kanisa savings and credit co-operative …...kanisa savings and credit co-operative society limited...

KANISA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY

LIMITED

BY-LAWS

(AMENDED 2012)

P. O. BOX 1210 - 00606, SARIT CENTRE

NAIROBI

KANISA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED BY-LAWS AMENDED 2012

II

CONTENTS

SECTION 1 - NAME, ADDRESS AND LEGAL DESIGNATION .........................................................6

1.1 NAME AND AREA OF OPERATION .................................................................................................................6

1.2 REGISTERED OFFICE AND POSTAL ADDRESS ...........................................................................................6

1.3 DEFINITIONS AND INTERPRETATIONS............................................................................................................6

SECTION 2 - SOCIETY GOALS ..............................................................................................................9

2.1 VISION STATEMENT ............................................................................................................................................9

2.2 MISSION STATEMENT .........................................................................................................................................9

2.3 OBJECTIVES...........................................................................................................................................................9

2.4 CO-OPERATIVE VALUES AND PRINCIPLES ...................................................................................................10

2.4.1 VALUES ................................................................................................................................................................10

2.4.2 PRINCIPLES.........................................................................................................................................................11

2.4.3 THE SOCIETY CORE VALUES .......................................................................................................................12

2.5 THE SOCIETY STRATEGIES ..............................................................................................................................13

SECTION 3 - CAPITAL, SHARES AND SAVINGS AND DEPOSITS ...............................................13

3.1 CAPITAL ..................................................................................................................................................................13

3.2 SHARES ..................................................................................................................................................................15

3.3 SAVINGS AND DEPOSITS ..................................................................................................................................15

SECTION 4 - SOCIETY MEMBERSHIP ..................................................................................................164.1 MEMBERSHIP COMPOSITION.............................................................................................................................16

4.2 MEMBERSHIP ELIGIBILITY ..................................................................................................................................16

4.3 MEMBERSHIP APPLICATION ..............................................................................................................................17

4.4 ADMISSION INTO MEMBERSHIP .......................................................................................................................17

4.5 VOLUNTARY WITHDRAWAL ................................................................................................................................18

4.6 CESSATION OF MEMBERSHIP ..........................................................................................................................18

4.7 RE-ADMISSION INTO MEMBERSHIP.................................................................................................................19

4.8 REFUSAL OF MEMBERSHIP ..............................................................................................................................19

4.9 LIMITATION OF MEMBER SHARE CAPITAL ..................................................................................................19

4.10 TRANSFER OF SHARES...................................................................................................................................19

4.11 RIGHTS, OBLIGATIONS AND LIABILITY OF MEMBERS ............................................................................20

4.11.1 RIGHTS OF MEMBERS ..................................................................................................................................20

4.11.2 OBLIGATIONS OF MEMBERS .......................................................................................................................21

4.11.3 LIABILITY OF MEMBERS ...............................................................................................................................21

4.12 APPOINTMENT OF NOMINEE(S) .....................................................................................................................22

4.13 MEMBERSHIP IN APEX ORGANIZATIONS ....................................................................................................22

III


SECTION 5 - HANDLING OF DISPUTES AND MEMBER EXPULSIONS ........................................ 22

5.1 DISPUTES ...............................................................................................................................................................22

5.2 SUSPENSION AND EXPULSION ........................................................................................................................23

5.3 SUSPENSION AND EXPULSION PROCEDURE ..............................................................................................23

5.4 PAYMENTS RESULTING FROM WITHDRAWAL OR EXPULSION ..............................................................24

SECTION 6 - MEMBERS MEETINGS .....................................................................................................24

6.1 GENERAL MEETING .............................................................................................................................................24

6.2 NOTICE OF SPECIAL OR ANNUAL GENERAL MEETING ..........................................................................25

6.3 MEETING QUORUM..............................................................................................................................................26

6.5 BINDING RULE ......................................................................................................................................................26

6.6 CHAIRING OF THE MEETINGS .........................................................................................................................26

6.7 IDENTIFICATION OF MEMBERS ........................................................................................................................27

6.8 POWERS AND DUTIES OF THE ANNUAL GENERAL MEETING ..............................................................27

6.9 ESTIMATES OF INCOME AND EXPENDITURE ..............................................................................................28

6.10 MINUTES OF THE MEETINGS ........................................................................................................................28

SECTION 7 - ELECTIONS AND ELIGIBILITY OF MEMBERS OF THE MANAGEMENT

COMMITTEE ..................................................................................................................................................28

7.1 ELECTIONS.............................................................................................................................................................28

7.2 ELIGIBILITY .............................................................................................................................................................29

SECTION 8 - CENTRAL MANAGEMENT COMMITTEE .......................................................................328.1 COMPOSITION .......................................................................................................................................................32

8.2 FUNCTIONS AND RESPONSIBILITIES ..............................................................................................................32

