Urithi Housing Co-operatives launches Sh1bn real estate scheme in Thika

By SIMON CIURI
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Kiambu-based Urithi Housing Cooperative Society has launched a Sh1 billion residential project in Kilimambogo on the outskirts of Thika town, targeting its 6,000 members. The venture, which will comprise 600 housing units, is funded through the society’s cash reserves, including financing from local banks.

Under the scheme, members contributed Sh355,000 to acquire the land and the sacco will help them secure building loans from local lenders.

Sacco chairman Samuel Maina told the Business Daily on phone that the project seeks to equip members with decent and affordable housing.

“The project stands on 100-acre piece of land. We started the groundwork last month and we have given the project a timeframe of two years to be complete. It will be named City Edge Project,” said Mr Maina.

He added: “Urithi Housing Co-operative Society will act as collateral to our members who want to acquire loans from the banks to develop their plots. We are in talks with Unaitas, K-Rep Bank and Equity Bank for the members to access loans.”

He said the first phase of the scheme is expected to cost Sh300 million and would be completed early next year. “The idea is to acquire more land through our members and start income generating projects that can accelerate the growth of the society,” he said.

Read More Here http://www.nation.co.ke/business/Sacco-launches-Sh1bn-real-estate-scheme-in-Thika/-/996/2395626/-/o6o661z/-/index.html

Safaricom Investment Co-operative unveils Sh1 billion housing project in Mlolongo

Safaricom Investment Co-operative has unveiled Sh1 billion housing project on a five acre parcel of land in Mlolongo.  The 300 housing units dubbed, Blue Bells Garden will be constructed in two phases. They will be completed in 2015. The project will be financed through a partnership with Co-operative Bank Speaking during the ground breaking, Safaricom Chief Executive Officer Bob Collymore said the first phase will be ready in September 2014, while the second phase will be ready at the end of 2015. “SIC has planned to invest more than Sh1billion in the entire project with the first phase having 160 units and the second phase having 140 units,” said Collymore yesterday. “These houses will be a mix of two and three bedroom units and will contribute towards reducing the 150,000 housing deficit that the country experience annually.” The project will also accommodate a commercial centre to serve its residents.
Read more at: http://www.standardmedia.co.ke/business/article/2000083297/safaricom-sacco-unveils-sh1-billion-housing-project-in-mlolongo

Types of savings products

The SACCO members have the urge to develop and to make their lives better. The question remains therefore ―How can they make their lives better?‖ Saving for the future is one of the ways that they can improve on their livelihood. It is therefore essential to know the various savings products available so that one makes the best choice and selects what suits them best. Savings products can broadly be classified in to three namely;
 Compulsory savings products
 Voluntary savings products
 Contractual savings products.
Compulsory Saving:
These are funds that must be contributed by all members of the SACCOs as a condition of membership and in some instances to access credit (loans). Compulsory savings can be considered as part of a loan product rather than actual savings product since they are closely tied to receiving and repaying loans. Compulsory saving is a saving that a member is forced to make on regular basis; it is a membership saving and must be saved on a weekly or monthly basis. This compulsory saving is collected to lend to
members. If members fail to save on time they will get penalized based on the saving policy of the society. Unless the member quits from membership, he or she should save on regular basis. If a member wants to withdraw from the SACCO, he will have the right to take this compulsory saving. The SACCOs are supposed to provide interest for this savings. There are 2 kinds of compulsory loans i.e.
 Group saving: composed of a certain percentage of the loan portfolio contributed monthly or weekly. Saving continues through the loan period and therefore protects the portfolio on one hand and serves, as an investment fund for economic ventures of the group members to supplement the loan in case of emergency needs.
 Personal or individual saving: This is where each borrower is required to save a minimum amount per month but motivated to save more voluntarily.
Voluntary Saving:
Voluntary savings are savings, not for access to credit, but for the sake of saving. These are not an obligatory part of accessing credit services. They are provided by both the borrowers and non borrowers who can deposit or withdrawal according to their needs.
The voluntary savings are best fit for people who don’t receive constant cash flow like farmers who get incomes when they sell off their produce once or twice a year. They can make voluntary saving during harvest time, and transfer monthly to their compulsory saving accounts. Farmers, and other individuals, can save the full amount for the coming year’s compulsory savings in advance with the SACCO by depositing 12 months worth of saving in a voluntary account. Following that, each month on the appropriate day the member will come to the SACCO to withdraw the amount of one month’s compulsory saving from the voluntary saving -account and deposit it in the compulsory saving account. This maintains the fundamental function of the SACCO and allows individuals with seasonal incomes to be members. This ensures regular flow of cash to the SACCO society and promotes members participation. This kind of saving can be withdrawn at any time when the owner needs it. The SACCO society may or may not provide saving interest for this voluntary savings. Farmers are highly advised to save on voluntary saving for small capital investment like purchasing seed for cultivation.
Contract Saving:
These are the kind of saving accounts where by the person saves to meet a particular goal.
These include:
1. School fees savings accounts: This is the type of account used by most parents so that they are able to save for their children’s education.
2. Target Savings Accounts: This is where the client opens up an account particularly to meet a particular target like buying land, paying a mortgage among others.
3. Fixed Deposit Accounts: This is the savings accounts were by a person deposits once and they withdraw the money after a period of time. The time ranges from 3 months onwards.
This kind of saving is not used by most SACCOs unless the SACCO has acquired and mastered the good skills in managing the loans and savings effectively. It can be short-term saving like if someone wants to pay school fees; he may save to pay school fees. It can also be long term like fixed deposit accounts were time deposit bring the opportunity of high interest rate on savings. This kind of saving is good in the future when the SACCO is in a good capacity and position of managing its savings and loans properly and if there is a shortage of feasible financial demand by members. This kind of saving can be collected from members and none members but the amount, period of collection and interest for this saving should be decided by the General Meetings of  members.

 

Be careful with fast growing Saccos!!!

People, Processes and Systems should be in place before Saccos go “viral.”  A Sacco growing fast is not a bad thing but management should make sure they are ready for it. I have witnessed some societies that were just recently registered that have opened up branches across the country raising questions as to whether they followed the right procedures in doing so.

I will be more comfortable with say Unaitas Sacco growing very fast than with a newly registered society like Good Life Sacco. Unaitas has been there for years and they have the experience running a co-operative business. Its important to have the right people, processes and systems in place before aggressive marketing.

Some of the newly registered societies are usually restricted to operate within a small area of operation e.g. a sub-county or county. Sometimes without close supervision, they expand very fast opening branches all over the country without following the required procedures or sticking to the society’s by-laws especially the area of operation and resolutions passed by members.

I have also realized that some of these newly registered and fast growing societies have hidden intention and the public should be wary of these societies and inquire appropriately before committing. Hidden agenda specifically boils down to management/board of directors. Some of them have no intention of exiting the board and have carefully orchestrated an election “system” where they get re-elected year on year out. They use intimidation or membership ignorance to continue being in office. They have somehow put in place an election policy that they sneaked into a general meeting and had it approved that assures assures them of re-election. I still believe an election nomination process that excludes independent persons, is a sham. How can a nomination committee be composed of same people in the management committee who are to be subjected to an election process and to make matters worse, end up nominating exact number of people required? Isn’t this an election carried out by board and not members of the society?

Some of the fast growing societies have also sometimes close relationship with the church or the company within which the membership is drawn. They have what they call “a patron” who has way too much sway when it comes to societal matters. They fail to note that the society is an autonomous and synonymous organization. That the society can be sued, it can sue, own both movable and immovable property, etc. The membership in this scenario has been reduced to the role of attending meetings….just to fill the hall!! They have also failed to note that the Co-operative Societies Act and Rules, does not mention “patron” anywhere!!

I predict very soon, we will have some of the fast growing societies collapsing. This is because they have not considered some of the following issues before going ‘viral’-

PEOPLE: Do you have people in place who will steer and direct the growth? Has the management been trained/educated on basic co-operatives operations, Act, Rules? Does the staff have the required qualifications and experiences? Do the membership know what are the objectives of their co-operative? Do you know the stakeholders??

PROCESSES: Are there loan applications, membership withdrawal, staff recruitment, code of conduct, staff promotion, staff dismissal, elections, investments, dividends payments, etc processes that are known by all concerned? How did these processes come into being? How are meetings conducted management (board of directors), supervisory, management/supervisory and general meetings? Are membership views taken into consideration? How is the management committee, supervisory committee, staff and membership taken into account?  How are disputes resolved? Do you have an ICT system in place to manage the unprecedented growth? Is there a strategic plan for the society? How are shareholders and stakeholders engaged? Is there a risk management programme?

SYSTEMS: How do you manage people and processes in your society? Is there congruence of action within the society? Does these system re-invent or how agile is it? How do you make sure that society’s vision is shared across board? Does this system infringe on people and processes? What is the organizational culture like?

We shouldn’t sit down and wait. The ministries (both national and county) concerned should have policies in place to check on Saccos growth and fund sub-county offices to effectively and efficiently carry out their mandate. Otherwise new kinds of DECI is in the making.

REACTIVE LEADERSHIP IN COUNTRYWIDE SACCOs A NAGGING BUG!!

I will refer to this article Will Saccos Die in the Devolved Governments Era I wrote here sometimes back and how the leadership of countrywide Saccos have failed their membership despite the impending difficulties. I had said that remittance could pose a challenge, and it sure did and is still an ongoing challenge. We all read these story Ukulima Sacco freezes staff loans on Daily Nation and you wonder how comes the leadership of Ukulima and other countrywide Saccos did not anticipate this problem and come up with measures to safeguard their members funds beforehand. 

