ADVISORY OPINION ON REGISTRATION

OF INVESTMENT GROUPS IN KENYA

A brief analysis on the different methods, cost and timelines of registering
and investment group in Kenya

INTRODUCTION
Following the instructions of the Kahuhia Girls High School Alumni Group on the various
methods that an investment group may be established, we hereby render our opinion as
follows;
1. SACCO
Overview
Sacco industry is part of the cooperative sector in Kenya, which has impacted on lives of
many Kenyans over the years. Saccos in Kenya may be categorized into nancial and
non-nancial cooperatives. Non-nancial cooperatives deal with the marketing of
members produce and services such as dairy, livestock coffee, tea, handicrafts and many
more similar cooperatives. On the other hand nancial cooperatives comprise Saccos,
housing and investment cooperatives
The Sacco sub sector can be described as two-tiered given the range of nancial services
to members and regulatory regime:
i.

The traditional Savings and Credit Cooperative Societies (Saccos) - described

in law as Non-Deposit taking Saccos provide a limited range of savings and credit
products, are registered and supervised under the Cooperative Services Act, CAP
490.

ii.

The Deposit Taking Saccos (DTS) - besides the basic savings and credit products,
also provide basic banking services (demand deposits, payments services and
channels such as quasi banking services commonly known as ATMs), FOSA (Front
Office Services Activities) and are licensed and supervised under the Sacco
Societies Act of, 2008.

The general trend is that Saccos start as non-deposit taking Sacco business and
grow to deposit taking Sacco business to expand the range of nancial services to
members.
Membership Requirements
As per the Law, a Savings and Credit Cooperative Society should have at least ten
Members. However, our consultations with the Sacco officials indicate a preference
for twenty (20) members
A member must be at least eighteen (18) years of age;
Every member must have a common need with other members of the society;
A member must be in an occupation relevant to the primary society;
A member must be capable of paying fees and buying shares.

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Procedure
Pre-registration Requirements ( Operational not in the Act)
Applicants should write a letter to the County Cooperative Officer (CCO) requesting
to be registered as a pre-cooperative society indicating their intention to do so;
The letter should;
Define the group and its location;
Outline the objectives of the group;
Please note that the Act provides that a society should have the
following objects
(a) the promotion of the welfare and economic interests of its
members;
And
(b) has incorporated in its by-laws the following co-operative
principles
(i) voluntary and open membership;
(ii) democratic member control;
(iii) economic participation by members;
(iv) autonomy and independence;
(v) education, training and information;
(vi) co-operation among co-operatives; and
(vii) concern for community in general,
Provide contact person to coordinate the registration;
Propose a tentative date for pre-cooperative training of potential
members
enclose a signed list of potential members and their ID numbers;
The members should then arrange for meeting (pre-cooperative training) that must be
chaired by the County Cooperative Officer (CCO).
The meeting is set in order for cooperative members to decide whether to proceed with
registration and to elect a Formation Board/committee with a Chairman and a Secretary.
Registration
An application to register a society shall be made to the Commissioner for
Cooperative Development in the prescribed form and signed by ten members.
The application shall be accompanied by four copies of the proposed by laws of the
society in English.

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 The application shall be accompanied by a payment of Kshs.6,500/= together with 3

proposed names of the SACCO.
It is important to note that the law provides that no society shall be registered under
a name identical with that under which any other existing society is registered, or
under any name likely, in the opinion of the Commissioner, to mislead the members
of the public as to its identity.
Please note that the word Co-operative shall form part of the name of every
co-operative society, and the word Limited shall be the last word in the name
of every co-operative society having limited liability.
If the Commissioner is satisfied that a society has complied with the Cooperatives Act and
its by-laws are not contrary to the Cooperative Societies Act or any rules, then the
Commissioner shall register it.
The registration process takes approximately 60 days.
Licensing by SACCO Societies Regulatory Authority (SASRA) to undertaking deposit
taking business
A SACCO Society shall not carry out deposit-taking business without a valid license from
the SACCO Societies Regulatory Authority (SASRA). In order to get this license an
application should be made to the Authority and the following documents are necessary:
i.