8.3 DELEGATION OF DUTIES ..................................................................................................................................34

8.4 RECORDS OF CMC MEETINGS .......................................................................................................................35

8.5 CMC SUB-COMMITTEES......................................................................................................................................35

8.5.1 EXECUTIVE COMMITTEE .................................................................................................................................35

8.5.1.1 CHAIRPERSON AND VICE CHAIRPERSON ..............................................................................................35

8.5.1.2 HONORARY SECRETARY..............................................................................................................................36

8.5.1.3 TREASURER .....................................................................................................................................................36

8.5.2 CREDIT COMMITTEE ........................................................................................................................................36

8.5.2.1 DUTIES AND RESPONSIBILITIES OF THE CREDIT COMMITTEE ......................................................37

8.5.3 EDUCATION COMMITTEE.................................................................................................................................37

8.5.3.1 DUTIES AND RESPONSIBILITIES OF THE EDUCATION COMMITTEE ...............................................38

8.6 VACATION OF OFFICE .......................................................................................................................................38

8.7 AUTHORITY TO SIGN AND ENDORSE DOCUMENTS .................................................................................38

8.8 MANAGEMENT COMMITTEE LEGAL STANDARD OF CARE ......................................................................39


IV

SECTION 9 - SUPERVISORY COMMITTEE ..........................................................................................39

9.1 ROLE OF THE SUPERVISORY COMMITTEE .................................................................................................39

9.2. ELECTION OF THE SUPERVISORY COMMITTEE MEMBERS ...................................................................40

9.3 ELIGIBILITY FOR SUPERVISORY COMMITTEE MEMBERSHIP ...................................................................40

9.4 POWERS, DUTIES AND RESPONSIBILITIES OF THE SUPERVISORY COMMITTEE ............................41

9.5 AUTHORITY OF THE SUPERVISORY COMMITTEE ......................................................................................42

9.6 LIABILITY OF THE SUPERVISORY COMMITTEE ..........................................................................................43

SECTION 10 - DUTIES AND RESPONSIBILITIES OF THE SOCIETY MANAGER ....................... 43

SECTION 11 - APPLICATION AND INVESTMENT OF FUNDS, CASH RECEIPTS, RESERVE

FUND AND LIQUIDITY ...............................................................................................................................44

11.1 APPLICATION AND INVESTMENT OF FUNDS .............................................................................................44

11.2 INVESTMENT OF EXCESS FUNDS ................................................................................................................45

11.3 RECEIPTING FOR MONEY ...............................................................................................................................46

11.4 RESERVE FUND AND LIQUIDITY ...................................................................................................................46

SECTION 12 - PAYMENT OF SOCIETY EXPENSES AND DISPOSAL OF SURPLUS ............... 47

12.1 SOCIETY EXPENSES .........................................................................................................................................47

12.2 DISPOSAL OF SURPLUS ..................................................................................................................................47

SECTION 13 - LOANS ..............................................................................................................................48

13.1 LOANS TO MEMBERS ......................................................................................................................................48

13.2 SECURITY FOR LOANS ....................................................................................................................................49

13.3 REPAYMENT OF LOANS ..................................................................................................................................50

SECTION 14 - CONFLICT OF INTEREST AND CONFIDENTIALITY POLICY ............................. 51

14.1 CONFLICT OF INTEREST .................................................................................................................................51

14.2 CONFIDENTIALITY POLICY ...............................................................................................................................52

SECTION 15 - BENEFICIARIES ...............................................................................................................52

15.1 BENEFICIARY NOMINEES .................................................................................................................................52

15.2 PAYMENT TO A BENEFICIARY ......................................................................................................................52

SECTION 16 - FINANCIAL YEAR ...........................................................................................................53

SECTION 17 - SOCIETY PAYMENTS AND BOOKS OF ACCOUNT ...............................................53

17.1 PAYMENTS ...........................................................................................................................................................53

17.2 BOOKS OF ACCOUNTS ....................................................................................................................................53

SECTION 18 - SOCIETY BOOKS AND RECORDS .............................................................................54

SECTION 19 - APPOINTMENT OF AUDITORS ....................................................................................56

SECTION 20 - INDEMNITY .......................................................................................................................56

SECTION 21 - SOCIETY BORROWING POWER .................................................................................57

V


SECTION 22 - PENALTIES FOR VIOLATION OF THE LAWS .........................................................57

22.1 PENALTIES FOR VIOLATION OF THE SACCO ACT AND BY-LAWS ....................................................57

22.2 PENALTIES FOR NON-REMITANCE OF DEDUCTIONS ..............................................................................58

SECTION 23 – THE SOCIETY COMMON SEAL ..................................................................................58

SECTION 24 - INSPECTION OF DOCUMENTS ...................................................................................58

