Duties of the Management and Supervisory Committees

The Management Committee

The Management Committee is the governing body of the society elected from the general membership and consists of nine (9) members. It includes the Chairman, Vice chairman, Treasurer and Secretary all of whom are elected by the Committee from amongst the members of the Committee.

Members of the committee hold office for a period of three years provided that, one-third of the committee members retires every year but are still eligible for re-election.

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

  • Observe in all its transactions the Act, the Rules, these By-laws and prudent business practices.
  • Act upon all applications for membership.
  • Make provision for sufficient funds for loans to members.
  • Ensure that true and accurate records and accounts of the society’s money, properties, capital reserves, liabilities, income and expenditure are kept and maintained;
  • Prepare and develop long term management plans and budgets for presentation at the General Meeting;
  • 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;
  • 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 amounts that may be loaned with or without security to any member;
  • 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;
  • Lay before the General Meeting audited accounts, together with proposals for the disposal of net surplus, if any;
  • Recommend to the General Meeting the dividend rate to be paid on shares, if any, and interest to be paid on deposits;
  • Fill through co–option, vacancies occurring in the Management Committee between General Meetings;
  • Recommend investments of the society;
  • Authorize the conveyance of properties;
  • Authorize borrowing and lending operations of the society in accordance with the Act and the Rules;
  • Designate a depository or depositories for the funds of the society;
  • Employ and fix the remuneration of the employees in accordance with the terms and conditions of service as approved by the Commissioner;
  • Impose fines as provided for under the By-laws;
  • Approve transfer of shares;
  • Supervise the recovery and collection of loans from members and recommend to the General Meeting the write off of bad debts.
  • Perform or authorize any actions consistent with the Act, the Rules and the By-laws, unless specifically reserved for the General Meeting;
  • Provide adequate budget for education and training of members, the committee and staff; and
  • Perform such other duties as the General Meeting may from time to time direct.

The Supervisory Committee

Co-operative societies  have supervisory committees consisting of three members each elected at the General Meeting for a period of three years and one member of the supervisory committee retiring annually. The supervisory committee verifies all transactions of the co-operative society. The supervisory committee cannot perform any of the duties or exercise any of the powers of the management committee of the society.

The specific duties of the supervisory committee shall be to:

  • confirm cash regularly and reconcile it with the records
  • check out bank accounts monthly and their reconciliation
  • make pass books or members personal accounts audits
  • check delinquent loans among the committee and members and ensure appropriate action is taken
  • verify society investments
  • analyze expenses of the society
  • check loan applications and note any anomaly
  • check balance sheets and income and expenditure statements to ensure their accuracy
  • check whether the books of the society are kept in accordance with the accounting standards
  • make regular checks on budgetary control by the officials
  • attend to and receive members complaints
  • prepare and present reports to the management committee for discussion during joint meetings
  • submit its reports to the commissioner
  • present its report to the annual general meeting
  • co-operate with the management committee in seeking solution to problems facing the society
  • carry out other duties as prescribed in the Rules.

Rights and Obligations of a Member

Rights and Obligation of Members.

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

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 :-)

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

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.

Co-operative Legislation In Kenya

The three main sources of co-operative laws applicable to the co-operatives in Kenya are:

  • The Co-operative Societies Act (Cap 490 of the Laws of Kenya)
  • The Co-operative Societies Rules 2008
  • The Sacco Society Act 2008
  • The Sacco Societies Regulations
  • The registered By-laws of the co-operative society

Other sources include government policies issued from time to time in form of circulars (commissioners circulars) and resolutions passed by members in validly convened and conducted general meetings.

The co-operative Societies Act

This is an Act of Parliament relating to the constitution, registration and regulation of co-operative societies. It is the supreme law relating to the operations of the co-operative societies. Like any other law, the provisions of the Act do not in any way conflict the constitution of Kenya.

The Act is one of the documents that should be available in every co-operative society office and should be thoroughly understood and referred to by the officials from time to time in the conduct of the society business.

