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Strategic advantages of Information Technology

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.

 

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CO-OPERATIVE TRIBUNAL (PRACTICE AND PROCEDURE) RULES

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 have ordered interest at the prevailing court rates.
Registers
The Tribunal shall cause to be prepared a register with regard to any disputes or appeals before the Tribunal containing the following particulars—
(a) the names of the parties;
(b) the serial number;
(c) date of claim or appeal;
(d) the relief sought; and
(e) the final determination or order and the date thereof.
21. Principal registry
(1) The principal registry of the Tribunal shall be at Nairobi.
(2) There shall be provincial registries at Mombasa, Kisumu, Nakuru, Nyeri, Embu, Kakamega, Garissa and such other place as the Chairman in his discretion determine from time to time.
(3) The tribunal shall conduct sessions or hearings at the principal registry and any of the other registries.

Savings provisions
(1) All the proceedings pending before the Tribunal immediately before the commencement of these Rules may be continued and concluded as if they had been commenced under or by virtue of these Rules.
(2) Every decree, order or award of the Tribunal which immediately before the commencement of these Rules had not been executed or enforced shall be executed or enforced in the same manner as if it were a decree or order of the Tribunal made in accordance with these Rules.
Amendment of rules
These Rules may be amended from time to time as the Tribunal may direct.

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CO-OPERATIVE SOCIETIES RULES

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; and
(f) any other expenditure approved by the Treasury including the investment of funds surplus to requirements.
19. Accounts of the Fund
Fifty per cent of the annual receipts received by the Fund shall be payable half yearly to the Government as appropriations-in-aid.
All expenditure from the Fund shall be supported by vouchers and authorized by the Commissioner in the same manner as for other Government expenditure.
The Fund shall be audited annually by the Controller and Auditor General.
Quorum at general meetings
The quorum of general meetings of a co-operative society shall be as laid down in the by-laws.
Where a meeting is convened by the Commissioner under provisions of section 27(8) of the Act, members present at such meetings shall be deemed to constitute a quorum.

Presiding over general meetings
At all general meetings of a co-operative society the Chairman or in his absence the vice chairman or such other person as provided for in the by-laws shall preside and in their absence, any person elected by a majority of those present shall preside.
The Commissioner or his representative may preside at any meeting convened under the provisions section 27(8) of the Act but shall not be entitled to vote.
Voting at general meetings
Unless otherwise provided for in the Act, these Rules or by-laws of a co-operative society, any question referred to the members present at a meeting shall be decided by a majority of votes.

The Chairman shall declare whether every resolution put to the vote has been carried or lost and shall cause an entry to that effect to be made in the minute book of the society which when signed by him shall be conclusive evidence of anything contained therein.
The Chairman shall have one vote only and no casting vote.
A resolution on which the voting is equal shall be postponed to a subsequent meeting.
Conduct of affairs of a Committee
The majority members of a Committee may for good cause suspend the Committee member subject to ratification by a general meeting.
If during the term of office of a committee, a vacancy occurs in the Committee, the Committee shall, if the number of members drop below five, co-opt a member of the society to serve on the Committee until the next general meeting of the society.
Elected members of a Committee shall be removed only by a two-thirds majority of members of the society present and voting at a general meeting.
If a general meeting removes a member of a Committee, it shall forthwith elect a new member who shall hold office for the remainder of the term of the member so removed and where the entire committee is removed from office, the general meeting may decide to elect or fix a day for election of an interim committee of not more than five
members to hold office for a period not exceeding ninety days.
The quorum at a Committee meeting shall be as laid down in the by-laws.
The Committee of a registered society shall hold regular meetings at which—
(i) the minutes of its previous meeting shall be considered and confirmed;
(ii) the accounts, bank books and cash in hand shall be scrutinized and checked, and the Committee’s observations thereon recorded in the minutes;
(iii) any current business shall be considered.
A person elected into a Committee of a co-operative union or apex society on the basis of his elected position at the affiliate primary co-operative society shall cease to be a Committee member of the co-operative union or apex society upon being replaced or voted out at the primary co-operative society.

