Co-operative Societies Rules, 1991

Government Notice 408 of 1991

Citation: Government Notice 408 of 1991
Primary work: Co-operative Societies Act
Date: 31 July 2002
Language: English
Type: Government Notice

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Tanzania

Co-operative Societies Act

Co-operative Societies Rules, 1991

Government Notice 408 of 1991

Published in Tanzania Government Gazette
Commenced
[This is the version of this document at 31 July 2002.]
[Note: This legislation has been thoroughly revised and consolidated under the supervision of the Attorney General's Office, in compliance with the Laws Revision Act No. 7 of 1994, the Revised Laws and Annual Revision Act (Chapter 356 (R.L.)), and the Interpretation of Laws and General Clauses Act No. 30 of 1972. This version is up-to-date as at 31st July 2002.]

[Section 126; G.N. s Nos. 408 of 1991; 18 of 1996]

Part I – Preliminary provisions (rules 1-2)

1. Short title

These rules may be cited as the Co-operative Societies Rules.

2. Interpretation

In these Rules, unless the context otherwise requires—"Act" means the Co-operative Societies Act¹;¹Cap. 211"area of operation of a Society" means a registered boundary where membership is drawn;"Balance Sheet" means a statement of assets and liabilities drawn at a specific date;"budget" means a projection of income and expenditure statement approved by the members at the general meeting;"Chief executive" means an officer of a Society vested with the powers to manage and supervise all the day-to-day affairs of a Society;"Co-operative Officer" means an officer of the Co-operative Development Division of the Ministry responsible for matters relating to Co-operative Societies;"Court" means district court or a court of a resident magistrate having jurisdiction over the area in which the headquarters of the society are situated;"Department" means the Co-operative department headed by the Registrar;"Formation Committee" means a committee elected under the provisions of rule 3;"Management Committee" means a committee elected by members at a general meeting;"prescribed" in relation to forms, means prescribed by regulations made under section 124 of the Act, and in relation to fees, means prescribed under these Rules.

Part II – Formation of societies (rules 3-4)

3. Initial meeting and election of a formation committee

Persons interested in the formation of a Co-operative Society, either primary or joint enterprise, secondary, Apex or Federation shall meet under the chairmanship of the local Co-operative Officer or any other Co-operative Officer appointed by the Registrar for that purpose for electing a formation committee.

4. Function of a formation committee

The function of a formation committee shall be—

(a)to consider in detail the type of society to be formed and to determine its objects;

(b)to assess the probable membership and expected volume of business;

(c)to undertake, with the assistance of the Co-operative Officer and, where necessary, with any person with a relevant technical skill, a feasibility study into the economic and practical aspects of the activities to be carried out by the proposed society;

(d)to prepare a viability statement or project write-up for submission to the Registrar;

(e)to compile a list of prospective members and a record of the probable share capital or contributions;

(f)to prepare, in consultation with the Co-operative Officer appropriate By-laws for the proposed society; and

(g)to do all such acts as may be necessary for the purpose of making an application for the registration of the proposed society.

Part III – Registration of societies (rules 5-7)

5. Registration of society

(1)Every society applying for registration must comply with the provisions of section 30 of the Act and shall submit an application to the Registrar in the form prescribed in these Rules.

(2)Every application for registration of a Co-operative Society shall be signed on its behalf by persons duly elected by the formation meeting—

(a)certified copy of such resolution shall be attached to the application;

(b)four copies of the By-laws which the society proposes to adopt shall be submitted together with the application;

(c)four copies of the viability statement or project write-up referred to in rule 4(d) shall be submitted with the application.

(3)Where the Registrar registers the application he shall return to the society—

(a)one copy of the By-laws and application for registration stamped with his official seal together with the certificate of registration;

(b)one copy of the viability statement or project write-up duly stamped as approved;

(c)one copy of income and expenditure contained therein to represent the first estimates of the society and shall be so treated.

6. Registrar may require additional requirement before registration

In order to determine whether the proposed society is economically viable or otherwise the Registrar may prescribe one or more of the following requirements before registration—

(a)that additional information be provided to show whether the proposed society meets economic, social or cultural need, and has reasonable prospects for achieving its object;

(b)that the applicants for registration obtain support from more persons who may be expected to become members;

(c)that more capital be furnished initially by the applicants for registration and other persons expected to become members, and that such additional capital be sufficient for the commencement of the operations;

(d)that arrangements be made for more educational and advisory work respecting co-operative principles and practices and the objects of the proposed society among the applicants for registration, and among other persons who may be expected to become members;

(e)that there be sufficient respecting the availability of officers capable of directing and managing the affairs of the proposed society and of keeping proper records and books of account as prescribed by the Registrar under the Act, and that if necessary, such officers be required to undergo such additional training as the Registrar deems necessary.

7. Procedure for refusal to register a society

Where the Registrar refuses to register a society or its By-laws he shall record in writing his reasons for doing so.

Part IV – Rights, liabilities and privileges of members (rules 8-18)

8. Membership of society

Members of a society shall consist of—

(a)persons who join during the application for registration of a society;

(b)persons admitted in accordance with the By-laws of the society;

(c)persons who have attained the age of eighteen and are of a sound mind, are following a trade or occupation relevant to the society's objectives, have a common need which the society seeks to satisfy and are capable of paying fees and acquiring shares;

(d)persons who have not attained the age of eighteen years but have attained the age of fifteen referred to as minors may join a Co-operative Society in accordance with subsection (3) of section 14 of the Act.

9. Rights of members

Members shall have the following rights—

(a)rights to vote and to be voted for, right to attend meetings and to participate in the leadership of the society, right to call a meeting in accordance with these Rules and By-laws;

(b)no member of a registered society shall exercise the right of a member unless or until he has made such payment to the society in respect of shares, entry fees, and any other dues;

(c)each society may limit the number of its members in relation to its activities and in accordance to sections 14 and 23 of the Act;

(d)no company incorporated or registered under the Companies Act² and no unincorporated or registered body of persons shall be entitled to become a member of a registered society except with the written permission of the Registrar and subject to the following conditions—²Cap. 212

(i)unless such company or body has shown interest to make use of services of the society and the Registrar is satisfied with such move;

(ii)the membership of such company or body shall comply with the Act, Rules and By-laws of the society;

(iii)the society shall benefit from the services of such company.

10. Rights of minors

(1)A minor may be a member but where parent or guardian of such a minor is informed of his desire to become a member he shall open a share account or pay a membership fee, and buy shares as the case may be.

(2)Where the parent or guardian has been informed of a share or deposit account held by a minor and no restrictions on the account held by a minor and no restrictions on the account are imposed by the society, a minor may make payments to and withdraw money from such account, or make such other use of the account as deemed desirable without the approval of his parent or guardian.

(3)A minor who makes use of the services of the society in accordance with subrule (1) or (2) shall have the rights of a member except the right to vote.

(4)The provision of this rule shall not apply in the case of school society.

11. Entry of member's name in register

Every member admitted after the registration of the By-laws shall have his name entered in the register of members and shall sign his name or affix his thumbprint to such entry in the presence of two members of the committee.

12. Withdrawals from membership

(1)A member may withdraw from the society upon giving such notices as may be required by the By-laws or such additional notice as the committee may deem necessary in any particular case.

(2)Without restricting the generality of the foregoing, additional notice may be required if the member is a borrower or guarantor of a loan owing to the society, or is otherwise indebted to the society.

(3)No member withdrawing shall be entitled to a refund of his entrance fee.

13. Vote of members

At general meetings and in the affairs of the society each individual member present shall have one vote only irrespective of the number of shares held by him and no proxies or representative of such member shall be allowed.

14. Nominees

(1)Every member of a society may at the time or after he becomes a member nominate in writing with two attesting witnesses, one person who, in the event of his death, will succeed to his shares or other interests in the society, and such nominee may apply for membership.

(2)In the event of such nominee not becoming a member or not being admitted to membership by the committee the value of the shares or other interest shall nevertheless be paid to him in accordance with subrule (4).

(3)In the event of such nominee dying or of the member desiring to cancel such nomination, the member may from time to time nominate in writing another person in the same manner as in subrule (1), and the necessary alterations shall be made in the records of the society.

(4)For the purposes of a transfer to the nominee, or to the legal presentative if there is no nominee, the value of any shares or other interest shall include the sum actually paid to the society by the member or credited to his share capital or other account from time to time out of the earnings of the society in accordance with the By-laws.

(5)The value of the interest of a member who has become of unsound mind and incapable of managing his affairs shall be ascertained and paid or transferred to a nominee of the unsound mind member to whom such interest shall vest.

15. Termination of membership

Membership shall be terminated—

(a)in accordance with the By-laws;

(b)upon the member's death;

(c)upon the member's ceasing to hold a share or shares and any contributions as required by the By-laws of a society;

(d)upon the member's ceasing to be a resident of the area of operation of the society;

(e)by expulsion;

(f)for failure to participate in the economic activities of the society as required by the By-laws;

(g)upon a member becoming of unsound mind;

(h)by withdrawal.

16. Suspension or expulsion of a member

(1)Save as is provided by paragraph (2) a member may be suspended or expelled—

(a)upon his conviction of a criminal offence involving dishonesty or a sentence of imprisonment for six months or more;

(b)for giving or tendering any gratuity or commission to anyone employed by the society;

(c)for any action which may be held by the committee and a general meeting to be dishonest or contrary to the stated objects of co-operation;

(d)for failure to pay any sum due from him to the Society within the period allowed;

(e)for any other reason specified in the By-laws.

