Co-operative Societies Act, 1970

Chapter 397

Co-operative Societies Act, 1970

This is the latest version of this Act.

Citation: Chapter 397
Date: 31 December 1996
Language: English

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Zambia

Co-operative Societies Act, 1970

Chapter 397

Published on 1 March 1972
Commenced on 1 March 1972
[This is the version of this document at 31 December 1996.]
[This legislation has been revised and consolidated by the Ministry of Legal Affairs of the Government of the Republic of Zambia. This version is up-to-date as at 31st December 1996. All subsequent amendments have been researched and applied by Laws.Africa for ZAMBIALII.]

[63 of 1970; 13 of 1994]An Act to provide for the registration, inspection, examination and supervision of co-operative societies which belong to the people who use their services, the control of which rests equally with all their members, and the gains from which are distributed among the members in proportion to the use they make of these services or their interest in their society; to repeal the Co-operative Societies Ordinance; to provide that co-operative societies registered under the Act repealed by this Act shall continue in existence and in operation as if registered under this Act; to encourage co-operative development by the provision of services to assist the organisation and operation of various kinds of co-operative societies to meet the economic and social needs of their members on a self-help basis; and to provide for all matters incidental to the foregoing.

Part I – Preliminary

1. Short title

This Act may be cited as the Co-operative Societies Act.

2. Interpretation

In this Act, unless the context otherwise requires—"agricultural product" means any product of agriculture, including grain and seed, maize, groundnuts, cotton, tobacco and other field crops, livestock and livestock products, fruit and fruit products, vegetables and vegetable products, honey and any article wholly or partially processed or otherwise derived therefrom;"agricultural requisites" means supplies needed for agricultural production, and includes building materials, fertiliser, dip, veterinary preparations, seed, animal feeding stuffs, breeding stock, draught animals, planting material, farm implements, hand tools, fencing materials, petroleum products, and other supplies and equipment normally used in agricultural production;"board of directors" means the governing body of a society to whom the supervision and the direction of its affairs are entrusted by the members;"by-laws" means the registered by-laws of a society, having been passed by the members and approved by the Registrar, and includes amendments thereto;"co-operative principles", except as otherwise provided in this Act, means the following principles and methods used in the operation and administration of a society:(i)each member or delegate has one vote;(ii)there is no voting by proxy;(iii)race, creed or political beliefs are no bar to voluntary membership and, subject to this Act, membership is open to all who can use the services of a society;(iv)the services of a society are mainly for its members;(v)the dividend on share capital shall not exceed six per centum per annum;(vi)the services are available as nearly as possible at cost, allowing for the fact that, except where otherwise provided in this Act, the rules or the by-laws, the savings arising from yearly operations are paid to members, or members and non-member patrons, in the form of patronage bonus, in proportion to the use made of the services, or to the supply of labour or other contributions made by members and non-member patrons;"co-operative union" means a society, the membership of which is comprised of societies operating in the same general locality;"delegate" means—(a)a representative of a society, which is itself a member of another society, the meetings of which such representative has been elected or appointed to attend, and at which he is entitled to vote under the by-laws of that other society;(b)a representative of members residing in a particular district, or of a particular group or class of members, who has received a mandate to vote at a meeting of their society from such members, group or class in accordance with the provisions of the by-laws of the society;"dividend" means a member's share of the net surplus divided amongst the members in the same proportion as the paid-up share capital held by them in the society;"federation" mean a society the membership of which is restricted to societies, co-operative unions and federations thereof;"member" means a person who, or other society which, in terms of the by-laws of a society is entitled to vote at meetings of that society;"natural product" means any product of forest, lake, river, mine or quarry, and any article wholly or partially derived therefrom, and includes fish and fish products, lumber and wood products, fuel and construction materials;"net surplus" means such portion of the total income received by or accrued to a society during any year as remains after deductions have been made for all expenditure incurred during that year, and adequate provision has been made for depreciation, bad debts, tax liability and reserve funds;"non-member patron" means a person, not being a member, who uses the services of a society to such extent as may be provided for in the by-laws;"officer" means Chairman, Vice-Chairman, member of the board of directors or of any committee, Secretary, Treasurer, employee or other person, empowered under this Act, the rules or the by-laws to give direction or supervision respecting the business of a society;"patronage bonus" means a share of the net surplus of a society divided amongst the members or, if the by-laws so provide, amongst the members and non-member patrons, in proportion to the use made of the services of the society, or the value of labour provided or other contributions made to the society;"Registrar" means the Registrar of Co-operative Societies appointed under section nine;"rules" means the rules made under this Act;"society" means a co-operative society registered under this Act or heretofore registered as such under any former written law;"special resolution" means a resolution passed by a three-quarter majority of the members, or delegates, or members and delegates, as the case may be, present at a meeting of a society called for the purpose, and of which at least twenty-one clear days' notice in writing was given together with a copy of the proposed resolution.

Part II – Responsibilities of the Minister

3. Encouragement of co-operative development

The Minister shall take such measures as he deems advisable for the encouragement generally of co-operative development for economic, social and cultural purposes and human advancement on the basis of self-help and, in particular, but without limiting the generality of the foregoing, for the encouragement of the organisation of co-operative societies as a means of—

(a)improving the economic situation of their members;

(b)contributing to the economy an increased measure of democratic control of economic activity;

(c)increasing personal and national capital resources by the encouragement of thrift, the prevention of usury and the wise use of credit;

(d)increasing incomes and employment by a fuller utilisation of resources, including the bringing of new land into productive use, the marketing and processing of agricultural and natural products, the development of local industries and processing of raw materials;

(e)improving social and cultural conditions and, where appropriate, providing supplementary services in housing, health, education and communications;

(f)raising the level of general and technical knowledge of members of societies.

4. Responsibilities of Minister

In encouraging co-operative development and in carrying out the provisions of this Act, the Minister shall take, authorise or approve such measures as he deems necessary to—

(a)assist the organisation of co-operative societies among persons or groups who desire to provide themselves with, or to market, commodities or services, or both, on a co-operative self-help basis;

(b)facilitate the financing of societies, where necessary for their establishment and operation, by the provision of, or arrangement for, loans, guarantees of loans, or otherwise;

(c)provide for such advice as may be necessary to assist officers and members of societies to achieve their objects;

(d)institute inquiry into and collect, classify and analyse information and statistics relating to societies and co-operative development;

(e)establish or facilitate the establishment of a research service or services for inquiry generally into the operation of societies, and for investigation and analysis of economic, social and other problems as may be deemed advisable to lead to the encouragement of new or improved methods of co-operative development, including—

(i)production of agricultural or natural products and the processing and marketing of such products;

(ii)industrial development, manufacturing and marketing and sale by wholesale;

(iii)credit, investment and business finance;

(iv)wholesaling and retailing of goods and services;

(v)community and welfare services on a co-operative basis;

(f)issue from time to time such reports, circulars and other publications relating to societies and co-operative development as may be deemed advisable;

(g)provide or authorise such other service as may be necessary in carrying out the provisions of this Act.

5. Information on co-operation

The Minister shall disseminate, or arrange for the dissemination of, information relating to co-operation and co-operative development in such manner and form as may be found best suited to promote interest in and understanding of co-operative principles and practices with a view to the encouragement of the organisation of co-operative societies based on self-help.

6. Persons required to furnish information to Minister

(1)All officers of societies to which this Act applies shall furnish the Minister with such information as he may from time to time require.

(2)An officer who fails to comply with a request of the Minister under subsection (1), or who knowingly makes a statement, false in any material particular, in any information furnished to the Minister, shall be guilty of an offence.

7. Annual report on societies

Within a period of six months after the close of the financial year, an annual report respecting the operations of societies registered under this Act shall be prepared under the direction of the Minister and included in the annual report of the Minister laid before the National Assembly.

Part III – Public officers

8. Director

(1)There shall be a Director of Co-operative Societies for the purposes of this Act, who shall be a public officer and who shall be responsible for providing and administering the services required by societies for their organisation, registration, operation and advancement and for carrying out the provisions of this Act.

(2)There may be appointed a Deputy Director of Co-operative Societies and such other public officers as may be necessary to assist the Director in carrying out his functions.

9. Registrar

(1)There shall be a Registrar of Co-operative Societies who shall be a public officer and who shall exercise such powers and perform such duties as are prescribed in this Act.

(2)There shall be a Deputy Registrar of Co-operative Societies (hereinafter referred to as the "Deputy Registrar") and one or more Assistant Registrars for the purposes of this Act, who shall be public officers and who shall exercise such functions and perform such duties as may be prescribed by or under this Act.

(3)The Registrar may, subject to the provisions of this Act and to the general or special directions of the Director of Co-operative Societies, delegate any of his functions under this Act to the Deputy Registrar or to an Assistant Registrar.

(4)Any power conferred or duty imposed by or under this Act on the Registrar, or delegated to him by the Director of Co-operative Societies, may be exercised or carried out by the Deputy Registrar if the Registrar is unable to exercise that power, or himself carry out that duty, due to illness or absence.

Part IV – Registration and organisation of co-operative societies

10. Procedure for registration

(1)Any ten or more persons, or two or more societies, desiring to associate themselves together to form a society in accordance with co-operative principles, with or without capital divided into shares, may, on payment of the prescribed fee and subject to the approval of the Registrar, be registered under this Act with limited liability.

(2)An application for registration as a society shall be made to the Registrar in the prescribed form and be subject to the rules.

(3)Where the application is made by two or more societies, at least two duly authorised officers of each society shall sign the application which shall be accompanied by the resolution of each society concerned approving the application for registration.

(4)Each application for registration shall be accompanied by copies of the by-laws of the proposed society.

11. Requirements before registration

(1)Before approving registration, the Registrar may require such additional information about the proposed society as he deems necessary, including—

(a)the economic or other need for the organisation of the society;

(b)the educational and advisory work respecting co-operative principles and the organisaton and operations already being carried on amongst the applicants for registration and other persons expected to become members;

(c)the number of persons expected to become members upon the commencement of operations;

(d)whether the capital to be furnished initially by the applicants for registration and other persons expected to become members is sufficient for the commencement of operations;

(e)the availability of officers capable of directing and managing the affairs of the society, and of keeping such records and books of account for the society as the Registrar may require.

(2)If, as a result of the information provided to him under subsection (1), the Registrar is of the opinion that the applicants for registration and other persons expected to become members require more educational and advisory work respecting co-operative principles and the organisation and operation of a society, or the expected membership appears to be too small for the satisfactory commencement of operations, or more time is necessary to raise the capital initially required, or that more training is advisable for persons expected to become officers, he may delay his approval of registration in order to prescribe more educational and advisory work, or discussion of the objects of the society with more persons who could be expected to benefit from membership, or more time to raise the capital initially required, or more training, as the case may be.

(3)If, as a result of the information provided to him under subsection (1), or notwithstanding any action taken under subsection (2), the Registrar is of the opinion that registration is not economically advisable or he is otherwise unwilling to approve registration, he shall give specific reasons therefor to the Minister and to the applicants for registration.

(4)An appeal against refusal to register the society shall lie to the Minister within ninety days of such refusal.

12. Certificate of registration

(1)If the Registrar approves registration, he shall issue a certificate of registration to the society, together with a copy of the by-laws certified by him as having been duly approved and registered.

(2)A certificate or registration signed by the Registrar shall be conclusive evidence that the society therein mentioned is duly registered, unless it is proved that the registration of the society has been cancelled.

(3)No society shall be registered under a name identical with that of another society or so nearly resembling the same as to be likely to deceive.

(4)The word "limited" shall be the last word in the name of every society and, except as otherwise provided in this Act, the word "co-operative" shall form part of the name of every society.

13. Societies to be bodies corporate

The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal and with limited liability, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings, and to do all things necessary to achieve its objects in the exercise of the powers available to it under the provisions of this Act, the rules and its by-laws.

14. Conversion of a company into a society

(1)A company registered under the Companies Act (or any Act which replaces it) may, by a special resolution as defined in that Act (or replacing enactment), determine to convert itself into a society.

(2)Such a resolution shall be accompanied by copies of the by-laws of the proposed society therein referred to, and shall appoint ten persons, being members of the company, who together with the Secretary shall sign the by-laws, and who may either be authorised to accept any alterations made by the Registrar therein without further consultation with the company, or may be required to lay all such alterations before the company in general or special meeting as the resolution may direct.

(3)A copy of such resolution, signed by the Chairman of the meeting at which it was passed and the Secretary, shall, with the by-laws, be sent to the Registrar, who thereupon shall deal with the resolution as an application for registration of a society under this Act.

(4)After the receipt of such resolution and such by-laws and of such information as he may require under section eleven, the Registrar may—

(a)if satisfied that the company will be operated in accordance with co-operative principles, register the company as a society; or

(b)refuse registration, giving specific reasons therefor to the company and to the Minister as required under section eleven.

(5)An appeal against refusal to register the company as a society shall lie to the Minister within ninety days of such refusal.

(6)

(a)Upon the registration of a company as a society, the Registrar shall issue a certificate of registration to the society together with a copy of the by-laws certified by him as having been duly approved and registered.

(b)A copy of such resolution under the seal of the company together with the certificate issued as aforesaid shall be sent by the company's secretary to the Registrar of Companies and, upon his registering that resolution and certificate, the conversion shall take place; the Registrar of Companies shall notify the said Secretary in writing of the date and time of this registration.

(c)The name under which any company is registered under these provisions as a society shall not include the word "company".

(d)Subject to paragraph (e), upon the conversion of a company into a society, the registration of the company as such shall become void and shall be cancelled by the Registrar of Companies.

(e)The registration of a company as a society shall not affect any right or claim for the time being subsisting against the company nor any penalty for the time being incurred by the company; and—

(i)for the purposes of enforcing any such right, claim or penalty, the company may be sued and proceeded against in the same manner as if it had not been registered as a society;

(ii)any such right or claim and the liability to any such penalty shall have priority as against the property of the society over all other rights or claims against or liabilities of the society.

[Cap. 388]

15. Limited liability

Every member shall be individually liable to the creditors of a society for the debts and liabilities of the society in a sum not exceeding the amount, if any, unpaid on the shares allotted to him, if any, or on his membership fee, as the case may be, until the whole amount of his shares or membership fee has been paid up.

16. Display of registered name

Every society shall cause its registered name to be painted or affixed, and to be kept painted or affixed, in a conspicuous position and in letters easily legible, on the outside of its registered office and every other office or place in which the business of the society is carried on, and shall have that name engraved in legible characters on its seal, and mentioned in legible characters—

(a)in all notices, advertisements and other official publications of the society;

(b)in all business letters of the society;

(c)in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods, purporting to be signed by or on behalf of the society;

(d)in all bills, invoices, receipts and letters of credit of the society.

17. Dealers or traders not to register under this Act

Notwithstanding the other provisions of this Act, a group of persons who desire to associate themselves together in trade or business primarily for gain, without provision for the distribution of profits amongst customers in proportion to patronage, shall not be registered as a society.

18. Registrar may require societies to form or join a co-operative union

Where the Registrar, after investigation, considers it to be in the interests of the members of a society or necessary to achieve the objects of a society, he may, by notice in writing served on the societies or society, as the case may be—

(a)recommend or require any two or more societies to form and apply for the registration of a co-operative union; or

(b)recommend or require any society to join a co-operative union.

19. Powers of societies

Subject to this Act, the rules and the by-laws, a society shall have, as ancillary and incidental to the object or objects set forth in its by-laws, the powers contained in the First Schedule, but nothing shall preclude a society from including in its by-laws, subject to the approval of the Registrar, any powers in addition to, or from excluding or modifying, those mentioned in the First Schedule.

20. By-laws

The by-laws of every society shall include provision in respect of the matters mentioned in the Second Schedule.