A completed application for the license together with the fit and proper test

ii.

A certified copy of the SACCO Societys registration certificate, under the

Cooperative Societies Act

iii.

A verified official notification of the Sacco Societys registered head office

iv.

A certified copy of the Sacco Societys bylaws

v.

A 3 year business plan and feasibility study of the Sacco society to be licensed
detailing the vision and mission, scope and nature of the business operations

vi.

Certified extract of minutes of the general meeting resolution authorizing the

application for deposit taking license

vii.

Name of the proposed C.E.O

viii.

Certified copies of financial statements for the preceding three years- A newly
registered SACCO cannot be issued a license until expiry of 3 years from the date of
their registration.

ix.

Evidence that the Sacco Society has adequate capital; and

x.

An application fee of Kshs. 3,000/=

If the Authority is satisfied that the above requirements have been fulfilled it shall issue a
letter of intent to the Sacco society to put the following in place:
i.

Institutional infrastructure, adequate space, banking hall, strong room and safe
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ii.
iii.

An information management system capable of performing and accounting for all

transactions and providing the minimum reports required by the authority
Risk management policies and internal control systems

Once you have completed the following requirements then the Authority shall conduct an
independent on-site inspection to ascertain compliance within 30 days. Once satisfied, the
Authority shall issue a compliance letter allowing the Sacco society to pay the required
license fees within 30 days. Finally, it shall issue a license upon the applicant Sacco society
paying a license fee of fifty thousand shillings (Kshs. 50,000/=) for head office; and Kshs.
20,000 for each branch.
The main disadvantage of a deposit taking Sacco is that it can only undertake deposit
taking business after 3 years of registration as a Sacco and upon acquiring a licence
from SASRA
MANAGEMENT OF CO-OPERATIVE SOCIETIES
General meetings
The supreme authority of a co-operative society is vested in the general meeting at
which members shall have the right to attend, participate and vote on all matters.
A co-operative society is required by law to hold an annual general meeting within
four months after the end of each financial year.
In the first year after registration of a co-operative society, the general meeting shall
be held not later than one month after receipt of the certificate of registration of the
co-operative society and during such meeting, the members shall:
(a) elect the co-operative societys office bearers for the ensuing year;
(b) determine the maximum borrowing powers of the co-operative society;
(c) consider and approve estimates of income and expenditure for the
ensuing financial
year or part thereof;
(d) appoint the co-operative societys bankers and auditors; and
(e) receive reports and decide upon such other matters as may be necessary
for the conduct of the co-operative societys business.
A general meeting of a co-operative society shall be convened by giving at least
fifteen days written notice to the members.
At the annual general meeting of a co-operative society, the members shall
(a) consider and confirm the minutes of the last general meeting;
(b) consider any reports of the Committee or the Commissioner;
(c) consider and adopt audited accounts;
(d) determine the manner in which any available surplus is to be distributed or
invested;
(e) elect the co-operative societys office bearers for the ensuing year;
(f) determine, where necessary, the maximum borrowing power of the
society;
(g) appoint an auditor for the ensuing year; and
(h) transact any other general business of the co-operative society of which
notice has been given to members in the manner prescribed in the by-laws of
the co-operative society.
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 The chairman or in his absence the vice-chairman or such other person as may be
prescribed in the by-laws of the co-operative society shall preside at a general
meeting of a co-operative society.
Membership, powers and responsibilities of the Committee
Every co-operative society shall have a Committee consisting of not less than five
and not more than nine members.
The members of the Committee shall elect a chairman and a vice-chairman from
among their number.
The Committee shall be the governing body of the society and shall, subject to any
direction from a general meeting or the by-laws of the co-operative society, direct the
affairs of the co-operative society. However, the Committee may delegate any of its
duties under this Act to an officer or officers of the co-operative society but, the
Committee is ultimately responsibility for running the affairs of the co-operative
society in a proper and business-like manner.
In the conduct of the affairs of a co-operative society, the Committee shall
exercise the prudence and diligence of ordinary men of business and the member
shall be held, jointly and severally liable for any losses sustained through any of their
acts which are contrary to the to the Act, rules, by-laws or the directions of any
general meeting of the co-operative society.
Committee Membership Criteria ( leadership and integrity)
The Act provides that no person shall be a member of a Committee if he/she
(a) is not a member of the co-operative society;
(b) is under eighteen years of age;
(c) is unable to read and write;
(d) receives any remuneration, salary or other payment from the co-operative society
save in accordance with this Act;
(e) is a committee member in two other co-operative societies;
(f) being a member of a co-operative society that lends money to its members, lends
money on his own account;
(g) being a member of a co-operative society which trades in goods or produce,
trades either on his own account or some other persons account in the same type of
goods or produce;
(h) has not, within thirty days of being appointed, declared his wealth to the
Commissioner in the prescribed manner;
(i) is an undischarged bankrupt;
(j) is of unsound mind;
(k) has been adversely named by the Commissioner in an inquiry report adopted by
a general meeting for mismanagement or corrupt practices while a member of the
Committee;
(l) has been convicted of any offence involving dishonesty or is sentenced to
imprisonment for a term exceeding three months;
(m) has been convicted of any offence under this Act or rules made thereunder;
(n) has any uncleared debt owing to a co-operative society at the end of its financial
year other than in respect of a loan under the provision of any rules made under this
Act;
(o) is a person against whom any amount of money is due under a decree, decision
or order or is pending recovery under this Act.
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NB: This write -up is a general over-view but the Act covers all aspects in much
greater details which members can go through.
2. Public Company
Overview
One of the methods of registration of an investment group is through a company.
Companies are classified as either public or private company, the distinguishing factor being
the number of members that can form a company and the ability of the company to
company to invite members of the public to subscribe to its shares.
A company is defined as a public company if:
i.
ii.

its articles allow its members the right to transfer their shares in the company;
its articles do not prohibit invitations to the public to subscribe for shares or
debentures of the company ; and
its certificate of incorporation states that it is a public company.

iii.

A company is defined as a private company if:

i.
ii.
iii.

its articles restrict a member's right to transfer shares;

its articles limit the number of members to fifty; and
its articles prohibit invitations to the public to subscribe for shares or debentures of
the company;
its certificate of incorporation states that it is a private company.

iv.

Stemming from the fact that Kahuhia Girls High School Alumni Group has about 147
members, the company can only be a public company. The management of a public
company is the same as that of a private company save for the following:
i.
ii.
iii.

A public company must have a company secretary;

It must have at least two directors one of whom must be a natural person
Every public company must hold an AGM within six months of its accounting
reference date in each year; failure to hold an AGM is an offence
A public company must publicize its financial statements and companys reports to
every member of the company at least 21 days before the date of the AGM;
A public company must file with the Registrar of Companies the financial statements
of the company within six months after the end of the companys relevant accounting
reference period.

iv.
v.

The main disadvantage of a public company is that it cannot purchase agricultural

land.
S 9 of the Land Control Act provides that the a Land Control Board shall refuse consent in
respect of agricultural land where the transfer, lease, exchange or partition is to a person
who is not;

i.

A Kenyan citizen;
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ii.

A private company or cooperative society all of whose members are Kenyan

citizens;

iii.

A group representatives incorporated under the Land (Group Representatives)

Act; or

iv.

A state corporation within the meaning of the State Corporations Act

Requirements
i.
ii.

At least three (3) names for search and reservation at the Companys registry;
main line of business that shall be carried out by the company on
incorporation(primary objects)
iii. other lines of business that shall be carried out by the company on incorporation
(secondary objects)
iv. Particulars of Directors of the Company including full names, occupation, nationality,
ID No/passport numbe, date of Birth(dd/mm/yy), telephone number, email address,
particulars of directorships in other companies in Kenya, residence, and copy of
ID/passport, PIN and 3 passport photos of all the Directors.
v. Particulars of subscribers - If this is different from the directors the following details
are necessary names of each subscriber their postal addresses, nationality, ID
number, telephone number, email address and their occupations must be
particularized for registration and copy of ID/passport, PIN and 3 passport photos of
all the subscribers.
vi.
Number of Shares taken up by each shareholder and the distribution of shares
among shareholders.
vii. Proposed Nominal Share Capital of the company;
viii. Value of each share
ix. Particulars of company secretary of the Company including full names, occupation,
nationality, ID No/passport number, date of Birth(dd/mm/yy), telephone number, email
address, residence, and copy of ID/passport, PIN and 3 passport photos of all the
Directors
x. The physical address of the registered office of the company upon registration i.e name
of Building, Name of Road and Land Reference Number of the Company. Including the
floor and room number of the office;
xi. Postal address of the business, telephone number (office number and mobile number)
and email address;
xii. Other information such as target business start date, target accounting period end
month, number of employees at target business start date.
xiii. Duration of incorporation takes two weeks after receipt of the executed documents.

3. Self -help group

Self-help groups have become a common savings vehicle in Kenya today. Initially
considered a womens venture, it is now common to come across groups that are
comprised of men. Many groups have graduated to become investment vehicles. This is a
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sign that these groups have the potential to transform the lives of members. While some
groups have been registered as investment companies, most self-help groups have
registered with the Ministry of Gender, Children and Social Development, which registers
chamas.
Requirements
i.
ii.
iii.
iv.
v.

The group must have ten or more members. A list of members with copies of their
National Identity Cards;
Duly signed minutes of a meeting held by the members approving the registration;
Details of the County and Location of the group;
The group should have by-laws or a constitution that guides its activities and dictates
its membership including the officials;
Payment of registration fee of Kshs.1000/=

The main disadvantage of a self-help group is lack of a separate legal standing from
its members. It can only thus hold properties through its officials.
The registration process takes one month after receipt of the executed documents.
BEST WAY FORWARD.
After going through the opinion and evaluating the best outfit for the Golden Girls, the
interim leaders recommend the formation of a Sacco as the most suitable vehicle. Such a
sacco will start off as non-deposit taking and after three years, members can decide
whether to convert it to deposit taking sacco.
Among the outstanding advantages leading to this proposal are:
i.
ii.

The laws governing saccos explicit

Ease of the registration process and requirements

iii.

Upon registration, the Sacco becomes a body corporate by the name under which it
is registered, with perpetual succession and a common seal, and with power to hold
movable and immovable property of every description, to enter into contracts, to sue
and be sued and to do all things necessary for the purpose of, or in accordance
with, its by-laws.
Members in full control of the sacco through self-created by laws which can be
amended whenever necessity demands
Financial reporting requirements is governed by Law
Easy to market/ sell to the alumni; fertile recruitment ground
Prospect of converting to deposit taking and ultimately a bank/ financial institution
with possibility of listing in NSE
Training for members
A sacco will cater for diverse needs the members ranging from savings, cheap
loans, welfare services etc.

iv.
v.
vi.
vii.
viii.
ix.

x.
xi.

Taxation on saccos less than for companies

Saccos are tested, tried and trusted in our society
Names of the Sacco
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The Interim leadership proposes adaption of the nameKAHUHIA GIRLS ALUMNI or

KAHUHIA GGS ALUMNI SACCO( not sure initials are allowed). This will appeal to a lot
of old girls and will net a good number of members.
Since the Law requires us to have three proposed names, we can get another name
along the same lines.

END

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