statement; (c) be approved by the Committee; and (d) be authenticated by at least three Committee members including the chairman of the co-operative society. No auditor shall present the audited accounts of a co-operative society to the members at a general meeting unless the accounts have previously been submitted to the Commissioner in such form as may be prescribed. The auditor shall submit the audited accounts to a general meeting within four months after the end of the accounting period and shall include his opinion as to whether or not the co-operative society’s business has been conducted— (a) in accordance with the provisions of this Act and, whether the books of accounts kept by the co-operative society are in agreement therewith and give a true and fair view of the state of the affairs of the society; and (b) in accordance with the co-operative society’s objectives, by-laws and any other resolutions made by the society at a general meeting. The auditor shall have the right to— (a) attend any general meeting of the co-operative society and be heard on any matter which concerns him as an auditor; (b) receive all notices and other communications relating to any general meeting which a member of the co-operative society is entitled to receive; (c) access, at all times, any accounting records, books or documents of the co-operative society as may be necessary for the purpose of carrying out his duties as an auditor and may at the time of his audit— (i) summon any officer, agent or member of the co-operative society for the purpose of obtaining information on the transactions of the co-operative society or management of its affairs; (ii) require the production of any book, document, cash or securities relating or belonging to the co-operative society by any officer, agent, trustee or member having custody of such book, document, cash or securities; (iii) demand such other information or explanation from any officer of the co-operative society as may be necessary for the performance of his duties as an auditor. Every co-operative society shall, at such time and in such form as may be prescribed, file with the Commissioner an annual return together with a certified true copy of the audited accounts and balance sheet of the society for each period of twelve months. Where a co-operative society fails to cause its accounts to be audited within the prescribed period in respect of its business for the previous financial year, members of the Committee shall automatically lose their positions at the next general meeting and shall not be eligible for re-election for three years unless the Commissioner is satisfied that the failure was due to circumstances beyond their control. For the purposes of this section, “International Accounting Standards” and “International Financial Reporting Standards” means the standards established by the Institute of Certified Public Accountants of Kenya. Production of books and other documents Any officer, agent, servant or member of a co-operative society who is required by the Commissioner, or by a person authorized in writing by him to do so shall, at such place and time as the Commissioner may direct, produce all moneys, securities, books, accounts and documents belonging to or relating to the affairs of such society which are in the custody of such officer, agent, servant or member.