Board of Representatives
Every co-operative union and apex society shall have a Board of Representatives consisting of at least one delegate from each affiliated society elected at its annual general meeting.
No member serving on the Committee of a co-operative union may be elected to serve on the Board.
A chairman shall be chosen for each meeting from amongst the representatives in attendance at the meeting.
Every representative shall hold office until the next annual general meeting after his election but shall be eligible for re-election.
If during the currency of office of the Board a vacancy occurs such vacancy may be filled by a nominee of the committee of the affiliated society concerned.

 

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CO-OPERATIVE SOCIETIES RULES

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 share or shares in a co-operative society to any other member of the society or to any person whose membership of the society has been approved by the Committee.
No transfer of a share in a co-operative society shall be valid and effective until
such transfer has been recorded in the register of the society.
No transfer of a share or shares in a co-operative society shall be valid and effective if made by a member indebted to a society whether such debt is due for payment or not.
When for any reason other than death, a member of a co-operative society registered with limited liability holding deposit from non-members ceases to be a member, he may, subject to section 20 of the Act, transfer his share or shares in such society to another member, or to a proposed member approved by the Committee of such society, but he shall not be entitled to repayment from the society of any money paid by him in respect of such share or shares.
Rights of a member
Subject to the provisions of the Act, these Rules and the registered by-laws of the co-operative society, a member of a society may transfer his membership to another registered society.

Approved budget
No society shall operate without a budget approved by a general meeting.

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SETTLEMENT OF DISPUTES THROUGH COURTS

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.

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SETTLEMENT OF DISPUTES

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 who has a direct interest in any matter which is the subject of the proceedings before the Tribunal shall not take part in those proceedings.
Any matter considered by the Tribunal shall be decided by the votes of the majority of the members constituting the Tribunal and voting, and the person presiding shall have a casting as well as a deliberative vote:
Provided that any point of law arising in any proceedings before the Tribunal shall be reserved to, and pronounced upon, by the person presiding exclusively.
Notwithstanding any other provision of this Act, the Chairman of the Tribunal acting alone shall have jurisdiction to deal with temporary injunctions.
Any power conferred or duty imposed by or under this Act on the Chairman may, unless a contrary intention appears, be exercised or performed by the Deputy Chairman of the Tribunal if—
(a) the Chairman is unable to exercise or perform that power or duty owing to illness or absence;   the Chairman authorises the Deputy Chairman to exercise or perform that power or duty.

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CHARGES BY CO-OPERATIVE SOCIETIES

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 day during which the refusal of permission continues, and the court may order an immediate inspection of such register or copies.

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PROPERTY AND FUNDS OF CO-OPERATIVE SOCIETIES

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.

 

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RIGHTS AND OBLIGATIONS OF CO-OPERATIVE SOCIETIES

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 held by or due from him, he shall give a written notification to the Commissioner stating the reasons for his inability and the Commissioner may—
(a) accept the notification and cancel or amend the notice accordingly; or

(b) if he is not satisfied with the reasons, reject the notification in writing.
Where an agent fails to notify the Commissioner or the notification is rejected, it shall be presumed that the agent has sufficient moneys for the payment of the amount specified in the notice.
Where an agent fails to pay the amount specified in the notice within thirty days from the date of service or the date on which any moneys come into his hands for or become due to him from the employer, the agent shall be liable for the amount specified in the notification as if he were the employer.
In any proceedings for the collection or recovery of the amount specified in the notice, it shall not be a defence for the agent to claim lack of the moneys.
This section shall apply notwithstanding that the failure under subsection
(1), to remit the sum deducted may constitute an offence under some other law for which the employer has been prosecuted, or is being, or is likely to be prosecuted.
In this section “employer” includes any person, firm or organization holding remuneration or payment for produce of a member of a co-operative society and the term “employee” includes any person who receives
remuneration or payment for produce from such persons or firm or organization.

Member’s share not subject to attachment
Subject to section 34, the share or interest of a member in the capital of a co-operative society shall not be liable to attachment or sale under any decree or order of a court in respect of any debt or liability incurred by such member, and a trustee in bankruptcy under the law relating to bankruptcy shall not have any claim on such share or interest:
Provided that, where a co-operative society is dissolved, the share or interest of any member who is adjudged a bankrupt under such law shall vest in the trustee in bankruptcy in accordance with such law.
Liability of past members
The liability of a past member of a co-operative society shall be in respect of the debts of the society as they existed at the date when he ceased to be a member and proceedings in respect thereof may be commenced within a period
of two years from such date:
Provided that, in the case of a co-operative society with limited liability, if the first audit of the accounts of such society after his ceasing to be a member discloses that the society is solvent, the financial liability of such past member shall cease forthwith.