SECTION 25 - DISSOLUTION OF THE SOCIETY ..............................................................................59

SECTION 26 - AMENDMENTS, AQUISITIONS AND REGULATIONS OF THESE BY-LAWS ....... 59

26.1 AMENDMENT OF BY-LAWS .............................................................................................................................59

26.2 ACQUISITION OF BY-LAWS .............................................................................................................................59

26.3 OTHER RULES AND REGULATIONS .............................................................................................................59

SECTION 27 - REPEAL AND BINDING CLAUSES .............................................................................60

SECTION 28 - ACCEPTANCE ..................................................................................................................61


�

SECTION 1 - NAME, ADDRESS AND LEGAL DESIGNATION

1.1 NAME AND AREA OF OPERATION

The Society shall be called KANISA SAVINGS and CREDIT CO-OPERATIVE SOCIETY LIMITED hereinafter referred to, in these By-laws, as “The Society” and its area of operation shall be in Kenya.

1.2 REGISTERED OFFICE AND POSTAL ADDRESS

The registered office of the Society shall be located at the ALL AFRICA CONFERENCE OF CHURCHES (A.A.C.C.) Compound, Waiyaki Way, Westlands, Nairobi and its postal address shall be P.O. Box 1210, Postal Code 00�0�, Sarit Centre, Westlands, Nairobi, Telephone+254-20-4450135.

Any change of address of the Society shall be furnished to the Commissioner for Co-operatives Development and to the members of the Society within sixty (60) days of such change through their last known addresses.

1.3 DEFINITIONS AND INTERPRETATIONS

(a) “Applicable Law” in these By-laws, unless the context otherwise requires, words or phrases shall be defined/interpreted in accordance with the Co-operative Societies Act No. 12 of 1997, Co-operative Societies (Amendment) Act No. 2 of 2004, and the Co-operative Societies rules, 2004 made hereunder, hereinafter referred to as “The Act” and “The Rules” respectively and which term shall include their subsequent amendments. Any questions relating to the interpretation of these By-laws or any other matters not provided for herein, errors and omissions shall be referred to the Commissioner whose decision thereon shall be final and conclusive.

(b) “The Society”refers to KANISA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED.

(c) “Apex Society” means a Society formed at the National level by the Co-operative movement in Kenya and registered under the Act to promote Co-operative development and represent the interest of Co-operative societies locally and internationally.

(d) “CMC”refers to the Central Management Committee or Management Committee and has the meaning assigned thereto in the Co-operative Societies Act, 1997 and as amended in 2004.

�


(e) “By-laws” has the meaning assigned thereto in the Co-operative Societies Act, 1997 and as amended in 2004.

(f) “Common Bond” shall mean any unifying factors that bring members together.

(g) “Commissioner” has the meaning assigned thereto in the Cooperative Societies Act..

(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 Society.

(i) “Date Of Dissolution” means the date on which the Commissioner’s cancelation of the registration of a Co-operative Society takes effect.

(j) “Share” means the amount represented by a member’s portion in the equity of the Society as a co-owner.

(k) “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.

(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 Society 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 or SACCO By-laws.

(o) “Institutional Capital” means and is comprised of statutory reserves, admission fees, appropriation accounts, donated equity, a permanent capital base and any other reserves established by the Society’s Management Committee for which no claim has been placed upon it by members or other parties.


8

(p) “Minors” shall mean individuals who are not at least 18 years of age who may not vote or hold office or borrow from the Society.

(q) “Members of the immediate family” when used in these By-laws 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.

(r) “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.

(s) “Officer” means a committee member or any other person, by whatever name or title such a person 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.

(t) “Personal Representative” means any person who, under law or customs, is responsible for administering the estate of a deceased person.

(u) “Place of Business” means the Society’s head office, branch, or outlet, including a mobile unit, marketing office, automated teller machine or agency of the Society and which is open to the public.

(v) “Share Capital” means members’ equity in the SACCO in the form of issued and fully paid up shares of common stock.

(w) “Special Resolution” means a resolution passed by two thirds of the members present and voting at a general meeting of a Society.

(x) “Supervisory Committee” means an oversight committee elected at a general meeting.

(y) “Total Capital” means the total sum of core capital and supplementary capital of a SACCO Society.

(z) “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.

(aa) “Tribunal” means the Co-operative Tribunal established under the Co-operative Societies Act, 1997 and as amended in 2004.

�


(bb) “General Meeting” refers to any general assembly of members of which at least fifteen (15) clear days written notice of the meeting has been given.

(cc) “Users” shall mean members, groups and other co-operatives who may from time to time carry out some business with the Society.

SECTION 2 - SOCIETY GOALS

2.1 VISION STATEMENT

To be the leading one-stop financial institution providing diverse products and services for members’ economic empowerment.

2.2 MISSION STATEMENT

To promote thrift, prudent management, member participation, regular education, development of dynamic systems that will ensure growth, security of funds and encourage a positive organizational culture.

