the by-laws of - kenya sacco net
TRANSCRIPT
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THE BY-LAWS
OF
ABC SACCO (DELEGATE SYSTEM)
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TABLE OF CONTENTS Page
SECTION 1 – NAME, ADDRESS AND LEGAL DESIGNATION .................................................................................... 4
1.1. NAME AND AREA OF OPERATION ............................................................................................................................ 4 1.2. REGISTERED OFFICE/POSTAL ADDRESS ................................................................................................................ 4 1.3. DEFINITIONS AND INTERPRETATIONS................................................................................................................... 4
SECTION 2 – SACCO GOALS ............................................................................................................................................... 7
2.1. OBJECTS .......................................................................................................................................................................... 7 2.2 STRATEGIES .................................................................................................................................................................... 7
2.2.1 VISION STATEMENT ........................................................................................................................................ 7 2.2.2 MISSION STATEMENT ..................................................................................................................................... 7
2.3 CO-OPERATIVE PRINCIPLES AND VALUES ............................................................................................................ 8 2.4 PRINCIPLES ..................................................................................................................................................................... 8 2.5 CORE VALUES AND ETHICS ........................................................................................................................................ 9 2.6 STRATEGIES .................................................................................................................................................................... 9
SECTION 3 – CAPITAL, SHARES AND SAVINGS/DEPOSITS .................................................................................... 10
3.1. SACCO SOCIETY’S FUNDS ........................................................................................................................................ 10 3.2 SHARES .......................................................................................................................................................................... 10 3.3. SAVINGS / DEPOSITS .................................................................................................................................................. 11 3.4. LIABILITY OF MEMBERS .......................................................................................................................................... 11
SECTION 4 – COMMON BOND AND MEMBERSHIP ................................................................................................... 12
4.1. MEMBERSHIP COMPOSITION .................................................................................................................................. 12 4.2. MEMBERSHIP RIGHTS AND ELIGIBILITY ............................................................................................................. 12 4.3. VOLUNTARY WITHDRAWAL .................................................................................................................................. 13 4.4. MEMBERSHIP APPLICATION FORM ....................................................................................................................... 13 4.5. ADMISSION INTO MEMBERSHIP ............................................................................................................................. 13 4.6. MEMBERSHIP IN THE APPEX ORGANIZATIONS ................................................................................................. 13 4.7. REFUSAL OF MEMBERSHIP ...................................................................................................................................... 14 4.8. RIGHTS AND OBLIGATIONS OF MEMBERS: ........................................................................................................ 14
SECTION 5 – HANDLING OF DISPUTES AND MEMBER EXPULSIONS ................................................................ 15
5.1. DISPUTES ...................................................................................................................................................................... 15 5.2. CEASATION OF MEMBERSHIP ................................................................................................................................. 15 5.3. SUSPENSION AND EXPULSION ............................................................................................................................... 15 5.4. SUSPENSION /EXPULSION PROCEDURE ............................................................................................................... 15 5.5. PAYMENTS RESULTING FROM WITHDRAWAL, TERMINATION OR SUSPENSION/EXPULSION FROM
MEMBERSHIP...................................................................................................................................................................... 16
SECTION 6 – MEMBERSHIP MEETINGS ....................................................................................................................... 17
6.1. GENERAL MEETING ................................................................................................................................................... 17 6.2. NOTICE OF SPECIAL OR ANNUAL GENERAL MEETING ................................................................................... 17 6.3. QUORUM ....................................................................................................................................................................... 17 6.4. REQUIRED MAJORITY ............................................................................................................................................... 18 6.5. ENFORCEMENT OF THE DECISIONS ...................................................................................................................... 18 6.6. CHAIRMAN AT MEETINGS ....................................................................................................................................... 18 6.7. IDENTIFICATION OF MEMBERS .............................................................................................................................. 18 6.8. POWERS OF THE GENERAL MEETING ................................................................................................................... 18 6.9. MINUTES ....................................................................................................................................................................... 19
SECTION 7 – ELECTIONS SACCO DELEGATES & MEMBERS OF THE BOARD ............................................... 20
7.1. ELECTIONS ................................................................................................................................................................... 20 7.2. BOARD OF DIRECTORS ............................................................................................................................................. 20 7.3. ELIGIBILITY AS A BOARD OF DIRECTORS ........................................................................................................... 20
SECTION 8 – BOARD OF DIRECTORS ............................................................................................................................ 22
8.1. FUNCTIONS AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS ......................................................... 22
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8.2. BOARD LEGAL STANDARD OF CARE: ................................................................................................................... 23 8.3. DELEGATION OF DUTIES .......................................................................................................................................... 24 8.4. RECORDS OF BOARD OF DIRECTORS MEETINGS: ............................................................................................. 24 8.5. SUB-COMMITTEES ..................................................................................................................................................... 24 8.6. VACATION OF OFFICE BY SUB-COMMITTEE ...................................................................................................... 24 8.7. EXECUTIVE BOARD ................................................................................................................................................... 24 8.9. CHAIRMAN AND VICE CHAIRMAN ........................................................................................................................ 24 8.10. TREASURER ............................................................................................................................................................... 25 8.11. AUTHORIZED TO SIGN DOCUMENTS .................................................................................................................. 25
SECTION 9 – CREDIT COMMITTEE / LOAN OFFICERS ........................................................................................... 26
9.1 CREDIT COMMITTEE / LOAN OFFICERS ............................................................................................................................ 26
SECTION 10 – SUPERVISORY COMMITTEE ................................................................................................................ 27
10.1. SUPERVISORY COMMITTEE. ................................................................................................................................. 27 10.2. ELECTION OF SUPERVISORY COMMITTEE. ....................................................................................................... 27 10.3. POWERS AND DUTIES OF SUPERVISORY COMMITTEE .................................................................................. 27 10.4. MINIMUM QUALIFICATIONS OF SUPERVISORY COMMITTEE ..................................................................... 29
SECTION 11 – DUTIES AND RESPONSIBILITIES OF OPERATIONAL MANAGEMENT ................................... 30
11.1. THE MANAGER ........................................................................................................................................................ 30
SECTION 12– INVESTMENTS, OF FUNDS, CASH AND LIQUIDITY ....................................................................... 32
12.1. INVESTMENTS OF EXCESS FUNDS ....................................................................................................................... 32 12.2. LIQUIDITY RESERVE FUND ................................................................................................................................... 33
SECTION 13 – ANNUAL BUDGET ..................................................................................................................................... 34
SECTION 14 – PAYMENT OF SACCO EXPENSES AND DIVIDENDS ON OWNERSHIP SHARES .................... 36
14.1. DISPOSAL OF SURPLUS ........................................................................................................................................... 36
SECTION 15 – RESERVES ................................................................................................................................................... 37
SECTION 16 – LOANS ........................................................................................................................................................... 38
16.1. LOAN OR CREDIT FACILITY .................................................................................................................................. 38 16.2. POWER TO BORROW ................................................................................................................................................ 38
SECTION 17 – CONFLICT OF INTEREST ....................................................................................................................... 40
17.1. CONFLICT OF INTEREST ......................................................................................................................................... 40 17.2. CONFIDENTIALITY OATH ...................................................................................................................................... 40
SECTION 18 – MERGER AND LIQUIDATION ............................................................................................................... 41
SECTION 19 – AMENDMENTS AND CHANGES TO BYLAWS .................................................................................. 42
19.1. AMENDMENT OF BY-LAWS ................................................................................................................................... 42 19.2. ACQUISITION OF BY-LAWS ................................................................................................................................... 42 19.3. REGULATIONS ........................................................................................................................................................... 42
SECTION 20 – GENERAL PROVISIONS AND/OR MISCELLANEOUS ITEMS ...................................................... 43
20.1. SACCO SAVINGS GUARANTEED FUND ............................................................................................................... 43 20.2. FINES AND PENALTIES ............................................................................................................................................ 43 20.3. BENEFICIARY NOMINEES ...................................................................................................................................... 43 20.4. PAYMENT TO A NON-MEMBER BENEFICIARY ................................................................................................. 43 20.5. BOOKS AND RECORDS ............................................................................................................................................ 44
20.5.1. FINANCIAL YEAR ........................................................................................................................................ 44 20.5.2. FORM OF ACCOUNTS ................................................................................................................................. 44
20.6. AUTHORIZATION TO SIGN DOCUMENTS ........................................................................................................... 45 20.7. COMMON SEAL ......................................................................................................................................................... 45 20.8. INSPECTION OF DOCUMENTS ............................................................................................................................... 45 20.9. ACCEPTANCE ............................................................................................................................................................ 45
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BY-LAWS OF ABC SACCO (DELEGATE SYSTEM)
SECTION 1 – NAME, ADDRESS AND LEGAL DESIGNATION
1.1. NAME AND AREA OF OPERATION
This society shall be called the ABC SACCO, herein after referred to in these by-laws as “the society”. Its area of operations will be ***********.
1.2. REGISTERED OFFICE/POSTAL ADDRESS
The registered office will be at **** and postal address shall be PO BOX ****** Kenya. Any change of address of the society shall forth-with be given to the Commissioner for Cooperative Development and to the members of the Society.
1.3. DEFINITIONS AND INTERPRETATIONS
a) “Applicable Laws” In these By-laws, unless the context otherwise requires, words or phrases shall be defined/interpreted in accordance with the Cooperative Societies Act No 12 of 1997 and Co-operative Societies Act (Amendment), No. 2 of 2004 and the Co-operative Societies Rules of 2004 and the SACCO Act, 2008 made there under, hereinafter referred to as “The Act” and “The Rules” respectively.
b) “Apex society” means a society formed at the national level by the co-operative movement in Kenya and registered under this Act to promote co-operative development and represent the interests of co-operative societies locally and internationally;
c) “Board of Directors” has the meaning assigned thereto in the Co-operative Society Act, 1997;
d) “by-laws” has the meaning assigned thereto in the Co-operative Societies Act, 1997;
e) “Common Bond” shall mean any unifying factors that bring members together.
f) “Commissioner" has the meaning assigned thereto in the Cooperative Societies Act, 1997;
g) “control” in relation to the term “associate” includes –
I. Ability to influence, whether directly or indirectly, the composition of the Board of Directors of a deposit-taking Sacco society; or
II. Holding, directly or indirectly, whether personally or though a holding company or subsidiaries thereof, or in any other way, an aggregate of twenty five per centum or more of the voting power of a company or body corporate, whether alone or with associates or of the body corporate;
h) “Core Capital” means the fully paid up members’ shares, capital issued, disclosed reserves, retained earnings, grants and donations all of which are not meant to be expended unless on liquidation of the SACCO Society;
i) “Date of dissolution” means the date on which the commissioner’s canceling the registration of a co-operative society takes effect;
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j) "deposit" means a sum of money received or paid on terms under which it shall be repaid, with or without interest or a premium and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it;
k) Deposit taking business” means:
a) A SACCO business in which the person conducting the business holds himself out as accepting deposits on a day-to-day basis: and
b) Any other activity of the SACCO business which is financed, wholly or to a material extent, by lending or extending credit for the account and at the risk of the person accepting the deposit, including the provision of short-term loans to members;
l) “Deposit Guarantee Fund” means the Sacco Deposit Guarantee Fund established by section 55 of the SACCO Act, 2008;
m) “Dividend” means the share of a cooperative society’s surplus allocated to members or an amount of the profit the organization pays to members of the SACCO Society.
