FIRST SCHEDULE
FORMS
| FORM A | (r. 4) |
| APPLICATION FORM FOR A LICENSE TO CONDUCT THE BUSINESS OF A COFFEE EXCHANGE |
| Name | Address and telephone number | Number of shares held |
| | |
| Name | Identitycard/Passportnumber | Date ofappointment | DateofBirth | Permanentaddress andtelephonenumber | Academic andprofessionalqualification | Numberof sharesheld inthecompany |
| | | | | | | |
| Name | Identitycard or Passportnumber | Date ofappointment | DateofBirth | Permanentaddress andtelephonenumber | Academic andprofessionalqualifications | Numberof sharesheld inthecompany |
| Name | Address | Telephonenumber(s) | Occupation |
| | | | |
_______________________________
| FORM B | (r. 8(1)) |
| APPLICATION FOR A LICENSE TO CONDUCT THE BUSINESS OF A COFFEE BROKER |
SECOND SCHEDULE
APPLICATION, LICENSING AND ANNUAL REGULATORY FEES FOR COFFEE EXCHANGES AND COFFEE BROKERS
Coffee ExchangesApplication fees ....................... Kshs. 10,000Annual regulatory fees ................. Kshs. 2,500,000/-Coffee BrokersApplication fees ....................... Kshs 10,000/-Annual regulatory fees ................. Kshs 50,000/-THIRD SCHEDULE
SALES CATALOGUE
1.The sales catalogue shall be prepared by a grower miller, or an appointed broker in consultation with a commercial miller, in accordance with the Coffee General Regulations and these Regulations, and forwarded to the Exchange.2.The details to be included in the sales catalogue shall include-(a)The name of the grower;(b)The name of the miller;(c)Name of broker, if any;(e)Day, date and time of the auction;(f)The place of the auction shall be at the exchange;(g)Total number of bags of coffee to be offered for sale;(h)Name of the warehouse where the coffee is stored;(i)The prompt date being the date on or before which proceeds are payable to the direct settlement system provider managed by the exchange;(j)Terms and conditions of sale;(k)The date on which rent charges in respect of purchased coffee shall be due from the buyers to warehousemen at which the coffee is stored;(l)The net weights as per warehouse weights (and unless otherwise stated coffee shall be packed in bags of 60 kg net, tare weight 1.1 Kgs but bids shall be on the basis of 50 Kgs), the bags used shall conform to the international coffee packaging standards;(m)Lot numbers arranged serially per miller or appointed broker for all coffee offered for sale;(n)The out-turn Number shown against each lot number and the registered distinguishing mark of the grower miller (whether Bulk, E/Bulk, P/Bulk, T/Bulk; Spillage, or sweepings) and out-turn Number arising from operations of grower/miller;(p)Number of bags in the lot (a saleable lot shall not be less than ten bags);(q)Net weight of coffee in kilograms respectively;(r)Adequate space for inserting big prices by buyers.3.The sales catalogue shall be prepared weekly or as frequently as the Authority may determine in consultation with a grower or his agent.4.The saleable lots in the special auction dedicated to local roasters may comprise less than ten bags.FOURTH SCHEDULE
COFFEE WARRANT
NAME OF WAREHOUSEMAN
Entered by .................on the account of the lot of coffee DULY Deliverable to .......... or assigns by endorsement hereon.| Coffeeseason andout-turnno. | Mark and code | Grade | Number ofbags | Net weightof pockets(kgs) | Total netweight (kgs) |
| | | | | | |
| | | | | | |
| Category A | Category B |
| Chief Finance Officer | Finance Manager |
| Head of supply Chain | Legal Manager-Regional Co Secretary |
| Head of Middle Office | Sea Exports Manager |
CONDITIONS
1.A warrant is issued in respect of each consignment.2.All deficiencies or losses on or damage to goods must whenever possible be notified in writing to ("the Company") prior to removal of the goods from the Company premises so as to afford an opportunity for checking by the Company, and in all cases where such notification is not possible, such deficiencies, losses or damage must be notified to the Company in writing within two days of the removal from the premises of the Company of the goods concerned if this condition be not complied with, the Company will in no case accept liabilities whatsoever for such deficiencies, losses or damages however caused.3.Every warrant is transferable by endorsement and entitles the person named herein, or the last endorsee therefore named in the endorsement, to the goods specified therein, and the goods so specified shall for all purposes be deemed to be his property.4.Upon lodging a warrant duly endorsed, the person there under entitled to the goods may transfer or obtain possession of the goods subject to the payment of all charges.5.The contents of one warrant may be divided into others for smaller quantities at the will of the person entitled to the goods subject to the payment of all appropriate charges.6.If a warrant is lost, written notice must at once be given to the Company. In such a case, before delivery of goods can be made, the loss of the warrant must be advertised in the Official Gazette and a copy of such publication containing the advertisement together with a guarantee signed by the applicant and countersigned by a bank approved by the Company to identify the Company against losses, claims, or damages, must be lodge with the Company in no circumstances will duplicate