2.3 OBJECTIVES

The objectives for which the Society is established are:

a) To promote thrift among 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 to them exclusively for providence and productive purposes at fair and reasonable rates of interest.

b) To provide an opportunity for each of its members to improve his/her respective economic and social status.

c) Carry out investment activities, under the authority of General Meetings, which should;

(i) Increase the volume of output of the Society.

(ii) Improve and sustain a healthy liquidity position.

(iii) Increase the level of surplus to the Society.

(iv) Benefit members and their families.


10

d) Offer the members’ complementary savings and credit services and other financial products and services or withdraw-able savings/deposits accounts as may be required by members from time to time.

e) Ensure safety and security of members’ funds through risk management programme or any other appropriate insurance scheme.

f) Ensure progress of its members by educating them on proper methods of credit administration.

g) Perform all those functions and exercise those powers designated for savings and credit Co-operative Societies under the relevant law for the benefit of members.

h) Cooperate with other Co-operatives and be affiliated to apex Co-operative bodies like KUSCCO and Co-operative Alliance of Kenya.

i) Perform within the relevant law (the Act, 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 subject to the approval of the Annual General Meeting.

For attainment of the above objectives, the Society may do all acts and things that are permissible under the Act, the Rules and these By-laws provided that such acts or things are approved by Members at General Meeting.

2.4 CO-OPERATIVE VALUES AND PRINCIPLES

In attaining the stated objectives, the Society shall be guided by the Co-operative values and principles, among others, as stated below:

2.4.1 VALUES

The Society is founded on the Co-operative values of:

a) Self-help

In co-operatives, people help each other whilst helping themselves by working together for mutual benefit.

b) Self-responsibility

Individuals within co-operatives act responsibly and play a full part in the organisation.

11


c) Democracy

A Co-operative will be structured so that members have control over the organisation – one member, one vote.

d) Equality

Each member will have equal rights and benefits

e) Equity

Members will be treated justly and fairly.

f) Solidarity

Members will support each other and other co-operatives.

2.4.2 PRINCIPLES

For the attainment of those values as outlined above, the Society shall apply the following principles as general guidelines to its activities:

1st Principle: Voluntary and Open Membership

Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd Principle: Democratic Member Control

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote), and co-operatives at other levels are also organised in a democratic manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to


12

their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the Co-operative Movement by working together through local, national, regional and international structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.

2.4.3 THE SOCIETY CORE VALUES

In addition to the co-operative values and principles, KANISA shall adhere to the following core values:

a) Integrity

The Society operations shall be characterized by mutual respect and openness; and show impartiality, independence and honesty, upholding the highest ethical and professional standards in an open and consistent way.

b) Transparency

The Society shall remain committed to serve the members with openness in all her transactions while maintaining good communication links and adherence to rules and regulations.

13


c) Professionalism

The Society shall maintain standards and a high level of knowledge and skills to enable the provision of quality service.

d) Teamwork

The Society shall harness synergies of the members to realize set goals. This shall be through commitment towards organizational goal attainment and ascertain that the interests of the organization supersede those of individual and that everyone’s contribution and participation is valued.

2.5 THE SOCIETY STRATEGIES

(a) Membership development and retention.

(b) Lending to KANISA members.

(c) Improvement of internal business processes.

(d) Product development and diversification.

(e) Resource mobilization.

(f) Public relations and marketing.

SECTION 3 - CAPITAL, SHARES AND SAVINGS AND DEPOSITS

3.1 CAPITAL

The funds of the Society shall consist of:

a) Core Capital which consist of the following:

(i) Fully paid up members’ shares, which is considered as part of the SACCO institutional capital, are non-refundable, cannot be used as a guarantee to obtain a loan; and are not insured by the SACCO Deposit Guarantee Fund (SDGF). These funds cannot be expended unless on liquidation of the Society as provided for in these By-laws.


14

(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 dividend to members (SACCO Act 2008).

(iii) Provisioning for loan losses (bad debts) (SACCO Act 2008).

(iv) A reserve fund maintained as required by the SACCO Act and such other reserves as may be required by the Authority.

b) Other sources of funds which consist of:

(i) An admission fee which may be reviewed from time to time by the General Meeting.

(ii) A re-admission fee which is payable by individuals who withdraw and reapply for admission and which may be reviewed from time to time by the General Meeting.

(iii) An unlimited number of shares whose value and minimum amount may be revised from time to time by the General Meeting.

(iv) Deposits or loans from members and/or non-members.

(v) Any surplus resulting from operation of the Society.

(vi) A reserve fund as provided under the Act, and any other reserve approved by the management.

(vii) Any donations grant or gifts from other bodies, organizations or individuals.

(viii) Deposit Protection Funds.

(ix) Funds obtained from fines and/or penalties as may be prescribed by the management from time to time as authorised by the Authority.

(x) Funds obtained from other lawful miscellaneous sources.

