Section 2 of Sacco Societies Act CAP 490B: Interpretation

In this Act, unless the context otherwise requires—
"associate" means—
(a) in relation to a company or other body corporate—
(i) its non-operating holding company or its subsidiary;
(ii) a subsidiary of its non-operating holding company;
(iii) a holding company of its subsidiary;
(iv) any person who controls the company or body corporate whether alone or with his associates or with other associates of it;
(b) in relation to an individual—
(i) any member of his family;
(ii) any company or other body corporate controlled directly or indirectly by him whether alone or with his associates; and a person shall be deemed to be a member of a family if he is the parent, spouse, brother, sister, child, uncle, aunt, nephew, niece, stepfather, stepmother, stepchild and adopted child of the person concerned, and in case of an adopted child his adopter or adopters;
"Board" means the Board of the Authority constituted under section 6;
"board of directors" has the meaning assigned thereto in the Co-operative Societies Act (Cap. 490);
"Board of Trustees" means the board of trustees established by section 56 of this Act;
"by-laws" has the meaning assigned thereto in the Co-operative Societies Act (Cap. 490);
"Cabinet Secretary" means the Cabinet Secretary for the time being responsible for matters relating to Sacco societies;
"Central Bank" means the Central Bank of Kenya established by the Central Bank of Kenya Act (Cap. 491);
"chief executive officer" means the chief executive officer of the Authority;
"Commissioner" has the meaning assigned thereto in the Co-operative Societies Act (Cap. 490);
"control" in relation to the term "associate" includes—
(i) ability to influence whether directly or indirectly, the composition of the board of directors of a deposit-taking Sacco society; or
(ii) holding, directly or indirectly, whether personally or through a holding company or subsidiaries thereof, or in any other way, an aggregate of twenty five per centum or more of the voting power of a company or body corporate, whether alone or with associates or of the body corporate.
"core capital" means the fully paid up members' shares, capital issued, disclosed reserves, retained earnings, grants and donations all of which are not meant to be expended unless on liquidation of the Sacco society;
"co-operative society" has the meaning assigned to it in the Co-operative Societies Act (Cap. 490);
"deposit" means a sum of money received or paid on terms under which it shall be repaid, with or without interest a return or premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it;
"Deposit Guarantee Fund" means the Deposit Guarantee Fund established by section 55;
"deposit-taking business" means—
(a) a Sacco business in which the person conducting the business holds himself out as accepting deposits on a day-to-day basis; and
(b) any other activity of the Sacco business which is financed, wholly or to a material extent, by lending or extending credit for the account and at the risk of the person accepting the deposit, including the provision of short-term loans or funding or in compliance with the Islamic law;
"director" has the meaning assigned to it in the Co-operative Societies Act (Cap. 490);
"dormant account" means a savings or current account maintained by a Sacco society which is not operational, or has had no transaction by the depositor within the maximum period prescribed;
"General Fund" means the fund established by section 16;
"international financial reporting standards" means the international accounting standards set by the International Accounting Standards Board;
"land" includes freehold and leasehold land in Kenya and all buildings and permanent improvements and premises thereon;
"levy" means the levy imposed under section 15;
"licence" means a licence granted under section 25;
"member" has the meaning assigned to it in the Co-operative Societies Act (Cap. 490);
"non-deposit taking business" means Sacco business, other than desposit-taking business;
"officer" in relation to a Sacco society, means a director or any other person, by whatever name or title he may be called or described, who carries out or is empowered to carry out functions relating to the overall direction in Kenya of that deposit-taking Sacco society or takes part in the general management thereof in Kenya;
"place of business" means a Sacco society's head office, branch, or outlet, including a mobile unit, marketing office, automated teller machines or agency of a Sacco society and which is open to the public;
"Sacco business" means financial intermediation and any other activity by a Sacco society based on cooperative principles and in accordance with this Act, or in compliance with Islamic law, by way of—
(a) receipt of withdraw-able deposits, domestic money transfer services, loans, finance, advances and credit facilities; or
(b) receipt of non-withdrawable deposits from members and which deposits are not available for withdrawal for the duration of the membership of a member in a Sacco society and may be used as collateral against borrowings providing finance and domestic money transfer services;
"Sacco society" means a savings and credit co-operative society registered under the Co-operative Societies Act (Cap. 490);
"share capital" means members' equity in the form of issued and fully paid up shares of common stock;
"total capital" means the total sum of core capital and supplementary capital of a Sacco society;
"total deposit liabilities" means the total deposits in Kenya in any Sacco society which are repayable on demand or after a fixed period or after notice under agreed terms and conditions;
"Tribunal" has the meaning assigned to it in the Co-operative Societies Act (Cap. 490);
"trustees" means the trustees of the board of trustees of the Deposit Guarantee Fund constituted under section 57.

