Co-Operative Banks Act, 2007 (Act No. 40 of 2007)

Chapter II : Registration, Constitution, Functions, Management and Auditor of Co-operative Bank

Part 2 : Constitution and functions of co-operative bank

13. Constitution of co-operative bank and amendment to constitution
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(1)The constitution of a co-operative bank must, in addition to the provisions of section 14(1) of the Co-operatives Act, provide—
(a)that none of its directors, other than the managing director, may be employees of the co-operative bank;
(b)that a director of a co-operative bank who is in arrears for such period and with such amount and type of debt payable to the co-operative bank as prescribed by the Minister is disqualified from continuing as a director and must vacate his or her office;
(c)for the determination of the remuneration and other benefits of directors, including the managing director, at the annual general meeting; and
(d)for the appointment of an audit committee consisting of members that are not directors, to—
(i)assist the board of directors in its evaluation of the adequacy and efficiency of internal control systems, accounting practices, information systems and auditing processes within that co-operative bank;
(ii)facilitate and promote communication regarding the matters referred to in subparagraph (i) or any other related matter between the members, board of directors, executive officers, auditor and the employee charged with the internal auditing of the transactions of the co-operative bank; and
(iii)introduce measures that in the committee's opinion may serve to enhance the credibility and objectivity of financial statements and reports prepared with reference to the affairs of the co-operative bank.

 

(2)Despite sections 14(2), 15(c) and 42(1) of the Co-operatives Act, the constitution of a co-operative bank must provide—
(a)for the establishment of a governance committee and the manner in which it must be constituted;
(b)for the appointment of a managing director of that co-operative bank;
(c)for the settlement of disputes between members of the co-operative bank or between a member of the co-operative bank and the co-operative bank itself;
(d)that any membership shares issued must be fully paid up; and
(e)that certificates, share statements or any other proof of shareholding must be issued to members.

 

(3)
(a)The Authority must approve any amendment to the constitution of a co-operative bank prior to the co-operative bank submitting the amendment to the registrar for registration in accordance with section 18 of the Co-operatives Act.
(b)A co-operative bank must apply for approval referred to in paragraph (a) on the form prescribed by the Authority.
(c)The Authority may refuse to approve an amendment.

 

(4)
(a)The Authority may at any time and in accordance with section 48 direct a co-operative bank to amend its constitution to remove anomalies or undesirable divergences in the activities of different co-operative banks.
(b)Any directive referred to in paragraph (a) must be considered by the members of the co-operative bank at its next general meeting and, if approved, the amendment must be submitted to the registrar for registration in accordance with section 18 of the Co-operatives Act.
(c)If a co-operative bank refuses or fails to amend its constitution in accordance with paragraph (a) the Authority may request the registrar to effect the required amendment to the constitution of the co-operative bank.
(d)The registrar must register the amendment to the constitution of the co-operative bank in accordance with section 18 of the Co-operatives Act.