n) “Dormant account” means savings or current account maintained by a SACCO society which is not operational, or has had no transactions by the depositor within the maximum period prescribed by the Regulatory Authority.
o) “Institutional capital” means and is comprised of statutory reserves, entrance fees, appropriation accounts, donated equity, a permanent capital base and any other reserves established by the Society’s Board of Directors for which no claim has been placed upon it by members or other parties.
p) “International financial reporting standards” means the international accounting standards set by the International Accounting Standards Board;
q) “Minors” shall mean people who are not at least 18 years of age who may not vote or hold office or borrow from the SACCO.
r) “Members of the immediate family”. When used in these By-laws, “Members of the immediate family” includes, but is not limited to, the spouse, parents and children of each person eligible to be a member of the Society, whether or not residing in the same household. The same term also includes any other relative of a person or of the spouse of the eligible person if the relative resides in the same household as the person.
s) “Member in good standing” means a member who is current on the repayment of his/her loan payments due the Society, who is current on making his/her required contributions and has not in any way acted in a manner which is potentially damaging to the Society, and has fully complied with the policies and rules set by this Society.
t) “Nominating Committee” means a committee made up from the board of directors to vet members who have submitted their names to be considered for elections as a delegate and then to possibly be considered to be elected to the board of directors. The Nominating Committee will also vet members vying to be elected to the Supervisory Committee. The nominating committee is to ensure that the nominees for the delegates and the Supervisory Committee are qualified under the Regulatory Authority qualifications of “fit to serve” and these by-laws.
u) “officer” in relation to a SACCO society, means a director or any other person, by whatever name or title he may be called or described, who carries out or is empowered to carry out functions related to the overall direction in Kenya of that deposit-taking SACCO society or takes part in the general management thereof in Kenya;
v) “Personal representative” means any person who, under law or customs, is responsible for administering the estate of a deceased person;
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w) “Place of business” means a SACCO Society’s head branch, branch, or outlet, including a mobile unit, marketing office, automated teller machine or agency of a SACCO Society and which is open to the public;
x) “Required amount (Provisions for Loan Losses)” – the required amount is the amount, which is to be set aside in a contra-asset account, and is intended to be a provision for potential loan losses in accordance to the Prudential Standards established by the Regulatory Authority as specified in SACCO Act of 2008; (SACCO Act 2008, article 33, (3) (b) (c))
y) “share capital" means members' equity in the SACCO in the form of issued and fully paid up shares of common stock;
z) “Special resolution” means a resolution passed by two thirds of the members present and voting at a general meeting of a society;
aa) “Supervisory committee” means an oversight committee elected at a general meeting;
bb) “total capital” means the total sum of core capital and supplementary capital of a SACCO society;
cc) “total deposit liabilities” means the total deposits in Kenya in any SACCO society which are repayable on demand or after a fixed period or after notice under agreed terms and conditions;
dd) “Tribunal” means the Co-operative Tribunal established under the Cooperative Societies Act, 1997;
ee) “Users” in the SACCO” shall mean members, groups and other co-operatives who may from time to time carry out some business with the SACCO.
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SECTION 2 – SACCO GOALS
2.1. OBJECTS
The objects for which the society is established are: -
a) To encourage, promote and further all measures designed to spread the spirit and practice of thrift among its members by affording them an opportunity for accumulating their savings and deposits and to create thereby a source of funds from which loans can be made available to them.
b) To assist society members to undertake income-generating activities through provision of credit facilities for buying production inputs, implements and equipments to members and facilitating processing, manufacturing, marketing and distribution of members produce.
c) To provide an opportunity for each of its members to improve his/her respective economic and social conditions through promotion of mutual help and self-help among its members.
d) To offer the members savings and credit services and other financial services on a competitive basis as may be required by members from time to time.
e) To ensure the progress of its members by educating them continuously on the proper use of credit and educating members on savings and the benefits of savings”)
f) To raise or negotiate loans from financial institutions or other sources in furtherance of any or all objects contained herein.
g) To ensure safety and soundness of the members funds through risk management programme or any other appropriate insurance scheme.
h) To ensure progress of the society through provision of education, training and information of members elected officials and employees
i) To perform all those functions and exercise all those powers designated for SACCO Society under the applicable law for the benefit of its members to encourage thrift among its members by affording them an opportunity to accumulate savings.
j) To cooperate with other cooperatives in order to promote members' interest and in furtherance of this object the society may affiliate to National Cooperative organizations and the Apex Society.
k) To perform within the relevant law (The Act, the Rules) and these by-laws, all those acts, deeds and things necessary to further enhance, promote or encourage any or all of the foregoing purposes and objects provided that such acts, deeds and things are approved by the General Meeting.
2.2 STRATEGIES
2.2.1 VISION STATEMENT
The SACCO’s vision statement
2.2.2 MISSION STATEMENT
The SACCO’s mission statement
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2.3 CO-OPERATIVE PRINCIPLES AND VALUES
In order to achieve the objects for which it is established, the society shall adhere to its vision and mission statements and practice the following co-operative principles and values: -
2.4 PRINCIPLES
i. Voluntary and Open Membership The primary purpose of Co-operatives is to serve their members in a prudent and effective manner. Within their capacity to admit members, co- operatives are open on a voluntary basis, without political, religious, gender or social discrimination, to all who can contribute to, and benefit from their activities.
ii. Democratic Member Control: Co-operatives are democratic and participatory organizations actively controlled by their members. In primary co-operatives, members enjoy equal voting rights, on a one member, one vote basis.
iii. In co-operatives at other levels, administration is conducted and control is exercised in a suitable democratic manner. Men and women responsible for the administration of co-operatives, involve members, managers and other employees, according to their roles, in making, decisions and setting policies.
iv. Economic Participation by Members: Members contribute equitably to the capital of their Co-operative and share in the results of its operations. Usually, at least a portion of a Co-operative's capital is owned collectively, intended to further the long-term purposes for which the co-operative exists. Co-operatives may pay a competitive rate of interest on capital; they compensate employees fairly, according to the standards of the society in which they exist. Members allocate surpluses for any or all of the following purposes: -
a) Developing the business of the co-operative;
b) Benefiting members in proportion to their involvement with the Co-operative; and
c) Encouraging further development of the co-operative movement.
v. Education, Training and Information: Co-operatives foster reciprocal, ongoing education programs for members, leaders and employees, so they can teach -and learn from each other in understanding and carrying out their respective roles. Co-operatives have a responsibility to inform the general public, particularly young people and opinion leaders, about the nature and benefits of the Co- operative Movement.
vi. Co-operation among Co-operatives: In order to best serve the interests of their members and their communities, co-operatives actively cooperate in every practical way with other co-operatives locally, nationally, and internationally.
vii. Autonomy and Independence: Co-operatives are autonomous, mutual-help organizations controlled by their members. If they enter into agreement with governments and other organizations, they do so freely, on mutually acceptable terms that ensure their autonomy.
viii. Concern for Community: Co-operatives are concerned about the communities in which they exist. While focusing on members needs, they strive for the sustainable development of those communities through policies that are respectful of the environment and acceptable to the membership.
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2.5 CORE VALUES AND ETHICS
The co-operative sector thrives on the following co-operative values: -.
a) Quality services
b) Affirmative action
c) Modern Technology
d) Equality and Equity
e) Discipline
f) Openness, transparency and honesty
g) Courtesy
h) Human capital development.
i) Self help and responsibility
j) Confidentiality
k) Corporate governance
l) Integrity
m) Social responsibility
n) Team work
2.6 STRATEGIES
1. Membership Development / Growth
2. Financial Management / Grow Institutional Capital
3. Human Resource Management / Recruit and maintain a competent and motivated work force
4. Information Technology / Embrace Technology / Optimize with strategic partners
5. Loan Management / Improve loan portfolio / Improve Micro-finance
6. Board & Staff Management / Comply with new Sacco Act
7. Membership Development / Grow membership and branches
8. Marketing Management / Mobilize savings & increase profitability
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SECTION 3 – CAPITAL, SHARES AND SAVINGS/DEPOSITS
3.1. SACCO SOCIETY’S FUNDS
The funds of the society shall consists of; -
a) Core Capital which consist of the following:
i. Fully paid up members’ shares, (the par values of shares determined by the board of directors per member), are considered part of the SACCO institutional capital, these funds are non-refundable, and can not be used as a guarantee to obtain a loan; these funds are not insured by the Sacco Deposit Guarantee Fund (SDGF). These funds can not be expended unless on liquidation of the Sacco Society (Sacco Act 2008, article 59 (1) of the SACCO Act);
ii. The SACCO shall comply with and maintain at all times the minimum institutional capital requirements as may be prescribed by the Regulatory Authority; any surplus resulting from the operations of the society can be utilized as a dividend to members (SACCO Act 2008, article 29).
iii. Provisioning for loan losses (bad debts) (SACCO Act 2008, article 40 (1) (2) (a), article 33, (3) (b))
iv. A reserve fund shall be maintained as required by the SACCO Act and such other reserves as may be required by the Authority.
b) Income from interest, fees and charges and commissions as authorized by the Authority.
i. Entrance fee if one has been established by the Board of Directors.
ii. Any donations, grants or gifts from other bodies, organizations or individuals
iii. Funds obtained from other lawful miscellaneous sources
c) Liabilities, which include deposits from members and borrowings from other sources as may be prescribed by the Regulatory Authority.