21. Amendments to by-laws

(1)The by-laws of a society may be amended by cancellation, alteration or addition thereto by a resolution of a two-thirds majority of members or delegates, or members and delegates, as the case may be, present at a duly called general meeting.

(2)Save as hereinafter provided, no amendment to the by-laws shall be valid until the amendment has been registered under this Act, for which purpose three copies of the amendment signed by the Chairman of the last-mentioned meeting and the Secretary shall be forwarded to the Registrar.

(3)If the Registrar is satisfied that the amendment is not contrary to this Act and the rules, and if he otherwise approves it, he may register the amendment.

(4)Where it is deemed expedient that the members or delegates, or members and delegates, to be present at a meeting of the society at which a proposed amendment to the by-laws is to be submitted for their approval, should take action at the same meeting towards implementing the proposed amendment, the Registrar may approve the proposed amendment prior to the meeting, and, if the proposed amendment is adopted as it stands, it shall have immediate force and effect:Provided, however, that as soon as possible thereafter copies of the resolution containing the amendment shall be forwarded to the Registrar for registration in accordance with subsection (2).

(5)After approval by the Registrar, a copy of every amendment, certified under the hand of the Registrar as approved and registered, shall be returned by him to the society.

22. Copy of Act, rules and by-laws to be open to inspection

Every society shall keep a copy of this Act, the rules, its by-laws and a list of its members open to inspection, free of charge, at all reasonable times at the registered office of the society.

23. Reserve fund and distribution of net surplus

(1)Every society which derives a surplus from its yearly transactions shall maintain a reserve fund, the constitution and operation of which shall be provided for in the by-laws.

(2)Except as otherwise provided in this Act, and unless the by-laws provide that the net surplus derived by a society from its operations shall be set aside in one or more reserve funds, or for the maintenance of further development of the services provided by the society, or donated to local organisations with objectives beneficial to the community, every society shall, after making the necessary provision for the reserve fund or funds, for any dividend payable on any share capital and for any amount for educational purposes, distribute such surplus, within a period of twelve months from the close of its financial year, as payment of patronage bonus in the manner provided for in its by-laws.

24. Kinds of societies not restricted

The kinds of societies which may be formed and registered under the provisions of this Act are not restricted to the kinds of societies mentioned in the following Parts V to XII.

Part V – Societies for rural development

25. Co-operative marketing

A society may be registered primarily to undertake and carry on all kinds of business operations connected with the marketing, collecting, receiving, taking delivery of, buying, handling, feeding, fattening, finishing, slaughtering, preserving, harvesting, drying, processing, manufacturing, canning, cleaning, grading, storing, transporting, selling, or otherwise disposing of or utilising any agricultural product produced or delivered to it by its members or non-member patrons, or connected with the manufacturing or buying, selling or marketing of the by-products thereof.

26. Distribution of agricultural requisites, etc.

A society may be registered primarily to undertake and carry on all kinds of business operations connected with the purchasing, procuring, processing, manufacturing, exchanging, hiring, dealing in and distributing agricultural requisites, consumer goods and household necessities for sale at retail to its members or non-member patrons:Provided that where the society is a co-operative union or a federation, it may sell such agricultural requisites, consumer goods and household necessities at wholesale to its member societies.

27. Co-operative farming

(1)A society may be registered primarily for the purpose of providing farming services to its members, including—

(a)purchasing, taking on lease or otherwise acquiring, developing, maintaining and operating land as a farming enterprise on behalf of its members; or

(b)purchasing; taking on lease or otherwise acquiring land for farming purposes and using such land by—

(i)dividing a portion thereof amongst its members, by sale, lease or otherwise, for their individual use and operation as producers of agricultural products; and

(ii)developing, maintaining and operating the remainder of such land as a farming enterprise on behalf of its members.

(2)In addition to the objects mentioned in paragraph (a) or (b) of subsection (1), a society registered for the purpose of providing farming services to its members may have one or more of the following further objects:

(a)marketing agricultural products produced by the society on behalf of its members and produced by its members on their own account;

(b)purchasing agricultural requisites, consumer goods and household necessities required by the society and its members;

(c)encouraging thrift among its members by the acceptance of savings deposits in accordance with section thirty-three;

(d)providing credit for its members in accordance with section thirty-five;

(e)providing housing and services relating thereto for the use of its members.

28. Multi-purpose societies

A society may be registered to undertake and carry on all kinds of business and operations connected with the co-operative marketing of agricultural products as provided in section twenty-five, for the handling of agricultural requisites, consumer goods and household necessities as provided in section twenty-six, and for one or more of the objects listed in section twenty-seven.

29. Society as agent of marketing board

A society marketing agricultural products, handling agricultural requisites or providing farming services to its members, may be appointed as agent of any marketing board or other authority established by law for the purpose of marketing agricultural products or distributing agricultural requisites.

30. Allotment of shares in lieu of patronage bonus or other payment

The by-laws of a society marketing agricultural products, handling agricultural requisites or providing farming services to its members may provide that, in lieu of the payment in cash of amounts deducted from the sale or resale price of agricultural products delivered to the society, or of a patronage bonus, the society may allot to its members shares of capital, and upon such allotment each member shall be deemed to have made an application for the said shares, and agreed to pay therefor by the application of such amounts or of such bonus towards the purchase price of such shares.

31. Borrowing of patronage bonus or other payment

The by-laws of a society marketing agricultural products, handling agricultural requisites or providing farming services to its members may provide that, in lieu of the payment in cash of amounts deducted from the sale or resale price of agricultural products delivered to the society, or of a patronage bonus, the society may require its members, without the completion of individual contracts, to undertake to make loans to the society from such deductions or patronage bonus, under such terms and conditions as are provided for in the by-laws, and such by-laws shall have the same effect as if each member had entered into a separate contract with the society and shall create a legal obligation on his part to make such loan, but only to the extent of such deductions or patronage bonus.

32. Marketing contracts

(1)A society marketing agricultural products may, with the approval of the Registrar, which may be given generally or specifically, make and execute marketing contracts with its members, requiring the members to sell or deliver for sale, for any period of time specified therein, all or any part of their products or commodities specified in such contracts, exclusively to or through the society or any agencies created by the society.

(2)A contract made under this section may provide that the society may sell or resell the products delivered to it by its members with or without taking title thereto, and pay over to its members the sale or resale price after deducting an agreed commission.

(3)A marketing contract may provide for payment by the members to the society of specified sums as liquidated damages for any products or commodities sold, marketed or withheld by them in breach of the terms of the contract, and any such provision shall be valid and enforceable in the courts.

(4)Except where the Registrar's approval has been given generally to a society in respect of a particular form of contract, every society entering into a contract under the provisions of subsection (1) shall, before the signing and execution of the contract, forward two copies of it to the Registrar who shall thereupon either indicate his disapproval thereof or endorse his approval on one copy and return it to the society.

(5)No contract entered into under this section shall be contested in any court on the ground that it constitutes a contract in restraint of trade.

33. Encouragement of thrift

(1)For the purpose of encouraging thrift amongst its members, a society which includes in its objects the marketing of agricultural products, the handling of agricultural requisites or the provision of farming services, may, subject to this Act and the rules, be authorised by its by-laws to accept interest-bearing savings deposits from its members.

(2)Savings deposits may be made in such minimum and in such maximum amounts as may be prescribed in the by-laws.

(3)Savings deposits may be made—

(a)for an indefinite period but withdrawable by the member on application in writing and on giving such notice, if any, as may be required by the by-laws:Provided that the board of directors may in any case require up to thirty days' notice in writing of the intention to withdraw, or such additional notice as may in any particular case be approved or required by the Registrar;

(b)for a stipulated term by agreement between the member and the society and on such conditions as may be prescribed in the by-laws.

(4)Moneys may be deposited by a member from his personal funds or by written order—

(a)upon the society to deduct and deposit in his savings account a designated amount or amounts from payments due to him for agricultural products delivered by him to the society; or

(b)upon any marketing board or other organisation to deduct and deposit in his savings account with the society a designated amount or amounts from payments due to him for agricultural products delivered by him to, or under the authority of, such marketing board or other organisation.

(5)The rates of interest payable on savings deposits for an indefinite period and for a stipulated term respectively, shall be set from time to time by the board of directors, within such limits as may be prescribed by the rules, and approved by the Registrar.

(6)Moneys deposited in the society for a stipulated term shall not be withdrawable before maturity except in the case of the death or disability of the member, or his removal from the district served by the society and his desire to terminate his membership, or other emergency, but the board of directors may in any case require up to thirty days' notice in writing of the intention to withdraw the whole or part of such moneys, or such additional notice as may in any particular case be approved or required by the Registrar, and the rate of interest specified in any agreement respecting deposits for a stipulated term may be discounted in such manner as may be determined by the board of directors or as set out in the deposit agreement.

(7)No member shall place in a deposit account for a stipulated term, in one amount or in an amount additional to amounts already deposited by him, such sum as would cause the total amount of his money in such deposit account to exceed one-fifth of the total amount of all such deposits in the society at that time.

(8)A member depositing moneys with the society for a stipulated term may be required to maintain paid-up share capital in the society in such amount as may be designated in the by-laws.

(9)Subject to the approval of the board of directors, a member may assign his savings deposits as security for a loan from or through the society.

34. Registration of by-laws to encourage thrift

The Registrar may approve and register by-laws for the purposes mentioned in section thirty-three if he is satisfied that—

(a)the purpose of the by-laws has been discussed by the members in educational meetings;

(b)the society is in a good financial position or, if it is a new society, its registration is considered to be economically advisable;

(c)savings deposits and withdrawals therefrom will be recorded separately from other transactions of the society;

(d)adequate safe-keeping facilities and accounting services will be provided by the society;

(e)the society will furnish such returns respecting savings deposits as he may require;

(f)officers of the society responsible for funds have received such information and training as he deems necessary for the proper supervision and management of savings deposits.

35. Provision of credit by agricultural societies

(1)For the purpose of providing credit required by farmers, a society which includes in its objects the marketing of agricultural products, the handling of agricultural requisites or the provision of farming services may, subject to this Act and the rules, be authorised by its by-laws to grant credit or make loans to its members for such purposes and under such terms and conditions as may be prescribed in the by-laws.

(2)Loans may be made by the society from its own funds or, under conditions prescribed in the by-laws, from the proceeds of loans made to the society by credit organisations or other persons.

(3)Any borrowing by the society for the purpose of making loans under subsection (2) shall be subject to the approval of the Registrar.

(4)A society may grant credit or make loans under this section—

(a)for productive purposes, including seasonal loans or advances for financing the production and marketing of agricultural products, for the purchase of agricultural requisites, for farm improvement, and for housing and building materials;

(b)for provident purposes, including the purchase of consumer goods and household necessities for the use of the borrower and his family, consolidation and repayment of debts, and payment of taxes, and for payments towards insurance, health and education;

(c)with the approval of the Registrar, to another society which is a member.

(5)The by-laws may prescribe the maximum credit or amount that may be lent to a borrower, the maximum period within which loans for varying purposes shall be repaid, and the maximum rate or rates of interest that may be charged for credit or loans.

(6)The society shall require such type of security from a borrower as the by-laws may prescribe or as may be approved by the board of directors:Provided that no society shall lend money under this section on mortgage of any description of immovable property except with the permission of the Registrar.

(7)No credit or loan shall be made to a person who is not a member in good standing with the society.

36. Board of directors to supervise credit and loans

(1)Subject to the provisions of this Act and the rules, the board of directors shall have general supervision of all credit and loans made by a society in accordance with section thirty-five, shall fix the amount of credit or loan in each case, shall determine the security required before the credit is granted or the loan is made, and shall fix the rate of interest.

(2)A majority of the members of the board of directors shall be present when an application for credit or a loan is under consideration, and the credit or loan applied for shall not be given or made unless the application is approved by at least a majority of those present.

(3)No officer of the society shall be allowed to borrow or receive credit in excess of the sum of his shares in the society, his loan capital in the society, if any, and his savings deposits in the society, if any, assigned as security to the society, unless the application is approved, in the absence of the applicant, by a majority of the board of directors and also by the Registrar.

(4)The board of directors, when reviewing an application for a loan, shall consider—

(a)the character of the applicant;

(b)whether the loan is for a productive or provident purpose;

(c)the ability of the applicant to repay the loan;

(d)the availability to the applicant of technical advice respecting agricultural production and farm management practices if the loan is for a productive purpose;

(e)the security to be given by the applicant, and whether one or more guarantors of the loan will be required.

(5)To encourage thrift, the board of directors may, as a condition of the loan being granted, require that the applicant agree, during the period within which the loan is to be repaid, to purchase shares in the society, or deposit moneys in a savings deposit account (if the society is permitted to accept savings deposits) in such amount or amounts as may be specified.

(6)A full and correct record shall be kept of all the proceedings of the board of directors in carrying out its duties under this section, and the record shall be available for inspection by the Registrar.

(7)The directors of a society shall examine regularly its credit and loan transactions and, if further such transactions are likely to impair the financial situation of the society, the directors shall direct the proper officers to refuse further credit and withhold further loans for such period as the directors may determine.

37. Registration of by-laws for the provision of agricultural credit

The Registrar may approve and register by-laws for the purposes mentioned in section thirty-five if satisfied that—

(a)the purpose of the by-laws has been discussed by the members in educational meetings;

(b)the society is in a good financial position or, if it is a new society, its registration is considered to be economically advisable;

(c)the granting of credit and making of loans, their supervision and repayment will be recorded separately from other transactions of the society;

(d)adequate safe-keeping facilities and accounting services will be provided by the society;

(e)the society will furnish such returns respecting grants of credit and lending operations as he may require;

(f)officers of the society responsible for the supervision of credit and loans have received such information and training as he deems necessary.

38. A society may combine thrift services with the provison of credit

A society with authority to provide and administer agricultural credit in accordance with section thirty-five may, by its by-laws, be authorised to accept interest-bearing savings deposits in accordance with section thirty-three.

39. Farm machinery and related services

A society may be registered for one or more of the following principal objects and purposes:

(a)providing, operating and maintaining farm machinery and other equipment for use by or on behalf of the members in the production of agricultural products;

(b)storing, marketing or otherwise utilising agricultural products produced by members with the assistance of services provided by the society under paragraph (a);

(c)handling agricultural requisites for the production of agricultural products produced by members with the assistance of services provided by the society under paragraph (a).

40. Assistance to livestock, dairy and poultry producers, etc.

A society may be registered to assist producers of livestock of various kinds, including dairy cattle and poultry, with one or more of the following principal objects and purposes:

(a)providing artificial insemination or other breeding services for livestock owned by members;

(b)assembling, transporting, selling by public auction or otherwise handling various kinds of livestock or poultry produced by members, and providing buildings and equipment required for such services;

(c)purchasing or otherwise acquiring livestock or poultry for feeding or finishing by members on a contract or other basis;

(d)purchasing or otherwise acquiring livestock or poultry as foundation, replacement or breeding stock for production by members;

(e)establishing and maintaining central feeding stations for the use of members engaged in the production of livestock;

(f)providing a hatching, brooding or raising station for the use of members engaged in poultry production;

(g)purchasing, procuring or maintaining bees for the production of honey for the use by or on behalf of members;

(h)purchasing, taking on lease or otherwise acquiring and maintaining land for the grazing of livestock of members;

(i)purchasing, taking on lease or otherwise acquiring land for the production of fodder and feeding stuffs required by members engaged in the production of livestock or poultry;

(j)purchasing, taking on lease or otherwise acquiring, maintaining and managing a livestock or poultry enterprise for the production of meat, milk and other dairy products, poultry and eggs, on behalf of its members;

(k)contracting for or otherwise providing veterinary services to members engaged in the production of livestock or poultry, and fixing and collecting fees payable by members to the society to finance such services:

Provided that no society shall be registered with this object without the written approval of the Minister responsible for veterinary services.