(2)Subrule (1) shall apply to any member or delegate of a co-operative society.

(3)For the purposes of subparagraph (a) of paragraph (1) of this Rule, the ordinary date on which the period allowed for making an appeal against a conviction or sentence, as the case may be expires or, if such appeal is made, the date on which the appeal is finally disposed of or is abandoned shall be deemed to be the date of the conviction or sentence, as the case may be.

17. Shares and deposits may be made on behalf of a school society

Shares may be held and deposits may be made in a society by a duly authorised person on behalf of school society or other junior organisation, and withdrawals may be made on behalf of such society or organisation with the written approval of the person authorised to hold shares or made such deposits.

18. Members to receive services in priority

A member of a society shall have priority in receiving such services and any other privileges as may be provided for in the By-laws of the society.

Part V – Duties of registered societies (rules 19-24)

19. Register of members

Every society shall maintain a register of members showing—

(a)the name, address and occupation of each member, and a statement of the number of shares held by him;

(b)the date on which each member's name is entered in the register;

(c)the date on which any member ceased to be a member;

(d)the nominee, if any, appointed under Rule 14.

20. Publication of balance sheet

Every society shall exhibit its annual balance sheet during office hours to any person interested in its funds as a member, depositor or creditor.

21. Annual Statements

(1)The committee of every society or some officers of the society appointed for this purpose by the committee, shall prepare in such form and for such period as the Registrar may direct—

(a)an account showing the income and expenditure or an account of like nature acceptable to the Registrar;

(b)an appropriation account; and

(c)a balance sheet:

Provided that the accounts shall be made up to the last day of the period to which they relate, and a copy thereof shall be sent to the auditor not later than three months after the closing of the financial year and auditors shall complete the auditing work within two months.

(2)Accounts of every registered society shall be audited at least once in a year by the Co-operative Audit and Supervision Corporation or a competent registered auditor who may charge a reasonable fee. The appointment of a competent and registered auditor shall be made at a general meeting of members and is subject to the approval of the Registrar.

(3)

(a)A registered society shall make annual contribution through its net surplus to a fund to be known as the Inspection and Supervision of Existing Societies, the administration of which shall be prescribed by Registrar.

(b)A general meeting of the society may fix the amount of the annual contribution.

22. Copies

For the purpose of section 60 of the Act, a copy of any entry in the book of the society may be certified by a certificate written at the foot of such copy declaring that it is a true copy of such entry, and that the book containing the entry is still in the custody of the society. Such certificate shall be dated and signed by the secretary of the society or officer approved by the Registrar.

23. Disputes

(1)Any dispute concerning the business of a co-operative society between the members of the society or persons claiming through them, or between a member of persons so claiming and the committee or any officer, or between one society and another shall be referred to the Registrar. Reference may be made by the committee or by the society by resolution in general meeting or by any party to the dispute, or if the dispute concerns a sum due from a member of the committee to the society, by any member of the society.

(2)The Registrar may either decide the dispute himself or refer it to arbitration under the Arbitration Act ³.³Cap. 15

(3)In any case of doubt as to the interpretation of the By-laws of the society the matter shall be referred to the Registrar for decision.

(4)A person aggrieved by a decision of the Registrar under paragraph (2) or paragraph (3) may within fourteen days of the receipt thereof appeal in writing against such decision to the Minster whose decision shall be final.

(5)In the event of conflict between the By-laws of a secondary society and the By-laws of a primary society which is a member of such secondary society, the By-laws of the secondary society shall prevail, and in the event of a conflict between the By-laws of an Apex society and the By-laws of a secondary society which is a member of such Apex, the By-laws of the Apex society shall prevail, and in the event of a conflict between the By-laws of an Apex society and the By-laws of a Federation or Apex societies, the By-laws of the Federation shall prevail.

(6)In the event of conflict between the By-laws of a joint enterprise and the By-laws of a primary society which is a member of such joint enterprise the By-laws of the joint enterprise shall prevail. In the event of conflict between the By-laws of a joint enterprise and the By-laws of an Apex society which is a member of such joint enterprise the By-laws of the joint enterprise shall prevail, in the event of conflict between the By-laws of a joint enterprise and the by-laws of a Federation of Apex societies which is a member of such joint enterprise the By-laws of the joint enterprise shall prevail.

24. Delegation of duties of Registrar

(1)The Registrar shall gradually delegate his duties of promoting, advising, educating and training of Co-operative Societies to the Co-operatives on mutual agreement according to section 12(2) of the Act, when such Co-operative Societies have attained the following qualifications—

(a)have employed competent staff to administer the affairs of the society;

(b)have instituted a sound internal control system to safeguard property and finances of the society;

(c)have attained an adequate internal financing system and are not very much dependent on external loans;

(d)have cleared themselves of all previous debts from their creditors especially bank overdraft;

(e)have committed members who fully participate in the affairs of the society;

(f)have sufficient turnover of business to cover all the costs and earn adequate revenue to facilitate operations of the society;

(g)have capability of paying patronage dividends and bonuses to its members;

(h)individual projects run/operated by the society must be self-sustaining;

(i)capable of producing current audited financial statements within six months from the closure of the financial year;

(j)have produced favourable audited results from operations for three consecutive years and have been able to pay honorarium/bonus.

(2)Subject to the provisions of the above conditions each society shall be graded on its own merits and shall be granted with gradual delegation of duties of the Registrar accordingly.

Part VI Management of societies (rules 25-41)

(a) General meetings (rules 25-31)

25. First general meeting

(1)Unless otherwise provided in the By-laws, or the time is extended by the Registrar, every society shall within two months from the receipt of the certificate of registration, hold a general meeting at which all members shall be entitled to be present and vote.

(2)The business of the first general meeting shall include the election of a Chairman, Vice Chairman and a managing committee.

(3)The managing committee shall elect from amongst themselves a sub-committee provided that in case of savings and credit society such sub-committee shall be elected by the general meeting.

26. Annual general meeting

Every society shall hold an annual general meeting of its members or delegate in every calender year as prescribed in the By-laws:Provided that such meetings shall, unless otherwise approved by the Registrar, be held within six months of the close of the previous financial year of the society.

27. General meeting

(1)Every society shall hold a general meeting for the disposal of necessary business including—

(a)the election, suspension or removal of members of the committee;

(b)the consideration and adoption of the annual balance sheet;

(c)the disposal of sums available for distribution;

(d)the amount of honoraria, if any, for unsalaried officers and committee members;

(e)the acquisition or disposal by the society of all immovable property and of movable property of value in excess of ten thousand shillings in the case of a primary society, twenty thousand shillings in the case of a secondary society, five hundred thousand shillings in the case of an apex society and one million shillings in the case of the federation of apex societies;

(f)the approval of the annual budget.

(2)The procedure for election of committee members shall be done in a manner following—

(a)for nomination of candidates it shall be done by a show of hands at the annual general meetings;

(b)the candidate so nominated shall get the support of some of the members present at the meeting;

(c)voting shall be done by secret ballot; and

(d)counting of votes shall be done immediately after election and results shall be announced by the chairman.

(3)Every society shall hold general meetings at least two times in a year except that the federation shall hold general meetings at least once in a year.

(4)The Registrar or any person authorised by him may summon and preside over a special or general meeting of the society in such manner and at such time and place as he may direct. He may also direct what matters shall be discussed at the meeting. Such meeting shall have the person and subject to the same rules as a meeting called in accordance with the By-laws of the society. All expenses for the meeting shall be met by the society.

(5)A special meeting shall be held by a society where at least one-third of members signify in writing the intention to hold such meeting.

28. Notice of meeting

(1)A notice of a least twenty-one days in the case of an annual general meeting, fourteen days' notice in the case of an ordinary general meeting and seven days' notice in the case of a special general meeting, shall be given whether by advertisement, mail or otherwise.

(2)The notice shall contain a statement of the purpose of the meeting and, wherever practicable, the agenda for the meeting shall be made available to each member or delegate before the meeting is held.

(3)The non-receipt by a member of a notice or information respecting the date, hour and place of meeting shall not invalidate the proceedings or the business transacted at the meeting.

29. Quorum

(1)The By-laws shall prescribe the quorum at a general meeting of a society:Provided that in the case of primary Co-operative society the number to constitute a quorum shall not be less than one hundred members or fifty per centum of all the members whichever is less.

(2)Where the By-laws of a society do not prescribe a quorum, the quorum at a general or special meeting of a society shall be one half of the members or delegates, as the case may be entitled to attend and to vote.

30. Voting

(1)Except as provided in subrule (3) of Rule 10 respecting minors, each member who has complied with the provision of the By-laws respecting admission to and maintenance of membership in the society or delegate shall have one vote at a meeting of the society.

(2)Voting at all elections shall be by secret ballot.

(3)A resolution put to the vote of the meeting shall be decided by a show of hands unless a poll is demanded by at least three members or delegates present.

(4)In the event of equality of votes in the meeting of committees, the Chairman shall have a casting vote. In the event of equality of votes in the general meeting the agenda shall be postponed or cancelled.

31. Minutes of general meetings

(1)All business discussed or decided at a general meeting shall be recorded in a minute book which shall, on confirmation, be signed by the chairman of the meeting and the secretary.