3.2 SHARES
a) The nominal value of each share shall be established by the Board of Directors and will establish the minimum number of shares that must be purchased to become a member.
b) Any amount may be accepted towards the purchase of shares, provided, however, that the Board of Directors might fix a minimum amount that may be paid in by a member at any one time.
c) Shares that have been paid into the Sacco Society are considered part of the “core capital” and are not withdrawable unless the Sacco Society is liquidated. Member’s shares can not be utilized as a guarantee to obtain a loan or credit facility from the SACCO. The Sacco Society does have first charge against deposits and share capital and any dividend and interest payable to a member for any debt due to the society from the member either as a guarantor or endorser of a loan or a credit facility or for any other obligation. Shares in the Sacco will be carried in the disclosure part of the financial statement in the Capital area. (SACCO Act 2008, article 42 (a))
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3.3. SAVINGS / DEPOSITS
a) Deposit received or paid on terms under which it shall be repaid, with or without interest or a premium and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; (Sacco Act 2008, article 2)
b) No member may withdraw savings below the amount of their primary or contingent liability to the SACCO if they are delinquent as a borrower, or if borrowers for whom they are co-maker, endorser, or guarantor are delinquent, without the written approval of the credit committee or loan officer. (Sacco Act 2008, article 36 (1))
c) The Sacco shall have a first charge against deposits and share capital and upon any dividend or interest payable to a member for any debt due to the society from the member, either as a guarantor or endorser of a loan or credit facility or for any other obligation. (Sacco Act 2008, article 36 (1))
d) The Sacco may refuse to allow withdrawals from any deposit account operated by the member where the member is in arrears on a debt owed to the society. (Sacco Act 2008, article 36 (2))
e) The treatment of members’ dormant accounts shall be in such manner as may be prescribed by the Regulatory Authority. (Sacco Act 2008, article 37)
3.4. LIABILITY OF MEMBERS
a) A member’s savings, deposits and shares shall be used to offset any liabilities owed by the SACCO society under liquidation including any liability under a loan guarantee by such member; this shall be the maximum liability of members.
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SECTION 4 – COMMON BOND AND MEMBERSHIP
4.1. MEMBERSHIP COMPOSITION
The membership of the society shall consist of: -
(i) Original members who signed the application for the registration and
(ii) New members subsequently admitted in accordance with these by- laws.
(iii) People whose common bond consists of the following:
a. Are individually, or as a member of a group, regularly employed, and engaged in income generating business in Kenya; and
b. Have the desire to engage in a regular savings program.
c. Is a resident within the Republic of Kenya
d. Is a resident or is employed or volunteers within the society’s area of operation.
e. Any person or group (s) who worships, works, volunteers or owns loan in the area of operation of the SACCO is eligible.
f. Any employee and their family members of the SACCO Society may become a member of this Sacco Society in the manner provided for in these by-laws.
g. A member who ceases to qualify for membership under this section may retain their full privileges in the SACCO and as provided for in accordance to regulations established by the Regulatory Authority.
4.2. MEMBERSHIP RIGHTS AND ELIGIBILITY
A person of either sex shall be eligible for membership if he/she possesses either or all of the following qualifications: -
a) Is within the field of membership, that is, within the common bond.
b) No one under the age of 18 can vote or hold office or borrow in the SACCO, if a natural person, and should not have been convicted of a criminal office involving fraud and dishonesty.
c) Is not directly or indirectly, a money lender, cash daily collector or carrying out such activities detrimental to the objectives of the SACCO;
d) Is a member of good character;
e) Is a member in good standing (has not caused the SACCO a loss in the past);
f) Is an employee of the society and members of his/her immediate family may become members of the SACCO society;
g) Is resident within or occupies land within the society area of operation
h) Is in employment, occupation or profession which falls within the category or description of those for which the co-operative is established, and
i) Is a member of the immediate family of the primary member
j) Legally registered organizations (churches and groups)
k) Any group, organization, association or corporation may become a member of this Society as long as the majority of its members or employees are eligible for membership under these
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bylaws, provided that the Board of Directors or its designate has approved the application for membership.
l) Persons whose common bond consists of the following;
I. Are individually, or as a member of a group, regularly employed and / or engaged in income generating business; and
II. Have the desire to engage in a regular savings program.
4.3. VOLUNTARY WITHDRAWAL
a) A member with no liability or outstanding obligations in respect to other member’s loans may withdraw from membership at any time provided that the member has met all of his/her obligation in respect to liabilities and guarantees;
b) Unless otherwise stated in the Society’s policies, the Board of Directors shall have the right to require a member or other person to give sixty (60) days’ prior written notice of intention to withdraw the whole or any part of the amount paid in by the member for shares or as deposits.
c) Provided that any person whose membership terminates under this Article may be re-admitted to membership at the discretion of the Board of Directors, by purchasing at least one (1) share, conforming to other requirements of membership eligibility, and qualifying under Article 4.1 of these by-laws.
4.4. MEMBERSHIP APPLICATION FORM
Every applicant for membership shall complete an “application for membership” form. This form may be drawn so as to show all the information required for the purpose of a Register of members. The completed form, when filed in serial order, shall constitute the Register of members as required under the Act.
4.5. ADMISSION INTO MEMBERSHIP
An applicant shall be admitted to membership on being accepted by a duly appointed membership officer who shall submit monthly reports on new members which shall be ratified by the board of directors. New admitted members shall not qualify for the rights and privileges of membership until he/she has paid the minimum par value of a share and any other fee that may be established by the Board of Directors. The potential member shall furnish a copy of the National Identity Card and Nominee form or any other authenticated identity. The application form, when filed shall constitute the register of members as required under the SACCO Act of 2008.
4.6. MEMBERSHIP IN THE APPEX ORGANIZATIONS
a) The SACCO Society may become a member of the Kenya Rural Sacco & Credit Society Union Ltd., Kenya Union of Savings and Credit co-operatives, Cooperative Bank of Kenya, C.I.C, Kenya National Federation of Cooperatives and or any other legal approved organization
b) It shall recognize the fact that such membership is vital for the safety of its transactions and in the interest of its members
c) In accordance with the principle of co-operation among co-operatives, it shall participate in building a strong SACCO System nationally and internationally.
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4.7. REFUSAL OF MEMBERSHIP
The Board of Directors may refuse membership to any applicant who is not a member in good standing with the SACCO and shall give him/her reasons for the refusal in writing, provided the person whose membership has been refused, if aggrieved by the decision, shall have the right to appeal to the next general meeting through a registered meeting. The decision of the general meeting on the matter shall be final.
4.8. RIGHTS AND OBLIGATIONS OF MEMBERS:
Subject to the SACCO ACT, By-laws, policies and procedures, all members shall have the rights and obligation to use the society’s services and members are entitled but not limited to: -
a) Receive, periodically and regularly, or upon request, and at least once a year, a Statement of Accounts containing the individualized record of his/her transactions in their account;
b) Attend and participate at a General / Delegates Meeting. Each member shall have one vote irrespective of the member’s total share holding;
c) Elect or be elected as an Officer/Delegate of the society unless otherwise prohibited by any other law or these by-laws;
d) Use the Society’s services according to the policies and procedures, SACCO Act, rules and these by-laws as approved by the Board of Directors;
e) Submit projects or initiatives to the Board of Directors, for improvement of the Society’s Products and Services;
f) To withdraw their savings and deposits (less any liability or obligation on their account and no outstanding collaterals or guarantees on other member’s loans), from membership at any time. Shares are considered part of the Sacco’s “core capital” and cannot be withdrawn, unless the Sacco is liquidated;
g) Once a member, always a member regardless of whether the member has left the field of membership, they can retain their rights and privileges of the SACCO;
h) Attend meetings and take part in decision-making;
i) Show good co-operative spirit;
j) Recruit qualified non-members who qualify and encourage them to join;
k) Bring out problems affecting the Society and look for solutions;
l) Participate in Society projects both physically and financially;
m) Attend educational meetings and seminars organized by the Society or KUSCCO, Co-operative Bank, CIC, or other organization approved by the Board of Directors;
n) Make use of the services of the Society as stated in the objects of the Society;
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SECTION 5 – HANDLING OF DISPUTES AND MEMBER EXPULSIONS
5.1. DISPUTES
Any dispute arising out of these By-laws or concerning the business of the society shall be referred to the Supervisory Committee for investigation resolution and if the dispute is not resolved then it will be referred to the Co-operative Tribunal established under the Co-operative Societies Act.
5.2. CEASATION OF MEMBERSHIP
Membership in the society shall be terminated upon: -
a) Voluntary resignation by the member
b) The death of the member
c) Suspension/Expulsion from membership
d) Becoming certifiably insane
e) Acting contrary to the relevant provisions of the Act, rules and the By-laws
f) Withdrawing all his deposits, and savings; shares may not be withdrawn but only upon the liquidation of the SACCO Society.
g) By vote of the membership at the next ensuing General Meeting following suspension of a member by the Board of Directors for any violation of these By-laws or conduct prejudicial to the society’s interest.
5.3. SUSPENSION AND EXPULSION
The Board of Directors may expel a member who: -
a) Willfully fails to comply or refuses to comply with the society’s By-laws, policies and contracts and persists in such refusal or failure
b) Fails to become a member in good standing by causing the SACCO a loss.
c) Acts in any way detrimental or prejudicial to the society’s interests or for other just cause
d) Is convicted in court of a criminal offence involving dishonesty or imprisoned for any other offence for three months or more
e) Any other reason approved by the Annual General Meeting and/or as may be contained in the Society’s Code of Ethics.
5.4. SUSPENSION /EXPULSION PROCEDURE
a) Upon formal and written announcement and proof that a member has committed a violation punishable by expulsion, the Board of Directors shall provide written notice to the member stating the reason(s) for the proposed expulsion, and grant the member 30 days for him/her to prepare a defense if any;
b) Upon expiry of the 30 days and taking into consideration the member’s defense, the Board of Directors shall initiate an administrative inquiry and take a decision on its findings within 15 days.
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c) A member so suspended by the Board of Directors shall have the right to appeal at the next Annual General Meeting provided the notice and grounds of such appeal have been filed with the Honorary Secretary no less than 30 days before the date of the meeting. The decision of the General Meeting on such suspension shall be final.
5.5. PAYMENTS RESULTING FROM WITHDRAWAL, TERMINATION OR SUSPENSION/EXPULSION FROM MEMBERSHIP
a) Withdrawal, expulsion, or termination of membership will not exonerate a member from any existing personal or membership liability.
b) A member who withdraws or is expelled shall be repaid the following amounts after deduction of any debts owed by him/her to the SACCO Society as borrower, endorser, and guarantor or otherwise: -
(i) The nominal or book value of deposits and savings provided however, that the Board of Directors may require a maximum of 60 day’s written notice of intention to withdraw from the SACCO.
(ii) Any dividends or interest due to him on the date membership ceased.
(iii) Any deposits or other sums held by the society on the member’s behalf.
c) Members who voluntarily withdraw may re-apply for admission as long as they still qualify for membership under the terms of these bylaws.
