REGULATION AND SUPERVISION OF SACCO SOCIETIES
Regulation and supervision of Sacco societies
The Authority shall be responsible for the regulation and supervision of Sacco societies to which this Act applies.
Without prejudice to the generality of subsection (1), the Authority shall—
(a) prescribe prudential standards to be adhered to by Sacco societies;
(b) undertake inspections or require a Sacco society to submit information and reports on its financial affairs of the deposit-taking business to enable the Authority to evaluate the society’s financial condition;
(c) require or oversee Sacco societies’ workout plan to avert or alleviate financial difficulties;
(d) prescribe the maximum number of years an external auditor may serve the same Sacco society;
(e) exercise such incidental powers as may be necessary or requisite to enable it to effectively carry out its functions under this Act.
Powers of the Authority to inspect
The Authority may, at any time and from time to time, and shall, if so directed by the Minister, cause an inspection to be made by any person authorized by the Authority in writing of any Sacco society and of its books, accounts and records.
The Authority shall assist any investigative authority regarding matters of suspected fraud or malpractice in Sacco societies either by identification of such matters for referral or at the request of such authority.
Where an inspection is made under subsection (1), the society concerned and every officer or employee thereof shall produce and make available to the person making the inspection, all books, accounts, records and other documents of the Sacco society and such correspondence, statements and information relating to the society as the person making the inspection may require, and within such period as he may direct in writing.
A person who fails to produce any books, accounts, records, documents, correspondence, statements or the information required under subsection (2), within the period specified in the relevant direction, commits an offence.
The person making the inspection shall prepare and submit a report to the Authority, and the report shall state—
(a) any breach or contravention of any of the provisions of this Act or any regulations made under this Act;
(b) any irregularity in the manner of conduct of the inspected society;
(c) any mismanagement of a Sacco society; and
(d) any other matter relating to a Sacco society not consistent with sound and prudent business practice.
A copy of the report of the findings of an inspection under subsection (1) shall be submitted by the Authority to the Commissioner.
A report of the findings of an inspection under subsection (1) shall, in addition to any action that may be taken under the Co-operative Societies Act, 1997 (No. 12 of 1997) be presented by the Authority to the board of directors of
the Sacco society.
Powers of the Authority to advise and direct
If, at any time, the Authority has reason to believe that—
(a) the business of a Sacco society is being conducted in a manner contrary to or not in compliance with the requirements of this Act or of any regulations made thereunder or in any manner detrimental to or not in the best interest of its members or members of the public; or
(b) a Sacco society, any of its officers or any other person participating in the management of the society is engaged in any practice likely to occasion a contravention of any of the provisions of this Act or any regulations made thereunder, or any other Act, the Authority may—
(i) give advice and make recommendations to the Sacco society with regard to the conduct of its business generally;
(ii) issue directions regarding measures to be taken to improve the management or business methods of the society or to secure or improve compliance with the requirements of this Act, any regulations made thereunder or any other written law or regulations;
(iii) in any case to which paragraph (b) applies, issue directions to the Sacco society, officer or other person to cease such practice;
(iv) appoint a person, suitably qualified and competent in the opinion of the Authority, to advise and assist the Sacco society generally or for the purposes of implementing any directions under subparagraphs (ii) and (iii).
The advice of a person appointed under subsection 1(b)(iv) shall have the same force and effect as a direction made under subsection 1(b)(ii) and (iii) and shall be deemed to be a direction of the Authority under this section.
The Authority shall, before issuing a direction under subsection (1), serve upon the Sacco society, officer or other person, a notice of such intent specifying the reasons therefor and requiring the Sacco society, officer or other persons, within such period as may be specified in the notice, to show cause why such direction should not be issued.
A Sacco society which receives a direction under this section shall comply with the direction within such period as may be specified in the direction and, if so required, shall produce evidence that it has done so.
The Authority may issue directions to a Sacco society generally, and where appropriate provide exceptions to those directions to be detailed at time of issuance for the better carrying out of its functions under this Act and in particular, with respect to—
(a) the prudential standards to be adhered to by a Sacco society in the conduct of its business in Kenya; and
(b) regulations to be adhered to by Sacco societies in order to maintain a stable and efficient deposit-taking Sacco movement and financial system.
A person who fails to comply with any direction under this section commits an offence and shall, in addition to the penalty prescribed under this Act, be liable to such additional penalty as may be prescribed for each day or part thereof during which the offence continues.
The Authority may impose minimum standards on significant members and officers of a Sacco society as prescribed.
