[Ch4204s67]67.     Creation of funds and sources of capital

            (1) The capital of a society which shall be devoted only to the carrying out of the objects of the society, the administration of the society and any other purpose authorized by this Act, any regulations or its bye-laws, may be raised from-

     (a)     membership fees;

     (b)     payments for shares;

     (c)     savings deposits from members;

     (d)     surplus carried to reserve funds; and

     (e)     loans or deposits from non-members.

            (2) Subsection (1) is subject to the following-

     (a)     no membership fees shall be refunded except where an application for admission is refused;

     (b)     no share may be redeemed except in accordance with the bye-laws and subject to the minimum shareholding specified therein;

     (c)     savings deposits shall be made and may be withdrawn in accordance with the bye-laws of the society;

     (d)     the Statutory Reserve Fund shall be kept and used in accordance with section 72;

     (e)     loans and deposits from non-members shall be subject to section 69.

[Ch4204s68]68.     Loans made by societies

            (1) A society shall not make a loan to any person who is not a member:

            Provided that a society may with the consent of the Commissioner make loans to another society or person specified by the Commissioner or to other societies or persons generally.

            (2) Except with the permission of the Commissioner a society shall not lend money on the security of any movable property other than produce or goods in which the society is authorized to deal.

            (3) The Minister may by regulation prohibit or restrict the lending of money on a mortgage on any particular description of immovable property by any society.

[Ch4204s69]69.     Deposits and loans

            (1) A society's bye-laws may contain provisions authorizing the society to receive loans and deposits from members and from non-members; any such bye-laws shall also provide that the general meeting shall set down the maximum amount of loans, deposits and bank overdrafts that may be outstanding at any time.

            (2) Notification of the maximum so fixed shall be sent to the Commissioner within 14 days, and that maximum shall be subject to the approval of the Commissioner who may at any time reduce it or impose such conditions as he may consider necessary, and his decision thereon shall be final.

[Ch4204s70]70.     Investment of funds

            A society may invest or deposit its funds—

     (a)     in the Botswana Co-operative Bank Limited or with any other bank authorized under the Cap. 46:04 Banking Act or the Cap. 56:03 Post Office Savings Bank of Botswana; or

     (b)     with any other registered society approved for the purpose by the Commissioner; or

     (c)     in any security issued or guaranteed by the Government of Botswana; or

     (d)     in any other manner approved by the Minister by regulations under this Act.

[Ch4204s71]71.     Restriction on capital expenditure

            (1) A society shall not utilise its funds for capital expenditure, such as the acquisition of land, buildings, vehicles, plant or machinery, in a sum exceeding the prescribed limit without first obtaining the written approval of the Minister.

            (2) The prescribed limit shall be P3 000 or such other figure as the Minister may by regulation prescribe providing that the Minister may prescribe different limits for different classes of societies.

[Ch4204s72]72.     Statutory Reserve Fund

            (1) Every society shall establish a Statutory Reserve Fund which shall be indivisible and in which no member shall be entitled to claim a specified share.

            (2) A society shall pay into the Statutory Reserve Fund at the end of each financial year at least twenty-five percent of the net surplus shown in the audited annual accounts.

            (3) The Commissioner may, by written order in the case of a society with limited liability, grant exemption wholly or partly from contributions, to the Statutory Reserve Fund and may revoke or vary such exemption at any time.

            (4) The Statutory Reserve Fund shall be invested in the manner provided in section 70.

            (5) The Statutory Reserve Fund may, with the written consent of the Commissioner, be utilised in the business of the society or for capital expenditure.

            (6) On the liquidation of a society the Statutory Reserve Fund shall be applied in the discharge of the liabilities of the society in the manner authorized by section 101.

[Ch4204s73]73.     Distribution of net surplus

            (1) The remainder of any net surplus together with any unallocated surplus remaining from past years which is available for distribution may be allocated to other funds of the society or divided amongst the members by dividend or bonus or used to pay an honorarium to officers of the society as authorized by this Act or the bye-laws.

            (2) The bye-laws of a society may establish a fund for the redemption of bonus certificates or shares, a share transfer fund, an education and training fund or any other fund for the efficient operation of the society.

            (3)(a) No society shall pay a dividend on shares in excess of ten percent of the paid up value of the shares or such other figure as may be specified by regulations.

            (b) No dividend shall be paid by any society while any claim due to a creditor from the society remains unsatisfied.

            (4) No society with unlimited liability which receives loans, deposits or goods on credit from its own members shall distribute its surplus until 10 years have elapsed from the date of its registration, but shall instead carry such surplus to its Statutory Reserve Fund.

            (5) "Bonus" means the distribution of a share in the net surplus of a society divided amongst its members in proportion to the volume of business done or use made of the society's facilities, from which the surplus of the society was derived, by each member.

            (6) The bye-laws of a society may provide for the distribution of any part of the free net surplus in the form of bonus certificates or bonus shares.

            (7) A bonus certificate shall entitle the holder to claim payment of the sum for which the certificate is issued out of the society's funds on a date specified in the certificate which date shall not be earlier than 5 years from the date of issue of the bonus certificate. No interest or dividend shall be paid on a bonus certificate.

            (8) A bonus share may not be withdrawn or transferred before the expiry of ten years from the date of issue unless the holder has ceased to be a member.

            (9) A society may, after twenty-five percent of the net surplus has been carried to the Statutory Reserve Fund, contribute an amount not exceeding ten percent of the remaining net surplus to any charitable, educational or public purpose.

[Ch4204s74]74.     Commissioner's consent to payment

            (1) No society shall pay any dividend or bonus either in cash or by way of bonus certificates or shares until the proposed scheme of division has been approved by the Commissioner.

            (2) The Commissioner shall approve the scheme of division prepared by the committee before it is submitted to the Annual General Meeting and if the Annual General Meeting decides to alter the approved scheme it shall be resubmitted for approval before any payment is made.

            (3) The Commissioner shall not approve the payment of dividend by a society with unlimited liability unless he is satisfied that its share capital and reserve funds are paid up and sufficient to cover its liabilities to non-members.