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SECTION 6 – MEMBERSHIP MEETINGS
6.1. GENERAL MEETING
The Annual General Meeting of Sacco Society is the supreme organ of the society; such meetings shall be held as follows: -
a) The Annual General Meeting shall be held within 120 days of the close of the financial year to hold elections and to undertake such other business as laid down in these By-laws.
b) Any business not completed at the Annual General Meetings, such as acting upon the auditor’s report (if not received by the time of the meeting), may be taken up at a subsequent Special General Meeting, or at the next Annual General Meeting.
c) A special general meeting shall be held; -
(i). When convened by the Board of Directors or the Commissioner in accordance to Co-operative Societies Act, 1997, Rule 23 (1)
(ii). Within 14 days of receipt of a written demand from at least 90 delegates or two third of the members whichever is the less
6.2. NOTICE OF SPECIAL OR ANNUAL GENERAL MEETING
a) Except as noted above, at least fourteen clear days’ notice shall be given in the case of an Annual General Meeting or a Special General Meeting.
b) For a Special General Meeting requisitioned by the members, the requesters must state the object of the meeting being called and be signed or thumb-marked by the requesting members. The requisition shall be deposited in the registered office of the society. Where the Special General Meeting has been convened by the Commissioner or his representative, the Commissioner shall direct what matters shall be discussed in the meeting and the members present in the meeting shall be deemed to constitute a quorum.
c) The Hon. Secretary shall take or cause to be taken all possible and usual steps, such as announcements at public meetings, posting a notice on the society’s notice Board or an advertisement in the local newspaper or news-sheet, or any other media to inform all members of the date, venue and main business of the meeting. All written notices shall include a statement of the business to be dealt with.
d) The notice of the Special General Meeting shall clearly specify all the issues to be discussed. The Special General Meeting shall deal exclusively with the issues for which it was convened.
e) An Annual General Meeting or a Special General Meeting of members, convened solely for this purpose, shall have the exclusive power to amend the SACCO Society’s By-laws in accordance with the SACCO Act, rules and regulations established by the Regulatory Authority.
f) All meetings of members shall be conducted according to the procedures and rules of order approved by the Board of Directors.
g) Any Other Business at least within Seven days written notice to Hon. Secretary.
6.3. QUORUM
Except when convened by the Commissioner, the presence of at least 90 delegates or 2/3 of the total number of members whichever is less, shall constitute a Quorum for the conduct of business at a
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General Meeting. When a Quorum is not attained, the Chairman shall adjourn the meeting, which shall be advertised, if at such a meeting, a quorum is again not attained, the Chairman shall declare the meeting open with those present, one-half hour after the advertised time of the meeting.
6.4. REQUIRED MAJORITY
a) The motion to revoke a specific decision taken by the Board of Directors or to remove a committee member from office must be seconded by a minimum of five members attending the meeting.
b) Amendments of these By-laws and vote of no confidence shall be approved by a vote of two-thirds majority of the members present at the meeting.
c) Any other motion shall be approved by simple majority of votes
6.5. ENFORCEMENT OF THE DECISIONS
Any decisions taken by the majority at members meetings shall be binding to all members and members present, absent and objecting. However, members may exercise their rights of objection and separation about decisions related to the SACCO’s conversion into a different organization or merger.
6.6. CHAIRMAN AT MEETINGS
The Chairman, or in his absence, the Vice-Chairman shall preside at every General Meeting. In their absence, any committee member elected by a majority of those present shall preside failing which any member elected by a majority of those present shall preside.
6.7. IDENTIFICATION OF MEMBERS
Before they may attend or vote at a General Meeting, each member shall be required to produce a pass, card, and some evidence of membership or identify himself/herself in a satisfactory manner.
6.8. POWERS OF THE GENERAL MEETING
The Annual General Meeting of members has both the right and responsibility to: -
a) Confirm the minutes of the previous meetings;
b) Elect Board members for the ensuing year as provided in the SACCO Act and or by other regulations that may be established by the Regulatory Authority;
c) Consider and decide upon the maximum borrowing powers of the society;
d) Consider and approve estimates of Income and Expenditure for the ensuing Financial year or part thereof;
e) Appoint the Society’s Auditors, Bankers and Advocates;
f) Receive reports and decide upon other matters as may be necessary for the conduct of the society’s business;
g) Consider the statements of account, the auditor’s report and the reports of the Board on the activities of the society during the past financial year;
h) Confirm or other wise consider, action taken by the committees, and give direction to the new Board where necessary;
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i) Consider appeals against the expulsion of members and refusals of membership by the Board of Directors;
j) Elect, suspend or remove members of the Board of Directors and the Supervisory Committee provided that proper notice and the purpose of the meeting has been given in advance;
k) Fix the maximum liability which the society may incur in loans but not to exceed limits that may be established by the Regulatory Authority;
l) Fix the honoraria, bonuses and other allowances if any, for board members or the employees within limits that may be established by the Regulatory Authority;
m) Receive, deliberate and make decisions on any reports that are delivered to the board of directors, which may include reports from the Supervisory Committee, Commissioner, and the Regulatory Authority;
n) Transact any other general business of the society of which notice has been given to the members in the manner prescribed in these By-laws.
6.9. MINUTES
All business discussed at a General Meeting shall be recorded 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 Board member who was present at the meeting to verify that in their opinion the minutes are a true and complete record of all important matters which were 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.
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SECTION 7 – ELECTIONS OF SACCO DELEGATES & MEMBERS OF THE BOARD
7.1. ELECTIONS
The Election of the Board of Directors and the Supervisory Committee is conducted utilizing the delegate system. Tenure of the Board of Directors and Supervisory committee shall normally be three years:
a) Elections shall be by secret ballot or any other applicable method;
b) No member shall be entitled to vote by proxy;
c) Irrespective of the number of shares held by him/her, no member shall have more than one vote;
d) Candidates for the Board of Directors and the Supervisory Committee (delegates) must be members in good standing and will be vetted by the Supervisory Committee. If a candidate has been delinquent on any of their loans at any time in the past 12 months, the candidate will not be qualified to run for office. Candidates shall be interviewed in respect to their qualifications and willingness to serve voluntarily in positions for which they are nominated. Nominated candidates shall be presented to the membership during the Annual General Meeting prior to the elections;
e) All elections shall be, determined by simple majority vote of members present and shall be by secret ballot, show of hands or any other method specifically requested by a majority of the members present except where there is only one nominee for the office. If there is a tie vote, the election shall be repeated;
f) In all society elections: -
i. Irrespective of the number of shares held by him/her, no member shall have more than one vote;
ii. Within 10 days after their election the names and address of all persons elected to office shall be kept compiled by the General Manager of the society;
g) After the elections, the Board of Directors shall pick the ballot to determine the tenure of office. In the first instance the Chairman and Vice-Chairman shall serve a term of three years but be eligible for re-election. Other members of the Board of Directors shall pick the ballot to determine three members who shall serve for one year, three members to serve for two years and one member to serve for one year but shall be eligible for re-election.
7.2. BOARD OF DIRECTORS
The Board of Directors shall be elected by and from the delegates who are elected from the membership and shall consist of a minimum of five and not more than nine. All Board members shall be at least 18 years of age and be a member in good standing. The Board of Directors shall include the Chairman, Vice Chairman, Treasurer and Honorary Secretary, all of who shall be elected from amongst the members of the Board of Directors.
7.3. ELIGIBILITY AS A BOARD OF DIRECTORS
a) Board of directors shall be elected from among the delegates.
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b) No person shall be eligible as a Board of Director member unless he has been a member of the Society for the immediate six months preceding the Annual General Meeting.
c) Subject to the provisions of the Rules, the regular terms shall be fixed at the beginning upon any increase or decrease in the Board of Director’s membership authorized by the members at a General Meeting that approximately an equal number of regular terms shall expire at each Annual General Meeting
d) Nobody shall be eligible to be elected into the Board of Directors if he/she: -
i. Is delinquent on his/her loans with the SACCO for more than 60 days or has been 60 days or more delinquent on his/her loan within 1 year prior to elections; or has caused the SACCO a loss;
ii. He/She shall not have attained a minimum of “O” Level Certificate of Education.
iii. Has declared personal bankruptcy within the last 5 years;
iv. If he/she can not read, write and understand English;
v. Is younger than 18 year of age;
vi. Is not of sound mind;
vii. Is a Board of Directors member of an existing SACCO;
viii. Does not conform to minimum qualification standards established by the Nominating Committee from time to time.
ix. He/She shall declare his/her wealth as per the Public Officer’s Ethics Act and sign the SACCO Society Conflict of Interest Policy and disclosure.
d). If a member of the Board of Directors fails to attend three consecutive meetings without being excused there from, or otherwise fails to perform his duties, his position may be declared vacant and the vacancy filled as provided in these By-laws.
e) If a member of the Board of Directors or the Supervisory Committee is delinquent on any loan in excess of 60 days shall either bring the loan current immediately or if the member has caused the Sacco a loss, will resign their position as an official of the Sacco.
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SECTION 8 – BOARD OF DIRECTORS
8.1. FUNCTIONS AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS
The Board of Directors shall be the Governing Authority and subject to any directions from a General Meeting, it shall direct the affairs of the Society. Its procedures, powers and duties shall be as prescribed in the SACCO Act and Rules, and in particular, it shall:
a) Observe in all its activities the SACCO Act, the Rules and these By-laws.
b) Applications for membership shall be delegated to a membership officer of the SACCO, who shall be required to submit monthly reports to the Board of Directors, who shall ratify them during their monthly board meeting.
c) Ensure that true and accurate records and accounts are kept of the Society’s funds, and its properties, capital reserves, liabilities, income and expenses.
d) Decide the amount and kind of surety bond, or other security, which shall be required of the Board of Directors, Manager, and any other officer or employee having the custody of, or handling fund or property of the Society, provided that it is incompliance with the Sacco Act or any other provisions established by the Regulatory Authority.
e) The Board of Directors may delegate the authority to determine, from time to time, the interest rates and terms on savings and loans, the maturities and payment of loans to members and the maximum amounts that may be loaned with or without security to any member to an Executive Committee or an Asset Liability Management Committee. The Executive Committee or the Asset Liability Management Committee shall consist of at least 2 Board members and the General Manager. The minutes which shall contain changes in the rates or terms on savings or loans will be submitted to the Board of Directors on a monthly basis and the board shall ratify them at that time.
f) Approve the SACCO’s procedures and policies such as lending, savings, personnel, financial management, financial statements, the annual budget, and the long- term business plan.
g) Employ and fix the compensation of a General Manager and ensure availability of appropriate terms and conditions of service, job descriptions and specifications of the goals and objectives of the Sacco.
h) Perform an annual written appraisal of the General Manager based on goals established in the budget and business plan.
i) Review monthly delinquency reports, monitor the collection of loans to members and authorize the write offs of uncollectible loans.
j) Report to the annual general meeting on: the activities occurring since the last annual meeting, the annual plan and budgets, financial statements audited by the auditor and the proposed use of profits for the fiscal year.
k) Recommend to the Annual General Meeting the dividend rate to be paid on shares, and bonus to staff and Honoria to Board.
l) Fill vacancies occurring in the Board of Directors and other committee between Annual General Meetings.
m) Control the investments of the SACCO, except to the extent that the Board may have delegated this responsibility to an Asset \ Liability Management committee or to the General Manager.
n) Appoint loans officers and delegate the lending limits to the loan officers; review limits annually.
