LBA II

THE LAW OF CO-OPERATIVE SOCIETIES 2021

1. Origin and development of Co-operative societies
Historical Background of Cooperatives in Kenya
In Kenya the history of cooperatives date back to 1908 and has continued to grow since
then;
 1908- first Co-operative Society was established in Kenya, a dairy Co-
operative
 1931 –Government’s first Co-operative Ordinance was enacted to regulate
the operations of co-operatives.
 1946 -Inclusion of Africans in the enactment of a new Co-operative Societies’
Ordinance.
 1955-African involvement in growing cash crops following Swynnerton Plan
for the formation of more co-operatives.
 1932 – 1969; 1,894 societies had been registered.
 First co-operatives were Predominantly marketing oriented & Auxiliary
focus,
 Key examples were Kenya Co-operative Creameries (KCC-1925), Kenya
Planters Co-operative Union (KPCU-1923) and Kenya Farmers Association
(KFA-1923).
 These organizations were originally registered as companies and only
became registered as co-operatives in 1931 when the first Co-operative
Ordinance was promulgated.
 1965-The sessional paper No. 10 of 1965 on “African Socialism” gave
impetus for rapid Africanization of Kenyan economy and poverty
eradication.
 1970-The first post-independence Government Co-operative Development
Policy was contained in Sessional Paper No. 8 of 1970 whose main goal was
the consolidation of the cooperative activities.
 This included improvement of management of societies, intensification of
education and training for members, committee and staff with provision of
government support staff as supervisors.
 1975- Another review of the Co-operative Development Policy took place in
which the government continued to recognize co-operatives as vital organs
for mobilizing material, human and financial resources for
national development.
 1980s –The government started implementing Structural Adjustment
Programmes (SAPs) for a market economy. Sessional Paper No.1 of 1986 on
“Economic Management for Renewed Growth”, emphasized the importance
of unfettered (free) private sector led economic development.
  The government through Sessional Paper No. 4 of 1987 on “Renewed Growth
through the Co-operative Movement”, reiterated its commitment to enhance
the participation of Kenyans in the economy through Co-operatives.
 The responsibility of organizing and managing co-operatives was left to the
members and their management committees.  The Government played an
advisory role.
 Through Sessional Paper No. 6 of 1997, on “Co-operatives in a Liberalized
Economic Environment”, the government reviewed its involvement in the
management of cooperatives by providing a legislative framework under
which co-operatives were to survive in a competitive economic environment.
 The enactment of the Co-operative Societies Act No. 12 of 1997 removed
completely the government’s role in the affairs of co-operative societies. This
resulted into a near collapse of the entire co-operative movement in the
country.

2. Principles of Co-operative Societies

(Section 4(b) – Co-operative Societies Act)

 C - Concern for Community in General

 O - Membership is open and voluntary
 D - Democratic control by members
 E - Economic participation by members
 C – Cooperation
 E - Education, Information and training
 A - Autonomy and Independence

3. Registration of Co-operatives/SACCO Societies

i. Essentials for registration of a co-operative society (Section 5 - Co-
operative Societies Act)

(a) Primary society - at least ten persons all of who qualify for membership under
section 14

(b) Co-operative union - at least two registered societies as its members.

ii. Licensing of SACCO Societies

a. Licensing Requirements for Deposit Taking Sacco Society

Application for licence – Section 24 of the Sacco Societies Act

C - Copy of the certificate of registration

B - By-laws of the Sacco society.

C - Evidence of the minimum capital requirements prescribed in the Second Schedule;

P - information relating to the place of business, indicating that of the head office, and
branches.

F - The prescribed fees.

R - a report, covering the following—

(i) M - membership and

(ii) E - economic and financial environment;
(iii) C -share capital;
(iv) O - objectives of the deposit-taking Sacco society business;

Revocation of Licenses

i. Cancellation of registration - Section 62 of Co-operative Societies Act

a. R - Failed to file returns with the Commissioner for a period of three years; or
b. O - Failed to achieve its objects, the Commissioner may, order cancellation of its
registration and dissolution of the society, the order shall take effect
immediately.
c. L - Less than the prescribed number of members.

Appeal must be made within 30 days

ii. Effects of cancellation - Section 63 of the Co-operative Societies Act

The society shall cease to exist as a corporate body from the date the order takes
effect.

iii. Revocation of licence for of Sacco Societies – Section 27 Sacco Societies Act

(a) D - Ceases to carry on deposit-taking business in Kenya.

(b) L - Goes into liquidation or is wound up.
(c) D - Is otherwise dissolved or deregistered under the Co-operative Societies Act.
(d) C - Fails to comply with this Act, or any rules, regulations, orders or directions
issued under the Act or any condition of the licence.
(e) L - Fails to pay the annual licence fee as required under section 25(3).
(f) C - Does not hold at least fifty percent of the capital requirements prescribed in
section 30 and the Second Schedule.
(g) C - Has knowingly engaged in serious criminal or fraudulent acts.

b. Renewal of Licenses

Renewal of licence under Regulation 5 of the Sacco Societies (Deposit-Taking

Sacco Business) Regulations

(1) Apply for renewal of a licence at least ninety days before expiry of operating
licence.

(2) Where Sacco societies amalgamate, the amalgamated Sacco Society shall be exempt
from paying licence fee in the year of amalgamation if the amalgamating Sacco societies
had existing licences.

c. Transfer/Assignment of Licenses

Transfer or assignment of licence under Regulation 7 of the Sacco Societies

(Deposit-Taking Sacco Business) Regulations

A licence issued under these Regulations is not transferable or assignable to any

other entity.

d. Capital Adequacy Requirements for Sacco Societies

i. Minimum capital requirements under Section 29 of the Sacco Societies
Act
ii. Minimum capital requirements under Regulation 9 of the Sacco
Societies (Deposit-Taking Sacco Business) Regulations

A Sacco Society shall at all times maintain—

(a) C - 10 - core capital of not less than ten million shillings;

(b) A - 10 - core capital of not less than ten percent of total assets;

(c) I - 8 - institutional capital of not less than eight percent of total assets; and

(d)D - 8 - core capital of not less than eight percent of total deposits.

iii. Criteria for higher minimum capital ratios under Regulation 10 of the
Sacco Societies (Deposit-Taking Sacco Business) Regulations
The Authority may require higher minimum capital ratios for a Sacco Society where the

Sacco Society has—

P - A high, or particularly severe volume of poor-quality assets.