The leadership of co-operatives in Kenya are sometimes laden with incompetence beyond your imagination. Yes, you can see buildings with names of co-operatives written on them and see suited men and women looking important heading to board meetings. But the truth is, most don’t measure to the task. They are ineligible even to attend a baraza in a village.

Devolution was coming. Staffs of certain sectors were to be devolved. We all knew this. News were full of these information. But the leadership just sat there and opted to be reactive. The sane thing to do was to visit all 47 counties and establish a rapport with the salary sections. Provide them with Sacco details and make sure to get contacts of all the 47 counties so that whenever the monies are not deducted as provided for in the deduction list or remitted within the stipulated time as per Section 35 of the Co-operative Societies Act, then you know who to contact and not just sit down and telling your members that you are waiting!!! Get realistic what are you waiting for? Your Saccos to collapse due to impending financial challenges?

It is a high time the leadership of the co-operative movement embraced technology. The government through GHRIS (Government Human Resource Information System) has provided (is it functional? Doubt it!!) an online platform where third parties e.g. Banks, MFI, Saccos, etc can login and access their members details. It would have been a relief if they could have used the system to provide deduction list or access individual members and have deductions posted for that particular month. This would have made it easier for county governments who in return would have paid the net salaries to its staffs and paid the various societies their members’ contributions within stipulated time. Things would have been easier and efficient instead of sending deduction lists to the 47 counties……this is where I start thinking if there is anyone out there who matters and has read what I have put here hehehe 🙂 Anyway, that is they way of the future. Cheers.

 

What are the Advantages and Disadvantages of Co-operative Society?

Advantages of Co-operative Society

1. Easy to form:

ADVANTAGE

The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. Any ten adults can join together and form a co-operative society. The procedure involves in the registration of a cooperative society is very simple and easy. Check-out my earlier post on registration procedure.

2. No obstruction for membership:

Unless and otherwise specifically debarred, the membership of cooperative society is open to everybody. Nobody is obstructed to join on the basis of religion, caste, creed, sex, colour etc. A person can become a member of a society at any time he likes and can leave the society if he does not like to continue as member. Based on one of the principles of co-operatives of voluntary and open membership.

3. Limited liability:

In most cases, the liabilities of the members of the society is limited to the extent of capital contributed by them. Hence, they are relieved from the fear of attachment of their private property, in case of the society suffers financial losses or goes bankrupt.

4. Service motive:

In Co-operative societies members are provided with better good and services at reasonable prices. The society also provides financial help to its members at concessional rates unlike mainstream banks. It assists in setting up production units and marketing of produce of small scale farmers.

5. Democratic management:

The co-operative society is managed by the elected members from and among themselves. Every member has equal rights through its single vote but can take active part in’ the formulation of the policies of the society. Thus all member are equally important for the society. Derived from the principle of democratic member control.

6. Stability and continuity/Perpetual succession.:

A co-operative society cannot be dissolved by the death, insolvency, lunacy, permanent incapability of its members.  It has got separate legal existence from its members. New members may join and old members may quit the society but the society continues to function unless all members unanimously decided to dissolve the society.

7. Economic operations:

The operations carried on by co-operatives societies are economical due to the eliminations of middlemen. The services of middlemen maybe provided by the members of the society at minimum cost or eliminated completely. The recurring and non-recurring expenses are minimized. Further, the economies of scale of production or procurement, automatically reduces the price of goods, thereby minimizes the selling price.

8. Surplus shared by the members:

The society sells goods and services to its members on a nominal profit. In some cases, the society sells goods and or services to outsiders. The profits are utilized in meeting the day-to-day administration and other costs of the society. The procedure for distribution of profit/surplus is stated in the Co-operatives Societies Act Cap 490. Some portion of the surplus is distributed as dividends or interest on deposit and some kept as reserve (i.e. 20%).

9. State patronage:

Government provides special assistance to co-operative societies to enable them achieve their objectives though currently through Finance Bill 2013, the government is introducing excise duty of 10%. Government also extends, or used to, many type of subsidies to co-operative societies strengthening their financial stability and sustainable growth in future.

Disadvantages of Cooperative Society:

Despite the many advantages, co-operative societies suffer from certain limitations or drawbacks. Some of these limitations are:

1. Limited resources:

DISADVANTAGE

Co-operative societies financial strength depend on the capital contributed by its members. The membership fee is limited so is the monthly contributions in case of Saccos as their members belong to the lower and middle class. Thus co-operatives initially are not suitable for the large scale businesses which require huge capital. Though this can be overcome by increasing membership with the downside of minimal returns to its members.

2. Inefficient management:

A co-operative society is managed by the members only. They may not possess any managerial and special skills. This is considered as major drawback of this sector.

3. Lack of secrecy:

Co-operative societies do not maintain secrecy in their businesses because the affairs of the societies are openly discussed in meetings. But secrecy is very important for the success of a business organisation. This paved the way for competitors to compete in more effective ways.

4. Excessive Government interference:

Government may influence the decision of the Board which may or may not be favorable for the interest of the society and its members. Excessive state regulation, interference with the flexibility of its operations and therefore affecting adversely the efficiency of the management of the society. Rare occurrence in Kenya

5. Absence of motivation:

The members may not feel enthusiastic because the law governing the co-operatives puts some restriction on when to invest or decision making process which can be lethargic and bureaucratic.

6. Disputes and differences:

The management of the society constitutes the various types of personnel from different social, economical and academic background. Many a times they strongly differs with one another on many important issues. This becomes detrimental to the interest of the society as it may lead to delayed decisions. The different opinions and disputes may paralyses the effectiveness of the management.

This article originally appeared on http://www.preservearticles.com/201101193579/advantages-and-disadvantages-of-cooperative-society.html and was adapted for this blog and Kenya audience.

Did you know that…

a) No management or Supervisory Committee member is allowed to receive from the society any payment apart from sitting allowance, and travelling and subsistence allowance, except an honorarium from the net surplus as allowed in the By-Laws.

b) The Management and Supervisory Committee members, and employees of the society hold in the strictest confidence all transactions of the society with its members.

c) When any Committee member is disqualified or unable to perform his duties, the Committee can co-opt a member or members of the society to serve on the Committee until the next general meeting if the number falls below five.

d)  No member of the management or Supervisory Committee shall in any manner participate in the deliberations and determination of any question affecting his/her financial interest. In the event of any disqualification, the remaining qualified Committee members present at the meeting, if constituting a quorum with the disqualified person may exercise, with respect to the matter, all powers of the Committee.

f) A copy of the By-Laws is to be furnished to every member who joins the society or on request upon payment of a fee not exceeding its actual cost to the society.

 

Historical Perspective of the Cooperative Movement

Co-operative Meaning and Definition

Effective Leadership Style

MODEL BY-LAWS FOR SACCOS

1. NAME AND AREA OF OPERATION

The society shall be called ……………………………………………………….. Savings and Credit Co-operative Society Limited (Ltd), herein after referred to in these by laws as “The society” and its area of operation shall be: ……………………………………..…….……………….

2. REGISTERED OFFICE/ POSTAL ADDRESS

The registered office of the society shall be at …………………………………. and the postal address shall be…………………………………..……………………

Notice of any change of address shall be given to the Commissioner for Co-operative Development and Marketing herein after referred to as ‘the Commissioner’ and to all members of the society through their last known address as per records held at the society within 30 days of such change.

3. DEFINITIONS AND INTERPRETATIONS

3.1 In these by-laws, unless the context otherwise suggests words or phrases shall be defined and interpreted in accordance with the Co-operative Societies Act Cap 490 Laws of Kenya and the Rules made there under herein after referred to as the “Act” and “Rules” respectively.

In these by-laws save as otherwise expressly stated:

(i) “General Meeting” shall be a meeting (either “annual” or “special”) for all members duly convened by the society to conduct its business.

(ii) “Management Committee” shall mean the members elected in a duly convened General Meeting to govern the Business of the society as per these by-laws herein referred to as the “committee”.

(iii) “Commissioner” shall mean “the Commissioner for Co-operative Development as provided for in the Act.”

(iv) “Tribunal” shall mean the Co-operative Tribunal established under the Act to hear and determine disputes.

(v) “SACCO” shall mean Savings and Credit Co-operative.

(vi) “Shares” shall mean the amount represented by a member’s portion in the equity of the society as a co – owner.

(vii) “Applicable Law” shall mean the Co-operative Societies Act, Rules and these by-laws.

(viii) “Co-operative Society” shall mean a society registered under the Act.

(ix) “Dividend” shall mean members share of the surplus of the society which is divided amongst its members.

(x) “Returning officer” is a person appointed to oversee or conduct the elections of a co-operative society at a general meeting.

(xi) “Member” shall include a person who signs the application for registration of a society and a person admitted to membership after registration in accordance with these by-laws.

(xii) “Deposits” shall mean a sum of money paid on terms under which it shall be repaid, with or without interest or premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the society to receive it at the risk of the society receiving it.

(xiii) “A nominee” means a person appointed by the member to inherit the shares, deposits and other interests in the society upon the death of that member.

3.2 In these by-laws where the masculine gender is referred to, it shall be construed to include the feminine gender.

3.3 Any questions concerning interpretation of these by-laws or any matter not provided for therein, errors and omissions shall be referred to the Commissioner.

4. OBJECTS

4.1. The objects for which the society is established are to organize and promote the welfare and economic interests of its members.

4. 2. In particular, the society shall undertake:

a) To promote thrift among its members by affording them an opportunity for accumulating their savings and deposits and create thereby a source of funds from which loans can be given to them exclusively for provident and productive purposes, at fair and reasonable rates of interest; thereby enabling them to use and control their money for their mutual benefit.

b) To ensure personal growth through the introduction of new products and services that will promote the economic base of the members.

c) To ensure progress of members and society through continuous education programs on proper use of credit, reduction of poverty, human dignity and co-operation.

d) To apply the co-operative principle of co-operation among co-operatives in order to promote members’ interests. In furtherance to the objects the society shall affiliate to the relevant National Co-operative Union and the Apex society.