(xi) Income from interest, fees and charges and commissions as authorized by the Authority.

(xii) Liabilities, which include deposits from members and borrowings from other sources as may be prescribed by the Regulatory Authority.

15


3.2 SHARES

a) The nominal value of each share shall be Twenty Kenya Shillings (KES 20/=) and every member shall hold a minimum of Three Hundred (300) shares in the Society worth Six Thousand Kenya Shillings (KES 6,000/=), but no member shall hold more than one-fifth (1/5) of the Society’s total shares. Non-members shall not hold shares.

b) Any amount may be accepted towards the purchase of shares, provided, however, that the General Meeting 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 Society are considered to be part of the “Core Capital” and cannot be withdrawn unless the Society is liquidated or dissolved as per section 25 of these By-laws. Member’s shares cannot be utilized as a guarantee to obtain a loan or credit facility from the Society. The Society will 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 Society will be carried in the disclosure part of the financial statement in the Capital area (SACCO Act 2008).

3.3 SAVINGS AND 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).

b) No member may withdraw savings below the amount of their primary or contingent liability to the Society 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).

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).

d) The Society 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).


1�

e) The treatment of members’ dormant accounts shall be in such manner as may be prescribed by the Regulatory Authority (SACCO Act 2008).

SECTION 4 - SOCIETY MEMBERSHIP

4.1 MEMBERSHIP COMPOSITION

The membership of the Society shall consist of:

a) Original members who signed the application for the registration and

b) Individual members subsequently admitted in accordance with these By-laws,

c) Any corporation, organization, association or group as long as the majority of its employees or members are eligible for membership as provided for under these By-laws.

4.2 MEMBERSHIP ELIGIBILITY

a) An individual shall be eligible for membership if in possession of the following qualifications:

(i) Is within the field of memberships consisting the following common bond:

(a) Is an employee of the All Africa Conference of Churches organization (A.A.C.C).

(b) Is an employee of a faith-based organization.

(c) Is an employee of a corporate organization or body.

(d) Is an employee or agent of the Society.

(e) Is in any other admissible occupation offering constant earnings.

(f) Is a previous member of the Society and wish to retain their membership.

(ii) Is not less than eighteen (18) years of age.

1�


(iii) Is of good character and of sound mind.

(iv) Is in employment, occupation or profession which falls within the category or description of those for which the Society is established.

(v) Is a member of the immediate family of the primary member.

(vi) 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 By-laws.

b) For any group, organization, association or corporation to be admitted as a member of the Society, the members of the Society shall pass a special resolution at a General Meeting outlining the terms and conditions of engagement between the corporate member and the Society.

c) In admitting members, the Society shall not fix any limit to the number of its membership.

4.3 MEMBERSHIP APPLICATION

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.

4.4 ADMISSION INTO MEMBERSHIP

a) An applicant shall be admitted to membership subject to conditions set forth in section 4 sub-section 4.2 on being accepted by a simple majority vote of the Management Committee, but shall not qualify for the rights and privileges of membership until:

(i) He/she has paid a non-refundable admission fee of One Thousand Kenya Shillings (KES 1,000/=) or as maybe reviewed from time to time by a resolution of the General Meeting.

(ii) He/she has paid in full for at least Three Hundred (300) transferable shares of Twenty Kenya shillings (KES 20/=) each or as maybe reviewed from time to time by a resolution of the General Meeting.

(iii) His/her application for membership has been duly filed in serial order in the Register of Members as required under the Act.


18

b) Upon admission to membership, the Society Secretary shall cause the name and relevant particulars of the qualified applicant to be entered in the Register of Members and assign him/her a membership number thereupon.

4.5 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 CMC 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) No part withdrawal or offsetting of loans shall be allowed unless the member concerned is leaving the common bond or as decided otherwise by the CMC.

4.6 CESSATION OF MEMBERSHIP

Membership in the Society shall be terminated upon:

a) Voluntary resignation by the member.

b) The death of the member.

c) Expulsion from the Society.

d) Becoming certifiably insane.

e) Acting contrary to the relevant provisions of the Act, rules and these By-laws.

f) Withdrawal of all deposits and savings; shares may not be withdrawn but only upon the liquidation of the Society.

g) By vote of the membership at the succeeding General Meeting following suspension of the member by the CMC for any violation of these By-laws or conduct prejudicial to the Society’s interest.

1�


4.7 RE-ADMISSION INTO MEMBERSHIP

a) Members who voluntarily withdraw may re-apply for admission as long as they still qualify for membership under the terms of these By-laws.

b) If re-admitted into membership, the applicant will pay a re-admission fee of Two Thousand Kenya Shillings (KES 2,000/=), non-refundable, and shall have to fulfil the conditions set forth in section 4 sub-sections 4.2, 4.4(a)(ii), 4.4(a)(iii) and 4.4(b) of these By-laws.