More Sections

Section 3 - Application

(1) This Act shall apply to— (a) every deposit-taking business; (b) specified non-deposit taking business, in the manner specified in subsection (2). (2) For the purposes of subsection (1)(b), the...

Section 4 - Establishment of the Authority

(1) There is established an Authority to be known as the Sacco Societies Regulatory Authority. (2) The Authority shall be a body corporate with perpetual succession and a common seal and shall be...

Section 5 - Objects and functions of the Authority

The objects and functions of the Authority shall be to— (a) license Sacco societies to carry out deposit-taking business in accordance with this Act; (b) regulate and supervise Sacco societies; (c)...

Section 6 - Board of the Authority

(1) The oversight function and management of the Authority shall vest in a Board of the Authority which shall comprise— (a) the Chairperson to be appointed by the Cabinet Secretary from amongst the...

Section 7 - Powers of the Board

The Board shall have all the powers necessary for the performance of its functions under this Act and, in particular, shall have the power to— (a) supervise, control and administer the assets of the...

Section 8 - Committees and delegation of powers

(1) The Board may appoint committees from among its own members or otherwise, to carry out such general or special functions as may be specified by the Board. (2) The Board may, by resolution, either...

Section 9 - Common seal of the Board

(1) The common seal of the Authority shall be kept in such custody as the Board may direct and shall not be used except on the order of the Board. (2) The common seal of the Authority when affixed to...

Section 10 - Remuneration of the Board members

The Authority, in consultation with the Cabinet Secretary, shall pay members of the Board such remuneration or allowances for their services and expenses as it may determine.

Section 11 - Meetings and procedure of the Board

The conduct of the business of the Board shall be as provided in the Schedule, but subject thereto, the Board may regulate its own procedure.

Section 12 - Appointment and remuneration of the chief executive officer

(1) There shall be a chief executive officer who shall be appointed by the Board, in consultation with the Cabinet Secretary, and whose terms and conditions of service shall be determined by the Board...

Section 13 - Appointment and remuneration of staff

(1) The Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its duties and responsibilities. (2) The officers and employees appointed under...

Section 14 - Protection from liability

(1) No matter or thing done by an officer or an employee of the Authority shall, if the matter or thing is done bona fide for executing the functions, powers or duties of the Authority, render the...

Section 15 - The Sacco societies levy

(1) The Authority may by order published in the Gazette, impose a levy to be known as the Sacco societies levy on the deposits held in deposit-taking Sacco societies, or on such other base as the...

Section 16 - The Authority's General Fund

(1) There is established a fund of the Authority to be known as the General Fund of the Authority which shall vest in the Authority. (2) There shall be paid into the General Fund— (a) all proceeds...

Section 17 - Investment of funds of the Authority

(1) The Authority may invest its funds in any securities which for the time being are authorized for trust funds or in any other securities which the Cabinet Secretary may, from time to time,...

Section 18 - Financial year

The financial year of the Authority shall be the period of twelve months ending on the thirtieth of June in each year.

Section 19 - Annual estimates

(1) The Authority shall, at least three months before the commencement of the financial year, prepare estimates of revenue and expenditure for that year. (2) The estimates prepared under subsection...

Section 20 - Accounts and audit

(1) The Authority shall cause to be kept proper books and records of accounts of the income, expenditure, assets and liabilities of the Authority. (2) The Authority shall within three months of the...

Section 21 - Submission and publication of annual reports

(1) The Authority shall within four months of the closure of the financial year, submit to the Cabinet Secretary a report on the operations of the Authority during that year. (2) The Authority shall,...

Section 22 - Preparation etc. of Sacco societies performance report

The Authority shall within four months of the closure of the financial year prepare and submit to the Cabinet Secretary a report on the operations and performance of the Sacco societies under this Act...

Section 23 - Carrying out of deposit-taking business

(1) No person shall carry out deposit-taking business within the meaning of this Act, unless such person— (a) is a Sacco society registered under the Co-operative Societies Act (Cap. 490); and (b)...

Section 24 - Application for licence

(1) A Sacco society intending to transact the deposit-taking business in Kenya shall, before commencing such business, apply in writing, to the Authority for a licence, in the prescribed form. (2) An...

Section 25 - Issuance of licence

(1) The Authority shall consider every application made under section 24 and may, if satisfied that the applicant meets the requirements of this Act, grant a licence to the applicant upon payment of...

Section 26 - Conditions of a licence

(1) The Authority shall endorse on a licence granted under this Act such conditions as it considers necessary and may from time to time add, vary or substitute such conditions as it deems...

Section 27 - Revocation of licence

(1) The Authority may, by notice in writing to a Sacco society, revoke the licence if the Sacco society— (a) ceases to carry on deposit-taking business in Kenya or goes into liquidation or is wound...