Liability of deceased members
The estate of a deceased member shall be liable for the debts of the co-operative society as they existed at the time of his death, and proceedings in respect thereof may be commenced within one year of the death:
Provided that—
(i) in the case of a co-operative society with limited liability, if the first audit of the accounts of the society after the death discloses a credit balance in favour of the society, the financial liability of the estate
shall cease forthwith; and
(ii) a personal representative shall not be liable except in respect of assets in his possession or under his control.
Transfer of share or interest of deceased members
On the death of a member, a co-operative society may transfer the share or interest of the deceased member to—
(a) the person nominated in accordance with this Act and any rules made thereunder; or
(b) if there is no person so nominated, such person as may appear to the Committee of the society to be the personal representative of the deceased member; or
(c) if either of such persons is not qualified under this Act and any rules made thereunder or the by-laws of such society for membership, such person, specified by the nominee or personal representative, as the
case may be, who is so qualified, or may pay to such nominee or personal representative, as the case may be, a sum representing the value of such member’s share or interest ascertained in accordance with any rules made under this Act or by-laws of the society:
Provided that—
(i) in the case of a co-operative society with unlimited liability, such nominee or personal representative, as the case may be, may require the society to pay him the value of the share or interest of the deceased member ascertained in the manner mentioned in this subsection; or
(ii) in the case of a co-operative society with limited liability, the society shall transfer the share or interest of the deceased member to such nominee or personal representative, as the case may be, being qualified in accordance with this Act or any rules made thereunder or the by-laws of such society for membership of the society, or on his application within one month of the death, to any person specified in the application, who is so qualified.
A co-operative society shall pay all other moneys due to the deceased member from the society to such nominee or personal representative, as the case may be.

All transfers and payments made by a co-operative society in accordance with this section shall be valid and effectual against any demand made upon the society by any other person.
Evidence of member’s interest in society
Any register or list of members or of shares which is kept by a co-operative society shall be prima facie evidence of any of the following particulars entered therein—
(a) the date on which the name of any person was entered in such register or list, as a member;
(b) the date on which any such person ceased to be a member; and
(c) the number of shares held by any member.
A copy of any entry in a book of a co-operative society regularly kept in the course of its business, shall, if certified in accordance with the rules made under this Act, be prima facie evidence in any proceedings of the existence of
such entry, and of the matters, transactions, and accounts, therein recorded.
Restriction on production of society’s books
No officer of a co-operative society shall in any legal proceedings to the society or liquidator is not a party may be compelled to produce any of the society’s books where the contents can be proved under section 40 or to appear
as a witness to prove the matters, transactions, and accounts therein recorded, unless the court, for special cause, otherwise orders.

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AMALGAMATION AND DIVISION OF CO-OPERATIVE SOCIETIES

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 resolution passed by a two-thirds majority of the members present and voting, confirm the preliminary resolution, with or without changes as in the opinion of the Commissioner are not substantial, and the decision of the Commissioner as to whether any changes are or are not substantial shall be final.
If, the Commissioner is satisfied within such time as he considers reasonable that the provisions of the secondary resolution and the provisions of this section have been complied with, he may, register the societies into which
the existing society has been divided and the by-laws of such societies and thereupon—
(a) the registration of the existing society shall stand dissolved;
(b) the registration of the new societies shall be sufficient to vest the assets and liabilities of the existing society in the new societies in the manner specified in the preliminary resolution, as confirmed;
(c) the remaining members of the existing society shall become members of one or other of the new societies, as is provided by the preliminary resolution, as confirmed; and
(d) any share holders or creditors of the existing society and any other persons who have claims against the existing society and whose claims were not satisfied in accordance with the secondary resolution, may pursue such claims against one or other of the new societies, as is provided by the preliminary resolution, as confirmed.

Where the Commissioner refuses to approve the division of an existing society under subsection (9), the society may appeal to the Minister within thirty days of the communication to it of the refusal.