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o) Designate a depository or depositories for the funds of the society in the investment policy of the SACCO.
p) Impose fines.
q) Affiliate and maintain liaison with KUSCCO Ltd., Cooperative Bank of Kenya, CIC, and any other organization or institution approved by the General Meeting.
r) Perform and authorize any action or duty as are necessary to preserve the sound management of the society consistent with the Act, Rules and these By-laws.
s) The Sacco society shall, not later than three months after the end of the each financial year, submit to the Authority, in the prescribed format (Sacco Act 2008, article 41 (1))-
i. An audited balance sheet, showing its assets and liabilities;
ii. An audited profit and loss account; and
iii. A copy of the auditor’s report.
t) The disclosures in the financial statements of the Sacco society shall include disclosures on (Sacco Act 2008, article 42 (a) (b) (c)): -
i. Members, if any, who hold more than twenty percent of the share capital and deposits in the Sacco society;
ii. Any advances or credit facilities exceeding such limits of its core capital as may be prescribed by the Authority; and
iii. Any lending to insiders.
u) The Board of Directors will appoint an internal auditor who shall report on the internal controls systems and financial matters of the society. (Sacco Act 2008, article 43 (1) (2))
i. The internal auditor shall hold professional q qualifications in accountings and have such experience in deposit-taking business, as may be prescribed by the Authority.
v) The Board of Directors shall appoint an external auditor who shall (Sacco Act 2008, article 44 (1) (a) (b) (c)):-
i. Qualify under Sacco Act, article 45;
ii. Be approved by the annual general meeting of the society;
iii. Be appointed as such by the Authority.
w) The external auditor shall, not less than four months after the end of the financial year, submit his report to the Authority, on the financial condition of the Sacco for which he has been appointed. The auditor’s report shall contain information on the (Sacco Act 2008, article 44 (3) (4) (a) (b) (c)):-
i. Solvency of the Sacco society’s business and any concerns with respect to the financial condition of the society’s business;
ii. Any violation of prudential standards or a condition of the license; and
iii. Any other contraventions of this Act.
8.2. BOARD LEGAL STANDARD OF CARE:
Sec 27(6) of the 2004 Co-operatives Act
“In the conduct of the affairs of a Co-operative Society, the members of the Board shall exercise the prudence and diligence of ordinary men of business and shall be held jointly and severally liable for
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any losses” sustained through any of their acts which are contrary to the Act, Rules and the by-laws of the Society or the directions of any General Meeting.
8.3. DELEGATION OF DUTIES
a) The Board of Directors may delegate in writing to an officer or employee of the society such of its duties, as it deems necessary
b) Nothing in (a) above shall absolve the Board of Directors from its responsibility of running the affairs of the society in proper and business like manner.
8.4. RECORDS OF BOARD OF DIRECTORS MEETINGS:
a) All business discussed or decided at Board of Directors meetings shall be recorded 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 Board of Directors member who was present at the meeting to verify that in their opinion, the minutes are a true and complete record of all important matters which were discussed or decided at the Meeting.
b) At the next meeting, after approving any alterations or variations, which may be written immediately below the above signatures, and not as alterations to the original record, the meeting shall authorize the Chairman to sign and date the final record.
8.5. SUB-COMMITTEES
The Board of Directors may appoint and delegate to sub-committees such of its powers and duties, such as an Education Committee, Executive Committee, Credit Committee, Asset Liability Management Committee, Merchandise Committee, SACCO Savings Committee and other types of sub-committees, as the Board of Directors shall determine.
8.6. VACATION OF OFFICE BY SUB-COMMITTEE
A member of the Board of Directors, or any other sub-committee shall cease to hold office if he/she ceases to be a member of the society or by resignation or removal from the Board of Directors or Sub-committee.
8.7. EXECUTIVE BOARD
The Chairman, Vice-Chairman, Treasurer and Secretary shall be termed “Executive Officers”. The Executive Officers shall be elected at a meeting of the Board of Directors in accordance with the SACCO Act and the Rules of the Regulator.
8.9. CHAIRMAN AND VICE CHAIRMAN
a) The Chairman shall preside over all meetings of the Members, and over all meetings of the Board of Directors. He shall perform such other duties as he may be directed by the Board of Directors, not inconsistent with the provisions of the Act, Rules and these By-laws
b) No person shall serve in the post of Chairman for more than two consecutive terms and no person who has held office for two consecutive terms shall be eligible for re-election as
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Chairman for a period of three years from the date of vacation of office without written authority from the Commissioner.
c) The Vice-Chairman shall perform the duties of the Chairman during his absence, and shall perform such other duties as the Board of Directors may direct him to.
8.10. TREASURER
a) The Treasurer should have financial management background. The powers and duties of the Treasurer shall be: -
i. Generally cause to be managed, the financial affairs of the society in a competent and efficient manner
ii. To ensure and maintain full and complete records of all assets, liabilities, income and expenses of the society
iii. To ensure the safe-keeping of the society’s money, securities and books of account
iv. To ensure that all payments and expenditures are duly authorized
v. To ensure compliance with all directives of the Board of Directors
8.11. AUTHORIZED TO SIGN DOCUMENTS
b) Unless decided otherwise by the Board of Directors all documents, contracts and cheques shall be signed on behalf of the society by: -
i. Chairman or Vice Chairman,
ii. Hon. Secretary and
iii. Treasurer
iv. Manager and his/her deputy
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SECTION 9 – CREDIT COMMITTEE / LOAN OFFICERS
9.1 Credit Committee / Loan Officers
a) The Board of Directors, at its discretion, may appoint loan officers to act on members’ requests for loans in lieu of the Credit Committee. Loan officers shall be employees of society’s staff and each officer shall be given an approval lending limits, which shall be reviewed at least annually by the board. Loan officers shall be required to keep records of their actions and submit monthly reports to the Board of Directors on loans made, rejected and such other information as they may require.
b) The part time Credit Committee shall consist of three members of the board of directors, and the credit manager as an ex-officio member; none of the board members whom shall be executive officers. The Credit Committee shall be elected at a meeting of the board of directors within 7 days after Annual General Meeting.
c) Duties and Responsibilities
i. The Credit Committee shall hold meetings at least once a month. The credit committee will review the loans approved by the loan officer during the past month. The credit committee will review loans that were declined to ensure that the lending policies were followed.
ii. Delegated lending authority limits are assigned by the Board of Directors to loan officers and the general manager; the limits shall be reviewed at least annually to ensure they are still valid.
iii. The loan officers shall enquire carefully into the character and financial conditions of each applicant (and guarantors if any) utilizing the 5 “C’s” of credit for a loan, to ascertain his/her ability to repay fully and promptly the obligations incurred by him/her, and to determine whether the loan is for a worthy purpose and will be a benefit to the borrower in accordance with the Society’s lending policy.
iv. The loan officers will maintain the lending records on loans approved and declined and by types and will report them to the Credit Committee who shall submit reports to the board of directors on a monthly basis.
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SECTION 10 – SUPERVISORY COMMITTEE
10.1. SUPERVISORY COMMITTEE.
a) The Supervisory Committee is considered the watch dog of the SACCO Society. The Supervisory Committee is responsible in ensuring that the SACCO is compliant with all Rules, Regulations and internal controls of all applicable laws and the SACCO’s bylaws
b) The Chairman of Supervisory Committee shall convene meetings of the Supervisory Committee. The Supervisory Committee shall meet as often as it finds necessary to carry out the work efficiently in coordination with the internal auditor. Their normal meeting shall be monthly and quarterly and will report to the Board of Directors on the internal control systems and the financial matters of the society. (SACCO Act 2008, article 43 (1)).
c) The Supervisory Committee in consultation with the Board of Directors shall appoint an Internal Auditor who holds professional qualifications in accounting and other such experiences in deposit-taking business or as may be prescribed by the Regulatory Authority (SACCO Act 2008, article 43 (1).
10.2. ELECTION OF SUPERVISORY COMMITTEE.
a) The Supervisory Committee shall be elected by the Delegates at the Annual General Meeting. The supervisory committee shall consist of not less than three members and not more than five members, all of whom shall not be employed by the SACCO or serve on the Board of Directors or any other committee of the society.
b) Terms of committee members will initially be for 3 years with 1/3 of the committee members terms expiring each year on rotational basis and no more than 2 consecutive terms may be served by any one committee member. Provided, after a term of 3 years without holding a position on the supervisory committee has passed, a member may be eligible to run again.
c) The Supervisory Committee members shall choose among themselves, a Chairman, and a Secretary. The Secretary of the Supervisory Committee shall prepare, maintain and keep custody of the records of all actions taken, including evidence of any audits performed by the Committee. Conditions for elections shall be the same as those of the members of the Board of Directors
10.3. POWERS AND DUTIES OF SUPERVISORY COMMITTEE
a) The Supervisory Committee is considered the watch dog of the SACCO Society. The supervisory committee is responsible for ensuring that the SACCO is compliant with all SACCO Act, rules, regulations and internal controls of the SACCO. It is also responsible for ensuring that the SACCO staff is complying with the policies and procedures approved by the Board of Directors. The Supervisory Committee must also ensure that the society’s administrative practices and procedures are adequate to safe-guard the members and institution’s rights and interests. Recommendations will be made to the Board of Directors. The following are the powers and duties of the Supervisory Committee.
1. To ensure that the Society complies with all applicable laws, by-laws, annual General Meeting resolutions, and policies and procedures of the Board of Directors.
2. Ensure the proper interpretation of loan policies and procedures, By-laws, Co-operative Societies Act and Rules, Annual General Meetings’ resolutions, other policies of the Board of Directors, and their implementation;
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3. To direct and work with the Internal Auditor in the review of the internal controls, compliance with the SACCO Act, and investigation into the affairs of the Society. Work with the external auditor in the annual audit of the SACCO books and records. In addition work with the Regulatory Examiner to coordinate all of the reports from the society and ensure the examiner has the information that is required.
4. At least monthly, perform or cause to have performed a surprise physical count of cash to determine that the amount corresponds to the records, and review and verify securities and investments held by the SACCO.
5. To generally countercheck the effectiveness of implementation of credit policy and payment of members products and ensure compliance:
a. Checking loan applications and produce payment requests and note exceptions;
b. Checking delinquent loans among Board of Directors and Society members,
6. By unanimous vote the Supervisory Committee may suspend until the next meeting of the members any director, executive officer, or member of the board of directors. In the event of any such suspension, the Supervisory Committee shall call a special meeting of the members to act on said suspension within 14 days of the suspension. The chairman of the committee shall act as chairman of the meeting unless the members select another person to act as chairman.
7. By the affirmative vote of a majority of its members, the Supervisory Committee may call a special meeting of the members to consider any violation of the provisions of any regulations or the bylaws of the SACCO, or to consider any practice of this SACCO which the committee deems to be unsafe or unauthorized.
8. To present the annual audit report to the Board of Directors and give a report at regularly scheduled meetings detailing the activities undertaken by the Committee, together with recommendations since last reporting..