A - if the Sacco Society is growing rapidly without adequate capitalisation and risk
management system among other resource needs.

R - significant exposure to risk.

L - Losses resulting in a capital deficiency.

S - If there is a likelihood that the Sacco Society may be adversely affected by the
activities or conditions of its associates or subsidiaries.

e. Minimum Liquidity Requirements for Sacco Societies

Regulation 13 of the Sacco Societies (Deposit Taking Sacco Business) Regulations

Sacco Society shall maintain fifteen percent of its savings deposits and short term
liabilities in liquid assets.

Because of the risks that inherently faced by such institution the societies must have a
safety net that can be used to meet the short term liabilities and deposit needs.

f. Loans by Sacco Societies

Section 33 - Application for loan or credit facility – Sacco Societies Act

Every Sacco society shall prescribe in writing—

P - A loans policy and procedures manual specifying the criteria and procedures
applicable in the evaluation, processing, approval, documentation and release of loans
or credit facilities.

R - an asset review system, which shall accurately identify risk and assure the
adequacy of the provisions for losses account.

P - a system of reviewing the entire asset portfolio including contingent accounts or

off-balance sheet items and adequate provisioning for losses at periodic monthly
intervals.

Section 34 - Limits on loans and credit facility – Sacco Societies Act

C - 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 prescribe.

S - No Sacco society shall grant a loan or credit facility against the security of the core
capital of the society.

Regulation 28 - General lending requirements – Sacco Societies (Deposit Taking

Business) Regulations

Every sacco is supposed to have a credit policy which contain information such as:

P - Loaning procedures

R - Requirements for grant of a loan

R - Permissible loan reasons,

C - Acceptable types of collateral and loan limits,

I - Interest rates,

I - Terms and conditions for insider lending.

Every sacco should disclose the following minimum information during lending process;
See Rule 29

• C - Financing charges.
• A - Amount to be financed .
• R - Conditions for refinancing of loans.
• I - Interest computation methods and the date when the interest charges
begin to accrue.
• S - Frequency of issue of statements.
• C - Collateral required to secure lending.

4. Types of Co-operatives
i. Apex Society

Means a society formed at the national level by the co-operative movement in

Kenya and registered under this Act to promote co-operative development and
represent the interests of co-operative societies locally and internationally.

ii. Co-operative Union

Means a co-operative society whose membership is restricted to primary societies.

iii. Primary Society

Means a co-operative society whose membership is restricted to individual persons.

Qualification for membership under section 14 of the Co-operative Societies Act

A person other than a co-operative society shall not be qualified for membership of a co-
operative society unless—

(a) 18 - He has attained the age of eighteen years;

(b) E - His employment, occupation or profession falls within the category or

description of those for which the co-operative society is formed; and

(c) R - He is resident within, or occupies land within, the society’s area of operation as
described in the relevant by-law.

• Can cooperatives have corporate members?

• The answers is no. They cannot have cooperate members unless they
decide by way of resolution during the annual general meeting that
they are going to have a corporate member. See section 16 of the Coop
Act.
• Why is this the case? A question of sophitication perhaps?

Rights of members under section 21 of the Co-operative Societies Act

A member of a co-operative society shall have the right to—

F - Enjoy the use of all the facilities and services of the society subject to the society’s
by-laws;

E - Be elected to organs of the society, subject to it’s by-laws;

G - Attend and participate in decisions taken at all general meetings of the society and
vote;

I - All legitimate information relating to the society, including: internal regulations,

registers, Minutes of general meetings, supervisory committees, reports, annual
accounts and inventories, investigation reports, at the society’s head office.

Section 22 notes that members have the obligations to

 • B - To observe and comply with all the society’s by laws and decisions taken by
the relevant organs of the society in accordance with its bylaws;
• S - To buy and pay up for shares or make any other payments provided for in its
by laws;
• D - To meet the debts of the society in case of bankruptcy in accordance with the
provisions of the Act and Society bylaws.

5. Obligations of Co-operative Societies

i. Registered address of co-operative society Section 23 of the Co-
operative Societies Act

Every co-operative society shall have a registered address to which notices and
communications may be sent and shall send to the Commissioner notice of every change
of address within one month of the change..

ii. Estimates of income and expenditure under Section 24 of the Co-

operative Societies Act

For each financial year, the Committee of a co-operative society shall cause to be
prepared estimates of the society’s income and expenditure including recurrent and
capital estimates for approval by the general meeting at least three months before the
end of the preceding financial year.

iii. Account and audit under Section 24 of the Co-operative Societies Act

(1) Every co-operative society shall keep proper accounts which shall—

(a) be prepared in accordance with International Accounting Standards.

(b) reflect the true and fair state of the co-operative society’s affairs; and

(c) explain the co-operative society’s transactions including—

(i) all sums of money received and paid by the co-operative society and the reasons
thereto.

(ii) all sales and purchases of goods and services by the co-operative society; and

(iii) all assets and liabilities of the co-operative society.

(2) The books of accounts shall be kept at the registered office of the co-operative
society or at such other place as may be determined by the co-operative society and
shall at all times be available for inspection by members of its supervisory committee
and the auditor.
(3) It shall be the duty of every co-operative society to cause its accounts to be audited
at least once in every financial year by an auditor appointed under subsection (4).

(4) The auditor shall be appointed at the annual general meeting from a list of auditors
approved by the Commissioner, in consultation with the Institute of Certified Public
Accountants of Kenya.

6. Rights and liabilities of members

i. Limitation of holding share capital under section 15 of the Co-
operative Societies Act

No member, other than a co-operative society, shall hold more than one-fifth of the
issued and paid-up share capital of any co-operative society.

ii. Membership subject to authorisation by annual general meeting

under section 16 of the Co-operative Societies Act

No company incorporated or registered under the Companies Act (Cap. 486), and no
unincorporated body of persons shall be entitled to become member of a co-operative
society, except with a written authorisation through a resolution by a general meeting
of that co-operative society.

iii. Limitation of membership to one society under section 18 of the Co-

operative Societies Act

No person shall be a member of more than one co-operative society with unlimited
liability and, no person shall be a member of more than one co-operative society having
the same or similar object:

Provided that a person who—

(i) is a member of a co-operative society; and

(ii) carries on business on land or at premises outside the area of operation of that co-
operative society, may be a member of a co-operative society in whose area of operation
that land or those premises are situate, notwithstanding that its objects are the same as
or similar to those of the first-mentioned society.