4.8 REFUSAL OF MEMBERSHIP

The CMC may refuse membership to any applicant who is not of good standing and shall give, to the applicant, reasons for such refusal in writing. The person, whose membership application has been declined, if aggrieved by the decision, shall have the right to appeal to the next General Meeting through the CMC. The decision of the General Meeting on the matter shall be final.

4.9 LIMITATION OF MEMBER SHARE CAPITAL

No member shall hold more than one-fifth (1/5) of the issued and paid-up share capital of the Society.

4.10 TRANSFER OF SHARES

a) Subject to the approval of the CMC, a member may transfer his/her share or shares in the Society to any other member of the Society or to any person whose membership in the Society has been approved by the CMC.

b) No transfer of share(s) shall be valid and effective until such transfer has been recorded in the register of the Society and a transfer fee of Five Hundred Kenya Shillings (KES 500/=), revisable, paid by the transferee.

c) No transfer of share(s) shall be valid and effective if made by a member indebted to the Society whether such debt is due for payment or not.

d) When, for any reason other than death, a member of the Society transfers his/her shares to another member approved by the CMC, he/she shall not be entitled to any repayment, whether interest or dividend in respect of such transferred shares.


20

4.11 RIGHTS, OBLIGATIONS AND LIABILITY OF MEMBERS

4.11.1 RIGHTS OF MEMBERS

Subject to the Act, the Society’s By-laws, policies and procedures, all members shall have the right to use the Society’s services and 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 Meeting. Each member shall have one vote irrespective of the member’s total shareholding.

c) Elect or be elected as an officer or 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, these By-laws or as approved by the CMC.

e) Submit projects or initiatives to the CMC 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 any outstanding collaterals or guarantees on other member’s loans), from membership at any time. Shares are considered part of the Society’s “Core Capital” and cannot be withdrawn, unless the Society 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 their Society membership.

h) Attend meetings and take part in decision-making.

i) Recruit qualified non-members and encourage them to join.

j) Bring out problems affecting the Society and look for solutions.

k) Participate in Society projects both physically and financially.

l) Attend educational meetings and seminars organized by the Society or apex bodies approved by the CMC.

21


m) Make use of the services of the Society as stated in the objects of the Society.

4.11.2 OBLIGATIONS OF MEMBERS

As privileged for under section 22 of the Act, members of the Society shall have the obligation to:

a) Observe and comply with these By-laws and decisions taken by the relevant organs of the Society.

b) Buy and pay up for shares and deposits or make any other payments provided for in these By-laws or made by majority vote in a General Meeting.

c) Meet the debts of the Society in case of bankruptcy in accordance with the provisions of the Act and these By-laws.

d) Be ambassadors of goodwill to the Society; and encourage non-members to join the Society.

e) Be articulate, rational and logical in matters pertaining to the Society.

f) Attend educational meetings and seminars organized by the Society or relevant organizations approved by the Management Committee.

n) Be economical, prudent and reasonable in making use of the services offered by the Society.

o) Show good co-operative spirit.

4.11.3 LIABILITY OF MEMBERS

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

b) In the event of liquidation, member’s savings, deposits and shares shall be used to offset any liabilities owed by the Society including any liability under a loan guarantee by such member; this shall be the maximum liability of members.

c) In the event of liquidation, where available funds are insufficient to pay the full nominal value of the shares/deposits held by members, the funds shall be distributed on pro rata basis among the members according to the amount of shares held by each.


22

4.12 APPOINTMENT OF NOMINEE(S)

In accordance with the Co-Operative Societies Act Section 39 Rule 32:

a) Every member of the Society may appoint nominee(s) for the purpose of transfer of shares and deposits or interest in case of death.

b) A member with more than one (1) share may appoint more than one (1) nominee provided the percentage of shares/deposits payable to each nominee shall be specified at the time of the appointment. Such appointment shall be made in prescribed form VII set out in the Rules and witnessed by two (2) persons.

c) The particulars of the nominee(s) shall be recorded and kept in a sealed envelope to be kept safely by the Society’s Secretary.

d) In the event of death of a nominee(s) or the member desiring to cancel any such nomination, the member shall have a right to nominate another person in same procedure, and necessary alterations shall be effected in the Society’s Records.

e) Nominee records to be updated every two years.

4.13 MEMBERSHIP IN APEX ORGANIZATIONS

a) The Society may become a member of a legally registered Apex Co-operative body subject to approval by the General Meeting.

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.

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 and which cannot be resolved internally, shall be referred to the Co-operative Tribunal established under the Co-operative Societies Act.

23


5.2 SUSPENSION AND EXPULSION

The CMC may suspend and/or expel a member who:

a) Wilfully 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 Society 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.