4.3 For the attainment of the above objects, the society may do acts and things that are permissible under the Act, rules and these By- laws including but not limited to acquire property and chattels and doing all such other things as are incidental or consequential to the economic enhancement of its members interests provided such act is approved by the members in a general meeting.

5. CO-OPERATIVE PRINCIPLES AND VALUES

In order to achieve its objects the society shall act in accordance with the following Co-operative principles and relevant values.

5.1. PRINCIPLES

(a) Voluntary and open membership

The society shall always be guided by the principle of voluntary and open membership in its member recruitment drive without political, ethnic, religious, gender or social discrimination.

(b) Democratic member control

The society will be fully controlled by members who will have equal voting rights on the basis of one member one vote.

(c) Economic participation by member

Members shall contribute equitably to the capital of the society and share in the results of its operations.

(d) Autonomy and independence

The society shall operate on mutually acceptable terms with its stakeholders who will ensure its autonomy and independence.

(e) Education, training and information

The society shall foster reciprocal, on–going education programmes for members, leaders, staff and the community so that they can teach and learn from each other or from the appropriate resource persons in understanding and carrying out their respective roles.

(f) Co-operation among co-operatives

In order to better serve the interests of the members and the community, the society shall actively co-operate with other co-operatives locally, regionally, nationally and internationally.

(g) Concern for community in General

The society shall show concern to the community in which it exists and operates.

5.2 VALUES

The values shall be self-help, mutual responsibility, equality and equity. It shall practice honesty, openness and social responsibility in all its activities

6. MEMBERSHIP

Membership shall consist of:-

a) Original members who signed the application for registration.

b) New members subsequently admitted in accordance with these by – laws.

7. QUALIFICATION FOR MEMBERSHIP

A person who possesses the following qualification shall be eligible for membership:-

(a) Is within the field of membership consisting of the following common bond………………………………………………………………….

(b) Has attained the age of 18 years.

(c) Is of good character and sound mind

(d) Pays the entrance fee and share capital as prescribed in these by-laws.

Provided that no member shall belong to more than one Sacco society having similar objects.

8. APPLICATION FOR MEMBERSHIP

Every applicant for membership shall complete an “application for membership” form. This form shall be drawn to show all the information required for the purpose of registration of members.

9. ADMISSION INTO MEMBERSHIP

9.1 An applicant shall be admitted to membership on application upon payment of an entrance fee of Kshs. ………………….. and for such other minimum shares as shall be fixed by the General meeting from time to time.

9.2 Upon admission the member’s name shall be entered in the membership register and a membership number issued.

9.3 The member shall sign or make a thumb mark in the register of members in the presence of two members of the committee to indicate his/her acceptance of the by-laws of the society.

9.4 Members shall be admitted by the committee subject to Confirmation by the next general meeting.

9.5 The member shall pay for a copy of the society’s by-laws at its actual cost to the society.

10. REFUSAL OF ADMISSION

The Committee may refuse admission to a person after assigning reasons for their decision. Such a person, if otherwise eligible for membership, shall have the right to appeal to the next General Meeting through a member.

11. RIGHTS OF MEMBERS

A member of the society shall have the right to:

1. Attend and participate in decision making at all general meetings of the society and vote;

2. Be elected to organs of the society, subject to these by–laws;

3. Enjoy the use of all the facilities and services of the society subject to the society’s by–laws;

4. All legitimate information relating to the society, including, internal regulations, registers, Minutes of general meetings and supervisory committees reports, annual accounts, inventories and investigation reports, at the society’s registered office.

12.OBLIGATIONS OF MEMBERS

A member of the society shall have the obligation to:

i) Observe and comply with all the society’s by–laws and decisions taken by the relevant organs of the society;

ii) Buy and pay up for shares or make any other regular payments provided for in these By–laws;

iii) Meet the debts of the society in case of insolvency in accordance with the provisions of the Act and these by–laws.

13.MEMBER’S PERSONAL STATEMENT

The society may use “check off system”, standing orders or cash for payments of members shares, deposits and loan repayments. However, when direct payments have to be made, they shall be paid directly into the society’s bank account and a receipt issued by the society on submission of the bank slip.

Every member shall receive regular statements at least once every three months, which shall contain particulars of membership, shares, deposits and loan transactions with the society.

14.CESSATION OF MEMBERSHIP

Membership in the society shall cease or deemed to have ceased in regard to any member from the date of:

(i) Death

(ii) Withdrawal

(iii) Expulsion

(iv) Being certified to be of unsound mind.

(v) Transfer of shares to another member.

(vi) Failure to remit share contributions and loan repayments for a continuous period of six months without valid reasons or leave of the society.

(vii) Ceasing to hold qualification for membership as specified in these by-laws provided that members who have lost the common bond may retain their membership.

15. SUSPENSION

15.1 The committee may suspend a member subject to the decision of the general meeting to expel who:

a) fails to fulfill his/her obligations to the society whether stated in these by-laws, general internal regulations, a resolution of the general meeting or in contravention of any other legal document, provided such a member has been called upon to do so but has failed,

b) Is convicted in a court of law for a criminal offence involving dishonesty or fraud or is, imprisoned for a period of three months or more,

c) Is a member of another society having similar objects,

d) Acts in any manner prejudicial to the interests of the society.

Provided that, no member shall remain in suspension for a period of more than 12 months.

16.PROCEDURE OF SUSPENSION AND EXPULSION

a) Upon formal and written proof that a member has committed a violation punishable by expulsion, the committee shall serve a thirty (30) days written notice to the member stating the reason(s) for the proposed expulsion and requiring him/her to file a defense.

b) Upon the expiry of the 30 days and taking into consideration the member’s defense if any, the committee shall initiate administrative inquiry and make a decision on its findings within 15 days. The Committee may;-

i. Suspend the member pending expulsion by the General Meeting or

ii. Impose any other punishment as provided for in the applicable law.

c) The suspended member may appeal to the supervisory committee if not satisfied with the decision of the committee.

d) The committee and supervisory committee shall present their findings to the next General meeting which may either lift the suspension or expel the member.

e) A member who is expelled from the Sacco society shall have the right to appeal to the tribunal.

17. WITHDRAWAL FROM SOCIETY

A member may at any time withdraw from the society by giving at least sixty (60) days written notice to the committee.

18.PAYMENT ON CESSATION OF MEMBERSHIP

18.1 On cessation of membership, a person shall be refunded the following amounts:

a) Any dividends or interests due to him prior to the date membership ceased and

b) Any other sums held by the society on his behalf after deduction of any sum owed to the society.

19.NOMINEE

Every member shall nominate in writing one or two persons as nominee(s. The nomination shall be attested to by two witnesses who are members of the society. The names of such nominee(s) shall be entered in the nominee register.

Provided that a member shall have the right to change his/her nominee(s) in writing in the presence of two attesting witnesses who are members of the society.

20. PAYMENT TO NOMINEE

The society after obtaining such documentary proof of the death of a member as it may consider necessary, shall pay to the nominee the value of the deceased member’s deposits, interest and dividend after deducting monies owed to the society, if any.

21.ADMISSION OF NOMINEE

A nominee may be admitted to membership of the society if qualified. The deposits, interest and dividends due to the deceased member shall be transferred to the account of that nominee.

22. FUNDS OF THE SOCIETY

22.1 The funds of the Society shall consist of:

a) Entrance fee.

b) An unlimited number of shares of the Kshs ….…. each.

c) Deposits from members and loans from non-members.

d) Administration fees and penalties.

e) Statutory reserve fund and any other reserve fund as may be kept by the society.

f) Any surplus resulting from operations of the society.

g) Any donations, gifts from other bodies, organizations and individuals.

h) Funds obtained from lawful miscellaneous sources.

22.2 The funds of the society shall only be applied to the promotion of the stated objects of the society as set forth in these by laws, and shall be invested in:

a) Such investments and securities as are authorized for the investment of trust funds,

b) The shares of any other co-operative society,

c) Any bank licensed under the Banking Act,

d) The stock of any statutory body established in Kenya or in any limited liability company incorporated in Kenya or in any other manner approved by a resolution at a general meeting of the society.

e) Loans granted to members.

23. SHARES

Every member shall hold at least ………… shares of Kshs….…… each as shall be fixed by the General Meeting. However, no member shall hold more than one-fifth of the total shares of the society.

24. TRANSFER OF SHARES

a) With the approval of the Committee, a member may at any time transfer shares to another member but not to any other person. Such transfers must be in writing and at nominal value.

b) All transfers of shares shall be registered with the society and no transfer shall be valid unless so registered. A fee of Kshs…….. shall be payable by the transferee.

25. LIABILITY

a) The liability of a member shall be limited to the nominal value of the shares held by him.

b) In the event of liquidation, where available funds are insufficient to pay the full nominal value of the shares held by members; the funds shall be distributed pro-rata among the shareholders according to the amount of shares held by each.

26. POWER TO BORROW

a) Loans may be obtained from non-members subject to the maximum amount and terms approved by the General meeting.

b) For the securing of any loans accepted by the society under paragraph (a) above, the society may grant a charge over its assets. The authority to grant a charge shall be reserved to the General Meeting.

c) The rate of interest on loans shall not exceed the current market rate.

27. RECEIPTING OF MONEY

a) Money received on account of shares, deposits, Loans, interest’s fees or fines shall be evidenced by a printed receipt in a form to be approved by the Committee. Every member paying any money to the society shall be identified on the receipt.

b) Should the receipt issued by the society be lost or destroyed, immediate notice of such fact shall be given to the Treasurer who may be authorized by the Committee to issue a duplicate receipt at a reasonable fee.

c) The Committee may require the member to sign an indemnity to protect the society against any loss due to the issuance of such duplicate.