(2)Unless the Registrar otherwise directs, societies shall send copies of the minute certified in the manner specified by rule 36 to the Registrar.

(b) Management of Societies (rules 32-41)

32. Management Committee

Subject to the provisions of the Act, members of the management committee shall be appointed, suspended or removed only by the majority which constitutes more than half of the members present and voting at a general meeting.

33. Eligibility of members

(1)No person who is not a member of a society shall be eligible for appointment as a representative of such a society, at any meeting or of any committee of any secondary society, Apex society or federation of which the society may be a member.

(2)No person who is not a member of a society shall be eligible for appointment—

(a)to the committee of the society;

(b)as a delegate to represent the society; or

(c)to the committee of a Co-operative joint enterprise, if such person—

(i)holds any office of profit under his society or such joint enterprise secondary society, apex society or federation or receives any honorarium from either of such societies except in accordance with the Act;

(ii)where either his society or such secondary society is a credit society, or he lends money on his own account;

(iii)where either a primary society or such a joint enterprise, secondary society or apex society is a trading society or deals in the same class of produce in which one of the societies deals;

(iv)if such a person fails to fulfil task targets set for every member of the society for the preceding year.

34. Circumstances in which member of committee ceases to hold office

(1)A member of the committee shall cease to hold office if—

(a)he ceases to be a share holder; or

(b)he becomes of unsound mind; or

(c)he is convicted of any offence involving dishonesty or is sentenced to imprisonment for three months or more; or

(d)he accepts any office of profit under the society or receives any honoraria or any other payment except in accordance with provisions of the Act; or

(e)in a credit society, he lends money on his own account; or

(f)in a trading society, he deals in the same class of produce in which the society deals; or

(g)he ceases to be a member of the society; or

(h)he ceases to be a member of the primary society which he represents in the secondary society;

(i)he voluntarily resigns his office.

(2)The provisions of paragraph (2) or rule 14 shall apply in respect of subparagraph (c) of paragraph (1).

35. Honorarium or payment to committee member

Payment of the honorarium to the committee of a registered Co-operative society shall be determined and approved by the annual general meeting of the members provided that the liquidity position of the society allows payment of such honorarium.

36. Duties of Committee

The duties of the committee shall include, inter alia, the following—

(a)to comply with the provisions of the Act and the rules and regulations made there under, and the By-laws of the society;

(b)to lay down financial regulations and maintain true and accurate accounts;

(c)to keep a correct register of members;

(d)to lay before the annual general meeting an audited income and expenditure account balance sheet and sources and application of funds;

(e)to facilitate the inspection of the books by any person authorised to inspect them;

(f)in a credit society, to ensure that loans are applied to the approved purpose for which they were made and that proper securities have been taken for any loans made in accordance with the By-laws;

(g)in a trading society, to ensure that the By-laws or the contracts binding members to deal the society are observed;

(h)to arrange for appointment of employees and staff or a society and their terms of service.

37. Duties of supervising manager

Where a supervising manager is appointed he shall be vested with powers to perform the following duties—

(a)supervising day-to-day activities of the society performed by his subordinates;

(b)preparing Scheme of Service of staff and employees and present for approval to the Managing Committee and ultimately to the General Meeting;

(c)answerable to the Management Committee of the Society;

(d)preparing a regular progress report at intervals as specified by the Management Committee including assets and liabilities;

(e)preparing annual accounts and balance sheet for submission to the Management Committee and auditors;

(f)ensuring the maintaining of proper books and records of business including assets and liabilities;

(g)dealing with purchase of shares and issuing of share certificates to members;

(h)keeping in safe custody all moneys and other instruments;

(i)acting as a secretary to all meeting;

(j)maintain a correct register of members and their shares;

(k)to countersign contracts and agreements on behalf of the society;

(l)to perform any other duties as instructed by the Managing Committee.

38. Additional functions of committees in savings and credit societies

The savings and credit society shall have the following committees—

(a)management committee which shall be responsible for managing the day-to-day affairs of the society;

(b)credit committee which shall have the responsibilities of supervising all the loan activities;

(c)supervisory committee which shall be responsible for examining the affairs of the society at least once in every three months;

39. Bank account

(1)The committee shall open a bank account with the assistance of Co-operative Officer.

(2)All cheques shall be signed by two members of the committee, the committee shall appoint signatories on condition that one of them is a secretary or manager of the society.

40. Committee minute book

All business discussed or decided at a meeting shall be recorded in a minute book which shall be signed by the Chairman of the meeting and such other persons as the By-laws may require.

41. Objects and functions of Co-operatives

(1)In order to carry out the objects of different levels of Co-operative Societies as provided under sections 17, 18 and 20 of the Act those objects shall apply to the secondary societies, apex societies and the federation respectively as their functions.

(2)Without prejudice to the generality of the foregoing the secondary society shall—

(a)provide services to primary societies as will be provided in the By-laws of the secondary society;

(b)to facilitate operations of primary societies which are its members;

(c)to procure and sell their products as it may deem necessary;

(d)to procure and distribute agricultural inputs to its member primary societies.

(3)Functions of an apex society shall be—

(a)to facilitate the operations of secondary societies;

(b)to provide services to secondary societies;

(c)organising and Co-ordinating activities of secondary societies;

(d)to render services designed to ensure efficiency and uniformity in the conduct of the business of its member societies, standardising their book keeping, accounting and another procedures and providing audit services to those societies;

(e)to reduce operating costs by arranging for group bonding of Co-operative Society employees and making bulk purchasing of book-keeping stationery and other supplies for sale to its members;

(f)print, publish and circulate any newspapers or other publication designed to foster or increase interest in Co-operative Enterprises, principles and practices;

(g)to represent its member societies in collective bargaining;

(h)to provide consultative services to member societies;

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

(4)Functions of the federation shall be—

(a)to provide, organise and supervise effective centralized services for the member societies and for Co-operative education and training and such other services as may be necessary or expedient for its members;

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

(c)to formulate, maintain and regulate the terms and conditions of services of persons employed in the secondary societies, apex societies, and such other registered societies;

(d)to carry on, to encourage and assist educational and advisory work relating to Co-operative enterprise;

(e)to advise the government on co-operative education and operating methods and for that purpose and may prepare and provide correspondence courses regarding Co-operative principles and operating methods and may disseminate information on Co-operative principles and practices;

(f)to represent its member societies in international conferences (to be the Chief spokesman of the member societies and represent its member societies in international conferences);

(g)to print stationery for the use of Co-operative Societies;

(h)to establish a department to perform function of—

(i)establishing joint negotiating machinery with regard to the remuneration and conditions of service of officers of the federation;

(ii)giving advice to employing Societies regarding the training of officers of the society;

(iii)establishing management and control of any provident fund, superannuation fund or pension scheme;

(iv)interviewing and selection of candidates for awards under training schemes and the Co-ordination of arrangement for courses of training;

(v)co-ordinating of arrangement for the setting of promotional examinations for prospective officers of the organisation;

(i)giving advice and making such recommendations to the Minister as it may think fit regarding—

(i)what the Minister may refer to the federation for its advice; or

(ii)what affects the interests of Co-operative societies;

(j)the Federation may with the consent of the Minister make regulations relating to any of its functions, as stipulated above and such regulations may—

(i)be expressed to apply to all officers of the federation or to any category or group of such officers;

(ii)prescribe such terms and conditions of services and provide for salary scales, the payment of allowances and gratuities, the grant of advances, promotion, the interdiction of officers, the termination of appointments, dismissals, leave and any other matters relating to the federation discipline and welfare of officers of the federation;

(iii)prescribe anything that may be or is required to be prescribed under these Rules;

(k)to do any other thing which in its opinion is connected with or is ancillary to the above functions.

Part VII – Property and fund of registered societies (rules 42-52)

42. Funds

The funds of a society shall be devoted only to the promotion of the stated objects of the society, the running of the society and such other purposes as are set out in the Act, these rules and the By-laws of the society.

43. Limit of loans

(1)Every society shall fix at a general meeting, the maximum liability which it may secure in loans or deposits from non-members. The maximum so fixed shall be subject to the approval by the Registrar. No society may receive any loan or deposits from a non-member which will make its liability to non-members exceed the limit approved.

(2)Without prejudice to the generality of subrule (1) every society shall transact its business in accordance to section 72 of the Act.

(3)There shall be a Central Reserve Fund to be established by the federation of apex societies which shall be contributed to by respective member societies. The fund shall be administered in such a manner as the Minister may direct and according to the regulations made therefor by the Minister.

44. Estimates of income and expenditure

(1)Every society shall, unless the Registrar otherwise directs, submit for his approval an estimate of income and expenditure in such detail as he may require for the next ensuing financial period. Such estimate shall be submitted not later than one month before the commencement of the period to which the estimate relates.

(2)A society shall not incur expenditure exceeding that provided in the estimates except with the approval in writing of the Registrar.

45. Guarantors

(1)No member of a society shall guarantee a loan by the society to any other member where such other member has guaranteed a loan by the society to the first-mentioned member. (Example:— "A" has borrowed a loan of Shs. 100/-from the society and "B" has guaranteed repayment. "B" wishes to borrow a loan from the society, "A" shall not be accepted as a guarantor of "B"'s loan).

(2)A guarantor shall be liable for the repayment of the loan for which he is a guarantor to the same extent as the guarantee and in the case of default of payment of such loan by the guarantee, he shall be liable to repay such loan.