41. Land improvement services

A society may be registered for one or more of the following principal objects and purposes:

(a)the provision and maintenance of water supplies for household and farm use;

(b)the provision and maintenance of water supplies for irrigation purposes and the management of irrigation projects on behalf of members;

(c)maintaining and supervising an area of land for watershed development, flood control, drainage, soil erosion control, and crop rotation.

42. Special provisions in the by-laws

(1)To achieve its objects a society registered with any of the objects mentioned in sections thirty-nine to forty-one inclusive, may provide in its by-laws—

(a)that each member undertake to lend such funds and furnish such fixed or working capital for the society as may be designated from time to time by the directors;

(b)that each member undertake to contribute such labour or other services as may be necessary for the operation of the society.

(2)Where the objects of a society include the provision of grazing land in accordance with paragraph (h) of section forty, or the production of fodder and feeding stuffs in accordance with paragraph (i) of the same section, the by-laws may authorise the directors to assign quotas for the number of head of livestock to be grazed by each member on land maintained by the society, or for the provision of fodder and feeding stuffs sold to or otherwise provided to each member from such land.

(3)Where the objects of a society include those mentioned in section forty or forty-one, the by-laws may provide that no dividend shall be paid to its members on share capital, that no patronage bonus shall be paid, and that any net surplus shall be transferred to reserve to meet unforeseen losses or other contingencies, or to maintain and improve the services provided by the society.

43. Advisory or supervisory services for farmers

A society may be registered for the principal object and purpose of contracting with, or arranging with, any technically qualified person or organisation to provide advisory and supervisory services to assist members with farm management practices connected with the farm operated by each, and to collect fees from members for payment by the society for such advisory or supervisory services.

44. Storage of agricultural products

A society may be registered for the principal object and purpose of purchasing, taking on lease, building or otherwise acquiring, operating and maintaining local, district or regional warehouses for storage of agricultural products produced by its members for their own use or for sale; and purchasing, hiring or otherwise acquiring and operating equipment for the assembling, cleaning and transporting of such products.

45. Transportation of agricultural products and farm supplies

A society may be registered for the principal object and purpose of purchasing, hiring or otherwise acquiring, operating and maintaining lorries, trucks and other equipment required for assembling and transporting to market, agricultural products produced by its members, and for the assembling and transporting of agricultural requisites and other goods required by its members.

Part VI – Co-operative services for producers of natural products

46. Co-operative services for producers of natural products

(1)A society may be registered having as its principal objects and purposes, or any of them, the production, processing, utilisation or marketing of natural products, and rendering to its members services ancillary to such objects, including—

(a)purchasing, hiring or otherwise acquiring, maintaining and operating boats, motors, nets and other equipment to be used in group fishing by members, or 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, or products derived wholly or partially there from;

(c)subject to the provisions of the Mines and Minerals Act, obtaining prospecting, exploration and mining licences and obtaining or providing equipment, contracts and management services for the development, utilisation and disposal of the products of any mine.[Cap. 213]

(2)A society registered under this section which includes amongst its objects the marketing of natural products for its members, may—

(a)be appointed as agent of any marketing board or other authority established by law for the marketing and distribution of products which the society may be authorised to market under its by-laws;

(b)make and execute marketing contracts requiring its members to sell or deliver for sale, for any period of time specified therein, all or any part of their products as specified in such contracts exclusively to or through the society or any agencies created by the society, in which case the provisions of section thirty-two shall apply to any such marketing contracts.

Part VII – Building construction and housing societies

47. Building construction society

A building construction society may be registered for the following principal objects and purposes:

(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 municipality 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 buildings, or contracting for architectural services or for the installation of utilities.

48. Housing society

A housing society may be registered for the following principal objects and purposes:

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

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

(c)purchasing and site planning land for sale or lease to its members for houses or blocks of flats.

49. Special powers

(1)A building construction society may, if so provided in its by-laws, make loans or advances to its members for the purchase of tools, materials and equipment for their individual use in connection with building projects undertaken in accordance with section forty-seven and sell to its members consumer goods and household necessities.

(2)A housing society may, if so provided in its by-laws, accumulate the savings of its members for the building and management of houses and flats, the ownership of which is vested in the society, or for the making of loans to its members for the building, purchasing or maintenance of houses or flats, or for other purposes mentioned in section forty-eight.

(3)A housing society may, if so provided in its by-laws, raise additional funds by borrowing for a period not exceeding thirty years for the building of houses and flats, the ownership of which is vested in the society, or for making loans to its members for the building of houses or flats, or for the purchasing and maintenance of houses or flats acquired by them from the society, or for other objects mentioned in section forty-eight.

50. Commencement of operations

No building construction, or housing, society shall commnece operations until it has furnished satisfactory evidence to the Registrar that the members have received the training required for the satisfactory completion of the building projects which the society expects to undertake, and that the capital furnished by its members is equal to such amount as may initially be prescribed by the by-laws.

51. Special features

The by-laws of a building construction, or housing, society shall, where applicable, provide—

(a)the manner in which each member is to furnish capital for the purposes of the society, and the amounts thereof;

(b)the manner in which a member may be required to pay for services furnished by the society, whether in the form of rent, purchase price of housing, or payment for other services;

(c)the manner in which the furnishing of labour services or materials by a member may be valued in payment for any services received by him through the society.

52. Sinking fund

Every housing society shall, before the distribution of any net surplus, set aside an amount annually in the form of a sinking fund for the repayment of any bonds, debentures or other funds borrowed in accordance with subsection (3) of section forty-nine, both as to principal and interest.

Part VIII – Credit unions

53. Objects of a credit union

A co-operative savings and credit society, in this Part referred to as a credit union, 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.

54. Name

One or more of the words "savings", "thrift" and "credit" shall form part of the name of every society registered exclusively for the purposes mentioned in section fifty-three, and, with the approval of the Registrar, the word "co-operative" may be omitted from the registered name.

55. Membership generally

Subject to the provisions of section fifty-six, the membership of a credit union shall be drawn from groups of persons having a common bond of occupation or association, or from groups living within a well-defined neighbourhood or community, or within a rural or urban district.

56. Membership of certain organisations

(1)A credit union may, with the approval of the Registrar, admit as members another credit union or other society and any of the following organisations:

(a)a municipality or other public body performing a function of government or providing a public service;

(b)a religious organisation;

(c)a labour organisation, an agricultural organisation, or a 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 the personal benefit of any proprietor, member or shareholder thereof.

(2)A society, municipality or other organisation mentioned in subsection (1), which is a member of a credit union, may vote at meetings of the credit union by a duly appointed delegate in accordance with the by-laws.

(3)The terms and conditions under which a member society or organisation may obtain loans from a credit union shall be set forth in the by-laws, and shall not be inconsistent with the provisions of this Act, and the total amount of all loans made by the credit union to member societies or organisations shall not at any time exceed an amount equivalent to one-quarter of the combined paid-up capital and deposits of the credit union.

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

57. Powers of a credit union

For the purposes of carrying out its objects every credit union may, subject to the provisions of this Act and the rules—

(a)receive the savings of its members as payments on shares and as deposits, either in individual or in joint accounts, and receive deposits from other societies, the Government of Zambia, or any department, board, bureau or agency thereof, any municipality or statutory authority performing a function of government or providing a public service, and any company, the majority of the shareholders of which are members of the credit union;

(b)make loans to its members for provident or productive purposes;

(c)deposit money in commercial banks in Zambia, the Post Office Savings Bank, building societies registered under the Building Societies Act, loan companies and trust companies authorised to receive money on deposit, and with any federation registered under Part XII and authorised to receive money on deposit;

(d)invest in any stocks, bonds or securities of the Government of Zambia, and, with the approval of the Registrar, to an extent not exceeding one-quarter of its capital, in paid-up shares of other credit unions or in securities issued by and secured by first mortgage on immovable property of a society, or to an extent not exceeding one-half of its capital in paid-up shares of any federation registered under Part XII with objects of making loans to and accepting deposits from its member societies:Provided that the total amount of investments made by a credit union under this paragraph, other than in stocks, bonds and securities of the Government of Zambia, shall not exceed one-half of its capital;

(e)borrow money as provided by section fifty-eight.

[Cap. 412]

58. Borrowing powers of a credit union

(1)Subject to the approval of the Registrar, a credit union may borrow—

(a)upon a vote of at least three-fourths of the members of the board of directors—

(i)moneys not exceeding in the aggregate one-quarter of its combined capital, surplus and deposits; or

(ii)moneys not exceeding in the aggregate an amount equal to the total of the market value of stocks, bonds and securities of the Government of Zambia held by the credit union, or an amount equal to the total value of the unencumbered shares and deposits for a stipulated term held by the credit union in any federation registered under Part XII with objects to lend money to and accept deposits from member societies, whichever such amount is the greater; or

(b)upon a special resolution passed by the members of the credit union, approving a recommendation of at least three-quarters of the members of the board of directors, additional moneys from time to time, so long as the balance owing by the credit union in respect of all moneys borrowed at no time exceeds one-half of its combined capital, surplus and deposits.

(2)The Registrar shall review annually the borrowing of a credit union under subsection (1) and may at any time withdraw his approval of further borrowings under that subsection.

(3)A credit union may, with the approval of the Registrar, charge, hypothecate, mortgage or pledge its immovable or movable property, rights and powers, undertakings, franchises, book debts and unpaid calls of the credit union, to secure any liability for the repayment of moneys borrowed under subsection (1).

59. Commencement of lending operations

No credit union shall commence lending operations until it has furnished satisfactory evidence to the Registrar that such number of members as he may specify have subscribed for the minimum number of shares prescribed in the by-laws for each member, and have made the payments initially required thereon.

60. Land and buildings

A credit union may, with the approval of the Registrar, for its purposes hold, purchase or take on lease in its own name, and sell, exchange, mortgage or lease, any land or buildings.

61. Election and appointment of officers

(1)Subject to the provisions of subsections (2) and (3), at the first general meeting held after the receipt of its certificate of registration a credit union shall elect—

(a)a board of directors of not less than five in number;

(b)a credit committee of not less than three members (unless the by-laws provide that the credit committee shall be appointed by the board of directors);

(c)a supervisory committee of three members (unless the by-laws provide that one member of the supervisory committee shall be appointed by the board of directors).

(2)No employee of a credit union, other than the Secretary, shall be a director.

(3)No director, nor any member of the credit committee, nor any employee of the credit union, shall be a member of the supervisory committee.

62. Special duties of directors

In addition to such other duties as are imposed by this Act and the rules, the board of directors of a credit union shall—

(a)determine the maximum individual shareholdings, the maximum individual loans and the aggregate amount of such loans which the credit union may make from time to time within the limits laid down in the by-laws;

(b)determine the interest rates on loans and deposits;

(c)declare dividends; and

(d)make and have charge of the investments of the credit union, other than loans to members.

63. Jurisdiction of credit committee

(1)Subject to the provisions of sections sixty-eight and sixty-nine, the credit committee of a credit union shall have the general supervision of all loans to members and, subject to any general order of the board of directors, the provisions of this Act and the rules, shall fix the amount of each loan.

(2)A majority of the credit committee shall be present when an application for a loan is under consideration and the loan applied for shall not be made unless the application is approved by a majority of the members of the committee present.

(3)A full and correct record shall be kept of all proceedings of the credit committee in carrying out its duties, and the record shall be available for inspection by or under the direction of the Registrar.

64. Loans by credit unions

(1)Every loan made by a credit union 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 other information as may be required by the committee.

(3)The credit committee shall inquire 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 amounts 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 a negotiable instrument 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 credit union before the loan is made, and where security covering immovable or movable property is required for the purpose of securing 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 union on the security in case of default have been duly executed and, if so required, registered.

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

(8)Where more loan applications are pending than can be granted by the credit union 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 applications for larger loans.

65. Maximum of loans to a member

(1)No loan shall be made by a credit union if it would cause the borrower to become indebted to the credit union for an amount in the aggregate of all loans made by the credit union 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 subsection (1), the by-laws of a credit union may authorise the making of loans for amounts in excess of eight per centum of its paid-up capital, surplus and deposits, to a municipality, 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.

66. No loans in certain cases

A credit union shall not, without the approval of the Registrar, make any, or any further, loans if the aggregate of its reserves consisting of cash on hand and on deposit with a bank, or other organisation authorised to accept money on deposit, is less than ten per centum of its combined paid-up capital and deposits.

67. Restrictions on making loans in certain cases

(1)Subject to its by-laws, and it having such minimum amount of paid-up capital, surplus and deposits as shall be prescribed in the rules, a credit union 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 buildings for the personal use of the borrower and the land on which such dwelling-house or other buildings are situated or are to be erected;

(c)for the purchase of land or the purchase or erection of buildings required 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 of land, or the purchase or erection of buildings, required for the use of that society, if the total assets of the society, before the loan is made, do not exceed such amount as may be prescribed in the rules.

(2)No loan shall be made by a credit union for financing the operation of a business except for such purposes and under such conditions as shall be prescribed in the rules.

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

68. Approval of loans for certain purposes

An application for a loan under section sixty-seven shall be considered by, and shall require the approval by majority vote of, the following persons meeting together:

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

(b)two or more directors; and

(c)one member of the supervisory committee.

69. Restrictions on loans to officers

No officer of a credit union shall be allowed to borrow in excess of the value of his shares and deposits, assigned as security to the credit union, and the market value of any stock, bonds or securities of the Government of Zambia held by him and so assigned, unless the application is approved by a 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; and

(b)two or more directors; and

(c)one member of the supervisory committee.

70. Prohibitions

Subject to the provisions of section fifty-seven, no credit union shall lend money to, or accept deposits from, a person who is not a member of the credit union.

71. Un-authorised loans prohibited

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

(2)An officer or employee who contravenes this section is guilty of an offence.

72. Rates of interest on loans

The interest rates on loans made by a credit union shall not exceed one per centum per month on unpaid balances.

73. Reports of credit committee

The credit committee shall report—

(a)at least monthly to the board of directors regarding the number of loans made during the period under review, the amount lent, renewals of loans granted, if any, the rate of interest where the rate varies between different types and classes of loans, and the purposes for which loans were made;

(b)to the annual general meeting respecting the work of the committee during the preceding year, and shall provide thereat a summary showing the purposes for which loans were made but without disclosing the name of any borrower.

74. Duties of supervisory committee

The supervisory committee of a credit union shall—

(a)make regular examinations of the affairs of the credit union;

(b)require at least one of its members to sign the monthly or other financial statement prepared by the treasurer;

(c)unless an auditor of the credit union has been appointed by or with the approval of the Registrar, make an annual audit and submit a report thereon to the annual general meeting signed by at least two members of the committee;

(d)fill any vacancy in its membership until the next annual general meeting;

(e)if approved by unanimous vote of all members of the committee, suspend any officer of the credit union and call a meeting of the credit union to consider the report of the committee on the suspension;

(f)call a special meeting of the credit union to consider any matters which, in the opinion of the committee, should be placed before the credit union;

(g)send to the Registrar within such period of time and in such form as he may require, details of all examinations made by the committee in accordance with this section;

(h)maintain a full and correct record of all its examinations and proceedings undertaken in accordance with the provisions of this Act and make the record available for inspection by or under the direction of the Registrar.

75. Engagement of auditor for a credit union

(1)Where the combined share capital and deposits of a credit union exceed such an amount as shall be prescribed from time to time by the Minister by statutory order, the supervisory committee shall request the board of directors to engage as auditor, with the approval of the Registrar, a person publicly carrying on the profession of accountant in Zambia to conduct the annual audit of the books and accounts.

(2)When an auditor is so engaged, the supervisory committee shall submit the auditor's report to the next annual general meeting.

76. Shares in credit union

(1)Shares in a credit union may be paid for by instalments at the times and in the manner determined by the by-laws.