warrants be issued.7.The Company takes all reasonable measures to protect goods against loss or damage but does not accept liabilities for—(a)Loss or damage, arising otherwise than through the Company's negligence;(b)Loss, damage or deficiency cause by or contributed to any of the following causes; Whether such loss, damage or deficiency be also in part caused by or contributed to by a neglect, wrongful act or default of the Company, it's servant or agents or other persons for whose acts the Company might apart from this clause be liable:(ii)Frail, unsuitable, insufficient or defective packing;(iii)Strikes, combinations or lock-outs of any person in the employ of the Company or in the service of others;(iv)Improper, insufficient, indistinct or erroneous marking or addressing of goods or packages;(viii)Loss of weight or damage in consequence of atmospheric conditions of humidity due to heat, damp or drought, or howsoever caused.8.This warrant, if referring to coffee bulked-:(a)The Company accepts no financial liability under any circumstances for the even mix of the bulk, but undertakes to re-bulk free of charge provide that:(i)The person first entitled under the warrant shall lodge the claim within seven days of receiving the warrant; and(ii)The person first entitled under warrant shall satisfy the Company that rebuilding is necessary or advisable, the Company being prepared to accept the advice of an Arbitrator.(b)The Company guarantees that the component coffees of the bulk are exactly those instructed by mark and quantity.(c)The Company does not accept liability in respect of any divergence of the bulk from the expected resultant quality by reason of a variation in quality of one or more components of the bulk. The bonus of proof of the use of coffee other than the stipulated components shall rest upon the instructing dealer and in the event of such proof the Company agrees to submit to the normal quality arbitration under the Arbitration Regulations of the Kenya Coffee Traders Association as shall be amended from time to time.9.This warrant is subject to the condition that the Company shall have a general as well as a particular lien on the goods specified therein in respect of any monies owing to the Company by the person first or subsequently entitled under the warrant.10.The acceptance of this warrant in the first place and subsequent presentation of this Warrant implies implicit acceptance of the conditions enumerated above.Deliver to ..................................... on payment of all chargesSigned ............................... Date ........... 20 ............Deliver to .............................. on payment of all chargesSigned ..................................... Date ........ 20 ..........Deliver to ................................... on payment of all chargesSigned ..................................... Date ........ 20 ..........FIFTH SCHEDULE
REQUIREMENTS FOR THE OPERATION OF THE DIRECT SETTLEMENT SYSTEM
Part A – CRITERIA FOR SELECTION OF DIRECT SETTLEMENT SYSTEM PROVIDER
1.Request for expression of interest by the exchange.2.Licensed commercial Banks.3.Past experience in the management of centralized processing and settlement system for commodities.4.Demonstrate capacity to expedite settlement and direct payment of coffee proceeds to coffee growers and service providers.5.Demonstrate the network to reach out to all coffee growing and other areas.6.Demonstrate an ICT infrastructure for information gathering, processing, dissemination and archiving.7.Past experience in handling proceeds of agricultural commodities.8.Demonstrate understanding and willingness to comply with government regulations.9.Be approved by the Authority.10.Be connected to the national payments system.Part B – REQUIREMENTS FOR COMMENCEMENT OF DIRECT SETTLEMENT SYSTEM ARRANGEMENTS AND OPERATIONS
1.The Authority may, on application made to it by the exchange, approve in writing the commencement of the direct settlement system operations if it is satisfied that the direct settlement system provider has adequate systems and safeguards for the issuance and transference of coffee warrants or Electronic Warehouse Receipts as the case may be and to prevent manipulation of records and transactions and it complies with the requirements specified in these Regulations and other relevant law.2.In considering an application made under paragraph 1 above, the Authority shall take into account all matters which are relevant for the efficient and orderly functioning of the direct settlement system and in particular whether the —(a)The mode of operation of the direct settlement system has been approved by the Exchange;(b)The systems provider has systems to open and maintain separate accounts in the name of each coffee grower whose coffee is traded;(c)Any changes in Depositors' account are supported by electronic instructions or any other mode of instructions received from the Clearing House and the designated Warehouses;(d)The direct settlement system has adequate mechanisms for the purposes of reviewing, monitoring and evaluating its internal accounting controls and systems;(e)The direct settlement system provider has a system to reconcile records of every depositor on a daily basis;(f)Automatic data processing systems of the direct settlement system are protected