28. PAYMENT/DISBURSEMENT

Payments made by the society shall be evidenced in writing in a form approved by the committee.

29. RESERVE FUND

a) The society shall pay into the Reserve Fund maintained in pursuance of the provisions of Section 47 of the Act and the Rules one fifth (1/5) of any net surplus resulting from the operations of the society during a financial year.

b) The Reserve Fund of the society shall be invested in the manner provided for in these by-laws.

c) The Reserve Fund shall be indivisible and no member shall be entitled to claim a specific share of it.

d) No withdrawal shall be made from the reserve fund of the society without a resolution from the General Meeting and a written approval from the Commissioner.

30. GENERAL MEETING

30.1. The supreme authority of the society shall be vested in the General Meeting of members.

a) An Annual General Meeting shall be convened within four months after the end of the society’s financial year.

b) A special general meeting of the society may be held when convened by:-

(i) The Committee.

(ii) The Commissioner.

(iii) The Committee within 15 days of receipt of a written request by at least ……. members or one fourth of the members, whichever is less.

Provided that when the General Meeting is convened at the request of the members, the request must be deposited by registered mail at the society’s address or delivered to the manager at the society offices within normal working hours.

(iv)The members in (b) iii) above, if the Committee fails to convene a meeting within fifteen days of receiving the request. The members shall give notice to the other members of the society, stating the object and reasons for the meeting and the fact that the Committee has failed to convene the meeting.

30.2. Any business not completed at the annual General Meeting, may be taken up at a subsequent special General Meeting of the society.

31. DUTIES OF GENERAL MEETINGS

31.1 The General Meeting shall have the powers and duties prescribed in the Act, Rules and these by-laws. It shall:

a) Consider and confirm the minutes of the previous General Meeting.

b) Consider reports of committees, the Commissioner or his/her representative and the audited accounts on the society’s activities during the past financial year.

c) Consider and resolve on the manner in which any available surplus shall be distributed or invested, subject to the Act and rules.

d) Elect or remove members of the Committee and the Supervisory Committee, subject to the Act, Rules and these by-laws.

e) Fix the indemnity for the elected committee members and management staff.

f) Consider recommendations from the Committee, against suspension and expulsion of members.

g) Consider appeals against refusal of membership by the Committee.

h) Confirm or reject admission of new members by the committee.

i) Fix the maximum liability which the society may incur in loans and deposits from both members and non-members.

j) Approve the estimates of income and expenditure for the financial year following the General Meeting.

k) Fix the honoraria, if any, for officers or employees of the society.

l) Decide on the management structure, including the establishment of branches to facilitate efficient and cost effective delivery of services to members.

m) Appoint bankers, auditors and advocates of the society for the ensuing year.

n) Affiliate the society to National Co-operative Organization for SACCO societies and the Apex society, subject to approval of the General Meeting;

o) Transact any other business of the society for which notice has been given to members in the manner prescribed in these by-laws.

31.2 All members have a right to attend the General Meeting and participate in its deliberations, however they may be required to identify themselves.

32. RECORD OF BUSINESS

All business discussed or decided at the General Meeting shall be recorded without erasures and corrections in a Minute Book, which within one week of the meeting, shall be signed by the Chairman of the meeting and at least one other committee member who was present at the meeting, to indicate that in their opinion the minutes are a true and complete record of all matters discussed or decided at the meeting.

At the next meeting after approving any alterations or variations which shall be written immediately below the above signatures and not as alterations to the original record, the meeting shall by resolution authorize the chairman to sign and date the final record.

33. NOTICE OF MEETINGS

(a) The general meeting shall be convened by giving at least 15 days written notice to the members.

(b) The Honorary Secretary shall take all usual steps to publish the notice of the meeting in public places, on the society’s notice board(s), in local newspapers or news–sheets, including the media or any other mode decided by the members.

(c) All notices shall include a statement of the business to be dealt with.

34. QUORUM

Except when convened by the Commissioner, the presence of at least ……………. members or 25% of the total membership, whichever is less, shall constitute a quorum for the conduct of business at the General Meeting. When a quorum is not attained the chairman shall adjourn the meeting and fix a date for another meeting within one month, which shall be advertised as prescribed in these by-laws. If a quorum is again not attained, the chairman shall declare the meeting open with those present one hour after the advertised time of the meeting.

35. ELECTIONS

a) With every notice of the General Meeting convened in accordance with these by-laws, where elections will be held, the Committee shall notify the members of the vacancies arising in both the Committee and the Supervisory Committee.

b) During elections, the Returning officer shall call for nominations from the floor. Each candidate must have a proposer and a seconder.

c) At the elections, members shall decide, by majority vote, the method of voting. The method may be secret ballot or queuing or by show of hands.

d) No member shall be entitled to vote by proxy.

e) Irrespective of the number of shares held by him, no member shall have more than one vote.

35.1 Within fourteen (14) days of the elections, the Honorary Secretary shall forward to the Commissioner the names and addresses of all persons elected.

35.2 A new committee elected at the General Meeting shall not assume office unless the members have satisfied the requirements of the Act, Rules and these by-laws.

36. THE MANAGEMENT COMMITTEE

a) The Committee shall be the governing body of the society elected from the general membership and shall consist of ………….. members. It shall include the Chairman, Vice chairman, Treasurer and Secretary all of whom shall be elected by the Committee from amongst the members of the Committee.

b) Members of the committee shall hold office for a period of three years provided that, one-third of the committee members shall retire every year but will be eligible for re-election.

c) Where the membership of the committee falls below five the committee shall co-opt qualified member(s) into the committee until the next General Meeting

37. ELIGIBILITY FOR MEMBERSHIP TO THE MANAGEMENT COMMITTEE

No person shall be eligible for membership in the committee of the society if he/she:-

a) Is not a member of the society;

b) Is under eighteen years of age;

c) Is unable to read and write;

d) Receives any remuneration, salary or other payments from the society save as in accordance with the Act;

e) Is a committee member in two other societies;

f) Lends money on own account;

g) Is an undischarged bankrupt;

h) Is of unsound mind;

i) Has been convicted of any offence involving dishonesty or is sentenced to imprisonment for a term exceeding three months;

j) Has been convicted of any offence under the Act or rules.

k) Has any uncleared debt owing to the society at the end of its financial year other than in respect of a loan granted under the provision of any regulations made under the Act;

l) Is a person against whom any amount of money is due under a decree, decision or order or is pending recovery under the Act.

38. MANAGEMENT COMMITTEE MEETINGS

(a) Meetings of the Committee shall be held at least once a month subject to a maximum of 15 meetings in a year. At least ……….. of the total number of committee members shall form a quorum for the disposal of business.

(b) If a member of the committee fails to attend three consecutive meetings without being excused thereon, or otherwise fails to perform his/her duties, the position may be declared vacant and filled as provided for in these by-laws.

39. RECORD OF BUSINESS OF THE MANAGEMENT COMMITTEE

All business discussed or decided at the Committee Meeting shall be recorded without erasures and corrections in a Minute Book, which within one week of the meeting, shall be signed by the Chairman of the meeting and at least one other committee member who was present at the meeting, to indicate that in their opinion the minutes are a true and complete record of all matters discussed or decided at the meeting.

At the next meeting, after approving any alterations or variations, which shall be written immediately below the above signatures and not as alterations to the original record, the meeting shall, by resolution, authorize its Chairman to sign and date the final record.

40. DUTIES AND POWERS OF THE MANAGEMENT COMMITTEE

The Committee of the society shall subject to any directions from the General Meeting generally direct the affairs of the society. Its procedures, powers and duties shall be as prescribed by the Act, Rules and these by-laws. In particular, it shall:

a) Observe in all its transactions the Act, the Rules, these by-laws and prudent business practices.

b) Act upon all applications for membership.

c) Make provision for sufficient funds for loans.

d) Ensure that true and accurate records and accounts of the society’s money, properties, capital reserves, liabilities, income and expenditure are kept and maintained;

e) Prepare and develop long term management plans and budgets for presentation at the General Meeting;

f) Propose to the General Meeting the amount and kind of surety bond, or other security, which shall be given by the member of the committee or employee having custody of or handling funds or property of the society;

g) Determine and recommend to the General Meeting the interest rates on loans, the maximum maturities and terms of payment or amortization of loans from time to time and the maximum amount that may be loaned with or without security to any member;

h) Cause the audited accounts to be displayed in a conspicuous place at its registered office and branches at least two weeks before presentation of accounts to its members at the general meeting;

i) Lay before the General Meeting audited accounts, together with proposals for the disposal of net surplus, if any;

j) Recommend to the General Meeting the dividend rate to be paid on shares, if any, and interest to be paid on deposits;

k) Fill through co–option, vacancies occurring in the committee between General Meetings;

l) Recommend investments of the society;

m) Authorize the conveyance of properties;

n) Authorize borrowing and lending operations of the society in accordance to the Act and the Rules;

o) Designate a depository or depositories for the funds of the society;

p) Employ and fix the remuneration of the employees in accordance with the terms and conditions of service as approved by the Commissioner;

q) Impose fines as provided for under these by-laws;

r) Approve transfer of shares;

s) Supervise the recovery and collection of loans from members and recommend to the General Meeting the write off of bad debts.

t) Perform or authorize any actions consistent with the Act, the Rules and these by-laws, unless specifically reserved for the General Meeting;

u) Provide adequate budget for education and training of members, the committee and staff; and

v) Perform such other duties as the General meeting may from time to time direct.

41. EXPENDITURE

No expenditure shall be authorized by the Committee unless it is provided for in the estimates formally approved by the General Meeting.