The Co-operative Societies Act provides the following areas

  • registration of co-operative societies
  • privileges of a registered co-operative society
  • rights and liabilities of members
  • duties of co-operative societies
  • amalgamation and division of co-operative societies
  • rights and obligations of co-operative societies
  • property and funds of co-operative societies
  • inquiry and inspections
  • surcharge
  • dissolution
  • settlement of disputes
  • offence under the Act, the rules and penalties

The Act has broad provisions and does not specify how certain issues shall be implemented. Section 91 of the Act therefore gives the Minister power to make rules for the better carrying out of provision and purpose of the Act.

The Sacco Society Act, 2008

This Act of Parliament makes provision for the licensing, regulation, supervision and promotion of Sacco societies, to establish the Sacco Society Regulatory Authority and connected purposes. This Act is divided in seven parts as follows:

  • preliminary
  • the Sacco Societies Regulatory Authority
  • licensing of Sacco societies
  • regulation Act and supervision of Sacco societies
  • the deposit guarantee fund
  • miscellaneous
  • schedule-conduct of the affair of the board

The Co-operative Societies Rules

The rules are subsidiary legislation made by the Minister. The Minister derives powers to make rules under Section 91 of the Act. The current rules were made and became effective from November  2004. Being subsidiary legislation, the Rules do not conflict with the Act.

The rule is another document that society should keep in the office and should be referred to and used by the society officials from time to time.

Important provisions in the rules

  • the procedures and forms used in the registration of co-operatives
  • the procedure for making and amending the by-laws of co-operatives
  • the procedure for admission of members in the co-operative societies
  • the procedure of general meeting of members and powers of members
  • the appointment, suspension and removal of committee members
  • the formation and maintenance of reserve fund
  • the procedure for appeals to the Minister
  • the returns to be submitted by the co-operative societies
  • the procedure to be followed in liquidation of societies

The Act and the Rules cannot give adequate details on how each individual co-operative society should be internally governed. Internal regulations are made by each society, because not all aspects are the same in all societies. The rules therefore provide for every society to make by-laws to serve as internal regulations (Rule 7).

The registered By-laws of co-operative societies

The By-laws are internal regulations made by each co-operative society to bind and govern its members. The By-laws are only effective if they are registered by the Commissioner for Co-operative Development. Important areas covered in the By-laws include:

  • name and postal address of the society
  • area of operation and membership common bond
  • the objects for which the society is formed
  • the purpose for which its funds maybe applied
  • the disposal of accumulated funds
  • the qualifications for membership, the terms and mode of admission
  • the withdrawal and expulsion of members
  • the rights, liabilities and obligations of members, including minimum shareholding
  • the transfer of shares or interest of members
  • the manner of raising funds
  • the procedure and quorum of general meetings
  • the appointment, suspension and removal of members of the committee
  • the duties of the management and supervisory committee
  • the period of its financial year
  • the authorization of officers to sign documents
  • the settlement of disputes
  • the condition for issuing of loans

By-laws maybe amended by members in a validly convened and held general  meeting. At least fifteen (15) clear days notice of the proposed amendment must have been given to all members.

Any amendment of the by-laws of a co-operative society shall only be valid if the amendment is registered with the Commissioner of Co-operative Development. When Commissioner registers an amendment of the by-laws of a co-operative society, he issues to the society a copy of the amendment certified by him as evidence that the amendment of the By-laws has been registered. This copy should be kept in the society office for use.

The By-laws of a co-operative society are subordinate to the Act and Rules. They should not contradict any of the above.

Copies of the registered By-laws should be acquired by each member of the society so that they are conversant with each provision there-in. This can be through suitable arrangement with the society officials.

The by-laws binds only members of the respective co-operative society. They bind all members irrespective of when they joined the society. They should therefore be obeyed by all members and be observed by the society officials in the conduct of all business of the society.