Section 28 - Publication of Sacco societies

The Authority shall cause the list of all Sacco societies to be published once every year in the Gazette and at least in one newspaper of national circulation.

Section 29 - Minimum capital requirements

All Sacco societies shall comply with and maintain at all times the minimum capital requirements as may be prescribed by the Authority.

Section 30 - Minimum liquid assets

(1) A Sacco society shall maintain such minimum holding of liquid assets of its members' deposits and borrowings as may be prescribed by the Authority. (2) Every Sacco society shall calculate the...

Section 31 - Prohibited business

A Sacco society shall engage only in such business as the Authority shall prescribe.

Section 32 - Place of business

(1) No Sacco society may open in Kenya a branch or a new place or business or change the location of a branch or the existing place of business in Kenya without the approval of the Authority. (2) A...

Section 33 - Application for loan or credit facility

(1) Any member of a Sacco society may apply to the Sacco society for a loan or credit facility in writing. (2) A person who applies for a loan or credit facility under subsection (1) shall provide...

Section 34 - Limits on loans and credit facility

(1) No Sacco society shall grant a loan or credit facility to a member where the loan or credit facility, in the aggregate, exceeds such limit of the society's core capital as the Authority may...

Section 35 - Insider lending

(1) A Sacco society may make loans to its employees and members of its board of directors. (2) The conditions for the grant of a loan or credit facility to an employee or board member shall comply...

Section 36 - Charge against shares and savings deposits

(1) A Sacco society shall have a first charge against deposits and share capital and upon any dividend or interest payable to a member for any debt due to the society from the member, either as a...

Section 37 - Dormant accounts

The treatment of members' dormant accounts shall be in such manner as may be prescribed by the Authority.

Section 38 - Investment by Sacco societies

(1) The funds of a Sacco society may be invested in— (a) securities, obligations or, other debt instruments issued or guaranteed by the government or any agency of the government; (b) deposits,...

Section 39 - Financial year

The financial year of a Sacco society shall be the period of twelve months ending the thirty-first December in each year.

Section 40 - Form of accounts

(1) Every Sacco society shall keep proper books of accounts. (2) Every Sacco society shall keep accounts and records which— (a) show a true and fair state of affairs; and (b) explain all...

Section 41 - Submission of accounts to the Authority

(1) A Sacco society shall, not later than three months after the end of each financial year, submit to the Authority, in the prescribed format. (a) an audited balance sheet, showing its assets and...

Section 42 - Disclosure requirements

The disclosures in the financial statements of a Sacco society shall include disclosures on— (a) members, if any, who hold more than twenty percent of the share capital and deposits in the Sacco...

Section 43 - Appointment of internal auditor

(1) Every Sacco society shall appoint an internal auditor who shall report to the board of directors on the internal control systems and financial matters of the society. (2) No person shall be...

Section 44 - Appointment of external auditors

(1) Every Sacco society shall, in each financial year, have an external auditor who shall be— (a) a person qualified under section 45; (b) approved by the annual general meeting of that society;...

Section 45 - Qualifications of external auditors

A person shall be qualified for appointment as an external auditor of a Sacco society if that person— (a) is qualified as an auditor under the Companies Act (Cap. 486); (b) is among the list of...

Section 46 - Display and publication of audited financial statements

(1) A Sacco society shall display, throughout the year, in a conspicuous position in every place of business, a copy of its last audited financial statements in the prescribed format. (2) A Sacco...

Section 47 - Annual general meeting to be supreme organ

The annual general meeting of a co-operative society as established under the Co-operatives Societies Act (Cap. 490) shall be the supreme organ of a Sacco society.

Section 48 - Regulation and supervision of Sacco societies

(1) The Authority shall be responsible for the regulation and supervision of Sacco societies to which this Act applies. (2) Without prejudice to the generality of subsection (1), the Authority...

Section 49 - Powers of the Authority to inspect

(1) The Authority may, at any time and from time to time, and shall, if so directed by the Cabinet Secretary, cause an inspection to be made by any person authorized by the Authority in writing of any...

Section 50 - Powers of the Authority to advise and direct

(1) If, at any time, the Authority has reason to believe that— (a) the business of a Sacco society is being conducted in a manner contrary to or not in compliance with the requirements of this Act or...

Section 51 - Supervisory enforcement actions

Where the Authority determines that a Sacco society conducts its business in a manner contrary to the provisions of this Act or of any regulations made thereunder or any other Act or in any manner...

Section 52 - Powers of the Authority to intervene in management

(1) Where the Authority takes an enforcement action under section 51 it may— (a) appoint a person to manage the affairs of the Sacco society and to exercise all the powers of the society to the...

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