iv. Voting rights of members under section 19 of the Co-operative Societies Act

Each member of a co-operative society shall have one vote only in the affairs of the
society, irrespective of the number of shares he holds:
Provided that a co-operative society which is a member of a co-operative union or an
apex society shall have as many votes as may be prescribed by the by-laws of the co-
operative union or apex society of which it is a member, and may, subject to such by-
laws, appoint any number of its committee members, not exceeding the number of such
votes, to exercise its voting power.

v. Rights of members under section 21 of the Co-operative Societies Act

A member of a co-operative society shall have the right to—

(a) attend and participate in decisions taken at all general meetings of the society and
vote;

(b) be elected to organs of the society, subject to it’s by-laws;

(c) enjoy the use of all the facilities and services of the society subject to the society’s
by-laws;

(d) all legitimate information relating to the society, including: internal regulations,
registers, Minutes of general meetings, supervisory committees, reports, annual
accounts and inventories, investigation reports, at the society’s head office.

vi. Member’s rights vis-a-vis the co-operative society under section 22 of the
Co-operative Societies Act

A member of a co-operative society shall have the obligation to—

(a) observe and comply with all the society by-laws and decisions taken by the relevant
organs of the co-operative society in accordance with the by-laws of that society.

(b) buy and pay up for shares or make any other payments provided for in the by-laws
of the society.

(c) meet the debts of the society in case of bankruptcy in accordance with the provisions
of this Act and the by-laws of the society.

a. Shares, Savings & Deposits for SACCO Societies

i. Terms of member shares under Regulation 21 of the Sacco Societies
(Deposit-Taking Sacco Business) Regulations

(1) A Sacco Society shall prescribe a minimum number of shares at a par value for which
an individual shall subscribe to become a member.
(2) A member shall not pledge shares as collateral or security for a loan granted by the
Sacco Society.

(3) A member may transfer shares to other members on leaving membership of a Sacco
Society, but the Sacco Society shall not refund shares.

(4) Shares may earn dividends paid from net surplus after required transfers to
reserves at the end of a financial year in accordance with the dividend policy of a Sacco
Society.

(5) A Sacco Society shall not pay dividends unless it has complied with the prescribed
capital adequacy and any other requirements that the Authority may impose.

ii. Non-withdrawable deposits under Regulation 22 of the Sacco Societies

(Deposit-Taking Sacco Business) Regulations

(1) Non-withdrawable deposit accounts shall be operated in accordance with the Sacco
Society’s bylaws and the amount accumulated in the account may be used as collateral
against borrowings and shall be refunded only when a member withdraws from
membership and provided the member has fully repaid all his debts and is free from
guarantee.

(2) Where a Sacco Society operates non-withdrawable deposit accounts, every member
shall contribute on a monthly basis or at such prescribed periods and in such amounts
as may be determined by the Sacco Society.

(3) A Sacco Society may refund the amount saved in his non- withdrawable deposit
account within sixty days after receiving a written notification from the member.

(4) Non-withdrawable deposits shall attract interest at a rate to be determined by the

Sacco Society as dictated by external market forces or internal funding needs.

iii. Withdrawable deposits under Regulation 23 of the Sacco Societies

(Deposit-Taking Sacco Business) Regulations

(1) A Sacco Society shall establish a savings policy with minimum prescribed terms and
conditions of opening, operating and closing accounts, interest rate calculations and
payments, penalties and other charges.

(2) All withdrawable deposits shall attract interest at a rate prescribed in the terms and
conditions of the deposit.

(3) Interest on withdrawable deposits shall accrue on a pro-rata basis.

 iv. Record keeping under Regulation 25 of the Sacco Societies (Deposit-
Taking Sacco Business) Regulations

(1) A Sacco Society shall maintain an account for each of its members through which
Shares and deposit transactions with the member shall be recorded.

(2) Term deposit accounts shall be evidenced by a receipt or statement that clearly
states the member’s name, the certificate and account number, the date of the deposit,
the amount of the deposit, the term of the deposit, the interest rate, and dates of interest
payments and penalties for early withdrawal.

v. Savings disclosure requirements under Regulation 26 of the Sacco

Societies (Deposit-Taking Sacco Business) Regulations

(1) A Sacco Society shall disclose to its members and potential members, the terms and
conditions for operating each account and legal obligations attendant thereto.

(2) An advertisement in respect of the terms and obligations attendant to an account

offered by a Sacco shall not be misleading or inaccurate and shall not misrepresent a
Sacco Society’s account contract, and shall state the following information to the extent
applicable, clearly and conspicuously—

(a) the minimum amount required to open an account and the minimum balance to
maintain it;

(b) the minimum interest bearing balance;

(c) the interest rate and fees applicable;

(d) the penalty for early withdrawal, if any; and

(e) the maturity of a term account.

(3) For a joint account, disclosures made to any one of the members shall be deemed to
be made to both members.

b. Credit Management for SACCO Societies

i. General lending requirements under Regulation 28 of the Sacco Societies
(Deposit-Taking Sacco Business) Regulations

(1) Except as otherwise provided, these Regulations shall apply to all credit facilities,
including loans, advances and overdrafts to members.
(2) A Sacco Society shall have a written credit policy consistent with the relevant
provisions of the Act, these Regulations and any other applicable laws, which shall
contain the following information—

(i) loaning procedures and their documentation.

(ii) requirements for grant of a loan.

(iii) permissible loan purposes and acceptable types of collateral.

(iv) loan concentration limits.

(v) loan types, interest rates, frequency of payments and conditions.

(vi) maximum loan size per product.

(vii) where collateral is used as security for lending, maximum loan amounts as a
percentage of the values of the same.

(viii) appraisal of the borrower’s ability to repay the loan.

(ix) terms and conditions for insider lending.

(x) maximum loan approval levels for each officer and committees; and

(xi) guaranteeing requirements.

(3) A member may repay a credit facility prior to its maturity in whole or in part on any
business day without being charged full-term interest.

(4) Except as otherwise provided, no director or employee of a Sacco Society, or

immediate family member of a director or employee shall receive anything of value or
other compensation in connection with any loan made by the Sacco Society.

(5) The board of directors of a Sacco Society shall be responsible for ensuring that the
written credit policy remains up-to-date and reflect current lending practices.

(6) A Sacco Society shall provide a sixty days’ written notice to every member affected
by a change in any term disclosed in the loan contract.