(3)Every loan shall be guaranteed by at least two guarantors.

(4)Security for loans shall be prescribed in the By-laws of each society.

46. Distribution of net balances

Subject to section 82 of the Act, the annual net balance together with any sum available for distribution from previous years, after the required provision has been made shall be applied as follows—

(a)not less than 20% of the surpluses retained in any one year shall be carried to the Statutory Reserve Fund;

(b)such amount not exceeding 10% of the net surplus retained in any one year as may be necessary to maintain the share Transfer Fund at a level equal to 10% of the subscribed share capital, shall be set aside for this purpose;

(c)the payment of interest on share capital shall be determined from time to time by the members;

(d)the payment of dividend or bonus or any part of its accumulated funds shall be made after the balance sheet has been audited by a duly authorised auditor and approved by the general meeting;

(e)the remainder may then be disposed of as decided by the general meeting—

(i)as contribution to a building or other fund;

(ii)by contribution to any charitable educational, medical or other purpose in accordance with the provisions of section 83 of the Act;

(iii)in the payment of honoraria to Committee Members and other unsalaried members of any society;

(iv)in any other way approved by the general meeting and undistributed balance shall be carried forward to the following year.

47. Reserve Funds

(1)Unless the Registrar otherwise approves, not less than one-fifth of the gain or surplus resulting from the operations of a registered society in any financial year, after provision has been made for depreciation in the value of the society's property and for contingent liability for loss, shall be carried to Reserve Fund.

(2)There shall be a share Transfer Fund formed and maintained to meet expenditure which may be incurred by the society in purchasing the shares of members whose membership has terminated with the consent of the committee.

48. Investment of Reserve Fund

(1)The Reserve Fund of a society may be utilised in the business of the society or for capital expenditure unless the Registrar otherwise directs.

(2)Any withdrawals from the Reserve Fund, unless the Registrar otherwise sanctions, shall be made good from the next accruing available funds in the following financial periods.

(3)Accumulated funds may be distributed to the members of a society with unlimited liability and the maximum rate of dividend which may be paid by the societies as shall be determined at the general meetings of such societies.

49. Indivisibility of Reserve Fund

The Reserve Fund shall be indivisible and no member shall be entitled to claim any specified share of it.

50. Application of Reserve Fund on dissolution

(1)On the dissolution of a society the Reserve Fund shall be applied to discharging the liabilities of the society and to the repayment of share capital.

(2)Any sum that may remain shall be deposited by the Registrar in a bank until a new co-operative society with a substantially similar area of operations is registered, in which case it shall be credited to the Reserve Fund of the new society. The Minister may permit any balance or portion of the reserve fund remaining after all liabilities have been met and share capital repaid to be divided amongst the share holders.

51. Contracts entered into by society

No society shall, except with prior Consultation in writing with the Registrar and with prior approval of a general meeting enter into any contract in respect of work done for the society or goods supplied or services provided for by the society or receive rent for the hire of any asset of the society where the value of the subject matter or such contract exceeds one hundred thousand shillings in the case of a primary society or five hundred thousand shillings in the case of a secondary society or one million shillings in the case of an apex society or two million shillings in the case of the Federation.

52. Property of society

The property of a society shall consist of such movable and immovable property as the society may acquire.

Part VIII – Special provisions relating to different categories of co-operative societies (rules 53-110)

(a) – Agricultural Co-operative societies (rules 53-62)

General provisions

53. Economic activities to be under the guidance of the management committee

(1)All economic activities in an agricultural Co-operative society shall be under the general guidance of the management committee to ensure that they are being run with maximum efficiency.

(2)A management committee may set up sub-committees as it deems necessary for the purpose of performing its functions.

(3)The general meeting shall determine the number of members of committee in accordance with section 64 of the Act.

54. Objectives of agricultural co-operatives

Every Management Committee shall observe the objectives of agricultural Co-operatives as provided under section 4 of the Act particularly that it shall be operated democratically on the basis of principles, methods and procedures of Co-operation. It shall thus strive to satisfy the cultural needs of its members and increase their social and political awareness. It shall improve the material living conditions of its members and promote Co-operative education among its members.

55. Allocation of production factors

(1)Subject to availability of productive factors the management shall ensure that every member of the society is allotted with production facilities and inputs.

(2)Production inputs and facilities shall be subject to overall control of the management committee of the society.

56. Ownership of property of society

All heavy agricultural machinery and other capital goods acquired by the society of shall be owned by the society through the Management Committee. Individuals may use such machinery or goods on their farms on condition to be determined by the General Meetings and as stipulated in the By-laws of the society.

57. Matters to be included in feasibility study

The economic viability to be determined when feasibility study is made for the purpose of registration shall include the statement of–

(a)potential members of common bond and felt needs to establish a Co-operative Society;

(b)potential members' ability to buy shares and make contribution in order to raise enough initial Capital for the purpose of sustaining the basic cost of running the society;

(c)potential members' background and skills they possess;

(d)potential capacity of management to organise and control the affairs of the society;

(e)potential business value of the Society to enable continuous Operations without losses;

(f)the minimum required infrastructure and supporting services whether available within the area of operation of the society.

58. Management committee may establish a scheme

(1)An agricultural Co-operative Society may establish a scheme for its members to facilitate payment of cash crop though pass-book system and agricultural credit facilities such as inputs.

(2)Members of such agricultural Co-operative Societies wanting to establish the scheme shall apply to the Registrar for permission to establish the scheme.

59. Powers of society to make By-laws

A society shall make By-laws in respect of the following matters—

(a)its name;

(b)the area in which the operations of the society will be conducted and from which membership will be drawn;

(c)the objects for which the society is established;

(d)qualifications for membership, the terms of admission of members and the mode of election;

(e)withdrawal and expulsion of members and the payments, if any, to be made to such members;

(f)the nature and extent of the liability of members;

(g)the consequences of default in payment of any loan or satisfaction of a guarantee;

(h)its funds and the method of raising funds;

(i)general meetings, the procedure at such meetings, powers of such meetings, and representation and voting at such meetings, where necessary;

(j)appointment, suspension and removal of members of the committee and officers and the powers and duties of committee and officers;

(k)the disposal of accumulated funds;

(l)the authorisation of an officer to sign documents on behalf of the society.

60. Persons with special skills may form Co-operative society

(1)Persons with special skills may form a Co-operative society.

(2)For the purpose of this Rule every Co-operative society other than agricultural Co-operative society, industrial Co-operative society, Savings and Credit Society, Service Co-operatives etc. shall be regarded as specialised Co-operatives formed by persons who possess expertise in a particular field termed as specialised skills.

61. Specialised Co-operative to operate according to the Act, Rules and By-laws

Every specialised Co-operative society shall operate in accordance with the Act, its Rules and its By-laws.

62. Co-operative society to maintain its own funds

Every Co-operative society shall maintain its own funds as provided in sections 69 and 70 of the Act.

(b) – Joint enterprises (rules 63-69)

63. Societies may form joint enterprise

(1)Two or more societies may form a joint enterprise.

(2)Every joint enterprise shall be formed for a single purpose only.

(3)Where a joint enterprise is formed for two or more societies, the societies forming the joint enterprise shall form a committee for the purpose of managing the joint enterprise.

64. A joint enterprise may cease to operate in certain cases

(1)Where it becomes necessary, in the public interest that the activities of the joint enterprise be run by another institution or organ, or that it be run jointly with another Co-operative institution or organ the Registrar shall cause a notice to be published to that effect in the Gazette and served on the societies forming that joint enterprise.

(2)The societies shall, within thirty days make representations, if any, to the Registrar.

(3)Where no objections or other representations are made, then the societies shall enter into an arrangement with the Co-operative institution or organ, or for the purpose of entering into a joint agreement with that Co-operative institution or organ, as the case may be.

(4)Upon finalisation of the arrangements referred to in subrule (1) the Registrar shall cancel the registration of the joint enterprise and shall register the Co-operative institution or organ which takes over the activities of the joint enterprise or the new body which is formed for the purpose of running the enterprise jointly.

(5)Any objections or representation may be made to the Minister whose decision shall be final.

65. Joint enterprise not to expand its operation without permission of Registrar

No joint enterprise shall expand its activities without the approval of the Registrar.

66. Minister to make regulations in relation to joint enterprises

The Minister may make regulations providing for conditions for forming joint enterprises, and for regulating their activities.

67. Joint enterprises to make By-laws

The By-laws of a joint enterprise shall be as provided in the Schedule to these Rules—

(a)the name and area in which the operations of the enterprise will be conducted and the area from which membership will be drawn;

(b)the objects for which the enterprise is established;

(c)the nature and liability of members;

(d)its funds and method of raising those funds.

68. Fees for registration

The fees for the registration of a joint enterprise shall be as provided in the Schedule to these Rules.

69. Permission to inspect documents, etc. of joint enterprise

Any member of the public shall be permitted, on payment of the prescribed fee, to inspect at the office of the Registrar any of the following documents in relation to a joint enterprise—

(a)the registration register;

(b)the registration certificate;

(c)an order cancelling the registration of a joint enterprises;

(d)an order directing the liquidation of a registered joint enterprise;

(e)the annual accounts of a joint enterprise in accordance with the Rules.

(c) – Industrial Co-operative societies (rules 70-74)

70. Industrial society to specify products

(1)An industrial Co-operative society shall, in its By-laws specify the products that it will be engaged in producing, preparing, processing or manufacturing including the means of expanding its activities and generally the means of achieving the objects of the society.

(2)The By-laws of an industrial society shall provide for a type of management system which in its opinion may facilitate the society to achieve its objectives.

(i)Artisans, Craftsmen and contracting societiesMay be registered with the following functions—

(a)production, preparing, adapting, processing and manufacturing goods, wares and merchandise from materials of every description for sale or under contract;

(b)undertaking contracts or sub-contracts by provision of labour and technical services, material, and equipment for land clearance or reclamation, road construction, the construction of industrial plants, public utilities of facilities for the development of natural resources, and or for the maintenance of building, plants and sites and public utilities;

(c)providing, all necessary materials, equipment, facilities and services to enable members and their families to produce, prepare, adopt or process goods, wares and merchandise in their homes either for individual sale by each member or for sale by or through the society;

(d)rendering services to its members as contractors or as producers, processors and manufacturers of goods, wares and merchandise which are ancillary to their operation or activities.

(ii)Co-operative societies for producers of natural productsMay be registered with the following functions—

(a)purchasing, hiring or otherwise acquiring, maintaining and operating boats, motors, nets and other equipment to be used in group fishing by each member on an individual basis and the marketing of fish and fish products;

(b)obtaining or providing equipment, contracts and management services for the production and marketing of pulp wood, fuel wood, timber, lumber and other forest products delivered wholly or partially therefrom;

(c)subject to the provisions of the Mining Act ⁴ obtaining prospecting, exploration and mining licences and obtaining or providing equipment, contracts and management services for development, utilisation and disposal of the products of any mine.⁴Cap. 123

(iii)Building construction and housing societiesA building construction society may be registered for the following functions—

(a)building houses and flats for individual or family use and other buildings for industrial business or public use, either for sale by the society itself or under agreement negotiated with a local authority or other public body or authority performing a function of government or providing a public service or with a company, society, association, partnership or other organisation or person;

(b)purchasing, manufacturing, processing or otherwise providing materials for the construction of building or constructing for architectural services or for the installation utilities;

(c)making loans and advances to its member for purchase of tools, materials and equipment for their individual use in building. A housing society may be registered with the principal functions of—

(i)building or otherwise acquiring houses or flats for sale to its members for their individual ownership and use;

(ii)building or otherwise acquiring, maintaining and managing houses or flats for lease to its members;

(iii)acquiring site planning land for the construction of houses or blocks or flats by and for its members.

71. Objects of society to be stated in its By-laws

Every industrial Co-operative society shall in its By-laws state its objects, the amount of capital which is to be contributed, if any, and the manner of raising that capital.

72. Evidence of ability to meet contractual obligation

Subject to the provisions of rule 51 where an industrial society has one of its objects as entering into contracts for the supply of services it shall undertake and discharge the obligation of that contract and where the contract requires special skill it must furnish evidence that some of its members have the necessary skills required for the discharge of the contract.

73. By-laws of society to lay procedure for apprentices to be members of the society

(1)Every industrial co-operative society shall in its By-laws lay a procedure for enabling apprentices to be full members of the society.

(2)In no case shall the labour force of non-members of every industrial Co-operative Society exceed a quarter of the total labour force.

(3)Without prejudice to the generality of subrule (2) the labour force shall not include casual labourers.

74. By-laws of building society to define tenancy contract

By-laws of building society shall provide for the tenancy contract.

(d) – Consumer co-operatives (rules 75-77)

75. Provision in the By-laws of consumer Co-operative society

A consumer society may be registered for the principal purpose of purchasing, procuring, processing, manufacturing, exchanging, hiring and dealing in goods, wares and merchandise including foods, clothing, household goods, fuel and other necessities of all kinds for individual or family consumption or use, as well as agricultural inputs for sale.A consumer Co-operative society may provide in its By-laws—

(a)that no member shall be paid on credit except with the prior approval of the managing committee;

(b)that no member shall be paid in cash his patronage bonus if the member has not paid in full the minimum amount of share capitals as may be required in the By-laws of the society;

(c)that members may be required without making individual contracts to undertake to make loans to the society to the extent of the patronage bonus.

76. Consumer Co-operatives to set price policy

Consumer Co-operatives shall set a price policy as shall be described in their By-laws.

77. No officer to act independently in credit transaction

No officer or employee of a consumer Co-operative society shall be allowed to act independently in all credit transactions, which shall be authorised by the management committee.

(e) Savings and credit societies (rules 78-110)

78. Objects, name and common bond in a savings and credit society

(1)A co-operative Savings and Credit Society, in this part referred to as a credit society may be registered for the promotion of thrift among its members and the creation of a source of credit for its members at controlled rates of interest, exclusively for provident or productive purposes.

(2)One or more of the words "Savings" and "Credit" shall form part of the name of every society registered exclusively for the purposes mentioned in Rule 78(1).

(3)The By-laws shall prescribe the common bond of occupation, association or residence to which membership of the savings and credit society shall be limited.

79. Employer of agricultural society to supply supporting services to the savings and credit society

(1)Savings and credit society so formed may request the employer to pay monthly salaries of its members through the society and in case of an agricultural or any other type of societies to pay members sales proceeds through the savings and credit society.

(2)Where a savings and credit society is formed by persons who are under one employer, employer may give the savings and credit society such supporting services as check off system and accounting. Where such employer defaults to remit deductions from members for a period of at least two months, an interest of ten percentage will be charged on the amount due to the society.

(3)Agricultural Co-operative society shall continue to provide material support to savings and credit society such services as deductions at the source and office accommodation.

80. Service to member organisation

(1)A savings and credit society may make By-laws and with the approval of the Registrar, provide for admission to membership of another credit society, or one or more organisations such as—

(a)a local authority or other public body performing a function of Government or providing a public services;

(b)a religious organisation;

(c)a labour organisation, an agricultural organisation or benevolent or fraternal organisation;

(d)an organisation operated exclusively for charitable, educational or community welfare purposes, no part of the income of which is payable to or otherwise available for personal benefit of any proprietor, member or shareholder thereof:Provided—

(i)that the By-laws shall specify the terms and conditions upon which such member credit society, other society or organisation may obtain loans or otherwise services;

(ii)that the total amount of loans made to such member credit society, other society or other organisation shall not at any time exceed an amount equivalent to one-quarter of the credit society.

(2)Except with the approval of the Registrar no credit society shall admit to membership another credit society or other organisation unless their membership is drawn from the same general group as that composing the credit society.

(3)A credit society shall require the committee or other elected officers of a registered organisation which is a member in accordance with provisions of this Rule to file with the credit society a resolution authorising the officers business with the credit society.

(4)A savings and credit society shall require the authorised officers of an organisation that is not registered but is a member in accordance with provisions of the Act, to furnish a resolution naming the officers who have authority to make withdrawals and to sign on behalf of such organisation.

(5)Except upon a resolution given to its signing officers a certified copy of which shall be filed with the credit society, no loan shall be given to a member organisation which is not registered:Provided however that the making of a loan to such organisation which is a member of a savings and credit society shall in any particular case require such additional security by way of an endorsement of a negotiable instrument in the form of promissory note to repay the loan as may deemed advisable.

(6)Loans to members other than natural persons the savings and credit society shall specify in the By-laws the services to be rendered to such members.

81. By-laws to provide for appointment of committee

The By-laws of a savings and credit society shall provide for the appointment of committees or sub-committee as are necessary for the efficient operations of the savings and credit society and shall provide in those By-laws as the constitution and duties of such committee or sub-committee.

82. Powers of a savings and credit society

(1)To receive the savings of its members as shares, deposits, entrance fees, and repayment of loans and interest on loans.

(2)The Registrar shall review annually the borrowing powers of the credit society under subrule (2) and may at any time withdraw his approval of further borrowing under that subrule.

(3)A credit society may with the approval of the Registrar charge, hypothecate, mortgage or pledge its immovable or movable property, rights and power, undertaking, franchises, book debts and unpaid call of the credit society, to secure any liability for the repayment of moneys borrowed under subrule (2).

83. Shares in savings and credit society

(1)The number and value of shares may be determined by the By-laws.

(2)Share in a savings and credit society may be paid for by instalments at the times and in the manner determined by the By-laws.

(3)The By-laws may require each member to subscribe for such minimum number of shares as may be designated in the By-laws.

(4)After a member has paid his initial membership share and for such minimum number of shares as may be prescribed pursuant to subrule (3) he may, unless the managing committee decides otherwise, continue to make payment for additional shares:Provided that no member other than a registered co-operative society may hold more than one-fifth of the shares of a credit society or such lesser amount as the By-laws may specify.

(5)Moneys paid on account of shares may be withdrawn on application made in writing on any day when the registered office of a savings and credit society is open for business, but the managing committee may in any case require up to ninety days' notice of intention to withdraw the whole or any part of such moneys.

84. Member's deposits and withdrawals

(1)A member may deposit moneys in a deposit account in a savings and credit society in such minimum amount as may be prescribed in the By-laws.

(2)If permitted by the By-laws, a member may, by agreement with the society, deposit money in an account with a credit society for a stipulated term, for such minimum and maximum periods and subject to such other conditions as may be prescribed in the credit society.

(3)Moneys deposited by a member in a credit society for a stipulated term shall be in such amount as may be agreed to by the credit society.