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

(3)After a member has paid for his initial membership share and for such minimum number of shares as may be prescribed pursuant to subsection (2), he may, unless the directors decide otherwise, continue to make payment for additional shares without being required to sign a written application to purchase such additional shares:Provided that no member, other than a society, may hold more than one-fifth of the shares of a credit union or such lesser amount as the by-laws may specify.

(4)Moneys paid for or on account of shares may be withdrawn on application being made in writing on any day when the registered office of the credit union is open for business, but the board of directors may in any case require up to ninety days' notice of intention to withdraw the whole or any part of any such moneys, or such additional notice as may in any particular case be required by, or approved by, the Registrar.

77. Members' deposits and withdrawals

(1)A member may deposit moneys in a deposit account in a credit union in such minimum amounts as may be prescribed in the by-laws.

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

(3)Moneys deposited by a member in a credit union for a stipulated term shall be in such amounts as may be agreed to by the credit union:Provided that the aggregate of all amounts received on deposit for a stipulated term shall not at any time exceed the amount of the paid-up share capital of the credit union.

(4)Moneys deposited in the credit union pursuant to subsection (1) may be withdrawn on any day the credit union is open for business:Provided that—

(i)the board of directors may in any case require up to thirty days' notice in writing of the intention to withdraw the whole or any part of such moneys, or such additional notice as may in any particular case be required by, or approved by, the Registrar;

(ii)if moneys deposited for a stipulated term pursuant to subsection (2) are withdrawn before maturity, the rate of interest fixed in the deposit agreement may be discounted in such manner as may be determined by the board of directors or as may be specified in the deposit agreement.

78. Cash reserve to meet withdrawals

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

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

79. Distribution of net surplus of credit union

(1)When determining the net surplus made by a credit union, the board of directors shall deduct and set aside annually in a reserve fund against uncollectable loans and probable future losses such sum 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 credit union, or to such other greater amount as may be prescribed in the rules or the by-laws.

(2)After determining the net surplus, the board of directors of a credit union shall present to the annual general meeting a declaration respecting the distribution of the net surplus, which may provide—

(a)that 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 credit union at the end of the preceding financial year, or held by a member for not less than such part of the preceding financial year as may be prescribed in the by-laws;

(b)that 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 directors may determine;

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

Part IX – Artisans', craftsmen's and contracting societies

80. Production, manufacture and sale of goods

A society may be registered for the following principal objects and purposes, or any of them:

(a)producing, 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 the provision of labour and technical services, materials and equipment, for land clearance or reclamation, road construction, the construction of industrial plants, public utilities or facilities for the development of natural resources, and for furnishing services for the maintenance of buildings, industrial plants and sites, mines and public utilities;

(c)providing all necessary materials, equipment, facilities and services to enable members and their families to produce, prepare, adapt 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 and non-member patrons as contractors, or as producers, processors, and manufacturers of goods, wares and merchandise, which are ancillary to their operations or activities.

81. Special provisions in the by-laws

To achieve its objects a society registered in accordance with section eighty may make provision in its by-laws regarding—

(a)the extent of the liability of each member to lend funds and to furnish fixed working capital for the society;

(b)the extent to which each member shall undertake by contract or otherwise to contribute labour or other services necessary for the operation of the society;

(c)the conditions under which the society may make loans or advances to members to finance their work;

(d)the sale of consumer goods and household necessities to members.

Part X – Consumers' societies

82. Consumers' societies

(1)A society may be registered for the principal purpose of purchasing, procuring, processing, manufacturing, exchanging, hiring and dealing in goods, wares and merchandise, including foodstuffs, clothing, household goods, fuel and other necessities of all kinds for individual or family consumption or use, as well as agricultural requisites, for sale at retail to its members and non-member patrons.

(2)The membership of a consumers' society may be limited to persons living within a well-defined neighbourhood or community, or within an urban or rural district.

83. Special provisions in the by-laws

To achieve its objects a consumers' society may provide in its by-laws—

(a)that no goods be sold on credit, or alternatively the conditions and restrictions to which the sale of goods on credit shall be subject;

(b)that in lieu of the payment in cash of patronage bonus due to a member, the directors may allot to him shares in the society in the manner and to the number mentioned in the by-laws, and that, upon such allotment, such member shall be deemed to have made an application for such shares, and shall be under an obligation to pay therefor out of the patronage bonus due to him, but only to that extent;

(c)that in lieu of payments of patronage bonus in cash, the society may require its members, without the completion of individual contracts, to undertake to make loans to the society from such patronage bonus for such purposes and under such conditions as are provided in the by-laws, which shall have the same effect as if each member had entered into a separate contract with the society, and shall create a legal obligation on the part of each member to make such loans, but only to the extent of such patronage bonus.

84. Special responsibilities of directors of a consumers' society

(1)The board of directors of a consumers' society shall examine regularly the condition of the society's business by requiring the proper officers to furnish during every financial year, monthly or quarterly, or at such other times as the directors may determine, a report disclosing the results of the operations of the society during a specified period, including information respecting accounts receivable and accounts payable, other assets and liabilities, income and expenses, purchases and sales, and a comparison of such information with the corresponding period of the previous financial year, for the purpose of enabling the directors to determine the progress being made by the society in achieving its objects.

(2)The directors shall examine regularly all credit or hire-purchase transactions to determine whether or not they are in conformity with the by-laws of the society, and if, in the opinion of the directors, such transactions are likely to impair the financial situation of the society, the directors shall direct the proper officers to refuse further credit and refrain from entering into further hire-purchase transactions for such period as the directors may determine.

85. Credit controlled by directors

No officer or employee of a consumers' society acting on its behalf shall purchase or sell goods on credit except in accordance with instructions given by the board of directors.

86. Qualifications for election in certain cases

A consumers' society may provide in its by-laws that no member shall be eligible for election as a member of the board of directors if any amount owing by him to the society is in arrear, or if he has failed to obtain or purchase from the society during its preceding financial year, goods, wares, merchandise or supplies to the value stipulated in the by-laws.

87. Application of Part X

Where a consumers' society has for its objects the providing of other services to its members, or members and non-member patrons, this Part shall nevertheless apply to that society with respect to the purchase and sale of goods, wares and merchandise, or agricultural requisites, if any, at retail.

Part XI – Community service societies

88. Community buildings, facilities or services

A society may be registered for the benefit of the community in which its members reside with one or more of the following objects:

(a)operating and maintaining a public or community hall or community centre, a recreational ground or any other facilities solely for health, community welfare, civic improvement, public entertainment, cultural activities or recreation; or

(b)providing services for procuring health care, or other services of a social or educational nature to promote occupational or community group welfare.

89. No dividends on capital or patronage bonus

(1)A society registered under section eighty-eight shall not pay a dividend or patronage bonus, and no part of the net surplus arising from the yearly operations of the society shall be paid to any member or patron.

(2)Any net surplus arising from the yearly operations of the society shall be set aside as a reserve fund for unforeseen losses or other contingencies, or for the maintenance or further development of the services provided by the society, or the directors, if so authorised by the annual general meeting and permitted by the by-laws, may donate the net surplus, in whole or in part, to one or more local organisations with objectives beneficial to the community.

90. Provision of health services

Where a community service society is to be registered under this Part for the main purpose of contracting for or otherwise arranging for the payment of medical or hospital or nursing services on behalf of its members, and collecting premiums assessed upon its members for payment by the society to persons or organisations providing these services, such society shall not be registered without the written approval of the Minister in charge of health services.

Part XII – Federations

91. Objects

A federation of societies, or of co-operative unions, or of societies and co-operative unions, may be registered as a society under this Act for one or more of the following purposes:

(a)carrying on any co-operative enterprise envisaged by this Act, and, without limiting the generality of the foregoing, providing facilities for—

(i)processing and marketing agricultural products or natural products;

(ii)procuring, manufacturing and selling agricultural requisites and consumer goods at wholesale;

(iii)establishing and operating a co-operative savings and credit service for member societies;

(iv)providing management and other services required by building construction or housing societies;

(v)managing, supervising and co-ordinating activities of farming societies and other societies providing special production services to agriculturists;

(vi)acquiring, maintaining and operating buildings and equipment for the assembling, warehousing and transporting of agricultural products;

(vii)operating services for the transportation of agricultural products and other commodities;

(b)carrying on, encouraging and assisting educational and advisory work relating to co-operative enterprise, and, without limiting the generality of the foregoing, establishing and operating a college or institute for education and training in co-operative principles and operating methods, operating district or regional training schools for officers and members of co-operative societies, providing correspondence courses regarding co-operative principles and operating methods and providing information on co-operative principles and practices to youth groups;

(c)rendering services designed to ensure efficiency and uniformity in the conduct of the business of its member societies, standardising their book-keeping, accounting and other procedures, and providing an auditing service;

(d)reducing operating costs by arranging for group bonding of co-operative society employees, and purchasing book-keeping and other supplies for sale to its members;

(e)printing, publishing and circulating any newspaper or other publication designed to foster or increase interest in co-operative enterprises, principles and practices.

92. Use of the word "co-operative"

The Registrar may, in his discretion, dispense with the requirement that the word "co-operative" shall form part of the name of a society, when such society is a federation.

Part XIII – Membership

93. Membership governed by by-laws

Subject to the provisions of this Act, membership of a society shall be governed by its by-laws, but in no case shall a society fix any limit to the number of its members.

94. Who may be members

(1)Each applicant for the registration of a new society who has subscribed for one share in the society or who has paid the membership fee, if any, shall be deemed to have agreed to become a member of the society, and his name shall, upon its registration, be entered in the register of members.

(2)No person, other than those mentioned in subsection (1), shall become a member of a society until his written application for membership has been approved by resolution of the board of directors and recorded in the minutes.

(3)Each applicant for membership shall be notified in writing that his application has been approved or has not been approved.

(4)Unless the by-laws provide to the contrary, a person of the age of sixteen years may become a member of a society, but such person shall not be eligible to act as a member of the board of directors or of any committee of the society until he has reached the age of twenty-one years.

(5)An applicant, other than another society or other organisation, shall not be admitted to membership unless he is resident within or occupies land within the society's area of operation as described in its by-laws.

95. Rights of minors

(1)If so provided in its by-laws, a society may receive moneys on share account, or on deposit account, from or for the benefit of a minor, and it shall be lawful for the society to pay such minor the dividend or interest which may become due on any such shares or deposits.

(2)Any payment or deposit made on behalf of a minor pursuant to subsection (1) may, together with any dividend or interest, be paid to the guardian of that minor for the use of the minor.

(3)The receipt of any minor or guardian for money paid to him under this section shall be sufficient discharge of the liability of the society in respect of that money.

(4)A minor under the age of sixteen years has only such rights in a society as may be prescribed in the rules.

96. Member not to exercise rights until due payment made

No member of a society shall exercise the rights of a member until he has made such payment to the society in respect of membership, or has acquired such interest in the society, as may be prescribed in this Act, the rules or the by-laws.

97. Certificate of membership

(1)Where there is no share capital, every member who has paid his membership fee, if any, in full shall receive a certificate of membership.

(2)Subject to subsection (3), a share certificate may be issued on request.

(3)Shares may be paid for by instalments at the times and in the manner prescribed by the by-laws, but no share certificate shall be issued to a member until the shares to which it relates have been fully paid for.

98. Lien on members' shares

Every society shall have a lien on the shares or other interest of its members in the society for debts due from them to the society, and the interest of any member in the society shall be subject to a set-off of any indebtedness by him to the society.

99. Certain societies to furnish statements to members

Except in the case of a community service society registered under Part XI, every society shall, after each annual general meeting, furnish a statement to each member showing his share capital or other amounts held to his credit in the society at the end of the previous financial year, and the amounts, if any, credited to him out of the distribution of the net surplus resulting from the operations of the society during that financial year.

100. Every society to keep a membership register

(1)Every society shall keep a register of its members, and of the shares, if any, held by members, which register shall show and shall be prima facie evidence of—

(a)the names, addresses and occupations of the members, the number of shares held by them respectively, if the society is registered with share capital, the numbers of such shares if they are distinguished by numbers, and the amount paid or considered to be paid thereon;

(b)the date on which each person, society or other organisation was registered or recorded as a member;

(c)the date on which each person, society or other organisation ceased to be a member.

(2)Every society may be required by the Registrar to furnish him with a list of members at such time as he may specify, and such list shall be open for inspection in the office of the Registrar on payment of such fee as may be prescribed in the rules.

101. Votes of members and delegates

(1)Each member or delegate in a society shall have one vote only at meetings of the society, and there shall be no voting by proxy.

(2)In case of an equality of votes, the Chairman shall have a casting vote.

(3)Where a society comprises other societies which are members of it, the by-laws of such society shall prescribe the number, or the method of determining the number, of delegates which those member societies may appoint to attend and vote at meetings of such society.

102. Contracts with minors

The fact that any person who has been admitted as a member of a society has not yet reached the age of twenty-one years shall not prevent that person from executing any instrument or giving any acquittance necessary to be executed or given under this Act or the rules, and shall not be a ground for the invalidation of any contract entered into by such person with the society, and any such contract entered into by any such person with the society, whether as principal or as surety, shall be enforceable at law as against such person, notwithstanding his minority.

103. Limitation on share holdings

No member, other than another society, shall hold more than one-fifth of the share capital of a society.

104. Assignment, transfer and re-purchase of shares

(1)Subject to the provisions of section seventy-six (which relate to the right of a member of a credit union to withdraw his shares), and subject to the provisions of subsection (2) of this section, shares may be assigned or transferred, or may be redeemed or re-purchased by the society.

(2)Every such assignment, transfer, redemption or repurchase shall be subject to such conditions as may be prescribed in the by-laws of the society, and shall not be valid unless approved by the board of directors, who shall not give such approval if it would reduce the total number of members below the minimum required by this Act for the registration of the society.

105. Shares or interest not attachable

The shares or other interest of a member in the capital of a society shall not be liable to attachment or sale under decree or order of a court in respect of any debt or liability incurred by such member:Provided that, subject to the by-laws, nothing herein contained shall prohibit the transfer, assignment or sale of the shares or other interest of a member to the society, or to any member thereof.

106. Transfer of interest on death of member

(1)On the death of a member, a society may transfer the shares or other interest of the deceased member to the person nominated in accordance with the rules made in this behalf, or, if there is no person so nominated, to the legal personal representative of the deceased member, or may pay to such nominee or legal personal representative, as the case may be, a sum representing the value of such member's share or other interest, as ascertained in accordance with the by-laws or the rules.

(2)A society shall pay all other moneys due to the deceased member from the society to his legal personal representative.

(3)All transfers and payments made by a society in accordance with this section shall be valid and effectual against any demand made upon the society by any other person.

107. Liability of past member and estate of deceased member for debts of society

(1)Subject to the provisions of section fifteen, the liability of a past member for the debts of a society as they existed on the date on which he ceased to be a member shall continue for a period of two years and no more reckoned from that date:Provided that, if the first audit of the accounts of the society after his ceasing to be a member discloses a credit balance in favour of the society, the financial liability of such past member shall forthwith cease.

(2)Subject to the provisions of section fifteen, the estate of a deceased member shall be liable for the debts of a society as they existed on the date of his decease for a period of two years and no more reckoned from that date:Provided that, if the first audit of the accounts of the society after his decease discloses a credit balance in favour of the society, such liability shall forthwith cease.

108. Creation of charges in favour of societies

Subject to any prior claim of the Republic on the property of the debtor and to the lien or claim of a landlord in respect of rent or any money recoverable as rent and to any stop-order registered under the provisions of the Farmers' Stop-order Act, Chapter 226 of the 1952 Edition of the Laws, and to any agricultural charge registered under the provisions of the Agricultural Credits Act, and, in the case of immovable property, to any prior registered charge thereon—

(a)any debt or outstanding demand due and payable to a society by any member or past member shall be a first charge on all crops or other agricultural produce, felled timber or other forest produce, marine produce, fish, livestock, fodder, agricultural, industrial and fishing implements, plant, machinery, boats, tackle and nets, raw materials, stock-in-trade and generally all produce of labour and things used in connection with production raised, purchased or produced in whole or in part from any loan whether in money or in goods given him by the society:Provided that nothing herein contained shall affect the claim of any bona fide purchaser for value without notice of the loan given by the society;

(b)any debt or outstanding demand due and payable to a housing society by any member or past member in respect of rent, shares, loans or purchase money or any other rights or amounts payable to such society shall be a first charge upon his interest in the immovable property of such society.