Government Policies/Commissioners Circulars 

The government issues policy circulars from time to time. Such circulars are normally issued by the Commissioner for Co-operative Development and are meant to be implemented and their purpose is to assist in the growth and development of the societies, and in the administration of the provisions of the Act and rules.

General Meeting Resolutions

Members do pass resolutions in general meetings. These resolutions, as long as they are passed in validly convened and conducted general meetings and do not contradict any of the By-laws of the society, form part of the society’s internal rules and regulations. Once the resolutions have been passed by the required majority, they bind all members whether they were present or not, and whether they voted in favor of the resolution or not.

Any resolution passed  in a general meeting should have a proposer and a seconder. Where there is division, the issue should be decided by vote and the majority vote is recognized. Resolutions passed in a general meeting should not contravene any provisions in the Act, Rules and the society By-laws. However a special resolutions requires 2/3 majority of the members present and voting at duly convened general meeting.

Compliance Issues as per the Act and Rules

The latest revised Act and the new Rules of November 2004 have introduced amendments and provisions which should be complied with by all co-operative societies. The compliance issues that affect societies include:-

  • every co-operative society shall hold its annual general meeting within four months after close of its financial year (by 30th April for Sacco Societies)
  • every co-operative society shall present to members its audited accounts and balance sheet for each year within four months after close of financial year. The audited accounts shall be displayed in a conspicuous place for members to read at least two weeks before they are presented to members in a general meeting.
  • the audited accounts and balance sheet shall be presented to the Commissioner for registration before they are presented to members in a general meeting
  • borrowing powers shall be fixed by members in a general meeting subject to approval by the Commissioner.
  • every co-operative society with employees shall have terms and conditions of service for staff. The terms and conditions shall be approved by the commissioner.
  • the manager shall be a counter signatory to all documents and contract of the society.
  • all society committee shall file an indemnity-Form V of the Co-operative Societies Act shall be signed by the management committee members agreeing to uphold the values of accountability, honesty and transparency in dealing with the affairs and resources of the society and accepting liabilities arising from lack of upholding such values. This is done within fourteen days after being elected, and if they do not, they will automatically lose their positions. The indemnity figure shall be fixed by members in a general meeting.
  • all committee members shall fill wealth declaration forms within thirty days after elections, and if they do not, they automatically lose their positions.
  • supervisory committee should write periodic reports (quarterly) and table their findings at management committee meetings. It shall also submit its reports to the commissioner present the report to the general meeting.
  • committee members shall be elected for three years, subject to one third retiring annually but being eligible for re-election.
  • every society shall have members funds separated into shares and deposits.
  • every society shall maintain a reserve fund where one fifth of the net surplus in any years shall be credited. An account should be maintained for the fund.
  • no co-operative society shall invest its funds in non-core business except with the approval of the Commissioner and the general meeting through a special resolution.
  • estimates of income and expenditure shall be prepared and presented to members for approval in a general meeting at least three months before the end of the preceding year.
  • every member of a co-operative society shall appoint a nominee or nominees, who shall inherit his/her shares or interest in the society upon his death.

Relevant Policies for Co-operative Societies

Societies are expected to carry out certain business operations according to their established policies. The purpose of policies is to establish procedures for carrying out certain aspects of the business of the society. The By-laws of the society should normally provide and give power to the society officials to formulate such policies as may be necessary from time to time. Some of the policies relevant to co-operative societies include:

  • The loan policy-this is an internal regulation document that guides and regulates loan granting and loan administration. The loan policy should be known, understood and adopted by members, as it affects them.
  • The investment policy-a document that guides the society on areas of investment of society’s and members’ funds.
  • The human resource policy-this is a document that guides the society on issues of administration of society’s human resource, right from recruitment stages to promotion and exit stage.
  • The education and training policy-this is a document that guides the society on issues of education to members and training of committee members and members of staff.
  • The public procurement and disposal policy-this is an internal document that establishes procedures for procurement and disposal of goods and services. it should be prepared in conformity with the Public Procurement and Disposal Act and the regulations made there under.
%d bloggers like this: