Co-operative societies are societies that incorporate the principles of voluntary and open membership; democratic member control; economic participation by members; autonomy and independence; education, training and information; and concern for community in general in its operations.
Co-operative Societies in Kenya are regulated under the Co-operative Societies Act, 1997 and the Co-operative Societies Rules, 2004. A society may apply for registration to the Commissioner for Co-operative Development as a cooperative society with limited liability meaning members will not be liable for the cooperative society’s liabilities or without limited liability meaning members will be liable for the cooperative society’s liabilities.
In this article, we shall navigate registration of a co-operative societies, unraveling the potential they hold for SMEs.
Registration of Co-operative Societies
Co-operative societies may be registered as primary societies or as a co-operative union. A primary society is a co-operative society whose membership is restricted to individual persons while a co-operative union means a co-operative society whose membership is restricted to primary societies.
For registration as a primary society, the society must consist of at least ten (10) persons all of whom shall be qualified for membership only if they have attained the age of eighteen years, their employment, occupation or profession falls within the category or description of those for which the co-operative society is formed while for co-operative unions have at least two registered primary societies as its members.
Registration may be full or provisional. Full registration occurs where the Commissioner is satisfied that a society has complied with the provisions of the Act and any rules. Provisional registration on the other hand occurs whereby the Commissioner is not satisfied as to compliance with the Act and rules or where the by-laws do not conform to the Act and the rules. The provisional registration is valid for a period not exceeding one year, and subject to the co-operative society’s compliance with such terms and conditions and provisions, as the Commissioner may specify failing which the registration is cancelled.
Upon registration of a society and payment of the registration fee the Commissioner will issue a certificate of registration or provisional registration and certified copy of the bylaws.
Requirements for registration
a. Name Search.
b. Minimum Membership: Have a minimum number of ten persons who are willing to be members for primary societies and two registered primary societies for a co-operative union.
c. Lodge the written letter of intent to form the cooperative society with the District Co-operative Office located near your area.
d. The Co-operative Officer will then convene a pre-cooperative education meeting for the proposed members willing to join the cooperative in which the members will agree on the initial officials.
e. Submit the Application, by laws and written economic appraisal and any Supplementary information form in four copies.
f. Submit the Minutes of the pre-co-operative meeting which show the decision to register and the elected officials.
g. Copies of National Identity Cards, KRA Pins, Passport Photos of all group members and elected officials,
h. Pay the registration fee.
Management of co-operative societies
The supreme authority is vested in the general meeting at which members shall have the right to attend, participate and vote on all matters while for the day-to-day affairs, the authority is vested on the Committee.
Compliance Requirements
a. Accounts
Every co-operative society is to keep proper audited accounts which will include a balance sheet; an income and expenditure account and a cash flow statement which must be approved by the Committee and be authenticated by at least three Committee members.
The audited accounts must be displayed in a conspicuous place at the co-operative society’s registered office and branches at least two weeks before presentation of the accounts to its members in the general meeting.
Where a co-operative society fails to cause its accounts to be audited within the prescribed period in respect of the previous financial year, members of the Committee shall automatically lose their positions at the next general meeting and shall not be eligible for re-election for three years unless the Commissioner is satisfied that the failure was due to circumstances beyond their control.
b. Books
Every co-operative society is to keep: a register of members, a minute book giving details of the proceedings at general meetings and at committee meetings; a cash book showing details of all moneys received and expended or paid out in any way by the society; a ledger containing such accounts as are necessary to properly record the transactions of the business; a personal ledger showing transactions of each member with the society including details of produce delivered to the society by each member and the payment made therefor; an assets register; a stock control ledger; a register of charges showing in respect of every charge created by the society the amount of the charge and the person entitled thereto; a register of loans to members showing in respect of each loan the name of the borrower, the amount borrowed, the purpose of the loan, the due date of repayment, and the date the repayment is made; and a ledger showing deposits and withdrawals by members.
c. Annual returns
Every co-operative society shall within four months of the end of the financial year submit its annual returns through the prescribed form.
How we can help
CM SME Club is committed to helping organizations ensure that they are compliant with all regulatory requirements and in this regard, is available to assist societies looking to be registered as cooperative societies apply for registration by guiding you through the entire application process to the Commissioner for Co-operative Development, drafting the attendant by-laws and compliance documents and subsequent reviews, engagement and follow-up with the Commissioner for Co-operative Development, to procure registration. For clarifications or assistance, kindly reach out to us at cmsmeclub@cmadvocates.com.
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