[Cap. 224]

109. Withdrawal by members

(1)Subject to the other provisions of this Act and the rules, a member may withdraw from a registered society under such conditions, and on giving such notice of withdrawal, as may be required by the by-laws.

(2)Payment of the shares or other interest of the member withdrawing under special circumstances, including illness, disability, permanent removal from the area or district served by the society, or death, shall be made in such order of priority as the by-laws may prescribe or, where not so prescribed, in such order of priority as the directors may approve.

(3)Where, upon the withdrawal of a member, to make payment for the shares held by the member at their par or paid-up value, or to make payment of any other interest of the member at the value shown on the books of the society, would, in the opinion of the directors, impair, or further impair, the financial stability of the society, the directors may suspend payment for such period as may be approved by the Registrar, or may offer in final settlement such lesser amount as they deem just.

(4)The directors shall deal promptly with all applications for withdrawal from membership.

110. Expulsion of a member

(1)

(a)Upon complaint arising against any member of a society, it shall be the duty of the Secretary, upon the instructions of the board of directors, to provide the member with written notice of the particulars of the complaint and of the date, time and place of the meeting of the board of directors at which the complaint and the question of the expulsion of the member will be considered.

(b)The directors may, at such meeting duly called and at which a majority of the directors are present, having given the member against whom the complaint has been raised the opportunity to make representations or submissions orally or in writing or both, in rebuttal or in mitigation, resolve, by at least a two-thirds majority vote, that the member be expelled.

(c)The Secretary of the society shall, within two weeks from the date on which the member is expelled, notify him in writing of the action of the directors.

(d)An appeal from the action of the directors may be taken by the member to the next general meeting of the society if written notice of intention to appeal is given by him to the Secretary of the society within thirty days from the date of receipt of the notice mentioned in paragraph (c).

(e)At such a meeting a majority of the members present may, after considering any written or oral representations by the member, confirm or rescind the action of the directors.

(f)If the meeting does not confirm the action of the directors in expelling the member, such expulsion shall be held to be null and void, and the member treated as if no such expulsion had occurred.

(2)Where the Registrar, after investigation, is of the opinion that a member has acted in contravention of the rules or the by-laws of the society, or has acted in a way that is detrimental to the interests of the society and its members, he may communicate his complaint in writing to the directors who shall thereupon proceed in accordance with the provisions of paragraphs (a) and (b) of subsection (1).

(3)The share capital or other interest in a society held by a member who is expelled under this section shall be refunded to him as soon as funds are available.

(4)A member who has been expelled from a society under this section shall forfeit all rights to share in the net surplus or other benefits of the society from the date of his expulsion, other than the right to have his share capital or other interest in the society refunded to him, together with such dividend as may later be declared and calculated up to the date his share capital or other interest was refunded.

(5)No person who has been expelled from a society shall be eligible for re-admission as a member within a period of one year from the date of his expulsion.

Part XIV – Directors

111. Board of directors (or committee)

(1)Every society shall have a board of directors consisting of such number of persons as shall be prescribed by its by-laws.

(2)Every reference in the by-laws of a society to a "committee" elected by the members to supervise the business and property of such society shall be deemed to have the same meaning as the words "board of directors" in subsection (1), and any reference in this Act to the powers and duties of directors shall apply to the powers and duties of such committee duly elected by the members of a society in accordance with its by-laws.

(3)The persons whose names appear in the application for the registration of a society shall, upon registration, be deemed to have all the powers and duties of directors, and shall direct the affairs of the society until their successors have been elected by the members at the first general meeting.

112. Effect of election of directors by districts

Where the by-laws of a society provide for the election of directors by members or delegates voting by districts, directors so chosen shall be deemed to be elected by all the members or delegates as if the election had been by vote of all the members or delegates present at a duly called meeting.

113. Duties and powers of directors

(1)Subject to the provisions of sections sixty-three and seventy-four (which relate to the duties of credit committees and supervisory committees in credit unions) the board of directors shall direct and supervise the business and property of a society and may exercise all such powers of the society as are not required by this Act, the rules or the by-laws to be exercised by resolution of the society in a general or special meeting.

(2)Without limiting the generality of the provisions of subsection (1), the directors shall—

(a)consider, and approve or reject, applications for membership of the society;

(b)call for and examine regularly reports from officers of the society which will disclose the true position of the society, its operations and financial condition;

(c)keep the members informed of the progress of the society, encourage interest and a sense of ownership on their part in the society, and have charge of any educational or advisory work amongst the members respecting co-operative principles and the objects of the society;

(d)except in the case of a credit union, to which the provisions of Part VIII apply, prepare and present to the annual general meeting of the society a resolution determining the distribution of the net surplus for the previous financial year in accordance with the other provisions of this Act, the rules and the by-laws of the society;

(e)make a report to the annual general meeting of the work of the directors during the preceding financial year, and the progress made by the society during that year, with such recommendations as they deem necessary to maintain or improve the services provided by the society to its members.

(3)A full and correct record shall be kept of all proceedings of the board of directors in carrying out its duties, and the records shall be available for inspection by or under the direction of the Registrar.

(4)If a director has an interest in any other society, company or organisation with which, to his knowledge, the society of which he is a director proposes to enter into a contract, he shall disclose the fact of his interest to his board of directors at or before the time the contract is made, and he shall not vote in respect of such contract; should he so vote, his vote shall not be valid.

114. Officers

The directors shall elect from their number a Chairman and one or more Vice-Chairmen, and may appoint and fix the remuneration of a Secretary, Treasurer, or a Secretary-treasurer or manager who need not be a member of the society.

115. Term of office

The term of office of the directors shall be prescribed in the by-laws.

116. Directors must be members

No person other than a member of a society or delegate of a member society shall be eligible to be elected or appointed as a director of the society, except as provided in sections one hundred and sixty-one and one hundred and sixty-two.

117. Vacancy on board of directors

(1)Subject to the provisions of subsection (2), where a vacancy on the board of directors occurs otherwise than by expiration of the term of office, the remaining members of the board may, unless the by-laws provide otherwise, fill the vacancy until the next annual general meeting.

(2)Where, by reason of vacancies on the board of directors, the number of directors is reduced to less than the number required by the by-laws to constitute a quorum for a meeting of directors, the remaining directors shall immediately call a special general meeting of the society to fill the vacancies.

118. Vacation of office of director

The office of a director shall be vacated if the director—

(a)is removed from his office under the provisions of section one hundred and twenty-two; or

(b)holds any office of profit in the society other than that of Secretary, Treasurer, Secretary-treasurer or manager; or

(c)becomes bankrupt; or

(d)becomes of unsound mind; or

(e)is concerned or participates in the profits of any contract made between the society and any other society, company or organisation in which he has an interest, the fact of which he knowingly failed to disclose to the board of directors at or before the time the contract was made; or

(f)is convicted of any offence involving dishonesty or is imprisoned for three months or more; or

(g)dies.

119. Liability of directors or other officers for unlawful transactions

If a loan or other transaction is made in contravention of this Act, all directors, members of any committee and other officers of the society who made the loan or other transaction, or assented thereto, are jointly and severally liable to the society up to the amount of the loan or other transaction:Provided that if, in proceedings to recover from a person mentioned in this section any amount for which he is liable hereunder, it appears to the court that he has acted honestly and reasonably and ought fairly to be excused in whole or in part for making or assenting to the loan or other transaction, the court may relieve him wholly or partly from personal liability.

120. Meetings of directors

(1)The directors shall hold meetings at such times as may be provided in the by-laws.

(2)Unless the by-laws provide otherwise, meetings of directors shall be held and notice thereof given in accordance with the resolutions of the directors.

(3)The Chairman may at any time and shall, if requested in writing by a majority of the directors to do so, call a special meeting of the directors.

(4)Unless the rules or the by-laws otherwise provide, the number of directors required to constitute a quorum for the transaction of business shall be a majority of the number of directors of the society; and if a quorum is not present at a meeting of the directors, those present shall adjourn the meeting from time to time until a quorum is present.

121. Security

Subject to the rules, the directors may require every person appointed to an office pertaining to the receipt, management or expenditure of the money of a society to give such security as the directors deem sufficient.

122. Removal from office

In the absence of a provision in its by-laws, a society may for good reason, by resolution passed by at least two-thirds of the members and delegates present at a general meeting or at a special meeting called for the purpose, remove any director before the expiration of his term of office.

Part XV – Meetings

123. Annual and other general meetings

(1)Every society shall provide in its by-laws for an annual general meeting and may also provide for semi-annual, quarterly or other general meetings.

(2)Unless the by-laws otherwise provide, a notice of every general meeting shall be sent to each member or delegate entitled to attend the same, at least twenty-one days prior to the date of the meeting, at the address given in the register of members.

124. Special meetings

(1)The directors of a society may at any time and, where at least one-tenth of the members or one-quarter of the delegates so request shall, call a special meeting of members or members and delegates, as the case may be.

(2)Unless the by-laws otherwise provide, notice of all special meetings, together with a statement of the purpose thereof, shall be sent to each member or delegate who is entitled to attend the same, at least twenty-one days prior to the date of the meeting.

(3)No business other than that specified in the notice shall be transacted at a special meeting unless all members of and delegates to the society are present at the meeting and unanimously agree to discuss other business.

125. Registrar may prescribe manner of calling meetings

If at any time it is impracticable to call a general or special meeting of the society in the manner provided by this Act, or the by-laws, the Registrar may, on application to him for the purpose, prescribe the manner of calling the meeting.

126. Quorum

Save as otherwise provided in this Act, the rules or the by-laws, the quorum at a general or special meeting of a society shall be a majority of the members, or delegates, or members and delegates, as the case may be, entitled to attend and vote.

127. Power of Registrar to call meetings

(1)If a society fails to hold an annual general meeting, the Registrar may call a meeting of the society to enable the members to secure such information regarding its affairs as they are entitled to receive under this Act, and to deal with any matter affecting the society and its affairs, including the adoption of additional by-laws or amendments to existing by-laws.

(2)The Registrar may call a special meeting of the society for the purpose of reporting to the members the result of any audit, examination or other investigation of the society's affairs ordered or made by him.

(3)Notwithstanding any other provision in this Act, the rules or the by-laws, the quorum at a general or special meeting called by the Registrar under subsection (1) or (2) shall be the members or delegates attending.

128. Authority of the members

(1)The authority of the members as joint owners of the business and property of a society shall be vested in the annual general meeting of members, and in any special meeting called in accordance with the provisions of this Part.

(2)Without limiting the generality of the provisions of subsection (1), the members at the annual general meeting shall confirm or amend the resolution of the board of directors respecting the distribution of the net surplus, if any, arising from the yearly business of the society, receive, discuss and dispose of the reports of officers of the society, the auditor's report, if any, the financial statement and the report of any inspection of the affairs of the society made by or under the direction of the Registrar, elect directors and committees as required by this Act, and make such decisions and recommendations as they deem necessary with respect to the objects and services of the society, for implementation by the directors and other officers.

(3)Officers may be paid reasonable travelling and other out-of-pocket expenses incurred by them in discharging their duties, and may be paid such honorarium as the by-laws of the society may permit, or such honorarium, payment of which shall be subject to the prior written permission of the Registrar, as the members may by majority vote approve at a general meeting.

(4)Receipt of an honorarium under the provisions of subsection (3) shall not imply that the recipient is the holder of an office of profit.

Part XVI – Charges by societies

129. Registration

(1)Every charge created by a society and being either—

(a)a charge for the purpose of securing any issue of debentures; or

(b)a charge on uncalled or unpaid share capital of the society; or

(c)a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale; or

(d)a charge on land, wherever situate, or any interest therein; or

(e)a charge on book debts; or

(f)a floating charge on the undertaking or property of the society;

shall, so far as any security on the society's property or undertaking is thereby conferred, be void against the liquidator and any creditor of the society, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, are delivered to or received by the Registrar for registration in the manner required by this Act within thirty days after the date of its creating, but without prejudice to any contract or obligation for payment of the money thereby secured, and, when a charge becomes void under this section, the money secured thereby shall immediately become payable.

(2)Where a negotiable instrument has been given to secure the payment of any debts due to a society, the deposit of the instrument for the purpose of securing an advance to the society shall not for the purposes of this section be treated as a charge on those debts.

(3)The holding of debentures entitling the holder to a charge on land shall not be deemed to be an interest in land.

(4)The Registrar shall keep with respect to each society a register in the prescribed form of all charges requiring registration under this section, and shall, on payment of the prescribed fee, enter in the register, with respect to every charge, the date of creation, the amount secured by it, short particulars of the property charged and the names of the persons entitled to the charge.

(5)The Registrar shall give a certificate under his hand of the registration of any charge registered in pursuance of this section, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this section as to registration have been complied with.

(6)It shall be the duty of the society to send to the Registrar for registration the particulars of every charge requiring registration under this section, but registration of any such charge may be effected on the application of any person interested therein:Provided that where the registration is effected on the application of some person other than the society, that person shall be entitled to recover from the society the amount of any fees properly paid by him to the Registrar on the registration.

(7)The register kept pursuant to this section shall be open to inspection by any person on payment of the prescribed fee.

(8)Every society shall cause a copy of every instrument creating any charge requiring registration under this section to be kept at the registered address of the society.

(9)In this Part, the expression "charge" includes mortgage.

130. Registration of enforcement of security and filing of accounts

(1)If any person obtains an order for the appointment of a receiver or manager of the property of a society, or appoints such a receiver or manager under any powers contained in any instrument, he shall, within seven days from the date of the order or of the appointment under the powers contained in the instrument, give notice of the fact to the Registrar, and the Registrar shall, on payment of the prescribed fee, enter the fact in the register of charges.

(2)If any person makes default in complying with the requirements of subsection (1), he shall be guilty of an offence and liable on conviction to a fine not exceeding one hundred penalty units for every day during which the default continues.

(3)Every receiver or manager of the property of a society who has been appointed under the powers contained in any instrument, and who has taken possession, shall, once in every half year while he remains in possession, and also on ceasing to act as receiver or manager, file with the Registrar an abstract in the prescribed form of his receipts and payments during the period to which the abstract relates, and shall also, on ceasing to act as receiver or manager, file with the Registrar notice to that effect, and the Registrar shall enter the notice in the register of charges.

(4)Every receiver or manager who makes default in complying with the provisions of subsection (3) shall be guilty of an offence and be liable on conviction to a fine not exceeding one thousand penalty units.

[As amended by Act No. 13 of 1994]

131. Rectification of register of charges

A Judge, on being satisfied that the omission to register a charge within the time hereinbefore required, or that the omission or mis-statement of any particular fact with respect to any such charge was accidental or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or of the society, or that on other grounds it is just and equitable to grant relief, may, on the application of the society or any person interested, and on such terms and conditions as seem to the Judge just and expedient, order that the time for registration be extended or, as the case may be, that the omission or mis-statement be rectified.

132. Entry of satisfaction

The Registrar shall, on evidence being given to his satisfaction that the debt for which any registered charge was given has been paid or satisfied, order that a memorandum of satisfaction be entered on the register, and shall if required furnish the society with a copy thereof.