5.3 SUSPENSION AND EXPULSION PROCEDURE

a) Upon formal and written announcement and proof that a member has committed a violation punishable by either suspension or expulsion, the CMC shall provide written notice to the member stating the reason(s) for the proposed suspension or expulsion, and grant the member 30 days for him/her to prepare a defence if any.

b) Upon expiry of the 30 days and taking into consideration the member’s defence, the CMC shall initiate an administrative inquiry and take a decision on its findings within 15 days.

c) A member shall not remain suspended for a period exceeding six (6) months.

d) The CMC shall review the status of members under suspension on a monthly basis.

e) A member so suspended and/or recommended for expulsion by the CMC 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 or recommendation for expulsion maybe contested before the Co-operative Tribunal if the aggrieved party is not satisfied with the decision of the General Meeting.


24

5.4 PAYMENTS RESULTING FROM WITHDRAWAL OR EXPULSION

a) Withdrawal of or expulsion from membership will not exonerate 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 Society as a borrower, guarantor or otherwise:

(i) The nominal or book value of deposits and savings provided however, that the CMC may require a maximum of 60 day’s written notice of intention to withdraw from the Society.

(ii) Any dividends or interest due to him/her on the date membership ceased.

(iii) Any deposits or other sums held by the Society on the member’s behalf.

SECTION 6 - MEMBERS MEETINGS

6.1 GENERAL MEETING

a) The supreme authority of the Society shall be vested in the General Meeting at which members shall have the right to attend, participate and vote on all matters.

b) The Society shall hold an Annual General or General Meeting within four months after the end of each financial year to undertake the business as laid down in these By-laws.

c) A General or Special Meeting of the Society shall be convened by giving at least fifteen (15) clear days written notice to the members.

d) Any business not completed at the General Meeting may be taken up at a subsequent special general meeting or at the next Annual General Meeting.

e) A Special General Meeting shall be convened:

(i) By the CMC for the purpose of approving annual estimates or discussing any urgent matter which is in the interest of the Society.

25


(ii) On receipt of a written notice for such meetings signed by at least a quarter (1/4) of the members, and stating the reasons and objectives for calling the meeting. If the CMC fails to convene such a requested meeting within fifteen (15) clear days of receiving the notice the members may themselves convene the meeting by giving a fifteen (15) clear days’ notice to the other members of the Society stating the reasons and objectives for calling the meeting, and the fact that the CMC has failed to convene the meeting.

(iii) By the Commissioner at which he may direct the matters to be discussed at the meeting in accordance to Co-operative Societies Act, 1997, Rule 23 (1).

f) The Chairperson or in his absence the Vice-Chairperson or such other person as may be prescribed shall preside over the General Meeting.

g) The Commissioner may preside over at any meeting convened under section 6.1 (e) (iii) above.

h) A Special General Meeting shall deal exclusively with the objects and issues as given in the notice and shall have power to make necessary amendments to either of these By-laws.

i) All General or Special Meetings shall be conducted according to the procedures and rules of order as set forth by the Management Committee.

6.2 NOTICE OF SPECIAL OR ANNUAL GENERAL MEETING

a) Except as noted under sub-section 6.1 above, at least fifteen (15) 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 requested for by the members, the requesters must state the objective of the meeting being called and be signed or thumb-marked by the requesting members. The request 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 Honorary 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


2�

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 Society’s By-laws in accordance with the SACCO Act, rules and regulations established by the Regulatory Authority.

f) Any Other Business (AOB) to be discussed at the Annual General Meeting or Special General Meeting must be handed to the Honorary Secretary at least seven days before the meeting.

6.3 MEETING QUORUM

(a) Except when convened by the Commissioner, the presence of at least twenty five percent (25%) of the total members of the Society or seventy five (75) members of the Society, whichever is lower, shall constitute a quorum for the conduct of the business at a General Meeting.

(b) When a quorum is not attained, the Chairperson shall adjourn the meeting and fix a date within one (1) month of the adjourned meeting which shall be adequately advertised and publicized. If at such a meeting a quorum is again not attained, the Chairperson shall declare the meeting open with those present, one-half hour after the advertised time of the meeting.

6.5 BINDING RULE

In the provisions in these By-laws, decisions made by the General Meeting shall be binding to all members both present and absent to the same extent as if it was voted for by each and every member.

6.6 CHAIRING OF THE MEETINGS

The Chairperson, or in his/her absence the Vice-Chairperson, shall preside at every General Meeting. In their absence, any committee member present shall preside; failing which any member elected by a majority of those present shall preside.

2�


6.7 IDENTIFICATION OF MEMBERS

Before attending and/or voting at a General Meeting, each member shall be required to produce a pass card or some evidence of current membership or identify himself/herself in a satisfactory manner.