(4)Moneys paid for on account of deposits may be withdrawn on any day the credit society's office is open for business. The amount to be withdrawn at one time must be specified in the By-laws. Any amount exceeding the specified amount shall require a notice of thirty days in writing of the intention to withdraw the whole or any part of such addition amount as may be specified in the By-laws:Provided further that if moneys deposited for a stipulated term pursuant to subrule (2) are withdrawn before maturity the rate of interest fixed in the deposit agreement may be discounted in such manner as may be determined and as may be specified in the deposit agreement of the society.

(5)No credit society shall accept deposits from a person who is not a member of the society.

(6)The society may pay interest on deposits. The rate of interest shall be determined by the general meeting.

85. Deposit services

Deposits may be accepted from members of a savings and credit under the following conditions—

(1)The savings and credit adopt the By-laws providing for the conditions under which such deposit may be accepted.

(2)The Registrar is satisfied that the credit society—

(a)has a permanent place of business;

(b)is adequately provided with safekeeping facilities for books to its individual members;

(c)has adequate bonding and insurance coverage;

(d)has adequate book-keeping system that is kept up to date;

(e)has the minimum amount of shares paid up;

(f)has been authorised to use order negotiable by endorsement (cheque) with clearing arrangements with commercial banks; and

(g)has appointed an auditor.

86. Cash reserves

(1)Every savings and credit society shall maintain a Reserve Fund to meet withdrawals of moneys in share and deposits accounts, consisting of cash on hand or in a bank or other organisation authorised by By-laws to accept moneys on deposit, and such reserve shall not at the end of any calender month be less than ten per centum of the liabilities of the credit society to its members in respect of shares and deposits at that time.

(2)Cash may only be kept on hand by a credit society in accordance with the conditions respecting safe keeping facilities, insurance and other safeguards prescribed in these Rules and approved in the case of credit society by the Registrar.

87. Methods of withdrawal of shares and deposits

(1)A member may withdraw funds standing to his credit in share capital account or in deposit account in the credit society, or placed to his credit by the savings and credit society from the proceeds of a loan made to him by cheque payable to the member and issued by the credit society or commercial bank or other depository in which the funds of the credit society are placed, provided that the necessary withdrawal voucher has been signed by the member.

(2)Withdrawals may be made in cash by signing a cash withdrawal and disbursement voucher at the office of the credit society in a form designated by the committee and approved by the general meeting for use only at the office of the savings and credit society and containing the member account number, his personal signature, and initiated by the treasurer or his assistant when the withdrawal is charged to the members account or a stamp bearing the name of the credit society and the date may be used in place of an initial.

(3)Withdrawal may be made by orders negotiable by endorsement (cheque) where the general meeting has authorised the use of such orders and the society has arrangements for clearing.

88. Cash fund to meet withdrawals

(1)Where a cash fund, other than loan petty cash for designated purposes as in rule 117 maintained for the purposes of subrule (2) of rule 87 and authorised by the committee with the approval of the Registrar, the following conditions shall apply—

(a)withdrawals from the bank or other depository for the stated cash funds shall be made only as required so that the amount of cash on hand shall not exceed at any time the amount authorised by the committee and approved by the general meeting;

(b)the cash shall be kept in a suitable safe until required and shall be in the safe custody of the treasure, secretary-treasurer or the manager as the case may be, provided that the Registrar may require such information as he deems necessary regarding the adequacy of safe-keeping facilities;

(c)the credit and savings society has in force burglary and hold-up insurance in an amount designated by the committee and approved by the general meeting.

(2)Where the use of orders negotiable by endorsement (cheque) has been authorised by the general meeting as in subrule (3) of rule 87 and to be issued by members on their deposit amount in the savings and credit society, the conditions obtainable in rule 85 shall apply.

89. No overdraft allowed

(1)No officer or employee of a savings and credit society shall permit any withdrawals of funds from share capital or deposit account, or from the proceeds of a loan properly approved in accordance with the Act and placed to the credit of the borrower by the savings and credit society when the funds in such account are not sufficient to cover the withdrawal.

(2)The proceeds of any loan and payments therein together with the recovery from a member of any account withdrawal in excess of the amount standing to his credit in his share capital or deposit account or loan account.

90. Commencement of lending operations

No savings and credit society shall commence lending operations until the minimum number of shares as prescribed in the By-laws have been paid.

91. Loans by credit society

(1)Every loan made a credit society shall be for a provident or productive purpose.

(2)Every application for a loan shall be on a form provided by the credit committee, and shall set forth the purpose for which the loan is desired, the security, if any, offered and such information as may be required by the committee.

(3)The credit committee shall enquire carefully into the character and the financial conditions of each applicant for a loan and his sureties or guarantors, if any in order to determine his ability to repay the loan and shall determine whether the loan applied for is for a provident or productive purpose and will be of probable benefit to the borrower.

(4)Except for loans of such small amount as may be prescribed in the rules, the credit committee shall require security to be given on all loans and shall determine the particular security to be taken in each case.

(5)An assignment of shares or of deposits or negotiable instruments endorsed by a guarantor may be accepted as security for a loan.

(6)The security for a loan shall be in the possession or within the control of the society before the loan is made and where security covering immovable or movable property is required for the purpose of security for the repayment of a loan, the proceeds of the loan shall not be made available to the applicant until all documents necessary to establish the claim of the credit society or the security in case of default have been duly executed and if so required, registered.

(7)Notwithstanding the provision of subrule (6) the lending of money on mortgage of any description of immovable property shall be subject to the approval of the Registrar.

92. Preference in the granting of loans

(1)Where more loan applications are pending than can be granted by the credit society from the funds available, preference shall be given by the credit committee to the applicants for the smaller loans in the order received if the need for the loan and the security offered compare favourably with the need and the security offered with respect to application for larger loans.

(2)Where the By-laws provide for loans to a savings and credit society or other societies or organisations, and where the By-laws provide for loans for business purposes and there are more loan applications pending than can be granted from the funds available preference shall be given by the credit committee to applications from individual members other than for business purposes.

93. Maximum loans to members

(1)No loan shall be made by the credit society if it would cause the borrower to become indebted to the credit society to the borrower in excess of eight per centum of its paid up capital, surplus and deposits, or in excess of such lesser percentage as may be provided in the By-laws.

(2)Notwithstanding the provisions of subrule (1) the By-laws of a credit society may authorise the making of loans for amounts in excess of eight per centum of its paid up capital, surplus and deposits, to a local authority, or to a statutory body performing a function of government or providing a public service or to a society:Provided that the total of all loans made to all such borrowers shall not at any time exceed an amount equivalent to one-quarter of its paid up capital, surplus and deposits.

94. Restriction in making loans in certain cases

(1)Subject to its By-laws and having such minimum amount of paid up capital surplus and deposits as prescribed in these Rules, a credit society may make loans—

(a)for the purchase of farm land for the personal use of the borrower and for the purchase or erection of buildings necessary for the conduct of farming operations on such land;

(b)for the purchase or erection of a dwelling house or other building;

(c)for the purchase or erection of building for use in the operation of a business of which the borrower is the sole owner or proprietor, whose total assets before the loan is made do not exceed such amount as shall be prescribed in the Rules;

(d)where the borrower is a society, for the purchase or erection of a building required for the use of the society, whose total assets before the loan is made do not exceed such amount as may be prescribed in these Rules.

(2)No loan shall be made by a credit society for financing the operation of business except for such purpose and under such conditions as shall be prescribed in these Rules.

(3)The total amount of loans made by a credit society in accordance with these Rules shall not any time exceed an amount equivalent to one-quarter of its paid up capital, surplus and deposits.

95. Total amount of loans for land, buildings and business purposes

(1)The total amount of loans made by credit society shall not at any time exceed an amount equivalent to one-quarter of the paid up capital and deposits of the savings and credit society.

(2)All applications for loans made require the approval by a majority vote of the following persons meeting together—

(a)a majority of the members of the savings and credit committee;

(b)two or more managing committee members; and

(c)one member of the supervisory committee.

96. Restriction on loans to officers

Where an officer of a savings and credit society applies for a loan in excess of the value of his shares and deposits assigned as security to the credit society, and the market value of any stock bond or security of the government of Tanzania held by him and so assigned his application shall require approval by majority vote taken in the absence of the applicant, of the following persons meeting together—

(a)a majority of the members of the credit committee;

(b)two or more managing committee members; and

(c)one member of the supervisory committee.

97. Prohibitions

Subject to the provisions of Rule 80 no credit society shall lend money to or accept deposits from a person who is not a member of the credit society.

98. Unauthorised loans prohibited

(1)No officer or employee of a credit society shall lend money from the funds of the credit society to an applicant for a loan unless the application and the loan have been approved as required by this Rule.

(2)An officer or employee who contravenes this Rule shall be guilty of an offence.

99. Limitation of loan

(1)No credit society shall lend money to a person who is not a member of the credit society.

(2)No loan shall be made to a member for a period exceeding five years.

100. Security for loan

No person shall be advanced with a loan unless he furnishes sufficient evidence that he will repay the loan.

101. Rates of interest on loans

The interest on loans by a savings and credit society shall be fixed annually by the general meeting and approved by the Registrar.

102. Loans for business purposes

(1)If the By-laws so provide, loans may be made by a savings and credit society for the purchase of land or the purchase or erection of building used in the operation of a business, or for financing the operation of a business of which the borrower is the sole owner or proprietor, subject to the following conditions—

(a)that the combined amount of paid-up capital and deposits of the savings and credit society is less than such sum as may be provided in the By-laws of the society and as approved by the Registrar;

(b)that a loan made for the purpose of this subrule and the total of any other loans made to the borrower shall not at any time exceed an amount in excess of eight per centum of the paid-up capital and deposits of the credit society, or in excess of such lesser percentage as may be provided in the By-laws;

(c)that the total assets of the borrower as shown by a statement of his affairs before the loan is made do not exceed such amount as may be fixed by the society in its By-laws.

(2)If the By-laws so provide loans may be made for the purchase of land or the purchase or erection of buildings used in the operation of a society or for financing the operation of business of a co-operative society subject to the following conditions—

(a)the combined amount of paid-up capital and deposits of credit society is not less than shillings 250,000/-;

(b)a loan made for the purpose of this subrule and the total of any other loan made to the borrower by the society shall not at any time exceed an amount in excess of eight per centum of the paid-up capital and deposits of the credit society, or in excess of such lesser percentage as may be provided in the By-laws, financial year, do not exceed such amount as the By-laws of the financial statement filed with the Registrar for the preceding financial year, do not exceed such amount as the prescribe.

(3)Loans made for financing the operation of business in accordance with subrules (1) and (2) shall be made only for the following purposes—

(a)for improvements to buildings or equipment used in the business;

(b)for the purchase of agricultural or other commodities for marketing, or for the purchase or agricultural requisites or other merchandise for sale at retail;

(c)for the consolidation of debts incurred by the borrower in the operation of the business.

103. Suspension and resumption of loaning operations

Where the Registrar is of opinion that the manner in which loans are being made by a savings and credit society as disclosed by an operations examination or investigation under the Act, or the amount of loans being made threaten the financial stability of the savings and credit society and the interests of its members, he may—

(a)by written notice sent or delivered to the Chairman and treasurer or secretary-treasurer or manager, as the case may be, order the suspension of loaning operations during such period as he may prescribe;

(b)call a special general meeting to advise the members on the issue as per section 67 of the Act. The meeting shall appoint a person to act as a caretaker of the financial affairs of the society;

(c)permit the resumption of loaning operations after the financial position of the savings and credit society has been restored to a satisfactory basis under the direction of its own officers or subject to assistance from such special committee or other special officers as he may appoint;

(d)the general meeting may suspend and resume loaning operations.

104. Uncollectable loans and charge offs

(1)Where the whole or any part of a loan has remained unpaid for a period of four years from the date fixed for repayment of the loan in full, and no payment on account of the principal has been made to the savings and credit society after the date, the amount remaining unpaid shall be charged to and paid from the reserve account.

(2)No loan shall be charged to the Reserve Fund without the approval of the general meeting.

(3)The amount to be charged off under subrule (1) shall be determined after deducting the shares and deposits, if any, standing to the credit of the member in default, on the books of the savings and credit society, and less the market value of any security held by the savings and credit society as security for the loan.

(4)The committee may, in its discretion determine that loan to be charged to and paid from the Reserve Fund under subrule (3) be paid from the Reserve Fund in annual instalments over a period of five years.

(5)Where no payment of interest and principal has been made to a savings and credit society on a loan made by it within a period of two years after the date on which the interest on principal become due, no further interest on loan shall be credited to the revenue of the savings and credit society as an account receivable.

(6)Any money subsequently received with respect to a loan charged off under this Rule shall be paid into the Reserve Fund.

105. Limitation of payments

Where the total of the amounts to be charged off to the Reserve Fund under Rule 104 exceeds the amounts of money in such Reserve Fund, no further payments to members shall be made except to the Reserve Fund until the moneys in the fund are sufficient to pay all amounts to be charge thereto.

106. List of loans in arrears

(1)Monthly and yearly reports of every savings and credit society shall include a list of all overdue loans for or loans in arrears showing with respect to each loan—

(a)the total amount of the principal outstanding;

(b)the terms of repayment and interest agreed upon with the borrower;

(c)the amount and number of instalments in arrears;

(d)the date on which the last payment was in arrears;

(e)the amount of shares and deposits assigned to the savings and credit society by the members in arrears;

(f)a description of the security held, if any;

(g)the estimated value of the security for the loan in arrears;

(h)the net amount of the loan in arrears after deducting the amount of shares and deposits assigned to the loan in arrears.

(2)The list referred to under subrule (1) shall be prepared within thirty days after the end of the savings and credit society to which the list relates, shall be signed as correct by the treasurer or the secretary-treasurer or the manager as the case may be, and shall be approved by the Chairman, and a copy sent to the Registrar immediately.

(3)For the purposes of this rule "loan in arrears" means any loan which the member is in default for more than thirty days on a payment or repayments of principal or interest according to any loan agreement he has made with the credit society.

107. Use of pass book

(1)All payments to or withdrawals from share capital amount or from deposit amount, if any, shall be shown by the necessary entries in the pass-book or statement provided to the member.

(2)The proceeds of any loan and repayment therein, together with interest payments, shall be shown by the necessary entries in the pass-book or statement provided to the member as in subrule (1).

(3)All entries in a pass-book statement under this Rule shall be initialled by the treasurer or his authorised assistant except where machine posting is used.

(4)A member using the stop order deduction plan for payments to or withdrawal from a savings and credit society pursuant to the Act, shall present his pass-book to the treasurer or his authorised assistant at least quarterly.

(5)If a pass book is lost or destroyed, immediate notice of the loss or destruction shall be given by the member to the treasurer who may issue a new pass-book:Provided that where a new pass-book is so issued the member's account in the savings and credit society may be given a new number.

108. Inspection and evaluation in a savings and credit society

(1)An annual inspection and audit of the affairs of a savings and credit society as required by the Act shall include an examination and evaluation of membership, management structure, shares and deposits, interest charges, reconciliations of cash, bank, shares, loans and deposits, loans withdraws, and repayments.

(2)An annual inspection and audit of the affairs of a savings and credit society shall include an examination and evaluation of each loan as shown by the books to determine the prospects for repayments whether the security appears to be adequate and in order, and what further action, if any will be necessary to ensure action, if any, will be necessary to ensure ultimate repayments.

(3)The inspection and audit report shall include a classification of each loan as follows—

(a)repayment in accordance with the terms of the loan seems assured;

(b)repayment will be delayed and new terms may have to be arranged;

(c)doubtful unless additional security is provided by the borrowers;

(d)poor in that a loss is probable unless adequate and immediate remedial action can be taken.

(4)The audited report of a savings and credit society shall disclose among other things the conditions of those loans that require special action to ensure repayment.

109. Discussion of inspection report with officers of a society

(1)Immediately after his inspection and audit of savings and credit society the representative of the Registrar or other duly authorised person who conducted such inspection and audit, shall meet with the managing committee to discuss with them the conditions of the society as he found it and the need for any immediate action to be taken by the managing committee and other officers to improve loaning and other operations and to protect the interest of the members.

(2)A report of any discussion under subrule (1) shall be included in the inspection and audit report to be sent to the Registrar for such further action as he may deem necessary.

110. Distribution of net surplus of credit society

(1)When determining the net surplus made by a savings and credit society, the managing committee shall deduct and set aside annually in Reserve Fund against uncollectable loans and probable future losses such sums as shall be equal to at least twenty per centum of the year's surplus, until the Reserve Fund is equal to and remains equal to at least ten per centum of the outstanding loans repayable to the saving and credit society or to such other greater amount as may be prescribed in these Rules or By-laws.

(2)Share Transfer Fund of at least ten per centum but the amount should not exceed ten per centum of total share capital.

(3)After determining the Reserve Fund and share Transfer Fund the managing committee of the savings and credit society shall present to the annual general meeting a declaration respecting the distribution of the net surplus which may provide that—

(a)a dividend of a specified amount not exceeding six per centum per annum be paid to the members on all fully paid up shares as shown by the books of the savings and credit society at the end of the preceding financial year as may be prescribed in the by-laws;

(b)there be set aside, if the By-laws so provide a specified amount not exceeding five per centum of the net surplus, to be used for such educational purposes as the managing committee may determine;

(c)the remainder of the surplus, if any, be divided amongst the members as a borrower's dividend in proportion to the amount of interest paid by them to the saving and credit society on all loans or on specified classes of loans during the preceding financial year.

Part IX – Amalgamation and division of society (rules 111-114)

111. Procedure on voluntary amalgamation

(1)Where two or more existing societies resolve at their respective general meetings to amalgamate for their mutual advantage then they shall entrust their committee to arrange for a joint meeting of their committee to elect, from amongst the members of their committee and on the basis of equal representation for each society, an amalgamation committee.

(2)It shall be the duty of the amalgamation committee in consultation with the Co-operative officer, to prepare detailed amalgamation proposals which include—

(a)a viability statement, in such form as the Registrar may approve;

(b)By-laws in respect of the proposed amalgamated society to make amalgamation effective;

(c)the date from which it is proposed to make amalgamation effective.

(3)The amalgamation proposals shall be presented to a joint meeting of the committee of the societies concerned for consideration and acceptance.

(4)Where amalgamation proposals are accepted by the joint meeting of the committee an application shall be made to the Registrar for his approval to proceed in the manner prescribed in section 98 of the Act.

112. Election of new committee

Where an amalgamated society is registered, the society shall proceed to hold a general meeting and elect a committee.