(7) A Sacco Society shall provide each borrower, at least once every six months or on
request a statement for each outstanding credit facility that provides adequate detail of
each transaction made during the period.
 ii. Lending disclosures requirements under Regulation 29 of the Sacco
Societies (Deposit-Taking Sacco Business) Regulations

A Sacco Society shall disclose at a minimum the following lending terms and legal
obligations between the parties as applicable—

(a) amount to be financed.

(b) finance charges, including interest rate, fees and any other charges that may be
imposed.

(c) interest computation method (variable, fixed, flat or reducing) and the date interest
charges begin to accrue.

(d) conditions for refinancing of loans.

(e) frequency of issue of statements; and

(f) Collateral required to secure the lending.

iii. Interest rates, fees and penalties under Regulation 30 of the Sacco Societies
(Deposit-Taking Sacco Business) Regulations

(1) Loan interest rates may be established by the management and shall be approved by
the board of directors.

(2) A Sacco Society may levy a late charge in connection with collecting a debt arising
out of an extension of credit which remains unpaid after its due date.

iv. Limit on interest recoverable under Regulation 31 of the Sacco Societies

(Deposit-Taking Sacco Business) Regulations

A Sacco Society shall be limited to the interest it recovers from a debtor with respect to
a delinquent loan up to the limit not exceeding the amount owing when the loan became
delinquent.

v. Security for loans under Regulation 32 of the Sacco Societies (Deposit-

Taking Sacco Business) Regulations

(1) A Sacco Society shall ensure that all loans granted are fully secured.
(2) A Sacco Society shall ensure that no member is allowed to over-guarantee.

(3) A guarantor shall be adequately informed of the nature of the liability prior to
signing an agreement creating guarantor liability.

(4) A Sacco Society shall not grant a loan or credit facility against a member’s shares.

vi. Inter Sacco borrowings under Regulation 33 of the Sacco Societies

(Deposit-Taking Sacco Business) Regulations

A Sacco Society may borrow or lend to another Sacco for purposes of providing funding
for member loans or to finance temporary liquidity short falls provided—

(a) a borrowing Sacco Society shall not exceed the prescribed limit for external
borrowings.

(b) the Sacco Society’s board of directors or on its delegated authority shall approve the
borrowing or lending to other Sacco societies.

(c) the terms and conditions for borrowing or lending shall be evidenced by a signed
written agreement between or among the participating Sacco societies to be approved
by the Authority.

(d) where a Sacco Society borrows for the purposes of on lending to members, it shall
retain a reasonable interest margin between its borrowing and lending rates.

vii. Loan product approval under Regulation 34 of the Sacco Societies (Deposit-
Taking Sacco Business) Regulations

(1) A Sacco Society intending to introduce a new loan product shall seek prior approval
from the Authority.

(2) An application for product approval shall be accompanied by the following

information on the planned scope of operations—

(a) the capacity, including availability of qualified or experienced staff to disburse loans;

(b) the projected demand for the product; and

(c) the market segment that the product targets.

viii. External borrowing and limits on loans under Regulation 35 of the Sacco
Societies (Deposit-Taking Sacco Business) Regulations
(1) A Sacco Society shall not acquire external borrowings in excess of twenty five
percent of its total assets unless the limit has been waived by the Authority.

(2) An application for such a waiver shall contain a detailed explanation demonstrating
the need to raise the limit above twenty five percent of its assets.

(3) The Authority may grant the waiver request if the proposed borrowing limit is not
likely to have any adverse effect on the safety and soundness of the Sacco Society.

(4) A Sacco Society acquiring external borrowing for on-lending to members shall
charge interest at least two percentages higher than the rate it is charged in procuring
the facility.

(5) A Sacco Society shall not grant to any member or permit to be outstanding any loan
such that the aggregate amount in respect of that member at any time exceeds ten
percent of the Sacco Society’s core capital.

7. Management of Co-operative societies

i. General meetings under section 27 of the Co-operative Societies Act

(1) The supreme authority of a co-operative society shall be vested in the general
meeting at which members shall have the right to attend, participate and vote on all
matters.

(2) Subject to subsection (3) a co-operative society shall hold an annual general meeting
within four months after the end of each financial year.

(3) In the first year after registration of a co-operative society, the general meeting shall
be held not later than one month after receipt of the certificate of registration of the co-
operative society and during such meeting, the members shall—

(a) elect the co-operative society’s office bearers for the ensuing year.

(b) determine the maximum borrowing powers of the co-operative society.

(c) consider and approve estimates of income and expenditure for the ensuing financial
year or part thereof.

(d) appoint the co-operative society’s bankers and auditors; and

(e) receive reports and decide upon such other matters as may be necessary for the
conduct of the co-operative society’s business.

(4) A general meeting of a co-operative society shall be convened by giving at least

fifteen days written notice to the members.
(5) At the annual general meeting of a co-operative society, the members shall—

(a) consider and confirm the minutes of the last general meeting;

(b) consider any reports of the Committee or the Commissioner;

(c) consider and adopt audited accounts;

(d) determine the manner in which any available surplus is to be distributed or

invested;

(e) elect the co-operative society’s office bearers for the ensuing year;

(f) determine, where necessary, the maximum borrowing power of the society;

(g) appoint an auditor for the ensuing year; and

(h) transact any other general business of the co-operative society of which notice has
been given to members in the manner prescribed in the by-laws of the co-operative
society.

(6) A special general meeting of a co-operative society may be convened—

(a) by the Committee for the purpose of approving annual estimates or discussing any
urgent matter which in the Committee’s opinion is in the interest of the co-operative
society; or

(b) on receipt of a written notice for such meeting signed by such number of the
members of the co-operative society as may be prescribed in the rules and stating the
objects and reasons for calling the meeting.

(7) If the Committee fails to convene a meeting within fifteen days of receiving the
notice under subsection (6)(b), the members demanding the meeting may themselves
convene the meeting by giving notice to the other members of the co-operative society,
stating the objects and reasons for the meeting and the fact that the Committee has
failed to convene the meeting.

(8) The Commissioner may convene a special general meeting of a society at which he
may direct the matters to be discussed at the meeting.

(9) The chairman or in his absence the vice-chairman or such other person as may be
prescribed in the by-laws of the co-operative society shall preside at a general meeting
of a co-operative society.

