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AMENDMENT OF UNSACCO BY-LAWS. Prepared by a special Committee … Reviewed by the CMC for AGM’s approval and adoption. 6 th March 2009. SHARE CAPITAL. The SACCO is a business entity. It should be viewed as a going concern.
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AMENDMENT OF UNSACCO BY-LAWS Prepared by a special Committee… Reviewed by the CMC for AGM’s approval and adoption. 6th March 2009.
SHARE CAPITAL • The SACCO is a business entity. It should be viewed as a going concern. • Since we are continuing into the foreseeable future-we are neither curtailing our operations nor liquidating, there is need to have a Fixed Share Capital. • Shares are transferable within the membership. • Deposits are only withdrawable when a Member leaves the SACCO. • There is now a distinction between Deposits, what we previously referred to as “Shares”, and Share Capital which is now mandatory for all SACCOs. • SACCOs that will not have raised adequate Share Capital (by a specific time) will be considered notviable & will either merge or be dissolved. • Merging or Liquidation- NOT an option for us.
WHERE WILL MONEY COME FROM? • The proposed minimum per member is 100 shares @ Ksh. 100= Ksh.10,000. • It is expected that UNSACCO’s authorised Share Capital will be way above Ksh.20M whenever the final figure is given. • Under the current economic conditions, should members be asked to raise this? • Retained earnings stand at Ksh.99M as at 31 Dec 2008. • The Board proposes a Bonus Share issue from Retained Earnings. Members need to approve a resolution to transfer a maximum of Ksh.31.5M towards this Share Capital.
THE BIG QUESTION(S) • Should each member get 100 shares of @ Ksh.100? • The Board proposes an equitable allotment formula. • No individual member should control more than 5% of issued Share Capital (Ministry Guidelines).
IMPLICATIONS: • The Society will neither merge nor be dissolved. • Ksh.31.5M of retained earnings will become initial Share Capital i.e not available for distribution as dividends. • Share Capital will be separated from Deposits and not available for lending. • The Society to issue Share Certificates. • Members will be both Shareholders (Returns-Dividends) and Depositors (Returns-Interest). • Withholding Tax:Dividends(5%),Interest (15%). • Compliance with the Law.
POLICY ON LOAN GUARANTEE • For prudent risk management, loan guarantors will specifically assign values to their guarantee. • In case of default, guarantors to share burden in proportion to value guaranteed. • The new Navision Software being implemented will enhance compliance with this By-law.
6-MONTH WAITING PERIOD • A new member may be granted a loan before expiry of the waiting period, provided that all other membership requirements have been fulfilled.
SUSPENSION from Office:- Board Members. • In keeping with sound corporate governance principles and business practices, whistle-blower policy will be encouraged. • A Board Member found to have violated the Society’s By-laws will be suspended by two-thirds of Board Members. • Suspension may be ratified or rescinded by the AGM. • The SACCO Regulatory Authority will also have suspension/removal powers
PAYMENT OF STAFF BONUS • It is best practice to link this to staff performance appraisal. • In separating responsibilities between the AGM and the Board, it seems the Board is better placed to handle staff matters. • The proposal is to treat Staff Bonus as Staff costs-payment being made in the light of an individual staff’s performance. • Industry norm is to de-link Directors’ honoraria (AGM item) from Staff Bonus.
RESOLUTIONS FOR AGM’s adoption • That Ksh. 31.5M of retained earnings be issued to members as Bonus Shares- thereby creating a Fixed Share Capital for the UNSACCO. • That the amendments to the by-laws be adopted.