9. To oversee the performance of the Board of Directors and the Sacco Manager. To perform various internal audit tests to evaluate internal operations and controls (policies and procedures) at least once every three months, and make accounting and procedural recommendations regarding internal controls. These recommendations will be submitted in writing to the Board of Directors at least quarterly;
10. At the annual General Meeting, give its opinion on the financial statements presented by the Board of Directors;
11. To receive and investigate any complaint or appeal by members concerning the operations of the SACCO society;
12. At least every three months, perform a review and verify securities and investments held by the SACCO society;
13. Attest to the balance sheet and income statements which the treasurer or the manager are required to prepare by the 10th day of the month following the reporting month and ensure that they are in compliance with the requirements of the Regulatory Authority;
14. To verify individual members’ accounts at least annually by either: (1) checking the balances in the general ledger to ensure that it balances to the detail ledger on loans and savings; or (2) sending account statements directly to members and soliciting their responses as to the accuracy of the statements.;
15. In case the supervisory committee requires the services of an expert to assist them in a specific job, the honorarium of the expert shall be determined by the Board of Directors
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based on the budget of the SACCO approved by the General meeting. The expert shall be selected by the supervisory committee.
16. Receive the reports of the Internal Auditor and take action on the same or recommend for action by the Board of Directors.
10.4. MINIMUM QUALIFICATIONS OF SUPERVISORY COMMITTEE The minimum qualifications standards for members of the Supervisory Committee are:
a) No member shall be eligible to be elected into the Supervisory Committee unless he/she has been a member of the society for at least the immediate twelve (12) months preceeding the Annual General Meeting and is a member in good standing
b) No member shall be eligible to be elected into the Supervisory Committee if he/she:
1. Is not current on his/her loans with the SACCO or has been delinquent more than 60 days within 12 months prior to elections; or
2. Caused a loss to the SACCO;
3. Acts in a manner that is detrimental to the well-being of the society, or
4. He/She has not attained a minimum of “O” Level Certificate of Education.
5. He/She shall declare his/her wealth as per the Public Officer’s Ethics Act and signed the SACCO Society Conflict of Interest Policy and disclosure.
6. Any member of any of the committees that has filed for personal bankruptcy within the last 5 years.
7. Any member of any one of the committees becomes delinquent at any time over 1 month shall be required to resign their position.
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SECTION 11 – DUTIES AND RESPONSIBILITIES OF OPERATIONAL MANAGEMENT
11.1. THE MANAGER
The General Manager is the Chief Executive of the society. The General manager reports directly to the board of directors and is ultimately responsible for implementing all board policies, procedures, budgets and business plans.
Duties shall be assigned by the Board of Directors and in particular: -
1) To manage the daily affairs of the society in a competent manner;
2) To prepare and propose to the Board policy and procedure changes with regards to all areas of the SACCO’s operations;
3) To participate in Board meetings, but with no voting rights;
4) To prepare and analyze at least on a quarterly basis the SACCO’s business plan and budget and submit to the Board of Directors the report;
5) To hire, supervise, appraise annually, and terminate SACCO personnel, as necessary;
6) To represent the SACCO in business transactions and any other transaction authorized by the Board of Directors;
7) To report to the Board monthly on the financial condition of the SACCO including the balance sheet, income statement, and delinquency list and the PEARLS report.
8) To provide information required by the Regulatory Authority in a timely fashion;
9) The compensation limits and benefits of the manager and society staff shall be established by the Board of Directors, and approved within the Human Resource Policy. The General Manager shall be delegated the authority to make recommendations on annual salary and benefit adjustments (with the annual appraisal process) to the staff. Such compensation and benefits shall be consistent with the standards and limitations established in the HR policies, which are approved by the Board of Directors.
10) To propose to the Board the opening of new positions within the organizational chart of the SACCO, and the revision of the salary schedule for all SACCO personnel as necessary.
11) To implement recommendations set forth in the audit reports and examination reports issued by the Regulatory Authority.
12) Authorize budgeted expenditures, and sign all SACCO notes, checks, and orders for the disbursement of the SACCO funds.
13) Ensure on a monthly basis that the accounting records are in balance and the individual account subsidiaries are up-to-date, and the income statement, balance sheet, and delinquency list are complete and correct. Ensure that the account records are maintained using “Internationally Accepted Accounting Principles” (IAAP).
14) Ensure that adequate insurance is in place if available for all employees, officials, and the business premise.
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15) Direct and supervise the administration and processing of loan applications by loan officers in accordance to the credit administration policy and procedures manual that is approved by the Board of Directors.
16) Establish a pricing strategy for products and services, in which the interest rate structure will seek a balance between the loans available to the members, and the long-term viability of the institution. For this purpose management should consider:
a. Costs, particularly those related to member savings dividends, the allowance for loan loss, and operating expenses.
b. The need for a strong institutional capital position, which is essential for the SACCO’s long term viability and future growth.
c. The competition’s pricing structure, given the competitive nature of the financial market.
17) Assist the Board in determining acceptable types of collateral that can be used to secure SACCO loans.
18) Ensure there is adequate liquidity to meet loan demand, savings withdrawal, and operating expenses.
b) The manager will ensure that the following requirements from the SACCO Act 2008 are in place (SACCO Act 2008, Article 33 (3) (a, b, c):
i. A loans policy and procedures manual specifying the criteria and procedures applicable in the evaluation, processing, approval, documentation and release of loans or credit facilities are in place and updated at least annually;
ii. An asset review system, that accurately identifies risk and assures the adequacy of the provision for losses account;
iii. A system of reviewing the entire asset portfolio including contingent accounts or off-balance sheet items and adequate provisioning for losses at periodic monthly intervals.
c) The Board of Directors will delegate to the General Manager of the SACCO the responsibility to recruit the management team and staff to help in the management of the society under terms and conditions of service set in the personnel policies and procedures, which are approved by Board of Directors.
d) Administrative Staff
1) The Manager will carry out the stipulated duties with the assistance of other administrative staff in the following categories:
i. Operations Manager
ii. Finance manager
iii. Credit Manager
iv. ICT Manager
v. Internal Auditor
vi. Marketing Manager
vii. Human resource Manager
viii. Branch Managers
ix. Or any other position as may be required and created in the organization by the board of directors
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SECTION 12– INVESTMENTS, OF FUNDS, CASH AND LIQUIDITY
12.1. INVESTMENTS OF EXCESS FUNDS
a) The SACCO may invest excess funds in interest earning investments; the SACCO will have a written investment policy; investments will be made in accordance to the SLY Principle (Safety, Liquidity and then Yield). The funds of the Sacco may be invested in: (SACCO Act 2008 - Article 38 (1):
a) Securities, obligations or other debt instruments issued or guaranteed by the government or any agency of the government.
b) Deposits, obligations or other accounts of deposit-taking institutions under the Banking Act.
c) Shares, stocks, deposits in, loans to or other obligations of any Sacco society or Co-operative society.
b) The investment policy will address the purpose and objective of the investment policy, at a minimum the following will be addressed in the investment policy:
i. Characteristics of the investments to be made, such as the issuer of the investment, and maturity;
ii. How the SACCO will manage the interest rate risk, including the risk permitted in relationship to the SACCO’s net capital and earnings;
iii. How the SACCO will manage liquidity risk;
iv. How the SACCO will manage credit risk, listing specific institutions and counterparties to be used or criteria for their selection, and specifying the limits on the amounts that may be invested with each;
v. How the SACCO will manage concentration risk, which can result from a single or related issuer, holdings of bond with having the same trustees, holdings of securitized loans having the same originator, packager or guarantor;
vi. Which SACCO employee or official has been given the investment authority and the extent of that authority;
vii. If the SACCO uses third-party entities to purchase or sell investments, specify the broker/dealers to be used;
viii. If the SACCO uses third-party entities to safe keep investments, specify the entities to be used.
c) The SACCO may engage in trading activities, but the investment policies will document how these activities will be conducted, addressing the following:
i. The person (s) who has authority to purchase and sell
ii. Trade account size limitations
iii. Allocation of cash flow to trading accounts
iv. Stop loss or sale provisions
v. Shilling size limitations of specific types, quantity, and maturity to be purchased
vi. Limits on the length of time an investment may be inventoried in the trading account
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vii. Internal controls, including appropriate segregation of duties.
d) An investment in the aggregate may not exceed such proportion of the total core capital and deposits of the Sacco as the Authority may prescribe. (SACCO Act 2008, Article 38 (2))
e) The Sacco shall not purchase or acquire any land or any interest or right therein except as may be reasonably necessary for the purpose of conducting its deposit-taking business and where such investments do not exceed such proportion of the total assets of the society as the Authority may prescribe. (SACCO Act 2008, Article 38 (3)).
12.2. LIQUIDITY RESERVE FUND
a) The SACCO shall maintain such minimum holdings of liquid assets of its members’ deposits and borrowings as may be prescribed by the Regulatory Authority. (Sacco Act 2008, article 30 (1))
b) The Sacco shall calculate the average monthly balance of its deposits and borrowings at the close of business on such day as may be prescribed by the Regulatory Authority. This report shall be submitted to the Regulatory Authority on a monthly basis or as required. (Sacco Act 2008, article 30 (2)).
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SECTION 13 – ANNUAL BUDGET
a) The Kenya SACCO Act will create a Sacco Savings Guaranteed Fund (SSGF) that will insure members’ deposits up to Kshs. 100,000. The Sacco Act 2008, article 50, (5) (a) (b) states that Sacco society’s conducting business in Kenya, shall adhere to the prudential standards established by the Regulatory Authority; the regulations established shall be to maintain a stable and efficient deposit-taking Sacco movement and financial system. Therefore Sacco’s will have to comply with the prudential standards that will be mandated by the Regulatory Authority. The business environment the SACCO’s operate in is changing, so the SACCO’s budgeting process and the way it operates will have to change. The priority from now on will be for the Sacco to achieve the minimum prudential standards within the shortest period of time, to ensure the Sacco survives the new regulatory environment.
b) The SACCO will provide reserves for delinquent loans, which will be required with the new Sacco Act; in addition, the Sacco will have to increase institutional capital to a minimum of 8% of total assets, plus other minimum prudential Standards. Sacco’s operate differently than banks; institutional capital for Sacco’s comes from earned profit whereas banks increase capital by getting investors to purchase more shares from them.
c) The Sacco will develop a budget and make changes to their operations by doing at a minimum the following:
a. Decrease the level of delinquent loans to total loans by instituting a pro-active collection department to reduce the ratio to acceptable levels; Set aside reserves for loan losses and potential loan losses by increasing the amount required in the allowance for loan loss account as required by the Regulatory Authority,
b. Recovering previously charged off loans;
c. Reducing its’ fixed assets to within the limits established by the Regulatory Authority;
d. Increase the gross margin through adjustments to the interest rate in assets and liabilities;
e. Controlling and reducing operating expenses where possible, so that it is within the limits established by the Authority;
f. Implement a Risk Based pricing on loans to charge interest rates based on the inherent risk they have to the Sacco society
g. Reducing the level of non-earning assets to maximize the return on assets, this includes non-earning fixed assets; minimize the level of liquidity by implementing cash control measures at each branch, etc...
h. The Sacco will implement a “Technical Lending Committee” made up from the staff, which will include the manager, lending manager, collection manager and others as seen fit to reduce the level of delinquency and loan losses to the Sacco.
i. The Sacco will develop an annual budget and strategic plan with the main emphasis in complying with the minimum prudential standards that are going to be prescribed by the Regulatory Authority.
d) Financial Management Plan
a. Capital and Earnings
i. Discuss the institutional capital goals and the means to achieve them. Include the level of profitability required based on the asset growth, level of delinquent loans, amount of loans to be charged off (over 12 months), level of institutional capital required by the Regulatory Authority.
