Application of Societies Property and Funds:

1.                  Section 42 provides that society property and funds shall only be applied for its benefit and its members benefit.
2.                  Restriction on giving Loans – this provides that a society shall not give a loan nor allow any credit to a person other than a member unless its bylaws provide for giving such a loan subject to a resolution passed at the annual general meeting.
3.                  Restriction on Borrowing:            Here a society may receive receipts loans from non-members only to such extent and under such conditions as its bylaws or rules allow.  In this connection a deposit of money under a higher purchase agreement shall be deemed to be a law.
4.                  Investments of society funds:       A society may invest or deposit its funds only in the following:
(a)                In the Post Office Savings Bank;
(b)               In and upon such investments and securities as are for the time being authorised for investment of Trust Funds;
(c)                In the Shares of any other cooperative;
(d)               With any bank licensed under the Banking Act; and
(e)                In the stock or any statutory body established in Kenya or in any limited liability company incorporated in Kenya or in any other manner approved by a resolution at an annual general meeting.

5.         Declaration and Payment of Bonus:   Every society shall declare each year all bonuses due to members but where the bonuses are required for re-investment for capital development or for the redemption of Bonus Certificates, it shall issue Bonus Certificates to members in lieu of cash payments redeemable from a revolving fund established for that purpose.  No society shall pay a dividend bonus or distribute any part of its accumulated funds without a balance sheet and audited account and report disclosing the surplus funds out of which these are to be made.  A Society shall pay a dividend at such a rate as may be recommended by the management committee and approved by the annual general meeting.

6.         Maintenance of a Reserve Fund:        It is provided that every society which does or can derive surplus from its consumptions shall maintain a reserve fund to which may be carried such portion of the net surplus in each year as may be prescribed by rules under the Act or Society bylaws.


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