against unauthorized access, alteration, destruction, disclosure or dissemination of records and data;(g)network through which electronic means of communications are established between the direct settlement system provider, the Clearing House, licensed Warehouses is secure against unauthorized entry or access;(h)The direct settlement system provider has established standard transmission and encryption formats for electronic communications of data between the direct settlement system, the Clearing House, the exchange, licensed Warehouses;(i)The direct settlement system provider has established adequate procedures and facilities to ensure that its records are protected against loss or destruction and arrangements have been made for maintaining back up facilities at a location different from that of the direct settlement system;(j)Physical or electronic access to the premises, facilities, automatic data processing systems, data storage sites and facilities including back up sites and access to the electronic data communication network connecting the direct settlement system, the Clearing House, licensed Warehouses is controlled, monitored and recorded;(k)The direct settlement system has an operations manual explaining all aspects of its functioning, including the interface and method of transmission of information between the direct settlement system provider, the Clearing House, the exchange, licensed Warehouses;(l)The direct settlement system has, either through the Exchange or otherwise, made adequate arrangements including insurance for indemnifying the Depositors for any loss that may be caused to such Depositors by the wrongful act, negligence or default of the direct settlement system provider or any of its employee and agents(m)The direct settlement system provider has a mechanism in place to ensure that the interest of Depositors are adequately protected and to register the transfer of coffee warrants or Electronic Warehouse Receipts as the case may be, in the name of the transferee only after the system provider is satisfied that payment for such transfer has been made;(n)The direct settlement system provider has adequate mechanisms for the purposes of reviewing, monitoring and evaluating its controls, systems, procedures and safeguards; and(o)The direct settlement system provider has adequate mechanisms to ensure that the integrity of the automatic data processing systems is maintained at all times and all precautions necessary to ensure that the records are not lost, destroyed or tampered with and in the event of loss or destruction, ensure that sufficient back up of records is available at all times at a different place.Part C – RECORDS TO BE MAINTAINED BY A COFFEE EXCHANGE AND INFORMATION SHARING ARRANGEMENTS WITH A DIRECT SETTLEMENT SYSTEM PROVIDER
1.The exchange shall maintain and avail to the direct settlement system provider the following records and documents relating to coffee sold at a coffee exchange —(a)records of every coffee warrant or warehouse receipt received, or created and the Delivery Notices issued and any cancellations thereof;(b)names of transferors, transferees, and the dates of transfer of the coffee warrant or warehouse receipts as the case may be;(c)records of requests received from and sent to the designated warehouses and clearing house; and(d)details of the buyers or roasters.2.The coffee exchange shall, when required to do so, disclose to the Authority the place where the records and documents are maintained.3.The coffee exchange shall preserve records and documents for a minimum period of 10 (ten) years.4.External monitoring, review, evaluation of systems/controls and reports to the Authority.A coffee exchange shall cause an inspection of its controls, systems, procedures and safeguards to be carried out annually and forward a copy of the report to the Authority.1.The Authority may undertake inspection of the books of accounts, records, documents and infrastructure, systems and procedures, or may investigate the affairs of a Coffee Exchange in relation to the direct settlement system provider, the Clearing House or Designated Warehouses, for any of the following purposes —(a)to ensure that the books of account are being maintained by the Exchange and its members in the manner specified in these Regulations;(b)to look into the complaints received from millers, buyers and roasters;(c)to ascertain whether the systems, procedures and safeguards being followed by the Exchange, the direct settlement system provider, Clearing House and Designated Warehouses, or their agents are adequate to enable the direct settlement system to carry out its purpose; and(d)to ensure that the affairs of the Exchange in relation to the direct settlement system provider are being conducted in a manner which are in the interest of the coffee growers, millers, buyers, roasters and the public.2.The Authority shall give the Exchange and its members, as the case may be, not less than 10 (ten) days' notice before ordering or conducting an inspection or investigation.3.Notwithstanding anything contained in paragraph 2 of this Article, where the Authority is satisfied that in the interest of growers, millers, buyers and roasters no such notice should be given, it may, by an order in writing direct that such inspection be taken up without such notice.Part D – APPLICATION BY A COMMERCIAL BANK FOR SELECTION BY THE EXCHANGE TO PROVIDE DIRECT SETTLEMENT FUNCTIONS FOR COFFEE SALES PROCEEDS