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ii. Discuss the earnings goals in terms of return on assets, net interest margin, or other profitability measurements, and summarize the strategies to achieve those goals.
iii. Discuss the plan for mobilizing funds from members to finance the growth of the Sacco, with particular emphasis on conformance with regulatory capital requirements.
iv. Discuss the adequacy of the proposed institutional capital structure relative to internal and external risks, planned operational and financial assumptions, including technology, branching, and projected organization and operating expenses.
b. The Sacco will plan to monitor and control its liquidity risk, including funding sources (deposits, borrowings, securitizations).
c. Plans to borrow funds from any financial institutions or other sources, including the amount, composition, interest rate, maturity, purpose, and collateral.
d. Monitoring and Revising the Plan
e) Financial Projections
a. The financial information will be developed in a pro forma format with quarterly projections for the next three years of operations. Also the line items in the financial statements should be consistent with the “Consolidated Balance Sheet and Income Statement” so that projected items may be compared conveniently with actual performance.
b. The assumptions used to prepare the projected statements, including the assumed interest rate scenario for each interest earning asset and interest costing liability over the term of the business plan.
c. Provide the basis for the assumptions used for non-interest income and non-interest expense. Indicate the amount of capital improvements, and furniture, fixtures, and equipment, including systems and equipment upgrades.
d. Describe the assumptions for the expected returns, and expected time frame to introduce each new product and service.
e. The Sacco will use marketing studies and/or surveys to support the Sacco’s projected growth.
f. The board will establish the level of marketing expenses necessary to achieve the projected market share for both loan and deposit products.
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SECTION 14 – PAYMENT OF SACCO EXPENSES AND DIVIDENDS ON OWNERSHIP SHARES
14.1. DISPOSAL OF SURPLUS
Subject to the SACCO Act and Rules, and the approval by the General meeting, the payment of dividends on Ownership Shares is only permitted after all operational expenses and cost of funds and the provisioning for loan losses have been paid. The minimum institutional capital established by the Regulatory Authority will have to be met, prior to paying a dividend on shares. The net surplus resulting from the operations of the society during any financial year shall be disposed as follows: -
a) An amount shall be set aside to bring the “allowance for loan loss” account equal to 100% of the required amount stipulated by the Regulatory Authority. In the initial year of establishing the allowance account, the amount required may be deducted from the institutional reserves of the SACCO. Thereafter, adjustments are made through the income and expense statement of the SACCO.
b) If the net institutional capital is less than 108% of the total assets, then the Board of Directors will develop a re-capitalization plan to bring the ratio of “net institutional Capital” to total assets up to the minimum in consultation with the Regulatory Authority.
d). The balance may be disposed of as the Annual General Meeting may decide:
(i). Paying dividends on shares
(ii). Paying it into the institutional capital to which no member has a claim
(iii). Being carried forward to an Education Fund or other funds of the society, including the appropriation accounts
(iv). An amount not exceeding 10% of the remaining net balance may be paid to any charitable purpose.
(v). Paying a gratuity or honoraria, bonuses, allowances and other commissions to Board members, other committee members of the SACCO or employees of the society as determined by the Annual General Meeting, except when conditions have been placed by the Regulatory Authority.
(vi). In any other way approved by the Annual General Meeting.
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SECTION 15 – RESERVES
The board of directors will establish reserves and allowance accounts in compliance with the SACCO Act 2008. At a minimum the following accounts will be established:
1. Statutory Reserves:
a. Institutional Capital – this is retained income from the operation of the SACCO;
b. Investment Re-evaluation Reserve – this is a reserve for investments that fluctuate if the investment is being held to maturity.
c. Other Reserves as authorized by the Regulatory Authority
d. Allowance for Loan Loss Reserves (ALL) – this is a contra-asset reserve account for delinquent loans and problem assets. The off-setting entry to increase the A.L.L. is a debit to an expense account called the “Provision for Loan Loss”. The percentage of the outstanding balances to be allocated to the A.L.L. account will be determined by the Regulatory Authority.
e. Special Reserve for Other losses – this is reserve for other potential losses, such as potential investment losses.
f. Members shares – these are shares that members’ deposit into the SACCO to become a member and are considered “core capital”. These shares are not withdrawable and can not be utilized as collateral to obtain a loan. These shares are only withdrawable, when the SACCO is liquidated. (Sacco Act 2008, article 2)
2. Revocable Reserves:
a. Undivided Earnings – is income from previous years that has been derived from the operation of the SACCO, and has not been allocated, but is being retained.
b. Net Income – This is current income less estimated dividend and interest owed to members for the year.
c. Accumulated Unrealized Gains/Losses on Investments Available for Sale (AFS) Securities.
d. Appropriated Undivided Earnings
e. Reserves for Loss Contingencies
f. Other Revocable Reserves
g. Donated Equity
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SECTION 16 – LOANS
16.1. LOAN OR CREDIT FACILITY
The Board of Directors is responsible for approving loan policies and procedures, the types of loans made, the loan application requirements, the maximum loan amounts, any individuals or groups that are restricted from accessing credit, whether a borrower may pay a loan off prior to maturity, and whether the SACCO can assess fees on loans granted and/or delinquent loans. (SACCO Act 2008, article 33 (3) (a)).
a) Any member of a Sacco society may apply to the Sacco society for a loan or credit facility in writing. (Article 33 (SACCO Act, article 33 (1))
b) A person who applies for a loan or credit facility under subsection (1) shall provide evidence of his or her ability to repay the loan or credit facility. (SACCO Act 2008, article 33(2)).
c) Where security is required with respect to a loan, the Sacco society may accept as security against any loan, an endorsement by a guarantor or co-guarantor, assignment of an interest in real or personal property, deposits or wages of the borrower or any collateral as may be prescribed by the Authority. (SACCO Act 2008, article 33 (4)).
d) The Sacco society may not grant a loan or credit facility to a person who is not a member of that society. (Sacco Act 2008, article 33 (5)).
e) The Sacco society shall not grant a loan or credit facility to a member where the loan or credit facility, in the aggregate, exceeds such limit of the society's core capital as the Authority may prescribe. Sacco Act 2008, article (34 (1)).
f) The Sacco society shall not grant a loan or credit facility against the security of the “core capital” (members’ shares) of this society, as provided by the SACCO Act - 2008. (Sacco Act 2008, article 34 (2))
g) The Sacco society may make loans to its employees and members of its board of directors, the terms or conditions for the granting of a loan or credit facility to an employee or board member shall not more favourable than those extended to other members. (Sacco Act 2008, article 35 (1) (2)).
h) The person that has applied for a loan or credit facility to the SACCO shall not be present nor participate in the consideration of the loan application. (SACCO Act 2008, article 35 (3)).
i) No director, officer, employee or a member of the board of the Sacco society shall act as a guarantor of any person with respect to a loan advanced or credit facility granted to a person by the society. (Sacco Act 2008, article 35 (4)).
j) The Sacco society may lend to its staff and officials an amount in the aggregate not exceeding such proportion of its total assets as prescribed by the Regulatory Authority. (Sacco Act 2008, article 35 (5)).
k) The SACCO society shall provide information in such manner and to such extent as the Minister may exchange such information on non-performing loans to other SACCO societies, credit bureau as may be specified by the Regulatory Authority. (Article 54, (5) (b) of the SACCO Act);
16.2. POWER TO BORROW
Section 44 of the Cooperative Act 1997, rule No. 34 sub section 1-4 & No. 35 sub section a-e)
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a) Loans may be obtained from members and non-members, subject to the maximum approved by the Annual General Meeting and Commissioner, provided the amount does not exceed 20% of the total assets.
b) For the necessary security of any loans accepted by the society under paragraph (a) above, the society may grant a charge (which must be registered with the Commissioner) over the assets of the society. 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 competitive market rates or as may be from time to time be determined by the Board of Directors
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SECTION 17 – CONFLICT OF INTEREST
17.1. CONFLICT OF INTEREST
a) Every official and employee is required to sign a conflict of interest policy when either they are elected or hired; in addition, an annual disclosure on any changes on the possibility of conflicts that may arise.
b) Every Board of Directors member and employee of the Society shall be required, before taking part in any business transaction which the Society may be about to discuss, or initiate to disclose any personal interest in the matter and shall not take part in any discussion or vote upon that item of business. The Board of Directors member or employee shall physically absent himself/herself from the discussion unless it is determined that the individual has relevant information to provide. Failure to divulge this information shall result in removal from office or termination of employment.
c) The remaining Board members present at the meeting if constituting a quorum without the disqualified person may exercise with respect to the matter, all of the powers of the committee.
d) In cases of breach of confidentiality, besides the resulting action for damages, the responsible party shall be removed from the office or in the case of any employee; his/her employment shall be terminated.
e) All Employees and officers of the SACCO Society, which includes members of all committees and the Board of Directors, are required to sign and acknowledge the Conflict of Interest Policy and to disclose annually any changes to the initial conflict disclosure.