42. DELEGATION TO EMPLOYEES

a) The Committee may delegate to any employee of the society such duties as it deems fit.

b) Nothing in (a) above shall absolve the Committee from its responsibility of running the affairs of the society in a proper and businesslike manner.

43. INDEMNITY

All Committee Members shall each provide an indemnity of an amount approved by the General Meeting. A duly completed Form V in the schedule to the Rules shall be lodged with the Commissioner within 14 days upon election to the committee.

44. DECLARATION OF WEALTH

Every committee members shall within 30 days of being elected declare wealth to the Commissioner in the prescribed manner.

45. LEGAL STANDARD OF CARE

In the conduct of the affairs of the society, the members of Committee shall exercise the prudence and diligence of ordinary men of business and shall be held jointly and severally liable for any losses sustained through any of their acts, or failure to act, which are contrary to the Act, the Rules, the By-laws or the directions of the General Meeting.

46. SUSPENSION FROM THE MANAGEMENT COMMITTEE

a) The Commissioner may suspend from duty any Committee Member charged in a court of law with an offence involving fraud or dishonesty pending the determination of the matter.

b) The majority of the Committee Members may suspend a Committee Member for;

(i) Failure to disclose vested interests.

(ii) Any other good cause.

Subject to ratification by the General Meeting.

47. REMOVAL FROM THE MANAGEMENT COMMITTEE

A member of the Committee shall cease to hold office if he/she:

a) Ceases to hold qualifications of a Committee Member as specified in the Act, Rules and these By–laws;

b) Is removed by the Commissioner under the provisions of the Act;

c) Is voted out by two-thirds majority of the society members present and voting at the General Meeting.

48. EXECUTIVE OFFICERS

The Chairman, the Vice-Chairman, the Treasurer and the Honorary Secretary shall be termed as the “Executive Officers of the Society” and shall be elected at a meeting of the Committee held within seven days after election at the General Meeting.

49. THE CHAIRMAN

The Chairman shall:

a) Preside at general meetings, Committee meetings and joint meetings with the Supervisory Committee.

b) Perform such other duties as directed by the Committee, not inconsistent with provisions of the Act, the Rules and these by-laws;

50. THE VICE-CHAIRMAN

The Vice-Chairman shall perform:-

a) The duties of the Chairman during his/her absence.

b) Such other duties as directed by the Committee.

51. HONORARY SECRETARY

The duties of the Honorary Secretary are to:

a) Cause minutes of the General Meetings, Committee meetings, and joint meetings with the Supervisory Committee to be recorded.

b) Ensure that notices of the meetings are prepared and sent out.

c) Ensure that the society’s correspondence is promptly and correctly attended to.

d) Perform such other duties as may be directed by the committee.

52. TREASURER

The duties of the Treasurer shall be to:

a) Generally manage or cause to be managed the financial affairs of the society in a competent manner;

b) Ensure that a proper record is kept of all monies received and paid out by the society, its assets, liabilities, capital reserve and its income and expenses;

c) Ensure the safekeeping of the society money, securities and books of accounts;

d) Ensure that all payments and expenditures are dully authorized;

e) Ensure that within ten days after the closure of each month, a financial statement showing the condition of the society’s finances at the end of the preceding month is prepared and submitted to the Committee for discussion; and

f) Ensure compliance with all directions of the Committee, the Act, the Rules and these by-laws on all financial matters.

g) Cause to be presented, a statement of the ensuing month’s cash flow.

h) Ensure sufficient funds are available for loans.

i) Perform such other duties as may be directed by the committee.

53. SUB-COMMITTEES

a) Sub-committees shall consist of persons drawn from the committee.

b) The Committee may delegate to the sub-committee some of its duties under these by-laws as it deems fit.

c) These sub-committees shall convene as directed by the Committee.

54. EDUCATION COMMITTEE

The Education Committee shall consist of three members including the Vice-Chairman who shall serve as its Chairman. Its duties shall be to:

a. Organize education programmes for members, committee members, staff and the general public.

b. Ensure that both the Committee members and the staff are well trained and prepared for the tasks they are entrusted with at the society.

c. Create co-operative awareness to the general public.

55. TENDER COMMITTEE

The tender committee shall consist of all the members of the Committee and any other officer(s).

56. CREDIT COMMITTEE

The credit committee shall consist of three members of the committee, none of whom shall be an Executive officer. Its duties shall be to:

a) Hold regular meetings as the business of the society may require, but at least once a month

b) Vet loan applicants and their guarantors and their ability to service their credit requirements.

c) Assist members solve their financial problems.

d) Maintain records of their deliberations on loans.

e) Forward its loan recommendations to the committee for approval.

57. SUPERVISORY COMMITTEE

(a) The society shall have a supervisory committee consisting of three members each elected at the General Meeting for a period of three years and one member of the supervisory committee shall retire annually. No person who has been in the committee within two (2) years preceding the date of the anticipated election shall be eligible for membership of the supervisory committee.

(b) The supervisory committee shall:

i. Hold quarterly meetings save for joint meetings with the committee.

ii. Have qualifications similar to those of committee members.

iii. Be required to have knowledge of accounts.

iv. Be removed by a resolution of the general meeting.

58. DUTIES OF THE SUPERVISORY COMMITTEE

58.1 The duties of the supervisory committee shall include:

(a) Counterchecking, the effectiveness of the society’s internal control systems through:-

i. Carrying out investigations as may be necessary for the wellbeing of society and members in general and verifying the accuracy of the transactions of the society.

ii. Checking if cash and bank accounts are reconciled in good time.

iii. Establishing whether the management of the society use managerial tools i.e. budgets, trial balances, economic reports, long term plans and others and thereafter making necessary recommendations to the committee.

(b) Preparation and presentation of periodic reports to the Committee during joint meetings.

(c) Presentation of Annual Report to the General Meeting.

(d) Submission of its reports to the Commissioner.

58.2. The supervisory committee shall not perform the duties or exercise any of the powers of the committee.

58.3 The supervisory committee shall be held liable for any loss incurred due to their negligence in performing their duties.

59. THE MANAGER

The Manager shall conduct the business of the society subject to overall control of the committee.

60. DUTIES OF THE MANAGER

The manager shall;

(i) Advise the Committee and other Committees in formulating, preparing and implementing long term policies and programmes of the Society.

(ii) Supervise the work of all staff and ensure that the business of the Society is conducted in a proper manner.

(iii) Ensure that proper books of accounts, records and returns are kept and that regular financial, statistical and operational information is prepared and submitted to the Committee and other Committees and also to the Commissioner.

(iv) Be responsible for the security of the funds and assets of the Society.

(v) Ensure that all statutory deductions such as National Social Security Fund (NSSF), National Hospital Insurance Fund (NHIF), Pay As You Earn (P.A.Y.E.) etc are correctly calculated and that all the amounts due and the necessary returns are submitted by the due date.

(vi) Ensure that rent, rates, levies and debts due from and to the Society are paid by the due date.

(vii) Recommend to the Committee the filling of any vacant position or dismissal of any staff member who is not performing his/her duties properly.

(viii) Countersign the society’s cheques, contracts and other documents.

(ix) Attend general and committee meetings as an ex-official.

(x) Perform such other duties as may be assigned to him by the Committee.

61.BOOKS OF ACCOUNTS AND RECORDS-

The society shall keep up to date and in a proper businesslike manner such books of accounts and records as stipulated in the Act, the Rules, and in particular:-

a) A register of members showing in respect of each member:

i. Name, age, date of application for membership, address and occupation;

ii. Date of admission to membership;

iii. Date of ceasation of membership,

iv. Name and particulars of nominees, and

v. Any other information as may be required by the society from time to time.

a) Minute books giving details of proceedings of Committee, joint Management and Supervisory Committee, Supervisory Committee meetings and all other committee meetings held in accordance with these by-laws.

b) Minute book giving details of proceedings at the General Meetings.

c) A cashbook showing the details of all monies received or paid out by the Society.

d) A general ledger containing such accounts as is necessary to reflect the business of the Society.

e) A personal ledger for each member showing his/her transactions with the society.

f) A register of assets and property.

g) A register of loans showing in respect of each loan; the loan number, name of the borrower, the amount borrowed, the purpose of the loan, the due date of repayments and the date repayments are completed.

h) Such other books and records as the committee may decide or that the Commissioner may prescribe.

62. REGULATIONS

a) The Committee may make such regulations, not inconsistent with these by-laws, as they deem necessary for the conduct of the society’s business. The regulations shall be recorded in the minute book and posted on the society’s notice board and shall come into force when and as determined by the committee.

b) The society shall formulate a code of conduct for good governance.

63. AUTHORIZATION TO SIGN DOCUMENTS

a) All documents, contracts and cheques shall be signed on behalf of the society by any three of the following:

a. Chairman;

b. Vice Chairman;

c. Secretary; and

d. Treasurer

b) The manager shall countersign all the documents.

c) The Committee may authorize any other officer to sign the society’s documents.

64. FINANCIAL YEAR

The financial year of the society shall be from……………….. to ………………

65. DISPOSAL OF SURPLUS FUNDS

Subject to the Act and Rules, the net surplus resulting from operations of the society during any financial year shall be disposed-off as follows:

a) 20% (1/5) shall be credited to the Reserve Fund.

b) The balance may be disposed-off as decided by the General Meeting for:

(i) Paying dividends and interest on shares and deposits.

(ii) Being forwarded to Education Fund or any other fund of the society including the appropriations.

(iii)Paying honorarium to Committee Members.

(iv)In any other way approved by the General Meeting.

66. LOANS

(a) The society shall have a loan policy approved by the General meeting.

(b) All loans shall be approved by the committee with recommendation from the credit committee.