(10) The Commissioners may preside at any meeting convened under subsection (8).
 ii. Membership and powers of the Committee under section 28 of the Co-
operative Societies Act

(1) Every co-operative society shall have a Committee consisting of not less than five
and not more than nine members.

(2) The members of the Committee shall elect a chairman and a vice chairman from
among their number.

(3) The Committee shall be the governing body of the society and shall, subject to any
direction from a general meeting or the by-laws of the co-operative society, direct the
affairs of the co-operative society with powers to—

(a) enter into contracts.

(b) institute and defend suits and other legal proceedings brought in the name of or
against the co-operative society; and

(c) do all other things necessary to achieve the objects of the co-operative society in
accordance with its by-laws.

(4) No person shall be a member of a Committee if he—

(a) is not a member of the co-operative society.

(b) is under eighteen years of age.

(c) is unable to read and write.

(d) receives any remuneration, salary or other payment from the co-operative society
save in accordance with this Act.

(e) is a committee member in two other co-operative societies.

(f) being a member of a co-operative society that lends money to its members, lends
money on his own account.

(g) being a member of a co-operative society, which trades in goods or produce, trades
either on his own account or some other person’s account in the same type of goods or
produce;

(h) has not, within thirty days of being appointed, declared his wealth to the
Commissioner in the prescribed manner.
(i) is an undischarged bankrupt.

(j) is of unsound mind.

(k) has been adversely named by the Commissioner in an inquiry report adopted by a
general meeting for mismanagement or corrupt practices while a member of the
Committee.

(l) has been convicted of any offence involving dishonesty or is sentenced to

imprisonment for a term exceeding three months.

(m) has been convicted of any offence under this Act or rules made thereunder.

(n) has any uncleared debt owing to a co-operative society at the end of its financial
year other than in respect of a loan under the provision of any rules made under this
Act.

(o) is a person against whom any amount of money is due under a decree, decision or
order or is pending recovery under this Act.

(5) The Committee may delegate any of its duties under this Act to an officer or officers
of the co-operative society but, nothing in this subsection shall absolve the Committee
from its responsibility to run the affairs of the co-operative society in a proper and
business-like manner.

(6) In the conduct of the affairs of a co-operative society the Committee shall exercise
the prudence and diligence of ordinary men of business and the members shall be held,
jointly and severally liable for any losses sustained through any of their acts which are
contrary to the Act, rules, by-laws or the directions of any general meeting of the co-
operative society.

(7) The Commissioner may suspend from duty any Committee member charged in a
court of law with an offence involving fraud or dishonesty pending the determination of
the matter.

a. Governance of SACCO Societies

i. Annual general meeting to be supreme organ Section 47 of the Sacco
Societies Act

The annual general meeting of a co-operative society as established under the Co-
operatives Societies Act shall be the supreme organ of a Sacco society.
 ii. Minimum capital requirements under Section 29 of the Sacco Societies
Act

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

iii. Minimum liquid assets under Section 30 of the Sacco Societies Act

(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 average monthly balance of its deposits and
borrowings at the close of business on such day as may be prescribed by the Authority.

(3) A Sacco society which does not comply with the requirements of subsection (1),
within such period as the Authority may prescribe, shall be liable to pay, on being called
upon to do so by the Authority, a penalty interest charge not exceeding one percent of
the amount of the deficiency, for every day during which the offence continues.

iii. Prohibited business under Section 31 of the Sacco Societies Act

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

b. Financial Performance & Reporting in SACCO Societies

i. Financial year under Section 39 of the Sacco Societies Act

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

ii. Form of accounts under Section 40 of the Sacco Societies Act

(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 transactions and financial position to enable the Authority to determine
whether the Sacco society has complied with the provisions of this Act and the
regulations made under this Act.

(3) The accounts and other financial records of a Sacco society shall be denominated in
Kenya shillings and shall comply with the international financial reporting standards
and such other requirements as the Authority may prescribe.
(4) The board of directors shall cause the accounts of the Sacco society to be audited
within three months after the close of each financial year.

iii. Submission of accounts to the Authority under Section 41 of the Sacco

Societies Act

(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 liabilities;

(b) an audited profit and loss account; and

(c) a copy of the auditor’s report.

(2) A person who contravenes the provisions of this section commits an offence.

iv. Disclosure requirements under Section 42 of the Sacco Societies Act

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 society.

(b) any advances or credit facilities exceeding such limits of its core capital as may be
prescribed by the Authority; and

(c) any lending to insiders.

v. Display and publication of audited financial statements auditors under

Section 46 of the Sacco Societies Act

(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 society which does not comply with the provisions of this section shall be
liable to pay to the Authority such penalty, not being less than one hundred thousand
shillings, as may be prescribed by the Authority.

c. Investments Policy for SACCO Societies

i. Investments by Sacco societies under Section 38 of the Sacco Societies Act

(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, obligations or other accounts of deposit-taking institutions under the

Banking Act (Cap. 488);

(c) shares, stocks, deposits in, loans to or other obligations of any Sacco society or co-
operative society.

(2) An investment made under this section shall not in the aggregate, exceed such
proportion of the total core capital and deposits of a Sacco society as the Authority may
prescribe.

(3) A Sacco society shall not purchase or acquire any land or any interest or right
therein except as may be reasonably necessary for the purpose of conducting its
deposit-taking business and where such investments do not exceed such proportion of
the total assets of the society as the Authority may prescribe.

d. Regulation & Supervision of SACCO Societies

i. Regulation and supervision of Sacco societies under Section 48 of the Sacco
Societies Act

(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 shall—

(a) prescribe prudential standards to be adhered to by Sacco societies.

(b) undertake inspections or require a Sacco society to submit information and reports
on its financial affairs of the deposit-taking business to enable the Authority to evaluate
the society’s financial condition.

(c) require or oversee Sacco societies’ workout plan to avert or alleviate financial
difficulties.

(d) prescribe the maximum number of years an external auditor may serve the same
Sacco society.

(e) exercise such incidental powers as may be necessary or requisite to enable it to

effectively carry out its functions under this Act.
 ii. Powers of the Authority to inspect societies under Section 49 of the Sacco
Societies Act

(1) The Authority may, at any time and from time to time, and shall, if so directed by the
Minister, cause an inspection to be made by any person authorized by the Authority in
writing of any Sacco society and of its books, accounts and records.

(2) The Authority shall assist any investigative authority regarding matters of suspected
fraud or malpractice in Sacco societies either by identification of such matters for
referral or at the request of such authority.

(3) Where an inspection is made under subsection (1), the society concerned and every
officer or employee thereof shall produce and make available to the person making the
inspection, all books, accounts, records and other documents of the Sacco society and
such correspondence, statements and information relating to the society as the person
making the inspection may require, and within such period as he may direct in writing.

(4) A person who fails to produce any books, accounts, records, documents,
correspondence, statements or the information required under subsection (2), within
the period specified in the relevant direction, commits an offence.

(5) The person making the inspection shall prepare and submit a report to the
Authority, and the report shall state—

(a) any breach or contravention of any of the provisions of this Act or any regulations
made under this Act;

(b) any irregularity in the manner of conduct of the inspected society;

(c) any mismanagement of a Sacco society; and

(d) any other matter relating to a Sacco society not consistent with sound and prudent
business practice.

(6) A copy of the report of the findings of an inspection under subsection (1) shall be
submitted by the Authority to the Commissioner.

(7) A report of the findings of an inspection under subsection (1) shall, in addition to
any action that may be taken under the Co-operative Societies Act, 1997 be presented
by the Authority to the board of directors of the Sacco society.

iii. Powers of the Authority to advise and direct under Section 50 of the Sacco
Societies Act

(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 of any regulations made thereunder or
in any manner detrimental to or not in the best interest of its members or members of
the public; or

(b) a Sacco society, any of its officers or any other person participating in the
management of the society is engaged in any practice likely to occasion a contravention
of any of the provisions of this Act or any regulations made thereunder, or any other
Act, the Authority may—

(i) give advice and make recommendations to the Sacco society with regard to the
conduct of its business generally.

(ii) issue directions regarding measures to be taken to improve the management or

business methods of the society or to secure or improve compliance with the
requirements of this Act, any regulations made thereunder or any other written law or
regulations.

(iii) in any case to which paragraph (b) applies, issue directions to the Sacco society,
officer or other person to cease such practice.

(iv) appoint a person, suitably qualified and competent in the opinion of the Authority,
to advise and assist the Sacco society generally or for the purposes of implementing any
directions under subparagraphs (ii) and (iii).

(3) The advice of a person appointed under subsection 1(b)(iv) shall have the same
force and effect as a direction made under subsection 1(b)(ii) and (iii) and shall be
deemed to be a direction of the Authority under this section.

(4) The Authority shall, before issuing a direction under subsection (1), serve upon the
-Sacco society, officer or other person, a notice of such intent specifying the reasons
therefor and requiring the Sacco society, officer or other persons, within such period as
may be specified in the notice, to show cause why such direction should not be issued.

(5) A Sacco society which receives a direction under this section shall comply with the
direction within such period as may be specified in the direction and, if so required,
shall produce evidence that it has done so.

(6) The Authority may issue directions to a Sacco society generally, and where
appropriate provide exceptions to those directions to be detailed at time of issuance for
the better carrying out of its functions under this Act and in particular, with respect to—

(a) the prudential standards to be adhered to by a Sacco society in the conduct of its
business in Kenya; and
(b) regulations to be adhered to by Sacco societies in order to maintain a stable and
efficient deposit-taking Sacco movement and financial system.

(7) A person who fails to comply with any direction under this section commits an
offence and shall, in addition to the penalty prescribed under this Act, be liable to such
additional penalty as may be prescribed for each day or part thereof during which the
offence continues.

(8) The Authority may impose minimum standards on significant members and officers
of a Sacco society as prescribed.

iv. Supervisory enforcement actions under Section 51 of the Sacco Societies

Act

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 detrimental to or not in the best interests of its members or
members of the public, or a Sacco society is undercapitalized, the Authority shall—

(a) D - restrict, suspend or prohibit the payment of dividends by the society.

(b) P - prohibit the conversion of any profits of the society into capital.

(c) S - direct the suspension or removal of any officer involved in such conduct from
the service of society.

(d) R - require the society to reconstitute its board of directors.

(e) A - withhold branch or other corporate approval with respect to such society.

(f) R - undertake regular inspections of that society.

(g) order the society to submit to the Authority within forty-five days a capital
restoration plan to restore the society to capital adequacy as prescribed in section 29 or
in the case of issues unrelated to capital such as violations of law, a plan to resolve all
deficiencies to the satisfaction of the Authority.

(h) prohibit the society from awarding any bonuses, or increments in salary,
emoluments and other benefits of all directors and officers of the society.

(i) appoint a person suitably qualified and competent in the opinion of the Authority to
advise and assist the society in designing and implementing the capital restoration plan
or other corrective action plan and the person appointed shall regularly report to the
Authority on the progress of the plan.
(j) impose restrictions on growth of assets or liabilities of the society as it deems fit;

(k) restrict the rate of interest on deposits payable by the society to such rates as the
Authority shall determine; and

(l) order the society to do any or take such other action that the Authority may deem
necessary to rectify a capital deficiency or other weakness.

(m) impose financial penalties on the society.

(n) issue an order placing the society under statutory management.

(o) restrict the withdrawal of deposits from the society.

(p) institute legal proceedings against any officer, director, committee member,
employee or agent of the society;

(q) issue such administrative directives as the Authority may deem necessary.

v. Powers of the Authority to intervene in management under Section 52 of

the Sacco Societies Act

(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 exclusion of the board of directors, including the use of the
corporate seal of the society.

(b) appoint a competent person familiar with deposit-taking business to its board of
directors, to hold office as a director for a period not exceeding twelve months, who
shall not be removed from office except with the prior approval of the Authority; and

(c) by notice in the Gazette, revoke or cancel any existing power of attorney, mandate,
appointment or other authority by an institution in favour of any officer or employee or
any other person.

(2) A person appointed to manage a Sacco society under this section shall hold office for
a period not exceeding six months but the High Court may, on the application of the
Authority, extend such period as it may deem necessary.

e. Deposit Guarantee Fund Requirements

 i. Establishment of the Deposit Guarantee Fund under Section 55 of the Sacco
Societies Act

(1) There is hereby established a Fund to be known as the Deposits Guarantee Fund.

(2) The Deposit Guarantee Fund shall vest in a Board of Trustees appointed under
section 56.

(3) The moneys constituting the Deposit Guarantee Fund shall be invested by the Board
of Trustees in government securities and in deposits with banks as directed by the
Board of Trustees.

ii. The Board of Trustees under Section 56 of the Sacco Societies Act

(1) The Board of Trustees shall consist of—

(a) the chairperson who shall be elected from among the members appointed under
subsection (2)(b) and (f);

(b) C - the chairman of the Board of the Authority;

(c) P - the Permanent Secretary to the Treasury or his representative;

(d) G - the Governor of Central Bank or his representative;

(e) C - the Commissioner or his representative;

(f) 4 - four members nominated by Sacco societies and appointed by the Minister;

(g) C - the chief executive officer of the Authority who shall be an ex officio member and
secretary to the Board of Trustees.

(3) The Board of Trustees shall be responsible for the management of the Deposit
Guarantee Fund and shall in particular—

(a) O - provide oversight function in the management of the Deposit Guarantee Fund;

(b) M - manage and apply the Deposit Guarantee Fund in accordance with this Act;

(c) C - levy contributions for the Deposit Guarantee Fund in accordance with this Act.

iii. Sources of the Deposit Guarantee Fund under Section 58 of the Sacco
Societies Act

The Deposit Guarantee Fund shall consist of—

(a) C - moneys contributed to the Deposit Guarantee Fund by Sacco societies in
accordance with section 60;

(b) I - income investment interest accruing to the Deposit Guarantee Fund;

(c) B - moneys borrowed for the purposes of the Deposit Guarantee Fund; and

(d) D - moneys received as donations or grants to the Deposit Guarantee Fund.

iv. Protection of deposits under Section 59 of the Sacco Societies Act

The Deposit Guarantee Fund shall provide protection for members’ deposits, but not
shares, up to an amount of one hundred thousand shillings in respect of each
member.

The amount being the aggregate credit balance of any accounts maintained by the
member to a Sacco society, less any liability of the member to the Sacco society,
shall be a protected deposit.

A member’s deposits shall be used to offset any liabilities owed by the Sacco society
under liquidation including any liability under a loan guarantee by such member.

If a member has outstanding loans or credit facilities owing to a Sacco society, the
member or guarantor’s deposits as the case may be, shall offset the loan or credit facility
before the member or guarantor may receive any net from the members’ or guarantors’
protected deposits.

The Board of Trustees may refuse to make any payments to any person who in its
opinion had any responsibility for, or may have benefited directly or indirectly from
the circumstances leading to, the Sacco society becoming insolvent.

The Board of Trustees may at any time cause inspection to be carried out to
ascertain the type, number and value of the protected deposits in any Sacco society.

(10) Notwithstanding the provisions on any other written law for the time being in
force—

(a) a claim for payment of a protected deposit by a creditor of a Sacco society shall not
be brought after the expiry of two years from the date of publication of commencement
of such payment by the Board of Trustees;

(b) a claim for payment of a dividend by a creditor of Sacco society shall not be brought
after the expiry of one year from the date of commencement of such payment by the
Board of Trustees.
(11) Subsection (10) shall not apply to a person who has, for reasons beyond his control
and to the satisfaction of the Board of Trustees, been unable to make his claim within
the said period.

v. Contribution to the Deposit Guarantee Fund under Section 60 of the Sacco

Societies Act

(1) Every Sacco society shall be a contributor to the Deposit Guarantee Fund and shall
pay into the Deposit Guarantee Fund such annual amount, and at such times, as the
Board of Trustees may determine in consultation with the Minister from time to time by
order published in the Gazette.

vi. Annual report under Section 61 of the Sacco Societies Act

The Board of Trustees shall, within three months after the close of each financial year,
submit to the Minister a report on the operations of the Deposit Guarantee Fund for that
year.

8. Charges levied by Co-operatives

PARTNERSHIPS

PARTNERSHIP ACT

Section 2 of the Partnership Act – Definition

Partnership is the relation which subsists between persons carrying on a business

in common with a view of profit.

Section 4 - Liability of partners

(1) Each partner in a partnership has unlimited liability.

(2) To be a limited partnership, a partnership shall have—

G - one or more general partners, each with unlimited liability; and

L - one or more registered limited partners, each with limited liability.

Section 5 - Variation of partnership agreement

A partnership agreement may, if it so provides, be varied—

B - Before the formation of the partnership, with the agreement of all proposed
partners; or

A - After the formation of the partnership, with the agreement of all existing partners.

Section 7 - The carrying on of partnership business

(1) Each partner in a partnership shall have responsibility for the business of the
partnership.

(2) A partnership shall be capable of—

S - Suing and being sued in its own name.

C - Entering into contracts

P - Owning or holding property for the purposes of the business of the partnership; and

C - Providing continuity for the partnership business despite a change in the partners.

(3) Each partner shall be an agent of the partnership for the purpose of the business
of the partnership.

(4) A change in the nature of the business of a partnership shall require the
agreement of all the partners.

Section 11 - Duty of disclosure on forming or joining a partnership

Section 12 - Share of profits and losses

E - A partner is entitled to share equally in the profits of the partnership and is liable
to contribute equally towards the losses incurred by the partnership in equal
proportions.

B - A partner is not entitled to a share in the profits of the partnership, and is not
liable to contribute to any losses incurred by the partnership, before he became a
partner.

E - The estate of a partner who dies is liable for debts and obligations incurred by
the partnership after becoming partner.
LIMITED PARTNERSHIP ACT

Section 3 of the Limited Partnership Act – Definition & Constitution

20 - A limited partnership shall not consist in any case of more than twenty persons,

G - must consist of one or more persons called general partners, who shall be liable
for all debts and obligations of the firm

L - one or more persons to be called limited partners, who shall contribute a sum or
sums as capital or property valued at a stated amount, and who shall not be liable
for the debts or obligations of the firm beyond the amount so contributed.

D - A limited partner should not, draw out or receive back any part of his
contribution, lest he becomes liable for the debts and obligations of the firm up to
the amount so drawn out or received back.

B - A body corporate may be a limited partner.

Section 4 – Limited Partnership must be registered lest it is deemed to be a

general partnership.

Section 5 – Modifications of General Law

B - Do not have power to bind the firm.

I - May by himself or his agent at any time inspect the books of the firm and examine
into the state and prospects of the partnership business.

M - Limited partner should not take part in the management of the partnership
business.

A - And may advise with the partners thereon.

L - If a limited partner takes part in the management of the partnership business he

shall be liable for all debts and obligations of the firm incurred while he so takes part in
the management as though he were a general partner.

 A limited partnership shall not unless specifically provided in the partnership

agreement be dissolved by the death or bankruptcy of a limited partner, and the
lunacy of a limited partner shall not be a ground for dissolution of the
partnership by the court unless the lunatic’s share cannot be otherwise
ascertained and realized.
Subject to any agreement expressed or implied between the partners—

M - Any difference arising as to ordinary matters connected with the partnership

business may be decided by a majority of the general partners.

A - A limited partner may, with the consent of the general partners, assign his
share in the partnership, and upon such an assignment the assignee shall become a
limited partner with all the rights of the assignor.

D - The other partners shall not be entitled to dissolve the partnership by reason of
any limited partner suffering his share to be charged for his separate debt.

I - A person may be introduced as a partner without the consent of the existing

limited partners.

D - A limited partner shall not be entitled to dissolve the partnership by notice.

Section 7 – Registration

The registration of a limited partnership shall be effected by sending by registered post

or delivering to the registrar of companies a statement signed by the partners
containing the following particulars—

N - The firm name.

N - The general nature of the business.

P - The principal place of business.

P - The full name of each of the partners.

T - the term, if any, for which the partnership is entered into, and the date of its
commencement.

S - A statement that the partnership is limited, and the description of every limited
partner as such.

S - The sum contributed by each limited partner, and whether paid in cash or how
otherwise.

LIMITED LIABILITY PARTNERSHIP

Section 2 of the Limited Liability Partnership Act defines a limited liability

partnership as a partnership registered under the Act.
Section 2 of the Limited Liability Partnerships Act defines a limited liability
partnership agreements as either an implied or express agreement between the
partners of the partnership or between the partnership and its partners that
defines the rights and duties of the partners.

Section 4 of the Limited Liability Partnership Act entitles the Registrar of Limited
Liability Partnerships to refuse an application if he deems that not enough information
has been provided about the proposed entity.

Section 5 – Electronic Lodgement of documents with registrar

Section 6 – Limited Liability Partnership takes on a separate legal personality and is a

body corporate with perpetual succession.

Section 7 – Limited Liability Partnership is an entity capable of:

1. Suing and being sued

2. Holding, disposing and owning movable and immovable property
3. Doing any other lawful act

Section 8 – Partnership Act applies to Limited Liability Partnerships in so far as it is not

provided for under the act.

Section 9 – Both natural and body corporates can be partners in a Limited Liability
Partnership, however, Trade Unions cannot.

Section 10 - Liability of partners in limited liability partnership to be limited

A limited liability partnership shall be solely obligated to an issue arising from contract,
tort or otherwise.

A person is not personally liable, directly or indirectly, for an obligation referred to in

subsection (1) only because the person is a partner of the limited liability partnership.

A partner may be held personally liable in tort for the wrongful act or omission of that
partner.

A partner is not personally liable for the wrongful act or omission of another partner of
the limited liability partnership.

If a partner of a limited liability partnership is liable to a person other than another

partner of the partnership as a result of a wrongful act or omission of that partner in the
course of the business of the limited liability partnership or with its authority, the
partnership is liable to the same extent as that partner.
The liabilities of a limited liability partnership are payable out of the property of the
limited liability partnership.

Section 11 - Power of partner to bind the limited liability partnership

A partner of a limited liability partnership is the agent of the limited liability

partnership.

Notwithstanding subsection (1), a limited liability partnership is not bound by anything

done by a partner in dealing with a person if—

a. The partner has in fact no authority to act for the limited liability partnership by
doing that thing; and
b. The person knows that that person has no authority or does not know or believe
that person to be a partner of the limited liability partnership.

If a person has ceased to be a partner of a limited liability partnership, the former

partner is, in relation to a person dealing with the partnership, to be treated as still
being a partner of the partnership, unless—

1. The person has notice that the former partner has ceased to be a partner of the
limited liability partnership; or
2. The former partner has ceased to be a partner of the limited liability partnership
and notice of that fact has been delivered to the Registrar.

Section 13 - How a partner ceases to be a member of a limited liability

partnership

A partner of a limited liability partnership may cease to be a partner—

1. A- By complying with the requirements of the relevant limited liability

partnership agreement; or
2. 90 - In the absence of such an agreement, by giving not less than ninety days’
notice to the other partners of the intention of the partner to resign as partner.
3. D - A partner of a limited liability partnership also ceases to be a partner on the
partner’s death or on dissolution of the partnership.

If a person ceases to be a partner of limited liability partnership, then, unless otherwise

provided for in the limited liability partnership agreement (if any), that person, or the
person’s personal representative, or the liquidator (if any) of the partner’s estate, is
entitled to receive from the limited liability partnership an amount —
 1. (a)  Equal to the person’s capital contribution to the limited liability partnership
and the person’s right to share in the accumulated profits of the limited liability
partnership after the deduction of losses of the limited liability partnership; and
2. (b)  determined as at the date the person ceased to be a partner.

 A person who was formerly a partner of a limited liability partnership, or, if

the person has died, the person’s personal representative or a liquidator is
not entitled to interfere in the management of the partnership.

Section 15 - Partner may assign interest in limited liability partnership

A partner in a limited liability partnership may assign the whole or any part of the
partner’s interest in the partnership but only to the extent that the assignee becomes
entitled to receive distributions from the partnership that the partner would otherwise
have been entitled to receive.

Section 17 - Requirements for registering limited liability partnerships

A statement complies with this subsection if it is signed by each person who proposes to
be a partner of the proposed limited liability partnership and contains the following
information—

1. N - The name of that partnership.

2. N - The general nature of the proposed business of that partnership.
3. O - The proposed registered office of that partnership.
4. P - The name, identity document (if any), nationality, and usual place of
residence of each person who will be a partner of the partnership;

 If any of the persons referred to in paragraph (d) is a body corporate—

N - The body’s corporate name

I - the body’s place of incorporation or registration

N - the body’s registration number (if any); and

O - The registered office of the body to which all communications may be addressed

M - The name, identity document (if any), nationality and the usual place of residence of
each person who will be a manager of the partnership and, if any such person is a body
corporate—

1. The corporate name, place of incorporation or registration number (if any)

of the body; and
 2. The registered office of the body to which all communications may be
addressed; and

O - Such other information concerning the proposed limited liability partnership as

may be prescribed by the regulations.

Section 20 - Requirements for names of limited liability partnerships

The name of a limited liability partnership shall end with—

1. E -the expression “limited liability partnership”; or

2. A- the abbreviation “llp” or “LLP”