133. Failure to send particulars for registration

If any society makes default in sending to the Registrar for registration the particulars of any charge requiring registration under this Part, then, unless the registration has been effected on the application of some other person, the society, and every officer thereof or other person who is knowingly a party to the default, shall be guilty of an offence and liable on conviction to a fine not exceeding one thousand penalty units for every day during which the default continues.[As amended by Act No. 13 of 1994]

134. Society's register of charges

(1)Every society shall keep a register of charges and enter therein all charges specifically affecting property of the society and all floating charges on the undertaking or any property of the society, giving in each case a short description of the property charged, the amount of the charge, and the names of the persons entitled thereto.

(2)If any officer knowingly and wilfully authorises or permits the omission of any entry required to be made pursuant to this section, he shall be guilty of an offence and liable on conviction to a fine not exceeding one thousand penalty units.

[As amended by Act No. 13 of 1994]

135. Right to inspect copies of instruments and register of charges

(1)The copies of instruments creating any charge requiring registration under this Part and the register of charges kept pursuant to the last foregoing section, shall be available at all times for inspection by any creditor or member of the society without fee, and the said register of charges shall also be open for inspection by any other person on payment of such fee, not exceeding one hundred kwacha for each inspection, as the society may prescribe.

(2)If inspection of the said copies or register is refused, any officer refusing inspection or authorising or knowingly and wilfully permitting the refusal shall be guilty of an offence and liable on conviction to a fine not exceeding one hundred penalty units, and a further fine not exceeding one hundred and forty penalty units for every day during which the refusal continues; and, in addition to the above penalty, any Judge sitting in Chambers may by order compel an immediate inspection of the copies or register.

[As amended by Act No. 13 of 1994]

136. Perpetual charges

A condition contained in any charge created by a society shall not be invalid by reason only that thereby the charge is made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.

Part XVII – Administration of societies

137. Registered office

Every society shall have a registered office to which all communications and notices may be addressed.

138. Seal

(1)Every society shall have a corporate seal which shall contain the name of the society.

(2)The seal of a society shall not be affixed to any instrument except by the authority of a resolution of the board of directors, and the application of the seal shall be authenticated by the signatures of two directors and of the Secretary.

139. Books and records

(1)Every society shall keep such records and books of accounts as the Registrar may require, including a proper set of commercial books, in which all transactions of the society shall be clearly entered.

(2)Subject to such conditions as may be prescribed by the rules, the records of the society shall be open for inspection by any member or delegate during the usual office hours at the registered office of the society:Provided that no person who is not an officer of the society, nor specially authorised by resolution thereof, shall have the right to inspect the account of any other member without the written consent of that member.

(3)A copy of any entry in a book of a society regularly kept in the course of business may be authenticated by a certificate written at the end 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 that society, such certificate being dated and signed by the Secretary of the society and one member of the board of directors.

(4)If authenticated as aforesaid, any such copy as is mentioned in subsection (3) shall be received in any legal proceedings, civil or criminal, as prima facie evidence of the existence of such entry and of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is admissible.

(5)No officer of any society shall, in any legal proceedings to which the society is not a party, be compelled to produce any of the society's books, the contents of which can be proved under subsections (3) and (4), or to appear as a witness to prove any matters, transactions or accounts therein recorded, unless the court for special reasons so directs.

140. Audit and investigation by Registrar

(1)Subject to the provisions of paragraph (c) of section seventy-four and sections seventy-five and one hundred and forty-one the Registrar shall audit, or cause to be audited by some person authorised by him by general or special order in writing, the accounts of every society at least once in every year.

(2)The audit under subsection (1) shall include the examination of accounts receivable, accounts payable and overdue debts, if any, and a valuation of the assets and liabilities of the society.

(3)The Registrar and every person appointed to audit the accounts of a society shall have power when necessary—

(a)to summon at the time of his audit, any officer, employee or member of the society who he has reason to believe can give information in regard to any transactions of the society or the management of its affairs;

(b)to require the production of any book or document relating to the affairs of, or any cash or securities belonging to, the society, by an officer, agent, employee or member in possession of such book, document, cash or securities;

(c)to examine any officer of the society under oath.

(4)When the accounts of a society have been audited, the report of the auditor shall be presented to the annual general meeting and to the Registrar.

(5)When the Registrar is of the opinion that the affairs of a society require an immediate investigation in order to safeguard the interests of the members, or the rights of creditors, he may order a special investigation to be made by some person authorised by him.

(6)A report of any special investigation made under subsection (5) may be presented to a special meeting of the members called by or under the direction of the Registrar.

141. When public accountant required as auditor

(1)The annual audit of the books and accounts of a society whose total assets exceed such an amount as shall be prescribed from time to time by the Minister by statutory order shall be conducted by a person publicly carrying on the profession of accountant in Zambia, appointed by the Registrar or engaged by the board of directors of the society with the approval of the Registrar.

(2)A federation registered under the provisions of Part XII, with objects which include the provision of auditing services, may appoint such an accountant as auditor for a society which is a member of such federation, and, if its by-laws so permit, for any other society at the request of that society or the Registrar.

(3)The rules may provide that a society, for whom the services of such an accountant are required as auditor under subsection (1), shall become a member of a federation registered under section ninety-one with objects which include the provision of auditing services, and shall request such federation to appoint the auditor for the society.

(4)An auditor engaged or appointed under this section shall make a report to the members of the society on the accounts and balance sheet examined by him, and shall state in the report—

(a)whether or not he obtained all the information and explanations he required;

(b)whether, in his opinion, the balance sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the society's affairs according to the explanations given, and as shown by the books of the society;

(c)whether, in his opinion, all the transactions of the society which have come to his notice have been within the objects and powers of the society.

(5)The auditor shall disclose to the Registrar any matter or circumstance which has come to his knowledge or attention during the course of his audit which will, in his opinion, assist the Registrar with the administration of this Act, and the Registrar may enlarge or extend the scope of the audit and direct that any further or particular examination be made or any other procedure for the audit be adopted.

142. Power of Registrar to inspect societies' books, etc.

The Registrar, or any person authorised by general or special order in writing by the Registrar, shall at all reasonable times have access to all the books, accounts, papers and securities of a society, and shall be entitled to inspect the cash in hand, and every officer of the society shall furnish such information in regard to the transactions and operations of the society as the person making the inspection may require.

143. Yearly and other returns

(1)Every society shall, within six months after the end of each financial year, send to every member who requests it, an audited statement of the receipts and expenditures and of the assets and liabilities of the society.

(2)Every society shall furnish the Registrar with such annual and other returns and information as he may require.

(3)Every return and other document required under this Act shall be made in such form as the Registrar may require or as may be prescribed in the rules.

(4)If any person wilfully makes, orders or allows to be made any entry or erasure in, or omission from, any balance sheet of a society, or any collecting book, or any return or document required to be sent, produced or delivered for the purposes of this Act, with intent to falsify the same, or to evade any of the provisions of this Act, he shall be guilty of an offence and liable on conviction to a fine not exceeding one thousand five hundred penalty units:Provided that a person shall not be prosecuted for an offence under this section without the written consent of the Director of Public Prosecutions.

[As amended by Act No. 13 of 1994]

Part XVIII – Amalgamation and division of societies

144. Amalgamation of societies

(1)Subject to the approval of the Registrar, any two or more societies may, by special resolution of each of those societies, become amalgamated together as one society, with or without any dissolution or division of the funds of those societies or any of them; and the property of each of those societies shall become vested in the amalgamated society, without the necessity of any form of conveyance or assignment, upon the registration of the amalgamated society.

(2)Subject to the approval of the Registrar, any society may by special resolution transfer its engagements to any other society which undertakes to fulfil those engagements; and if that resolution approves the transfer of the whole or any part of the society's property to that other society, the whole or, as the case may be, that part of the society's property shall vest in that other society, without the necessity of any form of conveyance or assignment, upon the registration of the resolution.

(3)At such meeting as aforesaid a declaration by the Chairman that the resolution has been carried shall be deemed conclusive evidence of that fact.

(4)Two copies of every such special resolution, signed by the Chairman of the meeting at which the resolution was passed and countersigned by the Secretary of the society, shall be sent within twenty-one days of the passing thereof to the Registrar with, in the case of an amalgamation, three copies of the by-laws of the amalgamated society.

(5)Subject to being provided with such additional information as he may require, the Registrar may approve and register the resolution, and, in the case of an amalgamation, register the amalgamated society and its by-laws; and until the resolution is so registered it shall not take effect.

(6)An amalgamation or transfer of engagements in pursuance of this section shall not prejudice any right of a creditor of any society which is a party thereto.

(7)Upon the registration of such resolutions, amalgamated society and by-laws, the Registrar shall endorse his certificate of registration upon one copy of each resolution and by-laws, as the case may be, and return it to the society which sent it.

(8)Whenever, in pursuance of this section, any property, rights, liabilities or obligations of a society become vested in an amalgamated or other society, in respect of the transfer of which any written law provides for registration, it shall be the duty of the amalgamated or other society to make written application to the proper officer of the appropriate registration authority for the registration of such transfer, and it shall be the duty of such officer, on production of the appropriate resolutions duly registered by the Registrar, and, in the case of an amalgamation, the certificate of registration, to make such entries in the appropriate register as shall give effect to such transfer and, where appropriate, to issue to the amalgamated or other society concerned a Certificate of Title or a Provisional Certificate in respect of the said property, or to make necessary amendments to the register, as the case may be, and, if presented therefor, to make endorsement on the deed relating to the title, right or obligation concerned.

145. Division of societies

(1)Subject to the approval of the Registrar and subject to such conditions as may be prescribed in the rules, a society may, by a special resolution, resolve to divide itself into two or more societies.

(2)The resolution shall contain proposals for the division of the assets and liabilities of the society among the new societies into which it is proposed to divide, and shall prescribe the area of operation of, and specify the members who will constitute, each of the new societies; and the property of the society, other than land or an interest in land, shall vest in the new societies in accordance with the division determined in the resolution upon the registration of the new societies.

(3)Two copies of the resolution, signed by the Chairman of the meeting at which the resolution was passed and countersigned by the Secretary of the society, shall be sent within twenty-one days of the passing thereof to the Registrar, with three copies of the by-laws of the proposed new societies.

(4)Subject to being provided with such additional information as he may require, the Registrar may, if satisfied that the proposed division is in the interest of the members, and does not prejudice the rights of any creditor, register the resolution, the new societies and their respective by-laws, and cancel the registration of the original society; and until the resolution is so registered it shall not take effect.

(5)A division of a society in pursuance of this section shall not prejudice any right of a creditor of the society divided.

(6)Upon the registration as aforesaid, the Registrar shall endorse his certificate of registration upon one copy of the resolution and return it to the original society with his certificate of cancellation of its registration, and shall likewise endorse the by-laws of the new societies and send one copy thereof to each of the new societies with their certificates of registration.

Part XIX – Dissolution and winding-up

146. Dissolution of societies

(1)The Registrar may make an order in writing for the cancellation of the registration of a society if satisfied that—

(a)the registration was obtained by fraud or mistake; or

(b)the society exists for an illegal purpose; or

(c)the society has wilfully, after notice by the Registrar, contravened any of the provisions of this Act, the rules or the by-laws; or

(d)the society is no longer operating in accordance with co-operative principles; or

(e)the number of members of the society has fallen below the minimum required by this Act; or

(f)the society is no longer in business or operation; or

(g)the results of an investigation made under section one hundred and forty show that the society is unable to continue in business.

(2)Upon receipt by the Registrar of an application from a society made in pursuance of a special resolution and requesting the cancellation of the registration of that society, he may, subject to the immediately following subsections, make an order for the cancellation of the registration of such society.

(3)Any member of such a society may, within sixty days from the date of an order under subsection (1), appeal from such order to the Minister.

(4)Where no appeal is presented within sixty days from the making of an order cancelling the registration of a society under subsection (1), the order shall take effect upon the expiration of that period; but where an appeal is presented within sixty days, the order shall not take effect unless and until the appeal is disallowed by the Minister.

(5)Where the Registrar makes an order for the cancellation of the registration of a society under this section, he may make such further order as he may think fit for the custody of the books and documents and the protection of the assets of the society until the order cancelling the registration takes effect.

(6)No society shall be wound up except by order of the Registrar.

(7)When the registration of a society is cancelled by an order under this section, the society shall from the date on which the order takes effect cease to exist as a body corporate and shall cease to carry on any business, make any transactions or do any act affecting its property or its members or patrons.

(8)Where the registration of a society is cancelled by an order under this section, a floating charge on the undertaking or property of such society which was created within twelve months prior to the date of dissolution of such society shall, unless it is proved that the society, immediately after the creation of the charge, was solvent, be invalid except to the amount of any cash paid to the society at the time of or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at a rate not exceeding six per centum per annum.

147. Liquidation after cancellation of registration

(1)Where the Registrar makes an order cancelling the registration of a society under the provisions of section one hundred and forty-six, he may, either before or after the said order takes effect, also make an order appointing one or more persons to be, subject to his direction and control, liquidator or liquidators of the society.

(2)The assets of the registered society shall vest forthwith in the liquidator or liquidators appointed under this section with effect from the appointment:Provided that if any appeal made under the provisions of subsection (3) of section one hundred and forty-six is upheld and the order cancelling registration is set aside, then the appointment of any liquidator or liquidators shall cease forthwith and the assets of the society shall forthwith again vest in the society, but without prejudice to the validity of any acts lawfully performed by a liquidator in terms of this Act.

148. Liquidator's powers

(1)A liquidator appointed under the provisions of section one hundred and forty-seven shall, subject to the guidance and control of the Registrar, and to any limitations imposed by the Registrar by an order under the provisions of section one hundred and forty-nine, have power to—

(a)determine from time to time the contribution to be made by members and past members or by the estates or deceased members of the society to its assets;

(b)appoint, and give notice of, a day before which creditors, whose claims are not already recorded in the books of the society, shall state their claims or be excluded from any distribution;

(c)decide in accordance with the law relating to bankruptcy and subject to the provisions of section one hundred and fifty-three of this Act, any question of priority which arises between creditors;

(d)refer disputes to arbitration and institute and defend suits and other legal proceedings on behalf of the society;

(e)decide by what persons and in what proportions the costs of liquidation are to be borne;

(f)give such directions in regard to the collection and distribution of assets as may be necessary in the course of winding up the society;

(g)compromise any claim by or against the society with the approval of the Registrar;

(h)call such general meetings of members as may be necessary for the proper conduct of the liquidation;

(i)take possession of the books, documents and assets of the society;

(j)carry on the business of the society so far as may be necessary for winding it up beneficially, but not to issue any loans; and

(k)arrange for the distribution of the assets of the society in a convenient manner when a scheme of distribution has been approved by the Registrar.

(2)Subject to such rules as may be made in this behalf, any liquidator appointed under this Act shall, in so far as such powers are necessary for carrying out the purpose of this section, have power to summon and enforce the attendance of parties and witnesses, and to compel the production of documents by the same means and (so far as may be) in the manner as is provided in the case of a civil court.

149. Power of Registrar to control liquidation

A liquidator shall exercise his powers subject to control and revision by the Registrar, who may—

(a)rescind or vary any order made by a liquidator and make whatever new order is required;

(b)remove a liquidator from office;

(c)call for all books, documents and assets of the society;

(d)by order in writing limit the powers of the liquidator under the provisions of the foregoing section;

(e)require accounts to be rendered to him by the liquidator;

(f)procure the auditing of the liquidator's accounts and authorise the distribution of the assets of the society;

(g)make an order for the remuneration of the liquidator;

(h)refer any subject of dispute between a liquidator and any third party to arbitration if that party shall have consented in writing to be bound by the decision of the arbitrator.

150. Appeals against decisions

An appeal to a subordinate court of the first class, having jurisdiction over the area in which the headquarters of the society are situated, from any act, decision or instruction, done or given by a liquidator under the provisions of section one hundred and forty-eight, or by the Registrar under the provisions of section one hundred and forty-nine, may, with the written consent of the Attorney-General, be made in the manner prescribed in the rules.