1.A Bank shall submit an application to the exchange with the approval of the Authority for appointment as a direct settlement system provider for receipt and disbursement of coffee proceeds, which must include in the application a showing that it complies with the requirements and conditions set forth by the exchange and also demonstrate that it will continue to comply with the said requirements.2.Application Procedure for selection as a direct settlement system provider:The Bank shall make an application for appointment through a selection process established by the exchange (and further approval by the Authority) which must include the following —(a)the particulars of the applicant's proposed affiliation with the exchange; The particulars include:(i)Name and Registered Address/Physical Location/Head Office of the bank;(ii)Names of the Board of Directors of the bank;(iii)Copy of the banking/regulator license and confirmation of current licensing status;(iv)Number of branches including their location;(v)Credit rating of the bank;(vi)Names and Designation of key contact personnel of the bank;(vii)Details of the banks Auditors;(viii)Undertaking to comply with the rules of the Exchange and applicable regulations;(ix)Commitment to pay exchange membership fee;(x)Evidence of adequate risk management framework;(xi)KYC (know your customer)/AML (anti-money laundering) management processes;(xii)Plans to deploy ICT systems to support the exchange; and(xiii)Evidence of technical staff capacity to run Direct Settlement System.(b)a representation by the Bank that it will operate in accordance with the definition of a direct settlement system relating to settlement of coffee transactions at the exchange as set out by the exchange;(c)a demonstration of how the Bank is able to satisfy each of the requirements for a direct settlement system specified under the Regulations;(d)any agreements entered into or to be entered into with the exchange or otherwise, that will enable the Bank to comply with the requirements specified under Regulations. The agreements must identify the services that the Bank will provide as a direct settlement system provider. If a submitted agreement is a draft, the application must include evidence that will demonstrate that such services will be provided as soon as exchange operations require;(e)descriptions of system test procedures, tests conducted or test results, that will enable the applicant to comply with the requirements specified in these Regulations; and(f)where the applicant with sufficient particularity identifies information in the application it deems confidential, a request for confidential treatment and with evidence to support such request.3.Except as provided for under these Regulations, the Exchange shall consider the application for recognition as a Bank within 7 (seven) working days of the filing of the application. The Exchange may in consultation with the Authority approve or deny an application or if deemed appropriate, select the applicant Bank subject to conditions to be specified. If the Exchange notifies the applicant Bank the application is incomplete and specifies the deficiencies in the application, the process date will be stayed until the application is resubmitted in a complete form.4.The Exchange may grant temporary appointment to the Bank on an expedited basis to give room for the bank to meet full criteria. The temporary appointment under this sub-rule may be subject to conditions and an expiry date as the Exchange may stipulate.5.An applicant Bank shall apply for permanent selection status when conditions of its selection are met and before the expiry of the temporary selection6.If the Exchange denies an application by a Bank, it shall specify the grounds for the denial. In the event of a refusal to select a Bank, any person that has made an application for selection shall be afforded an opportunity for a hearing on the record before the Authority, with the right to appeal an adverse decision after such hearing to the High Court.7.The Exchange in consultation with the Authority is authorized to suspend for a period not to exceed 30 days or to revoke the selection of a Bank on a showing that —(a)The Bank is not enforcing or has not enforced its operations, standards, procedures and rules made a condition of its selection as a direct settlement system provider.