(c) Loans shall only be given for worthy purposes that benefit the borrower.

(d) The rate of interest on loans shall be determined by the General Meeting on recommendation by the Committee.

67. APPLICATION FOR LOANS

(a) All loans shall be applied for on forms provided by the society.

(b) The loan application in each case shall set forth the amount applied for, the purpose for which the loan is desired, the terms of repayment, the security if any, and such other information as the Committee may require.

(c) All applications for loans and reports thereon shall be filed as permanent records of the society.

68. LOAN GRANTING

a) Loans shall be granted by the committee in respect to the credit limit approved by the general meeting.

b) No loan shall be granted except for a specified and approved purpose, for a definite period and at a fixed rate of interest.

c) No loan shall be made to any member in excess of 5% of the society’s total share capital and reserves.

d) Loans shall be granted to Executive Officers, employees of the society who are members only if:

(i) The loan is in accordance with these by-laws and is not on terms more favorable than those extended to other borrowers.

(ii) The loan is approved by the Credit committee and thereafter by the Committee.

(iii) The applicant takes no part in the consideration of his application at either the Credit or Committee Meeting.

69. SECURITY FOR LOANS

The Credit Committee shall require the member to give the following securities for loans:

a) The shares and deposits of a member

b) The shares and deposits of guarantor(s)

c) Any other as it may consider necessary.

Provided that;

(i) The committee shall not accept as guarantor, a member who has taken a loan and has already guaranteed three loans.

(ii) No member of the Management and Supervisory Committee member shall act as endorser or guarantor for borrowers from the Society.

(iii) A borrower may apply to the Committee for change of guarantors.

70. REPAYMENT OF LOANS

a) Loans shall be repaid according to the terms in the loan application form. However, a borrower may, on any day on which the Society is open for business, repay his loan in whole or in part prior to its maturity, subject to approval of the Committee.

b) Any request for an extension of time in which to pay, shall be accepted by the Committee only in exceptional circumstances; provided such extension shall not result in financial losses to the society. Any extension so granted shall be treated as a new loan and an extension agreement shall be executed and signed.

71. RE-FINANCING OF LOANS

a) Notice shall be given to all members when the society intends to re-finance loans.

b) The re-financing of a loan shall be allowed by the Committee only when the society has satisfied all loan demands and has sufficient funds.

c) The re-financed loan shall be treated as a new-loan, and subjected to the normal loan approval procedures.

72. LOANS AS AN ITEM OF THE AGENDA

a) At every committee meeting the item “loans” shall appear on the agenda and the Credit Committee shall present a list of loans recommended for approval.

b) In the meeting, the Treasurer will present an up-to-date list of delinquent borrowers showing; –

i. Name of borrower.

ii. Account number.

iii. Date of loan

iv. Unpaid loan balance.

v. Borrower’s share balance.

vi. Number of months the loan has been defaulted.

vii. Security and guarantor/s.

c) The committee shall take action to collect the overdue loans as follows;

i. Any loan overdue for payment for more than three months shall be referred to the guarantor/guarantors provided that the society shall give notice of such intention to the borrower and guarantor/s.

ii. Any disputed loan shall be referred to the Tribunal provided that the society shall give a written notice to the borrower on its intention to do so.

d) The Committee shall make a full report on loans to the General Meeting.

73. CASH RESERVE

Except as otherwise authorized by the General Meeting and approved by the Commissioner, a cash reserve shall be maintained of not less than 10% of total capital for the specific purpose of meeting requests for deposits, withdrawals and other emergency pay-outs. The cash reserve may consist of cash in hand, the balance in the current and savings accounts, and fixed deposits.

74. COMMON SEAL

(a) The society shall adopt and use a common seal. The seal shall have an imprint bearing the words “seal of ………………………………………….. SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED” which shall be different from the ordinary name-stamp of the society.

(b) The seal shall be kept securely under key and lock by the Manager and be used only in the presence of the officers authorized to sign documents on behalf of the Society.

75. FINES

For any breach of these by-laws or lawful instructions issued by the Committee and General Meeting, or his obligations on time, the member shall be fined an amount not exceeding Kshs.20,000.00.

76. DISPUTES

If any dispute concerning the business of the society arises: –

a) Among members, past members and persons claiming through members, past members and deceased members; or

b) Between members, past members or deceased members, and the society, its committee or any officer of the society; or

c) Between the society and any other co–operative society;

Which cannot be determined by the Committee or General Meeting, it shall be referred to the Tribunal. Appeals shall be taken to the High Court.

77. MISCELLANEOUS

a) No management or Supervisory Committee member shall receive from the society any payment apart from sitting allowance, and travelling and subsistence allowance, except an honorarium from the net surplus as allowed in these by-laws.

b) The Management and supervisory committee members, and employees of the society shall hold in the strictest confidence all transactions of the society with its members.

c) When any Committee member is disqualified or unable to perform his duties, the committee shall co-opt a member or members of the society to serve on the committee until the next general meeting if the number falls below five.

d) The society shall pay an audit and supervision fee of such sums as may be required by the Commissioner.

e) No member of the management or supervisory committee shall in any manner participate in the deliberations and determination of any question affecting his financial interest. In the event of any disqualification, the remaining qualified committee members present at the meeting, if constituting a quorum with the disqualified person may exercise, with respect to the matter, all powers of the committee.

f) A copy of these by-laws shall be furnished to every member who joins the society or on request upon payment of a fee not exceeding its actual cost to the society.

78. INSPECTION OF DOCUMENTS

a) All books of accounts and other records shall at all times be available for inspection by all members of the management and supervisory committee of the society, and to the Commissioner.

b) The by-laws of the society and the registration certificate shall at all times be available for inspection by the Commissioner and the members.

c) A list of members excluding details of nominees and shareholdings or loans shall be available for inspection by any member and any other stakeholder upon payment of the prescribed fee.

79. DISSOLUTION

The society shall be dissolved in accordance with the procedures set forth in the Act and Rules.

80. AMENDMENT OF BY-LAWS

These by-laws shall be amended in accordance with the Act and the Rules but no amendment shall become effective until it is approved and registered by the Commissioner.

81.ACCEPTANCE

We the undersigned Executive officers of …………………….……………… Savings and Credit Co-operative Society Limited named herein do hereby accept these by laws for and on behalf of the society.

TITLE	NAME	I.D. No.	SIGNATURE
CHAIRMAN
VICE CHAIRMAN
SECRETARY
TREASURER

OFFICIAL CERTIFICATION

I CERTIFY that the foregoing by-laws of the ……………………………….Savings and Credit Co-operative Society Limited have been approved and duly registered.

Given under my hand at Nairobi this …………………… Day of ……………. 20…..

COMMISSIONER FOR CO-OPERATIVE DEVELOPMENT

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• Speech by Hon. Adan Mohamed, Ebs, Cabinet Secretary for Industrialization and Enterprise Development During the 91st International Cooperative Day Celebrations on 6th July 2013 (funnyardstick.wordpress.com)

 

Start saving as soon as you start making money!

Guys this is important. If you have started earning, this is the right time to start saving or is the right time to increase your savings. The longer you wait the difficult it will become as your life will probably become comfortable and you might have many responsibilities soon afterwards!!

Let me tell you the boiling frog story that I love to tell my fellow cooperators: If you drop a frog in a pot of boiling water, it will of course frantically try to clamber out. But if you place it gently in a pot of tepid water and turn the heat on low, it will float there quite placidly. As the water gradually heats up, the frog will sink into a tranquil stupor, exactly like one of us in a hot bath, and before long, with a smile on its face, it will unresistingly allow itself to be boiled to death. The boiling frog story is generally told in a metaphorical context, with the upshot being that people should make themselves aware of gradual change lest they suffer eventual undesirable consequences (Wikipedia).

See yourself as a frog and of course like the frog dropped in boiling water, you will automatically clamber out like we do in uncomfortable/unpleasant situations. But if you were to be dropped in tepid water and the water be gradually heated, you will rarely notice change in temperature until probably it is too late. Life happens like that!! Change sometimes will find you still trying to adjust to it despite it being constant!!! Life has a way of sneaking onto you and gives you a surprise though most probably you saw this surprise miles away and you told yourself you had all the time. Living life without considerable savings is like water that is being gradually boiled with you in!!!

When you leave collage with your degree or diploma certificate and you get a job, do not wait to start saving. It is likely that at this time you are still single and you have a few financial obligations. So immediately you get a job, you should start saving and save as much as possible. This is so because once you start a family, your expenses will automatically go up or if you delay, you will get used to the pay you get and therefore it will become hard to adjust. You will have established a comfort zone. We all know getting out of a comfort zone is the hardest of things to do.

Saccos have a minimum savings per month that is allowed. So if you are in a Sacco DO NOT start saving the minimum allowed. It is thought wise that one should at least save 10% of his/her income. If possible when you have just been employed, save more than the 10%. It is also wise to save with a Sacco as they pay better dividends and interest on deposit than most financial institutions. Ask around the interest paid by banks on savings accounts then ask what Saccos pay! Saccos pay way better .

So my friends, start saving now for a better future.

Related articles

• Boiling a frog (ambrosia1966.wordpress.com)
• Opinion: A Frog in the Pot – by Gwynne (tripolipost.com)
• Effective Credit Utilization in SACCO Societies (funnyardstick.wordpress.com)

DUTIES AND POWERS OF THE MANAGEMENT COMMITTEE/BOARD OF DIRECTORS

The Committee of the society subject to any directions from the General Meeting generally direct the affairs of

BOARD OF DIRECTOS

the society. Its procedures, powers and duties are prescribed by the Co-operative Societies Act Cap 490, Co-operative Rules and the By-Laws of the society. In particular the management committees or board of directors shall:

a) Observe in all its transactions the Act, the Rules, the by-laws and prudent business practices.

b) Act upon all applications for membership.

c) Make provision for sufficient funds for loans.

d) Ensure that true and accurate records and accounts of the society’s money, properties, capital reserves, liabilities, income and expenditure are kept and maintained;

e) Prepare and develop long-term management plans and budgets for presentation at the General Meeting;

f) Propose to the General Meeting the amount and kind of surety bond, or other security, which shall be given by the member of the committee or employee having custody of or handling funds or property of the society;

g) Determine and recommend to the General Meeting the interest rates on loans, the maximum maturities and terms of payment or amortization of loans from time to time and the maximum amount that may be loaned with or without security to any member;

h) Cause the audited accounts to be displayed in a conspicuous place at its registered office and branches at least two weeks before presentation of accounts to its members at the general meeting;

i) Lay before the General Meeting audited accounts, together with proposals for the disposal of net surplus, if any;

j) Recommend to the General Meeting the dividend rate to be paid on shares, if any, and interest to be paid on deposits;

k) Fill through co–option, vacancies occurring in the committee between General Meetings;

INVESTMENT

l) Recommend investments of the society;

m) Authorize the conveyance of properties;

n) Authorize borrowing and lending operations of the society in accordance to the Act and the Rules;

o) Designate a depository or depositories for the funds of the society;

p) Employ and fix the remuneration of the employees in accordance with the terms and conditions of service as approved by the Commissioner;

q) Impose fines as provided for under these by-laws;

r) Approve transfer of shares;

s) Supervise the recovery and collection of loans from members and recommend to the General Meeting the write off of bad debts.

t) Perform or authorize any actions consistent with the Act, the Rules and these by-laws, unless specifically reserved for the General Meeting;

u) Provide adequate budget for education and training of members, the committee and staff; and

v) Perform such other duties as the General meeting may from time to time direct.

DUTIES OF GENERAL MEETINGS

General Meetings of co-operatives usually have the following duties:-

MEETINGS

a) Consider and confirm the minutes of the previous General Meeting.

b) Consider reports of committees, the Commissioner or his/her representative and the audited accounts on the society’s activities during the past financial year.

c) Consider and resolve on the manner in which any available surplus shall be distributed or invested, subject to the Act and rules.

d) Elect or remove members of the Committee and the Supervisory Committee, subject to the Act, Rules and these by-laws.

e) Fix the indemnity for the elected committee members and management staff.

f) Consider recommendations from the Committee, against suspension and expulsion of members.

g) Consider appeals against refusal of membership by the Committee.

h) Confirm or reject admission of new members by the committee.

i) Fix the maximum liability which the society may incur in loans and deposits from both members and non-members.

j) Approve the estimates of income and expenditure for the financial year following the General Meeting.

k) Fix the honoraria, if any, for officers or employees of the society.

l) Decide on the management structure, including the establishment of branches to facilitate efficient and cost effective delivery of services to members.

m) Appoint bankers, auditors and advocates of the society for the ensuing year.

n) Affiliate the society to National Co-operative Organization for SACCO societies and the Apex society, subject to approval of the General Meeting;

o) Transact any other business of the society for which notice has been given to members in the manner prescribed in these by-laws.

CO-OPERATIVE PRINCIPLES

7 CO-OPERATIVE PRINCIPLES

(a) Voluntary and open membership

The society shall always be guided by the principle of voluntary and open membership in its member recruitment drive without political, ethnic, religious, gender or social discrimination.

(b) Democratic member control

The society will be fully controlled by members who will have equal voting rights on the basis of one member one vote.

(c) Economic participation by member

Members shall contribute equitably to the capital of the society and share in the results of its operations.

(d) Autonomy and independence

The society shall operate on mutually acceptable terms with its stakeholders who will ensure its autonomy and independence.

(e) Education, training and information

The society shall foster reciprocal, on–going education programmes for members, leaders, staff and the community so that they can teach and learn from each other or from the appropriate resource persons in understanding and carrying out their respective roles.

(f) Co-operation among co-operatives

In order to better serve the interests of the members and the community, the society shall actively co-operate with other co-operatives locally, regionally, nationally and internationally.

(g) Concern for community in General

The society shall show concern to the community in which it exists and operates.

Related articles

• Co-operatives can play a key role in development (guardian.co.uk)
• REI – The Power of Crowdfunding (criccafunding.com)
• How can mobilization of member funds be improved? (funnyardstick.wordpress.com)
• Cooperative Societies: Untapped investment opportunities (vanguardngr.com)

 

Corporate Governance Issues in Co-operatives

Basic Issues to Consider

• Authority and powers of the members
• Appointment of the committee
• Composition of the committee

GOVERNANCE

• Training and development of the members of the committee
• Tenure of the members of the committees
• Authority and responsibilities of the committees
• Committees succession planning
• Relationship between committee and management

Relevance of Good Corporate Governance Practices in Co-operative Societies

• Strategic thinking and strategy setting
• Balance of power and control
• Efficiency and effectiveness
• Transparency and probity
• Productivity and profitability
• Responsibility an responsiveness
• Creativity and responsiveness
• Competitiveness and sustainability

WE ARE 389 ON OUR FACEBOOK PAGE!! HOW WILL OUR SACCO LOOK LIKE IF WE WERE TO FORM ONE?

Thanks for joining this page and for visiting the main site. Now we are 389. That’s is incredible. We can form a co-operative society a savings and credit type (Sacco), and the law requires only ten people. Only ten!!

CAN WE REGISTER IT?

Lets assume we all want to form a co-operative. We call it Facebook Sacco. Our area of operation is Republic of Kenya. We all agree on postal and physical address of our society. Our common bond is Facebook users who have liked “Co-operative Movement in Kenya” (am sure commissioner won’t buy that!!!). The entrance fee/registration fee we all agree to set it at Ksh. 500. We also agree that one share is Ksh. 20 (i.e. nominal value of one share) and the minimum number of shares is 100 and therefore the non-withdrawable share is Ksh. 2000 and we set transfer of share fee at Ksh. 200. We all unanimously agree also that our minimum monthly contribution (deposits) should be Ksh. 2000.

If we all pay the entrance fees, we will have Ksh. 194,500. This is more than enough for registration and buying few stationary for our society and also remain with some cash that we can loan to our members! Saccos don’t give loans until they are six months old, also members don’t qualify for loans until they are six months old and have been contributing consecutively. We are all contributing Ksh. 2000 per month so every month our account will be reading Ksh. 778,000. In six months, we shall have savings of  Ksh. 4,668,000! Now after six months we can loan to few of our members. Of course by then we will have a loan policy that will control loan granting, repayment terms, etc.

Who is not feeling all nice now? Questions?

MEDIA WHY REFER SACCOs ISSUES TO KUSCCO?

I find it absurd that everybody in the media, usually refer questions concerning co-operatives (Saccos especially) to KUSCCO (Kenya Union of Savings and Credit Co-operatives). Why would one go to KUSCCO seeking to register a co-operative or clarification on what a Sacco is? Or more confusing what Sacco to join?

WHY THE HELL DO THAT?

Isn’t there a government department (used to be a fully fledged ministry) that has an extension department that:

• Offers advisory services to the Co-operative Movement on development of accounting, entrepreneurship, ICT and Management?
• Empowers members to understand and apply the Cooperative Societies Act and Co-operative Development Policies?
• Identifies opportunities for co-operatives to participate in the industrialization process, acquisition of required capital and value addition?
• Facilitates dialogue between stakeholders on how to create a sustainable co-operative structure?
• Ascertains compliance with provisions of the co-operative societies Act?
• Sensitize the public on the advantages of the co-operative system and?
• Disseminates relevant information on the development of cooperatives?
• Promotes groups to be registered as co-operatives?
• Encourages value addition and co-operative marketing?

KUSCCO is a union. A union is formed by two or more primary co-operatives. KUSCCO is a union of co-operatives and rarely play the advocacy role they claim they do. They though offer financial services to Saccos i.e. loans and insurance services. Technical services like consultancy, by-laws drafting, etc offered by KUSCCO are just too expensive for many Saccos. Its is therefore prudent to consult extension services of the Ministry of Industrialization and Enterprise Development, Co-operatives Department who will assist you.

WILL SACCOs DIE IN THE DEVOLVED GOVERNMENTS ERA?

We are still in a situation where the National Government has halted a crisis from occurring by stating that they will continue with the function of paying civil servants salaries. This is until such a time when County Governments have put up the necessary infrastructure and systems that will handle salary payments. The National Government has just saved Saccos!!!!

Backwards?

Saccos under the various Ministries otherwise referred to as countrywide Saccos, functioned effectively under the National Government. These Saccos they all received employees deductions from the main line ministries not from numerous fragmented sources read County Governments, as it is going to be. These Ministries remitted the same to Saccos within seven days as required by the Co-operative Societies Act Cap 490 Section 35. This particular section give us clue when sums deducted should be remitted and the consequences of not doing so within the stipulated time. In the 90’s, many Saccos under the Local Authorities i.e. the county councils and municipal councils, collapsed or were rendered almost incapable of providing services to their members. The various councils and municipalities, used to deduct from salaries of their employees and never remitted to their respective Saccos. Instead these municipalities and county councils used the monies (which are salaries) to carry out other activities of those municipalities and county councils!! Some of the membership of these Saccos have not been refunded their Sacco contributions to date!!

Tick Tock Tick Tock!!

Will it work with Saccos?

All Saccos that are under Ministries of Health, Co-operatives Development and Marketing, Agriculture, Environment etc or any devolved “Ministry” may be affected. The main line Ministries all made sure that Saccos received members contributions together with loan repayments and the interests due within stipulated period. Will County Governments deduct and remit the same within the period required? Will instances like one viewed in some Counties e.g. Kiambu (missing a deadline!!) affect and ultimately kill these Saccos? What would be the situation like where County Governments will be required to deduct from employees salaries and remit monies to hundreds of Saccos within stipulated time given some counties are far removed from some services e.g. certain banks? Should the membership of these Saccos start withdrawing membership and seek refunds before things go haywire?

Tick Tock Tick Tock!!

Let us paint a picture here. In a County Government, their would be members of various countrywide Saccos (Wakulima Sacco, Shirika Sacco, Afya Sacco, Jamii Sacco, etc.). These County Governments would have of course budgeted for recurrent expenditure though probably despite the politics and greed like we just witnessed. The salaries would be paid through the County Governments to civil servants who work in the devolved systems. Also deductions will have to be effected by the County Governments from these workers to be remitted to their respective Saccos within seven days. There would be hundreds of Saccos waiting for their members deductions. Cheques will be written and deposited to these Saccos accounts or send all the way from Mandera, Lodwar, West Pokot, etc. The magnitude of these activities are overwhelming to say the least. Some County Governments probably will view this activity (deducting and remitting) as not a “priority”. It will be a disaster too if salaries will delay, if County priorities will be as we just witnessed, if certain activities in a county have been underfunded and employees deductions seem easy way out, if corruption will intensify,etc.

Tick Tock Tick Tock!!

More information is needed!!

Then again are these Saccos placed to collect their members deductions from the 47 Counties? Do these Saccos know where their members are and how many are to be affected? Do these Saccos have a way of monitoring remitted deductions and notifying its membership of any failure by County Governments to do so? Will the Ministry or department at County Government responsible for co-operative societies have the muscles to effectively enforce Section 35 or shoot itself? Under which County will be these countrywide Saccos be? Nairobi? Will Nairobi County (if it is) have the manpower and even the mandate to enforce Section 35 to a County or Counties that failed to remit sums deducted?

We all know most people that have been employed by the County Governments are political or were employed for political reasons or tribal, nepotism, etc reasons. What will prevent them from doing shoddy jobs? What will motivate them to ensure Saccos don’t die? What will prevent them from punishing members of a certain Ministry within the County by holding their deductions and even salaries?

Tick Tock Tick Tock!!

Transcend your reality.

I say that co-operatives should have never been devolved. Devolve health, agriculture etc. but not co-operatives. Co-operatives have political bearing as they have elections and sometimes these elections are highly contested and attract politicians who influence it their way. What motivation will a co-operative officer have to stop such interference? What motivation will a co-operative officer have to enforce Co-operative Societies Act despite it being unpopular and being against County Government officials?

Tick Tock Tick Tock!!

 

Disputes in Co-operative Societies in Kenya

Co-operative Societies Act Section 76 defines Disputes as:
(1) If any dispute concerning the business of a co-operative society arises—
(a) among members, past members and persons claiming through members, past members and deceased members; or
(b) between members, past members or deceased members, and the society, its Committee or any officer of the society; or
(c) between the society and any other co-operative society, it shall be referred to the Tribunal.
(2) A dispute for the purpose of this section shall include—
(a) a claim by a co-operative society for any debt or demand due to it from a member or past member, or from the nominee or personal representative of a deceased member, whether such debt or demand is admitted or not; or
(b) a claim by a member, past member or the nominee or personal representative of a deceased member for any debt or demand due from a co-operative society, whether such debt or demand is admitted or not;
(c) a claim by a Sacco society against a refusal to grant or a revocation of licence or any other due, from the Authority.

Rights and Obligations of a Member

Rights and Obligation of Members.

Rights of a Member

A right is what a member of a co-operative deserves to be given, or is entitled to get, enjoy or feel. In order to enjoy these rights, a member must have paid the necessary membership fees and purchased at least one minimum share and also have deposits in the Sacco Society.

These rights are:-

• to attend and participate in general meetings.
• to elect and be elected to the organs of the society subject to this by-laws.
• to enjoy the use of all facilities and services of the society subject to the by-laws.
• to receive periodically and regularly or upon request a statement of account in respect of transactions with the society.
• to access all legitimate information relating to the society including: internal regulations, registers, minutes of general meetings, annual accounts, inventories and investigation reports at the registered office of the society subject to any regulations in force.
• to transfer shares.
• to share in the profits of the society, if any.
• to vote on all matters put before the general meeting of the society.
• to appoint a nominee.
• to ask for a special general meeting subject to the rules and the society by-laws.

Members Obligations/Duties

The conferment of rights to a member also demands that a certain obligations be fulfilled. A member’s obligation is what the society expects from a member. As much as a member enjoys rights from the society, he has an obligation to:-

• attend and participate in passing resolutions at general meetings.
• observe and comply with all the society’s by-laws and decisions made by organs of the society in accordance with the by-laws.
• buy and pay-up for shares or make any payments as provided for in the by-laws of the society.
• patronize the society’s products.
• attend members’ education meetings.
• repay loans as per the agreement.
• promote the society and its service or products.
• pay for the debts of the society at the time of liquidation where the assets are insufficient to meet liabilities.
• support projects of the society approved by the relevant authority.

Co-operative Corporate Governance

What is co-operative corporate governance?

 

GOOD CORPORATE GOVERNANCE

Corporate governance takes into account public policy, national values and ethics. It covers systems by which the individual corporations regulates itself for competitiveness and sustainability through practices and procedures for supervising, monitoring, regulating and controlling its affairs. Regulatory authorities, national trade and business associations, professional bodies and societies should all practice good corporate governance.

Co-operative corporate governance is about the use of power in co-operative organizations. It is concerned with the leaders who are the people who govern, that is, direct and control co-operatives.

Co-operative corporate governance also targets members of co-operatives. These are the main stakeholders. They are the people whose money is invested in the organization. They are the ultimate beneficiaries of well run co-operatives and the ultimate losers of badly run organizations and for this reason, they are the supreme authority. 

For co-operatives to be efficient and productive, they must apply good corporate governance practices that seek to ensure that the power of the organization is used in a manner that ensures:

• effectiveness-that the co-operative society abides by and achieves the objects for which it exists.
• efficiency-that the undertaking of the organization are honest and have integrity.
• fairness-that the organization treats all its shareholders and the community in which it operates in reasonably and justly.
• transparency-that the organization is open about its activities and that it meets that information needs of all its stakeholders.
• discipline-that the organization complies with all the laws of the country, its by-laws and that it exercises self-control in all its dealings.
• accountability-that the organization is answerable to and satisfactorily explains its actions to its members/stakeholders.
• responsibility-that the organization exercises good judgment. That is able to make informed and astute decisions, act accordingly and accept the consequences of its actions, taking remedial actions where necessary.
• independence-that the organization acts of its free will, in its best interests and with the consideration for all its stakeholders and not according to the dictates of external interests.
• social responsibility-that the organization is sensitive to and that it responds to the needs of the members/society, for example by improving its products or where necessary developing new ones.

Why Good Corporate Governance

 

Money can’t buy happiness, however it can rent it 🙂

Good corporate governance can greatly enhance effectiveness, competitiveness and sustainability of the organization. This is important in the highly competitive global market. Members must demand good governance of their co-operative to ensure:

• that the organization achieve the objective for which they exist.
• that the organization are effective and make good returns on members’ investments.
• that the organization are innovative by improving on their products and introducing new ones.
• that the organizations are credible so that they can attract more members and savings.
• that the organizations are sustainable and continue to exist and be effective for a long time.
• that the organizations use resources efficiently and with due regard to the needs of future generations.
• that the organizations are responsible and that they contribute to well-being of the community in which they exist.

Authority and Duties of the Members as Stakeholders

Shareholders in the co-operative society must play their role in ensuring that their organizations are well-governed. In order to do this, they must keep themselves informed about their co-operative societies  so as to be in a position to make independent and informed decisions on all issues on they are called upon to make decisions. Shareholders should ensure that they clearly understand the objects for which their co-operative are formed so that they can effectively hold directors they elect to account.

Shareholders have a duty to ensure that only competent and reliable persons, who can add value, are elected to the board of directors. They must also ensure that the board is constantly held accountable and responsible for the efficient and effective governance of the co-operative society so as to achieve corporate objectives, prosperity and sustainability.

The Board of Directors

BOARD OF DIRECTOS

Every co-operative should be led by an effective board which exercises leadership, enterprise, integrity and judgment in directing the co-operative society and which acts in the best interest of the co-operative in a transparent, accountable and responsible manner.

Accountability and Transparency

To enhance accountability and transparency in co-operative organizations, the leaders have to observe and adhere to the co-operative values of honesty, openness, social responsibility and caring for others. These values may be exercised while performing various activities of the co-operative organization as follows:

• meetings-convene and conduct co-operative meetings as specified in the Act and Rule and the co-operative by-laws.
• elections of leaders-have regular and timely elections and allow members to participate without interference such as rigging and other forms of influence.
• accounts and audit-maintain up to date an accurate records of the organization and ensure audited accounts are presented and read to members in time and members allowed to deliberate and resolve on them.
• budgeting procedures-budgeting for the organization should be participatory, with members originating ideas and giving final approval.
• recruiting of personnel-co-operative leaders should source personnel from open market and should avoid nepotism.
• code of conduct for leaders-co-operative societies should develop code of conduct and best practice for their leaders.
• delegation of duties-to enhance transparency and accountability, each co-operative should recruit experienced and professional persons to avoid board members acting as executives. Clear job description should be prepared for every position.
• training-training can do a lot to enhance transparency and accountability. It should be done in  a participatory and leaner centered manner and be geared towards change.
• tendering and procurement-tendering should be done according to the provisions of the Public Procurement and Disposal Act and Regulations. Always seek for quality goods and services.