17.2. CONFIDENTIALITY OATH
a). The members of the board of directors and any other committee and the employees of the society shall hold in the strictest confidence all transactions of the society, with its members, and all information respecting their personal affairs, except to the extent deemed necessary by the Board of Directors in connection with the loans and the collection thereof.
b). In cases of breach of confidentiality, besides the resulting action for damages, the responsible party shall be removed from the office or their employment terminated.
c). No executive officer, Board member, or employee of the society shall in any manner participate in the deliberations upon, or determination of any question affecting his/her own financial or personal interest.
d). In the event of disqualification of any such executive officer, Board of Directors member, or employee, he/she shall withdraw from such deliberation or determination, and the remaining qualified committee members present at the meeting, if constituting a quorum without the disqualified person, may exercise with respect to the matter, all the powers of the Board
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SECTION 18 – MERGER AND LIQUIDATION
a) The SACCO’s Board of Directors will actively be seeking mergers with other SACCO’s, to improve the financial services to members and potential members by providing the economies of scale.
b) It is the Ministry of Co-Operatives and Marketing of Kenya’s policy that all Savings and Credit Cooperatives (SACCO’s) insured by the SACCO Savings Guaranteed Fund (SSGF) may merge with one or more other SACCO’s if they conform to the Regulations pertaining to Mergers and Amalgamations. Before any insured SACCO, may merge with any SACCO, prior written approval must be obtain from the Regulatory Authority; where an uninsured SACCO is involved, the appropriate supervisory authority must also authorize the merger.
c) The Regulatory Authority must find the merger desirable in order for the merger to be approved, that the merger conforms to applicable laws and regulations, as well as administration policies and regulations. It must find the merger in the best interest of the shareholders of all SACCO’s concerned, and that the officials of the continuing SACCO are capable to manage the expanded operation.
d) As necessary and appropriate, the Regulatory Authority will provide examiner assistance to investigate a proposed merger, assist officials of the SACCO’s in preparing a suitable merger plan, and, if necessary, analyze the financial condition of each SACCO involved. For example, examiner assistance may be provided in cases where assistance is deemed vital for the merger completion.
e) The society may be dissolved in accordance with the procedures set forth in the Co-operative Societies Act No. 12 of 1997 and the Cooperative Society’s Amendment Act 2004 and the rules made there under.
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SECTION 19 – AMENDMENTS AND CHANGES TO BYLAWS
19.1. AMENDMENT OF BY-LAWS
These By-laws may be amended in accordance with the procedure set forth in the Cooperative Societies Act 1997, Rules and these By-laws article 6.4 (b) but no amendment shall become effective until it is approved by the General Meeting and registered by the Commissioner.
19.2. ACQUISITION OF BY-LAWS
Any person may purchase a certified copy of these By-laws from the registered office of the society upon payment of a fee that is to be established by the Board of Directors.
19.3. REGULATIONS
a) The Board of Directors may make such rules not inconsistent with these By-laws, as they may deem necessary for the conduct of the society’s business. Any such regulations shall be recorded in the minute book and shall be posted on the society’s notice board, and shall come into force when and as determined by the Board of Directors.
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SECTION 20 – GENERAL PROVISIONS AND/OR MISCELLANEOUS ITEMS
20.1. SACCO SAVINGS GUARANTEED FUND a) The SACCO Society will participate in the SACCO Savings Guaranteed Fund (SSGF) as
stipulated in the SACCO Act 2008 by making the required contribution into the fund, as the Board of Trustees may determine. Member’s deposits will be protected up to one hundred thousand shillings in respect to each member.
b) The amount being the aggregate credit balance of any account maintained by the member to the SACCO Society shall be a protected deposit.
c) Member’s deposit shall be used to offset any liabilities owed by the SACCO Society under liquidation including any liability under a loan guarantee by such a member.
20.2. FINES AND PENALTIES
a) For any breach of these By-laws or any instruction issued by the General Meeting, or for failure of a member to honor his/her financial obligation on time, the defaulting member may be fined an amount that has been established by the Board of Directors in its’ policies and procedures.
b) Any person, who contravenes the provisions of the SACCO Act 2008, commits an offence and shall be liable, on conviction, to a fine or imprisonment, or both as stipulated in the SACCO Act.
20.3. BENEFICIARY NOMINEES
a) Every member may appoint his or her beneficiary nominee or nominees in writing and one or more persons in order of priority to whom upon his/her death, his/her shares, deposits or any other interest shall be transferred.
b) Every appointment of a nominee (s) by a member shall be in writing and signed by the member in the presence of two or more competent witnesses.
c) Where more than one nominee is appointed by the member, the member shall specify the amount of the shares to be transferred to each nominee. Provided, however, that where no amount is specified each of the nominees shall receive an equal share
d) A member desirous of changing his/her nominee (s) may do so at any time provided that such change or alteration is in writing and signed by the member in the presence of two competent witnesses
e) The Particulars of the nominee(s) shall be recorded and kept in a sealed envelope to be kept in the members’ file.
20.4. PAYMENT TO A NON-MEMBER BENEFICIARY
The value of a deceased member’s shares or interest, less any liabilities or guarantees will be paid to a non-member the sums due by the society within 60 days upon receiving official notice of the death of the member. The beneficiary may also receive payments from the sinking fund, Risk Management or any approved insuring programme.
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20.5. BOOKS AND RECORDS
20.5.1. FINANCIAL YEAR
The financial year of the society shall be the same as the calendar year, which is from 1st January to 31st December every year.
20.5.2. FORM OF ACCOUNTS
a) The SACCO Society shall keep proper books of accounts which:
i. Show a true and fair state of affairs; and
ii. Explain all transactions and financial position to enable the Authority to determine whether the Sacco Society has complied with the provisions the SACCO Act 2008 and the regulations made under the Act. (Sacco Act 2008, article 40 (1) (2) (a) (b)
b) The accounts and other financial records of the SACCO shall be denominated in Kenya Shillings and shall comply with the International Financial Reporting Standards and other such requirements as the Authority may prescribe. (Sacco Act 2008, article 40 (3))
c) The Sacco Society shall provide monthly disclosures in the financial statements on the following: (Sacco Act 2008, article 42 (a) (b) (c))
i. Members, if any, who hold more than twenty percent of the share capital and deposits in the SACCO Society
ii. Any advances or credit facilities exceeding such limits of its core capital as may be prescribed by the Regulatory Authority; and
iii. Any lending to insiders.
d) Any officer of the Sacco Society who fails to: - (Sacco Act 2008, article 64 (a) (b) (c))
i. Take all reasonable steps to secure the compliance of the Sacco Society with the Sacco Act 2008 or regulations made under the act;
ii. Take all reasonable steps to secure the accuracy and correctness of any statement or information submitted under the Sacco Act and the regulations; or
iii. Supply any information required under the Sacco Act to the Minister or the Authority,
Commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both such fine and imprisonment.
e) Any officer of the Sacco Society who willfully - (Sacco Act 2008, article 65 (a) (b) (c) (d) (e):
i. With intent to deceive, falsifies any books of account, report, statement, record or other document of the society;
ii. Signs, issues, publishes or transmits to a government official any book of account, report, statement, record or other document which that person knows, or has reason to believe, to be false;
iii. With intent to deceive, knowingly obtains a forged signature on a document;
iv. With intent to deceive, destroys any book of account, report, statement, record, or other document of the society; and
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v. Engages in transaction or takes part in a deliberation in which there is a conflict of interest prohibited under the SACCO Act,
Commits an offence and shall on conviction, in addition to the penalty imposed by the SACCO Act 2008, be liable to be prohibited from holding office in any SACCO society in Kenya.
f) The Society shall keep up-to-date and in a proper business-like manner accounts and such books as the Acts and Rules may require from time to time. The following books shall be kept by the Society.
i. A register of member’s showing in respect of each member;
- The name, age, date of application for membership, address and occupation;
- The date on which he/she ceased to be a member;
- Particulars of his/her nominee, if any;
h) Such other books and records as required by the SACCO Act, Rules or as the Commissioner may prescribe and as are customarily necessary to be kept by a business concern to show that it is being operated in a proper and businesslike manner.
20.6. AUTHORIZATION TO SIGN DOCUMENTS
a) All document, contracts and cheques shall be signed on behalf of the SACCO by the individuals that are authorized to sign and are identified in the policies and procedures of the SACCO Society.
b) The Supervisory Committee is responsible to ensure that the checks are signed by authorized individuals identified in the SACCO Policies
20.7. COMMON SEAL
The society may adopt and use a common seal bearing the word “seal of the ABC*** Savings and Credit Co-operative Society” Ltd and shall be kept securely under lock and key by the Manager or duly designated officer for that purpose and shall be used only by, and in the presence of, the officers authorized to sign documents on behalf of the society.
20.8. INSPECTION OF DOCUMENTS
All books of accounts and other records shall at all times be available to the members and the committee of the society. A copy of the Act, registration certificate, these By-laws and a list of its members excluding details of nominees and share holdings or loans shall be available for inspection by any member at all reasonable times during business hours at a fee to be determined by the committee from time to time.
20.9. ACCEPTANCE
We the undersigned Executive Officers of the Co-operative Society named herein do hereby accept and adopt these By-laws for and on behalf of ABC*** Savings and Credit Co-operative Society Limited together with any changes or alterations that have been initiated or signed by us.
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NAME SIGNATURE DATE
………………………………… ………………………………… ……………………. Chairman’s Name
………………………………… ………………………………… ……………………. Vice-Chairman Name
………………………………… ………………………………… ……………………. Hon. Secretary Name
………………………………… ………………………………… ……………………. Treasurer Name
………………………………… ………………………………… ……………………. Manager Name
Certified that the foregoing By-laws of the ABC*** Savings and Credit Co-operative Society Limited, have been approved by me and duly registered.
GIVEN UNDER MY HAND AT NAIROBI
THIS..................................DAY OF………………………………..……200...........................
COMMISSIONER OF CO-OPERATIVE DEVELOPMENT & MARKETING
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FORM I
THE CO-OPERATIVE SOCIETIES ACT
(No. 12 OF 2004)
CERTIFICATE OF AMENDMENT OF BY-LAWS
We ………………………………………………………………………….. and
…………………………………………………………………………..
Chairman and Secretary of ABC** SACCO Society Limited certify:-
a) That the enclosed amendment for the By-laws was made at a General Meeting held on
……………………………………………….
b) That proper notice of the meeting and the proposed amendment were issued to all members of
the society:
c) That a voting paper was duly issued to every member
d) That the amendment has received the prior approved permission of the Commissioner
Date: …………… Chairman…………………………………………………………………………
Date: …………… Secretary…………………………………………………………………………
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THE CO-OPERATIVE SOCIETIES ACT, 2004 RESOLUTION
PASSED
At a General Meeting of the Members of ABC** SACCO Society limited duly convened and held
at…………………………………………………………………………………………………………
The following Resolution was duly passed: THAT BY-LAWS OF THE SOCIETY BE AMENDED
AS FOLLOWS:-
CERTIFIED that the above is a true copy of the Resolution duly recorded as Resolution
NO………………MIN: ……………………………….or…………………
Under the provisions of Section 8 of the Co-operative Societies Act and that there were
…………….paid up Members present at the meeting of whom ………………..voted in favour.
Authorized to sign under By-law No 8.11 ……………………………………… Chairman: ……………………………………………….. Secretary: ………………………………………………. Treasurer: ………………………………………………..
Date: ………………………………….
CERTIFIED THAT the foregoing amendment to the By-laws of ABC** SACCO Society Ltd. have been approved by me and duly registered in accordance with Sec 8(3) of the Co-operative Societies Act. Given under my hand at Nairobi this……………..Day of…………………….. COMMISSIONER OF CO-OPRATIVE DEVELOPMENT & MARKETING