151. Enforcement of decisions

Orders, decisions or instructions given under the provisions of sections one hundred and forty-eight, one-hundred and forty-nine and one hundred and fifty may be enforced as follows:

(a)when given by a liquidator or the Registrar, by any court having jurisdiction, in the same manner as a decree of such court;

(b)when given by a subordinate court of the first class on appeal, in the same manner as a decree of such court.

152. Limitation of the jurisdiction of the civil court

Save in so far as is hereinbefore expressly provided, no civil court shall have any jurisdiction in respect of any matter concerned with the dissolution of a society under this Act.

153. Closure of liquidation

(1)In the liquidation of a society whose registration has been cancelled, the funds, including the reserve fund, shall be applied first to the costs of liquidation, then to the discharge of the liabilities of the society, then to the payment of the share capital and then, if the by-laws of the society so permit, to the payment of a dividend at a rate not exceeding six per centum per annum for any period for which no disposal of the net surplus was made.

(2)When the liquidation of a society has been closed and any creditor of that society has not claimed or received what is due to him under the scheme of distribution, notice of the closing of the liquidation shall be published in the Gazette, and all claims against the funds of the society liquidated shall be cancelled when two years have elapsed from the date of the publication of the notice in the Gazette.

(3)Any surplus remaining after the application of the funds to the purposes specified in subsection (1), and to the payment of any claims not cancelled under subsection (2), shall—

(a)be distributed amongst the members at the time of dissolution (or their legal personal representatives) in proportion to the value of the business of each such member with the society during the three years immediately preceding the date of dissolution or, if the society has not existed for such period, during the existence of the society or, if the society has done no business during these three years, then in proportion to the share capital held by them at such date;

(b)if it is impracticable to make a distribution in accordance with paragraph (a) whether through insufficiency of funds or otherwise, be paid, subject to the approval of the Registrar (either in whole or as to any residue of a partial distribution) to local organisations with objectives beneficial to the community.

Part XX – Disputes

154. Settlement of disputes

(1)If any dispute touching the business of a society arises—

(a)among members, past members, and persons claiming through members, past members and deceased members; or

(b)between a member, past member, or person claiming through a member, past member or deceased member, and the society, its board of directors, or any officer of the society; or

(c)between the society or its board of directors and any officer of the society; or

(d)between the society and any other society;

such dispute may, unless the by-laws provide for the arbitration of disputes, be referred to the Registrar for decision.

(2)A claim by a society for any debt or demand due to it from a member, past member or the nominee or legal personal representative of a deceased member, shall be deemed to be a dispute touching the business of the society within the meaning of subsection (1).

(3)The Registrar may, on receipt of a reference under subsection (1)—

(a)decide the dispute himself; or

(b)refer it for disposal to an arbitrator or arbitrators:

Provided that if the question at issue in such dispute is one involving complicated questions of law and fact, or one of the parties requests that the dispute be referred to a civil court, the Registrar may, in his discretion, suspend proceedings in the matter until the question has been determined by a civil suit instituted by one of the parties to the dispute; if no such suit is instituted within six months of the Registrar's order suspending proceedings, the Registrar shall take action in accordance with the foregoing provisions of this subsection.

(4)Any party aggrieved by the award of the arbitrator or arbitrators may appeal therefrom to the Registrar within one month of such award.

(5)An appeal to the Minister against a decision of the Registrar under subsection (3) or (4) shall lie within two months of such decision.

(6)An award of the arbitrator or arbitrators, or a decision of the Registrar under the provisions of this section, if no appeal is made therefrom, or if any such appeal is lost, abandoned or withdrawn, and the decision of the Minister under subsection (5), shall be final and shall not be called in question in any civil court, and shall be enforced in the same manner as if the award or decision had been a judgment of a civil court.

155. Case stated on question of law

(1)Notwithstanding anything contained in the last foregoing section, the Registrar at any time, when proceeding to a decision under this Act, may refer any question of law involved in such decision for the opinion of the High Court.

(2)Any Judge, as the Chief Justice may direct, may consider and determine any question of law so referred, and the opinion given on such question shall be final and conclusive.

Part XXI – Rules

156. Purpose and contents of rules

(1)For the purpose of carrying out the provisions of this Act according to their intent, and to facilitate the administration of societies, the Minister may, by statutory instrument, make such rules and orders as are ancillary thereto and are not inconsistent therewith, for any society, or kinds or classes of societies, or societies seeking registration.

(2)Without restricting the generality of the foregoing, the Minister may make rules and orders respecting—

(a)provisions other than those prescribed in this Act which shall be contained in the by-laws of a society;

(b)fees to be paid under the provisions of this Act, or any rule;

(c)the procedure to be followed in applying for the registration of a society;

(d)model by-laws for different kinds of societies;

(e)the forms to be used, the conditions to be complied with and procedure to be followed by persons, societies or other organisations applying for admission as members;

(f)the rights in a society of a minor under the age of sixteen years, subject to section ninety-five;

(g)the manner in which payment of their interest in a society may be made to members who have been expelled;

(h)the procedure for the nomination of a person to receive a deceased member's shares or interest, and the manner in which the value of such shares or interest shall be ascertained;

(i)the procedure at general or special meetings of members, the order of business at such meetings, the nomination and election of officers, the methods of voting, the quorum at meetings and the reports of results of elections and of the appointment of officers which have to be forwarded to the Registrar;

(j)the procedure at meetings of boards of directors, the quorum and order of business at such meetings and the manner in which boards of directors shall carry out their duties;

(k)the procedure at meetings of credit committees and supervisory committees elected or appointed by a credit union or a federation, and the manner in which such committees shall carry out their duties;

(l)the duties of and procedure to be followed by officers, including the Chairman, Vice-Chairman, Secretary, Treasurer and Secretary-treasurer, and the manner in which these duties may be modified or altered when assigned to a manager or a managing director;

(m)the conditions under which a society marketing agricultural products, handling agricultural requisites or providing farming services may, subject to section thirty-three, be authorised to accept interest-bearing savings deposits from its members;

(n)the conditions under which a society marketing agricultural products, handling agricultural requisites or providing farming services may, subject to section thirty-five, be authorised to make loans to its members;

(o)the procedure by credit unions and federations in providing savings and credit services to their members under Part VIII or under paragraph (a) (iii) of section ninety-one, including the purchase and withdrawal of shares by members, the making and withdrawal of deposits by members, the manner of making loans to members, the deposit and payment of funds of the credit union or society, the maintenance of a cash fund to meet withdrawals, the qualifications of officers, and requirements for the keeping of records;

(p)the maintenance of reserve funds, the objects for which such funds may be applied, and the investment of funds controlled by a society;

(q)the minimum amount and form of security which may be required by the directors from any person appointed to an office relating to the receipt, management or expenditure of money;

(r)when a society shall be required to become a member of a federation registered under section ninety-one with objects which include the provision of auditing services, the appointment of such federation as auditor for the society;

(s)the manner in which any question of breach of contract involving the disposal of agricultural products or natural products to or through the society may be determined, and the manner in which liquidated damages for such breach may be assessed, if the question is not referred to the courts;

(t)the conditions under which funds may be raised by a society by means of the sale of bonds, debentures or other securities of the society, and the information respecting the sale of such bonds, debentures or securities to be filed with the Registrar or with a board constituted under section one hundred and sixty-four;

(u)the duties of and the procedure to be followed by a board constituted under section one hundred and sixty-four;

(v)the form of yearly or other financial returns and reports to be filed by societies with the Registrar;

(w)provision for the audit of the accounts of societies, for the charges, if any, to be made for such audit, for the levy of contributions from all or any societies to be paid into a fund to be used to finance the audit of such accounts, and for the administration of such fund.

Part XXII – Organisation and supervision

157. Assistance with co-operative organisation and education

(1)The Registrar or any person authorised to act for him shall, at the request of any person or groups of persons interested in the organisation of a society under this Act, furnish such information regarding co-operative principles, practices and organisation as will assist them in determining the feasibility of such organisation and facilitate registration.

(2)Where the Registrar is of the opinion that a group or groups of persons can improve the conditions under which they live, or can provide themselves with new services which they need, by the organisation, registration and operation by them of a society under this Act, the Registrar, or any person authorised to act for him, may offer to assist such group or groups of persons with such information respecting co-operative principles, practices and organisation as will enable them to determine the feasibility of such organisation and registration.

(3)Where a federation has been registered under Part XII with objects which include the provision of education and advisory work relating to co-operative enterprises and development, the Registrar may request such federation to furnish information regarding co-operative principles, practices and organisation required pursuant to subsection (1), or carry on such educational and advisory work as will assist in determining the feasibility of organising a society under the conditions mentioned in subsection (2).

158. Inspection and advisory services by registrar, etc.

(1)The Registrar, or any person authorised to act for him, shall provide, or cause to be provided, such inspection, examination, and technical or other information and advice regarding the affairs of a society as may be necessary to assist its officers and members in the due observance of and compliance with this Act, and in the achievement of the objects and the purposes of the society on a co-operative basis.

(2)Subject to the provisions of subsection (1), the Registrar may encourage and arrange with the officers of a federation registered under Part XII, where consistent with its objects, to provide such technical or other information and advice regarding the operations of a society which is a member of such federation, 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 the inspection and examination of its affairs.

(3)Subject to instructions from the Minister, the Director of Co-operative Societies may arrange with the proper officers of any department or agency of the Government that such 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 inspection and examination of its affairs in accordance with this section.

159. Registrar may supply by-laws

The Registrar may, upon request and upon an indication of the proposed objects or purposes, prepare such by-laws as may be required for any society, or proposed society.

160. Inspection of records

(1)Upon payment of the prescribed fee, any person may inspect in the office of the Registrar the by-laws of any society registered under this Act.

(2)A certified copy of the by-laws of any society registered under this Act may be furnished at cost.

(3)Except with the consent of the Registrar, no other document or part thereof relating to any society registered under this Act shall be available for search.

161. Appointment of special directors and other officers

(1)The Registrar may of his own accord, and shall on the direction of the Minister, appoint one or more special members to the board of directors of a society, or one or more special officers to manage the affairs of a society, or to assist the persons deemed to have all the powers and duties of directors under the provisions of subsection (3) of section one hundred and eleven, or to provide other services required for its management.

(2)The number of special members appointed to the board of directors under subsection (1) shall not exceed one-third of the number of directors prescribed in the by-laws, including the Chairman and the Vice-Chairman.

(3)Action may be taken under subsection (1) if—

(a)deemed necessary to assist the society to achieve its objects or otherwise deemed to be in the interests of the member; or

(b)the society has received a grant-in-aid from the Government or an agency of the Government; or

(c)money has been lent to the society by the Government or an agency of the Government and the loan or a portion thereof has not been repaid by the society; or

(d)a loan made to the society has been guaranteed by the Government or an agency of the Government, and either such guarantee is still outstanding or the Government or agency of the Government has been called upon to make a payment in respect of such guarantee, and the society has failed to pay to the Government or its agency all or a portion of the sum paid out as a result of the implementation of the guarantee.

(4)Special members appointed to the board of directors under subsection (1) shall exercise all the powers and responsibilities of directors elected by the members of the society under this Act.

(5)Special officers appointed under subsection (1) to provide services with respect to the management of the society shall exercise all the powers and responsibilities of officers appointed by or under the authority of directors under this Act.

(6)Special members appointed to the board of directors under this section may require that a decision of the board in any particular case shall not take effect until it has received the approval of the Minister or the Registrar, as the case may be.

(7)Special members appointed to the board of directors under this section shall assist the board in its duties and responsibilities as prescribed in section one hundred and thirteen, including the provision of training courses for directors and other officers, and in any educational or advisory work respecting co-operative principles and methods carried on among the members of the society under the direction of the board.

(8)The allowance or salary, if any, of a person or persons appointed under subsection (1) shall, if the Registrar so directs, be paid out of the society's funds.

(9)Where the objects of a society include the marketing of agricultural products, the handling of agricultural requisites or the marketing of natural products, management services to be provided to such society by special officers pursuant to action taken under subsection (1) may, with the approval of the Minister, be provided by another society or by or under the direction of a marketing board or other authority established by law for the purpose of marketing agricultural products, handling agricultural requisites or marketing natural products.

(10)Special members of the board of directors or special officers appointed under this section shall continue in office until the Registrar, subject to instructions from the Minister, is satisfied that the administration and management of the affairs of the society can be carried on exclusively by its elected directors, or officers appointed by or under the authority of such directors.

162. Removal of directors and other officers

(1)When the investigation of the affairs of a society discloses that elected directors or other officers are not performing their duties properly, or that their actions are detrimental to the interest of the members or creditors, the Registrar may of his own accord, and shall on the direction of the Minister, remove such directors or other officers, as the case maybe, from office, and order that the affairs of the society shall be administered by one or more special directors, or managed by one or more special officers, all to be appointed by him.

(2)Special directors appointed under subsection (1) shall have authority to exercise all the powers and responsibilities of directors elected by members of the society under this Act, and be entitled to receive such allowance or salary, if any, as the Registrar may determine.

(3)Special officers appointed under subsection (1) to provide services with respect to the management of the society, shall have authority to exercise all of the powers and responsibilities of officers appointed by or under the authority of directors of the society under this Act, and be entitled to receive such allowance or salary, if any, as the Registrar may determine.

(4)An order made by the Registrar under subsection (1), including the appointment of special directors or other officers to replace those removed, shall be reported by the Registrar or his representative to the next general meeting of members, giving the reasons therefor.

(5)The allowance or salary, if any, of persons appointed under subsection (1) shall, if the Registrar so directs, be paid out of the society's funds.

(6)Where the objects of the society include the marketing of agricultural products, the handling of agricultural requisites or the marketing of natural products, management services to be provided to such society by special officers pursuant to action taken under subsection (1) may, with the approval of the Minister, be provided by another society or by or under the direction of a marketing board or other authority established by law for the purpose of marketing agricultural products, handling agricultural requisites or marketing natural products.

(7)Special directors or other officers appointed under subsection (1) shall, at such times as the Registrar may approve, call meetings of the members of the society to report to them on the affairs of the society, and shall carry on amongst the members of the society such educational and advisory work respecting co-operative principles and practices as they deem necessary to facilitate resumption of the administration and management of the society by its own directors and officers.

(8)Special directors or other officers appointed under this section shall continue in office until the Registrar, subject to instructions from the Minister, is satisified that the administration and management of the affairs of the society can be resumed by its own directors and officers.

(9)Appointments of special directors or other officers made under this section, and the cancellation of the appointment of such special directors or other officers, shall be published by notice in the Gazette.

163. Appointment of administrator

(1)Where the Registrar is of the opinion that the financial position of a society, or the manner in which it is being operated, as disclosed by an investigation or an examination under this Act, necessitates the appointment of an administrator to protect the interests of members, he may of his own accord, and shall on the direction of the Minister, appoint an administrator and fix his remuneration.

(2)An administrator appointed under subsection (1) shall have all the powers and may perform all or any of the duties of the board of directors, of any committee or of any other officers, shall be responsible to the Registrar for the conduct of the business of the society, shall carry out all orders and directions of the Registrar with respect to the society and may pay the expenses of his administration out of the funds of the society.

(3)Where an administrator is appointed under subsection (1), no member of the board of directors or of any committee, nor any other officer of the society shall thereafter, so long as the administrator remains in charge of the conduct of the business of the society, exercise any of the powers conferred upon them by this Act, the rules or the by-laws.

(4)The administrator shall take steps and do all things necessary to protect the interests of the members and the rights of the creditors of the society and shall maintain, so far as is practicable, the services of the society to its members.

(5)For the purpose of this section, the administrator shall have access to all books, accounts, securities, documents, vouchers and cash of the society, and shall have control of all the property of the society.