(b)The Bank, or any director, officer, agent, or employee of such Bank, is violating or has violated any of the provisions of these Regulations or any of the directives, or orders of the Exchange or the Authority.8.In the event of a denial of selection or suspension or revocation in accordance with these Regulations, any person that has made an application for selection as a direct settlement system provider whose selection has been suspended or revoked shall be afforded an opportunity for a hearing on the record before the Authority, with the right to appeal an adverse decision after such hearing to the High Court.9.The testimony and evidence taken or submitted before the Exchange or the Authority, duly filed as per these Regulations as part of the record, shall be considered by the High Court as evidence in the case.10.The High Court may affirm or set aside the order of the Authority and the Exchange or may direct it to modify its order. However, no such order of the Authority shall be modified or set aside by the High Court unless it is shown by the applicant Bank that the order of the Authority is unsupported by the weight of the evidence or was issued without the appropriate notice and a reasonable opportunity for a hearing.11.An application may be withdrawn by filing with the exchange such a request. Withdrawal of an application for registration shall not affect any action taken or to be taken by the exchange or the Authority based upon action, activities, or events occurring during the time the application was pending with the exchange or the Authority.12.If an applicant Bank or financial institution proposes to make—(a)any amendment to its constitution which has an impact on its function as a provider of a direct settlement system;(b)any business rules that have an impact on its function as a direct settlement system provider; or(c)any amendments to its existing business rules having impact on its function as a direct settlement system provider, the Bank shall, as soon as practicable, give a written notice to the exchange.13.The notice shall—(a)set out the text of the proposed amendment;(b)state the date on which the amendment are proposed to be put into force; and(c)contain an explanation of the purpose of the proposed amendment.14.The exchange shall, within 30 (thirty) days or such longer period as may be agreed between the exchange and the Bank after the receipt, notify the Bank in writing of its decision on the proposed amendment or the proposed business rules, as the case may be.15.Where the exchange does not approve any proposed amendment or business rule, the notice to the Bank shall identify or specify it.16.In addition to the power conferred upon the exchange, the exchange may in consultation with the Authority and by notice in writing to the Bank, amend the Bank's constitution or any of its business rules relating to the clearing and settlement system for payment of coffee proceeds.17.A notice by the exchange to the Bank —(a)may contain provisions as to the manner in which the amendments made by the exchange shall take effect; and(b)shall state when the amendments shall take effect, specifying a period for the Bank to make a response.18.A Bank shall comply with a notice given to it under these Regulations once the stipulated period expires.19.Where it is shown that a Bank, any director, officer, agent, or employee of a Bank has failed to comply with, observe, enforce or give effect to these Regulations and conditions of its selection, or that the Bank, or any director, officer, agent, or employee thereof, otherwise is violating or has violated any of the provisions of these Regulations or any of the orders of the exchange, the exchange may take one or more of the following actions —(a)direct the Bank to suspend the business of such Bank as it relates to the exchange. A direction under this Rule shall only be after a written notice, specifying the grounds for the action, served upon the Board or the CEO of the Bank not less than 7 (seven) working days before such proposed action and a hearing on the record;(b)require the Bank, any director, officer, agent, or employee of the Bank to act in a particular manner to enforce or comply with, as the case may be, with these Regulations or other directives of the Authority;(c)reprimand the Bank or individual concerned; and(d)require the Bank, director, officer, agent or employee concerned to take such steps as the Authority may direct to remedy or mitigate the effect of such breach.20.The Authority shall give the Bank, director, officer, agent or employee thereof, notice of not less than fifteen working days, of its intention to take any of the actions under these Regulations and the notice shall specify the grounds for the action taken.21.A recognized Bank may terminate its recognition by filing such a request with the exchange. Termination of selection shall not affect any action taken or to be taken by the exchange based upon action, activities, or events occurring during the time the application was pending with the exchange or the Authority.22.A Bank shall (through the exchange) receive from growers or the growers' authorized representatives all the relevant particulars of the growers and the growers' service providers, maintain these records and submit the same to the exchange and the Authority regularly as follows —(a)The Bank shall submit a report to the exchange showing transactions matched and approved for settlement by it; and(b)Each selected Bank which receives funds belonging to growers, shall monthly submit to the exchange a report showing separately for each grower or service provider, the dates when such funds were received, the identity of the depositor, the dates such funds were debited, withdrawn or disposed of otherwise, together with the facts and circumstances of such debit, withdrawal or disposition, including the authorization thereof.23.The Bank shall prepare and avail to the grower through the exchange, a comprehensive sales statement to account for each coffee lot sold through the exchange and paid for through the Bank.