113. Procedure on voluntary division

Where an existing society resolves to divide into two or more separated societies the committee shall prepare, in consultation with the co-operative officer, such detailed proposals as may be necessary and shall make application to the Registrar for approval to proceed in the manner prescribed in section 100 of the Act.

114. Election of committee of divided societies

After the registration of new societies emerging from the division of an old society each such new society shall proceed to hold a general meeting and elect a committee, as soon as practicable but such period shall not exceed one calender month.

Part X – Dissolution of societies (rules 115-116)

115. Rules relating to winding up of societies

(1)Upon the cancellation of the registration of a society taking effect the Registrar may publish in such manner as he thinks proper, a notice requiring claims against the society to be submitted within one month to him or to such person as he may name as liquidator. All liabilities recorded in the books of any society shall be deemed ipso facto to have been duly notified.

(2)When an order cancelling the registration of a society is made by the Registrar under section 100 of the Act, the liquidator may immediately, and shall from the date on which the order takes effect, take charge of the books of the society in order to wind up its affairs.

(3)The liquidator shall proceed to determine the assets and liabilities of the society as they stood at the time of cancellation of its registration and shall determine the contributions to be made by the members and past members respectively to the assets of the society. He shall also determine by what person and in what proportions the cost of liquidation shall be borne.

(4)The liquidator shall make an order noting the names of members and past members and the amount to be realised from each as the contribution under paragraph (c) subsection (1) of section 105 of the Act, and as costs of liquidation under paragraph (e) of the same subsection. This order shall be submitted to the Registrar for his approval, and he may modify it or refer it back to the liquidator for further inquiry or other action.

(5)A copy of the order as finally approved by the Registrar, accompanied if possible by a list of the property of each member or past member against whom the decree has to be enforced shall be filed in the court of a Resident Magistrate having jurisdiction to be enforced as prescribed in paragraph (a) of subsection 105 of the Act.

(6)If the court is unable to recover the sum assessed against member or members the liquidator may frame a subsidiary order or orders against any other member or members to the extent of the liability of each for the debts of the society until the whole amount due from the members is recovered and those orders shall be executed in the same manner.

(7)The liquidator shall submit to the Registrar a report after such period and in such form as the Registrar shall require, showing the progress made in the liquidation of the society.

(8)All funds in the charge of the liquidator shall be deposited with such bank or person as the Registrar may approve.

(9)After recovery of the dues of the society and the realisation of the contribution and costs of liquidation from the members and past members the liquidator shall, after meeting the liabilities of the society, wind up its affairs and submit a final report to the Registrar.

(10)The Registrar shall fix the remuneration if any, to be paid to the liquidator.

(11)The Registrar shall fix a period within which the liquidator shall complete liquidation.

116. Appeals from decision of liquidator

(1)Where any person is aggrieved by a decision made by the liquidator of a society he shall within thirty days of the date of the decision appeal to the court of the Resident Magistrate or further appeal to the High Court.

(2)On an appeal under paragraph (1) the court may confirm, set aside or vary the decision of the liquidator.

(3)An order of the court on appeal under this Rule may be so appealed from in the same manner and to the same extent in all aspects as a decree of that court in a civil suit.

Part XI – Miscellaneous rules (rules 117-125)

(a) – Use and maintenance of Reserve Fund (rules 117-118)

117. Use of Reserve Fund

Subject to rule 48 of the Reserve Fund or Funds as prescribed by the Act, the By-laws of a society shall be used to protect the financial position of the society under the following conditions—

(a)the net losses resulting from the business operations of a society in any area as well as uncollectible loans or other overdue costs or instalments;

(b)in the event that the Reserve Fund of a society is depleted or reduced as a result of operational losses or uncollectible loans or other accounts being charged against it, the amounts to be placed in the Reserve Fund each year from the surplus arising from the business of the society as provided in the By-laws shall be increased by an additional ten per centum, if the Registrar so directs, or the Registrar may direct that the entire surplus arising from the business of the society in each year shall be placed in the Reserve Fund until the amount in that fund has reached the amount that stood prior to the losses charged against it;

(c)no member shall have any claim against the fund or funds of society prescribed by the Act and provided for in the By-laws except in the case of closure of liquidation in accordance with the Act.

118. Investment of moneys in the Reserve Fund

Subject to the approval of the Registrar, money placed in a Reserve Fund may until required for the purposes of a society, be deposited in any commercial bank or financial institution in Tanzania.

(b) – Inspection and management advice (rules 119-125)

119. Discussion of inspection report with officers of a society

(1)Immediately after his inspection and audit of a co-operative society the representative of the Registrar or other duly authorised person who conducted such inspection and audit shall meet with the managing committee to discuss with them the condition of the society as he found it and the need for any immediate action to be taken by the managing committee and other officers to improve operations and to protect the interests of members and of the need for technical or other special advice to improve operations and to achieve the objects of the society.

(2)Discussion under subrule (1) shall be included in the inspecting and audit report to be sent to the Registrar for further action as he may deem necessary.

(3)A report of any discussion under subrule (1) shall be included in the inspecting and audit report to be sent to the Registrar for further action as he may deem necessary.

120. Special service by another society

The Registrar shall arrange with officers of the society to which another society is affiliated to provide, where consistent with its objects such technical or other information and advice regarding the operations of a society which is a member to such society, as may be necessary to assist its officers and members in the achievement of its objects and purposes, and to provide to the society other services designed to facilitate the annual inspection and examination of its affairs, and such a society shall provide the Registrar with such yearly and other returns and information as he may require for the purposes of the Act.

121. Special services by government agencies

(1)When the Registrar, subject to instruction, if any from the Minister responsible for Co-operative Societies, arranges with the proper officers of any department or agency of the Government that that department or agency undertake to provide such technical or other information and advice regarding the operations of a society as may be necessary to assist its officers and members in the achievement of its objects and purposes and where appropriate to provide to the society other services designed to facilitate annual inspection and examination of its affairs, such a society shall provide the Registrar with such yearly and other returns and information as he may require for the purposes of the Act.

(2)The adequacy of any inspection or examination or other service provided to a society under subrule (1) shall be subject to the approval of the Registrar of Co-operative societies.

122. Special services by advisory officers and members

(1)When the Registrar is of the opinion that one or more persons because of their knowledge, experience and position, will be able to advise and assist the officers of a society in the achievement of its objects and purposes, he may appoint such a person or persons as advisory member or members of the managing committee of the society for such a period as it may specify:Provided that such advisory member of the managing committee shall have all the rights and privileges of an elected committee member except the right to vote.

(2)When the By-laws of a society provide for the admission of an advisory or ex officio members to assist and advise the society in the achievement of its objects and proposes, such advisory or ex officio members shall subject to the By-laws have all the rights and privileges of members except the right to vote.

123. Inspection of documents

Any member of the public shall be permitted on payment of the prescribed fees, to inspect at the office of the Registrar any of the following documents—

(a)the registration register;

(b)the registration certificate of a society;

(c)the registered By-laws of a society and the amendments affected in such By-laws;

(d)an order cancelling the registration of a society;

(e)an order directing the liquidation of a registered society;

(f)the annual accounts of a society lodged by the society in accordance with the Rules.

124. Fees

The fees specified in the Schedule hereto shall be payable for the matters to which they relate.

125. Revocation

(1)[Revokes the Co-operative Societies Rules, 1982.]

(2)Notwithstanding the revocation of the Co-operative Societies Rules, 1982, no act done under those Rules shall be invalid only by the reason that those Rules have been revoked and the same act shall continue as if commenced under these Rules.

Schedule

Fees and forms (Rule 124)

1.	On application for registration of Primary society		400.00
2.	On application for registration of Secondary society		700.00
3.	On application for registration of an Apex society		1,200.00
4.	On application for registration of a Federation		{2,500.00
5.	On application for registration of a Joint enterprise		600.00
6.	On issue of Certificate of registration of a Primary society		200.00
7.	On issue of Certificate of registration of Secondary society		400.00
8.	On issue of certificate of registration of an Apex society		600.00
9.	On issue of Certificate of registration of a Federation		1,000.00
10.	On issue of certificate of registration of a Joint venture		300.00
11.	On registration of By-laws:
	(a)	A Primary society	1,200.00
	(b)	A Joint enterprise	1,800.00
	(c)	A Secondary society	2,500.00
	(d)	An Apex society	3,500.00
	(e)	A Federation	4,000.00
12.	For registration of every amendment of By-laws of a Primary society		400.00
13.	For Registration of every amendment of By-laws of a Secondary society		850.00
14.	For Registration of every amendment of By-laws of an Apex society		1,400.00
15.	For Registration of every amendment of By-laws of a Federation		2,000.00
16.	For Registration of every amendment of a Joint venture		600.00
17.	For every inspection of the Register		120.00
18.	For every inspection of the public file of any society		60.00
19.	For every registration of charge by society		300.00
20.	For every inspection of register of charges		60.00
21.	For a copy of a certified document or an extract therefrom per single page or part of a single page		120.00
22.	For Certifying any document or part therefrom		200.00

Forms

[Editorial note: The forms have not been reproduced.]

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History of this document

31 July 2002 this version

Consolidation

Cited documents 4

Act 3

1.	Companies Act	661 citations
2.	Mining Act	34 citations
3.	Co-operative Societies Act	30 citations

Ordinance 1

1.	Arbitration Act	293 citations