(6)Subject to the approval of the Registrar, the administrator may call a meeting of the members of the society to report to them on the affairs of the society and the steps taken by him to protect their interests.

(7)The administrator shall conduct the business of the society until the Registrar, subject to instructions from the Minister, is satisfied that the administration and management of its affairs can be resumed by its own directors or other officers, or until the society is dissolved and a liquidator appointed.

164. Board of review

(1)The Minister may constitute a board of not more than five persons to review, at his request—

(a)applications by societies for grants-in-aid from the Government, or proposals to make such grants-in-aid to societies;

(b)applications from societies for loans from the Government or from an agency of the Government, or for the consolidation or refinancing of such loans if they have not been repaid in whole or in part;

(c)applications from lending agencies for guarantees of the repayment of moneys lent, or to be lent to societies;

(d)the information filed with the Registrar respecting the proposed sale of securities by a society pursuant to subsection (3) of section one hundred and sixty-six.

(2)The board may recommend, for the consideration of the Minister, approval of or changes in an application made pursuant to paragraphs (a), (b) and (c) of subsection (1) and may prescribe conditions which have to be complied with by a society before receiving any grant or loan, or before any guarantee is given.

(3)When the board is requested to review the information filed with the Registrar pursuant to subsection (3) of section one hundred and sixty-six, the board may, subject to the approval of the Minister, prescribe the manner of creating and setting aside by the society of reserves, or prescribe some other plan to be put into effect by such society for the purpose of ensuring the payment of interest on securities sold and the repayment of the principal sum secured thereby, as and when the interest and principal respectively become due.

(4)If the board disapproves of an application referred to it pursuant to paragraphs (a), (b) and (c) of subsection (1), or of the proposed sale of securities pursuant to paragraph (d) of that subsection, the board shall report the reasons for such disapproval to the Minister.

Part XXIII – Miscellaneous

165. Recovery of sums due to Government

(1)All sums due to the Government from society, or from an officer or member or past member of a society, as such, may be recovered in the manner provided for the recovery of debts due to the Government under the law for the time being in force.

(2)Sums due from a society to the Government may be recovered firstly from the property of the society and secondly from the members, subject to the limit of their liability.

166. Special exemptions

(1)A credit union registered for the promotion of thrift amongst its members and the creation of a source of credit for its members as provided under section fifty-three, and any federation registered for objects and purposes provided in paragraph (c) of section ninety-one, shall be exempt from the provisions of any written law specially governing banks.

(2)The Minister may, by statutory instrument, remit in the case of any society or class of societies any fee payable under any law requiring registration and for the time being in force:Provided that such remittance of duty or fees may be withdrawn by the Minister at any time in like manner.

(3)A society shall be exempt from the provisions of any written law for the time being in force governing the sale of securities:Provided that if the society intends to invite its members or the public, or both, to subscribe for or purchase any bonds or debentures or any other securities of the society, having a definite date of maturity and bearing interest, it shall, before making such offer, file with the Registrar such information as he may require, or as the rules may prescribe, including the amount to be offered for purchase or subscription, the purposes for which the amount to be subscribed or purchased is to be used, and the security to be offered.

(4)Notwithstanding anything in the Trades Licensing Act, or any subsequent law relating to trade licensing, it shall not be obligatory upon any society to obtain a licence to carry on trade or business in so far as the trade or business carried on is exclusively with the members of the society.[Cap. 393]

167. Power to exempt societies from provisions of this Act

The Minister may, by statutory instrument, exempt any society or class of societies from any of the provisions of this Act under such conditions as he may think fit, or may direct that such provisions shall apply to any society or class of societies with effect from such date or with such modifications as may be specified in the order.

168. Prohibition of the use of the words "co-operative" or "credit union"

(1)No person, other than a society, shall trade or carry on business under any name or title of which the word "co-operative" or of which the words "credit union" constitute a part without the approval of the Minister.

(2)Any person who contravenes the provisions of this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding one hundred penalty units, and, in the case of a continuing offence, to a further fine not exceeding twenty penalty units for each day during which the offence continues.

[As amended by Act No. 13 of 1994]

169. Companies Act not to apply

The provisions of the Companies Act (or any Act which replaces it) shall not apply to a society.[Cap. 388]

170. Offences and penalties

(1)Any officer or member of a society who—

(a)wilfully fails to give any notice, send any return or document, or fails to do or allow to be done any act or thing which the society is required by this Act to give, send, do or allow to be done; or

(b)wilfully neglects or refuses to do any act or furnish any information required for the purposes of this Act by the Registrar or any other official or person whose duties require him to obtain the information, or wilfully does any act or thing forbidden by this Act; or

(c)wilfully makes a record or a return or furnishes information in any respect false or insufficient;

shall be guilty of an offence.

(2)Any person found guilty of an offence under this Act shall be liable on conviction, where no penalty is specially provided, to a fine not exceeding one thousand penalty units, or to imprisonment for a term not exceeding six months, or to both.

(3)If a society fails or refuses to forward a return or document required by the Registrar for the purposes of this Act, the Registrar may, notwithstanding any other provision of this Act, make an order for the cancellation of the registration of the society and remove its name from the register of societies maintained in his office.

(4)If a society remedies the default referred to in subsection (3), the Registrar may issue a new certificate of registration upon payment of the fees prescribed for that purpose, and restore the society to the register of societies, and thereupon the society shall be deemed to have continued in existence, and the society and all persons shall be in the same position as if the registration of the society had never been cancelled.

[As amended by Act No. 13 of 1994]

171. Misdealings with property

(1)If any person unlawfully obtains possession of any property or moneys belonging to a society, or, having such property or moneys in his possession unlawfully and without a claim of right, withholds the same or mis-applies the same or wilfully applies the whole or any part thereof to purposes other than those permitted by this Act, the rule or the by-laws, he shall be guilty of an offence.

(2)Any person convicted of an offence under subsection (1) may, at the time when sentence is passed, be ordered to return, deliver up or repay the aforesaid property or moneys either forthwith or within a stipulated time and, in default of compliance, to be imprisoned for a term not exceeding six months.

(3)Imprisonment imposed under the provisions of subsection (2) shall terminate forthwith in the event of the property or moneys being returned, delivered up or repaid before the expiration of the sentence.

(4)No prosecution shall be brought under the section without the written consent of the Director of Public Prosecutions.

172. Repeal and savings

(1)The Co-operative Societies Act, Chapter 689 of the Revised Edition (hereinafter referred to as the "repealed Act") is hereby repealed.

(2)Notwithstanding the provisions of subsection (1)—

(a)every society, and all the by-laws of a society, registered under the repealed Act, shall be deemed to have been registered under this Act;

(b)any register kept pursuant to the repealed Act shall be deemed to be part of a register to be kept under this Act;

(c)any documents referring to a provision of the repealed Act shall be construed as referring to a corresponding provision of this Act;

(d)any orders, rules and directions, appointments and other acts, lawfully made or done under a provision of the repealed Act, or appointments made for the administration thereof, and in force immediately before the commencement of this Act, shall be deemed to have been made or done under the corresponding provision of this Act or for the administration of this Act, and shall continue to have effect accordingly in so far as they are not inconsistent with the provisions of this Act.

First Schedule (Section 19)

Powers of societies

For the purpose of carrying out its objects, every society shall, subject to the provisions of this Act and the rules, have the following powers unless these powers or any of them are expressly excluded or modified by its by-laws:

(a)Purchase of propertyto purchase, take on lease or in exchange, hire or otherwise acquire and hold any movable or immovable property, and any rights and privileges the society deems necessary or convenient for the attainment of its objects;

(b)Sale of propertyto sell, exchange, lease, dispose of, turn to account or otherwise deal with all or any part of the property and rights of the society;

(c)Management of propertyto manage, improve and develop the property of the society;

(d)Borrowingto borrow or raise money—

(i)by mortgage of any of the land or buildings of the society;

(ii)by the issue of bonds or debentures conferring no charge, or a fixed or floating charge, upon all of the assets and undertakings of the society, including its uncalled capital;

(iii)by pledging as security the products, goods, wares, merchandise and other property vested in or acquired by the society;

(e)Contractsto enter into any contract or arrangement whatever for or incidental to the attainment of its objects;

(f)Loans and advancesto make loans or advances to its members;

(g)Savingsto accept the savings of its members;

(h)Construction of roads, factories, etc.to construct, improve, maintain, develop, work, manage, carry out or control any roads, warehouses, factories, buildings, shops, stores and any other works or conveniences that may seem directly or indirectly calculated to assist to advance the interests of the society and its members;

(i)Purchase of businessto purchase or otherwise acquire or undertake all or any part of the business of, and to assume the whole or any part of the liabilities of, any person, company or another society carrying on any business which the society is authorised to carry on;

(j)Arrangements with other societies or companiesto become a member of, or to take or otherwise acquire and hold shares or securities of, any other society or company with limited liability having objects wholly or in part similar to those of the society, or carry on any business capable of being conducted so as to benefit the society in accordance with its objects, and sell or otherwise deal with the same;

(k)Membership in savings and credit societiesto become a member of a credit union or of any federation registered with objects described in paragraph (a)(iii) of section ninety-one, and to purchase shares from, or loan to, or borrow money from, such credit union or federation;

(l)Amalgamation or partnershipto amalgamate with or enter into any agreement for co-operation with any other society having objects wholly or in part similar to the objects of the society;

(m)Co-operationto agree with any persons, company or society to employ and use the same personnel, methods, means or agencies for carrying on and conducting their respective businesses or services;

(n)Arrangements with Government and other authoritiesto enter into any arrangements with the Government or any authority, national, provincial, district, municipal, local or otherwise, that may seem beneficial to the society, and to obtain from the Government or authority any rights, privileges and concessions which the society may think it desirable to obtain, and carry out, exercise and comply with such arrangements, rights, privileges and concessions;

(o)Promissory notes, etc.to draw, make, accept, endorse, execute and issue promissory notes, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments;

(p)Investment of fundssave as provided in section fifty-seven (which relates to credit unions), to invest or deposit moneys of the society not immediately required—

(i)in the Post Office Savings Bank; or

(ii)in any commercial bank in Zambia; or

(iii)in any securities issued or guaranteed by the Government; or

(iv)in such other manner as may be decided by the board of directors and either sanctioned by this Act or the rules, or approved by the Registrar;

(q)Benefits to members and employeesto become a member of such other society or company as the Registrar may permit for the purpose of establishing and supporting or aiding in the establishment and support of trusts, funds and institutions calculated to benefit members, employees or ex-employees of the society, or the dependants or relatives of such persons, to grant benefits and allowances, and to make payments towards insurance;

(r)Support of community organisationsto subscribe or guarantee money for local organisations with objectives beneficial to the community;

(s)Issue of shares for property or servicesto issue fully paid-up shares of capital stock or other securities of the society to a member in payment or part payment of any immovable or movable property purchased or otherwise acquired by the society from that member, or for labour, services or materials sold to the society by that member;

(t)Sale of undertakingto sell or dispose of the undertaking of the society or any part thereof for such consideration as the society thinks fit;

(u)Co-operative educationto carry on, encourage and assist educational and advisory work relating to co-operation and the objects of the society;

(v)To operate branchesto enlarge the business of the society and its services to members by the operation of branches;

(w)Hold mortgages and liensto take or hold mortgages, hypothecs, liens and charges to secure the price of any part of the property of the society of whatever kind sold by the society or any money due to the society, and to assign or otherwise dispose of the said mortgages, hypothecs, liens and charges;

(x)Appointment of officialsto appoint or employ such officials, servants or other persons as the board of directors thinks necessary, to fix the terms and conditions of their appointment or employment, and to pay them remuneration according to these terms and conditions;

(y)General powersgenerally to carry on and undertake any business or service which may seem capable of being conveniently carried on in connection with the objects of the society, or calculated directly or indirectly to benefit the society and its members, and to insure against any losses, damage, risks or liabilities which the society may incur.

Second Schedule (Section 20)

Matters required to be in the by-laws of a society

Every society shall have by-laws in respect of the following matters:

1.The name of the society.

2.The place and postal address of its registered office.

3.The objects for which the society is established.

4.The value of each share if the society is formed with capital divided into shares, and whether the capital is limited or unlimited in amount.

5.The qualifications for membership.

6.The minimum number of shares to be subscribed for by each member as a condition of being admitted to membership, the minimum amount payable on application on each share so subscribed which shall not be less than ten per centum of its value, the method of payment of the amount, if any, remaining unpaid on the minimum subscription for shares, and the method of allotment of and payment for any additional shares.

7.If there is no share capital, the terms of membership and the basis on which the interest of the member in the society will be determined.

8.The entrance fee, if any.

9.The annual membership fee, if any.

10.The purposes to which funds may be applied.

11.The composition of the board of directors.

12.The manner of distributing the net surplus.

13.The conditions on which a member may withdraw from membership.

14.The geographical area of operation of the society.

15.The term of office of the directors.

16.The holding of annual general meetings.

17.The honorarium (if any) to be paid to the officers of the society.

18.The dates of the society's financial year.

19.Subject to the provisions of section seventy-nine in the case of a credit union, the method of constituting, operating and allocating the reserve fund and the amount or method of fixing the amount to be contributed thereto.

20.Such other matters concerning the administration and operation of the society as may be required by the rules or by the Registrar.

History of this document

31 December 1996 You are here

31 December 1996 You are here

Chapter 397

Consolidation
01 March 1972

01 March 1972

Published

Commenced

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Co-operative Societies Act, 1970

Chapter 397

Co-operative Societies Act, 1970

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Co-operative Societies Act, 1970

Chapter 397

Part I – Preliminary

1. Short title

2. Interpretation

Part II – Responsibilities of the Minister

3. Encouragement of co-operative development

4. Responsibilities of Minister

5. Information on co-operation

6. Persons required to furnish information to Minister

7. Annual report on societies

Part III – Public officers

8. Director

9. Registrar

Part IV – Registration and organisation of co-operative societies

10. Procedure for registration

11. Requirements before registration

12. Certificate of registration

13. Societies to be bodies corporate

14. Conversion of a company into a society

15. Limited liability

16. Display of registered name

17. Dealers or traders not to register under this Act

18. Registrar may require societies to form or join a co-operative union

19. Powers of societies

20. By-laws

21. Amendments to by-laws

22. Copy of Act, rules and by-laws to be open to inspection

23. Reserve fund and distribution of net surplus

24. Kinds of societies not restricted

Part V – Societies for rural development

25. Co-operative marketing

26. Distribution of agricultural requisites, etc.

27. Co-operative farming

28. Multi-purpose societies

29. Society as agent of marketing board

30. Allotment of shares in lieu of patronage bonus or other payment

31. Borrowing of patronage bonus or other payment

32. Marketing contracts

33. Encouragement of thrift

34. Registration of by-laws to encourage thrift

35. Provision of credit by agricultural societies

36. Board of directors to supervise credit and loans

37. Registration of by-laws for the provision of agricultural credit

38. A society may combine thrift services with the provison of credit

39. Farm machinery and related services

40. Assistance to livestock, dairy and poultry producers, etc.

41. Land improvement services

42. Special provisions in the by-laws

43. Advisory or supervisory services for farmers

44. Storage of agricultural products

45. Transportation of agricultural products and farm supplies

Part VI – Co-operative services for producers of natural products

46. Co-operative services for producers of natural products

Part VII – Building construction and housing societies

47. Building construction society

48. Housing society

49. Special powers

50. Commencement of operations

51. Special features

52. Sinking fund

Part VIII – Credit unions

53. Objects of a credit union

54. Name

55. Membership generally

56. Membership of certain organisations

57. Powers of a credit union

58. Borrowing powers of a credit union

59. Commencement of lending operations

60. Land and buildings

61. Election and appointment of officers

62. Special duties of directors

63. Jurisdiction of credit committee

64. Loans by credit unions

65. Maximum of loans to a member

66. No loans in certain cases