6.8 POWERS AND DUTIES OF THE ANNUAL GENERAL MEETING

The Annual General Meeting of members shall have both the right and responsibility to:

a) Confirm minutes of the last General Meeting.

b) Consider any report of the Committee or the Commissioner if any.

c) Elect Committee members if their term of office is over, or due to other reasons as contained in these By-laws, and one retiring supervisory committee member.

d) Appoint the Society’s auditors for the year.

e) Consider the Society’s statements of account, the auditor’s report and the balance sheet of the Society for the past financial year.

f) Consider and approve estimates of income and expenditure for the next financial year.

g) Confirm or otherwise consider actions taken by the committee and give direction to the committee where necessary.

h) Consider and determine ways in which any available surplus is to be distributed or invested.

i) Consider and determine, where necessary, the maximum borrowing power of the Society, as stipulated in the Co-operative Act, Rules and Regulations.

j) Consider appeals against expulsion of members and refusals of membership by the Management Committee

k) Consider and fix honoraria, bonuses and other allowances, if any, for officers of the Society

l) Consider and 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.


28

6.9 ESTIMATES OF INCOME AND EXPENDITURE

Notwithstanding section 6.8(f) above, for each financial year, the committee shall cause to be prepared estimates of the Society’s income and expenditure including recurrent and capital estimates for approval by the General Meeting at least three (3) months before the end of the current financial year.

6.10 MINUTES OF THE MEETINGS

All business discussed at all General meetings shall be recorded in a minute book which, within one week of the meeting shall be signed by the Chairperson of the meeting, the Secretary and at least one other committee 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 the Chairperson to sign and date the final record.

SECTION 7 - ELECTIONS AND ELIGIBILITY OF MEMBERS OF THE MANAGEMENT COMMITTEE

7.1 ELECTIONS

a) The tenure of the CMC shall be three years with a third of the committee retiring every year but shall be eligible for re-election except the Chairperson and Vice-Chairperson who shall serve for three years before retiring and seeking re-election.

b) The following guidelines will apply in the Society’s elections:

(i) All candidates for election to the CMC or Supervisory committee must be members in good standing and should fulfil the conditions set out in section 7.2 of these By-laws.

(ii) All candidates shall submit their names in writing or through electronic mail to the registered office of the Society at least seven (7) days before the General Meeting.

(iii) All candidates shall be presented to the membership during the General Meeting prior to the elections.

2�


(iv) All elections shall be determined by simple majority vote of the 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.

(v) In all Society elections:

(a) Irrespective of the number of shares held by him/her, no member shall have more than one vote.

(b) Within 10 days after their election the names and address of all persons elected to office shall be compiled and kept by the manager of the Society.

7.2 ELIGIBILITY

a) No person shall be eligible to be a Management committee member:

(i) Unless he/she has been a member of the Society for at least two (2) years prior to the Annual General Meeting at which he/she offers himself/herself for election.

(ii) Unless he/she has minimum deposits of One Hundred Thousand Kenya shillings (KES 100,000/=) in the Society.

(iii) If he/she has been adversely named by the Commissioner or his/her representative in an inquiry report endorsed by a General Meeting for mismanagement or corrupt practices whilst still a member of the Board of Directors or CMC of a Co-operative Society or union, or named in any other national inquiries where he/ she has been shown to be engaging in dishonest activities.

(iv) If he/she has been declared bankrupt.

(v) If he/she has been convicted of any offence involving dishonesty or has been imprisoned for three months or more.

(vi) If he/she is delinquent on his/her loans with the Society for more than 60 days or has been 60 days or more delinquent on his/her loan within 1 year prior to elections.

(vii) If he/she has caused the Society a loss.


30

(viii) If he/she cannot read, write and understand English.

(ix) If he/she is younger than eighteen (18) years of age.

(x) If he/she is not of sound mind.

(xi) If he/she is a committee member in two other Co-operative Societies.

(xii) If he/she is an official of a political party or holds a political office at any other level.

(xiii) If he/she has not declared his/her wealth as per the Public Officer’s Ethics Act.

(xiv) If he/she has not conformed to the Society’s Conflict of Interest Policy and disclosure.

(xv) If he/she has any un-cleared debt owing to the Society at the end of the Society’s financial year preceding his/her election other than in respect of a loan.

(xvi) If he/she has been convicted of any offence under the Act or rules made there under.

(xvii) If he/she is not a member in good standing.

b) A Management Committee member shall lose his/her position immediately:

(i) If he/she fails to attend three consecutive meetings without being excused there from or otherwise fails to perform his/her duties.

(ii) If he/she becomes delinquent at any time for a period of more than sixty (60) days.

(iii) If he/she fails to declare his/her wealth as per the public officers’ ethics act in a period of thirty (30) days following his/her election.

(iv) If he/she fails to conform to the Society’s indemnity and conflict of interest and disclosures policy in a period of fourteen (14) days following his/her election.

(v) If he/she is a money lender on his own account.

31


(vi) If he/she ceases to be a member of the Society.

(vii) If he/she acts in a manner that is detrimental to the well-being of the Society.

(viii) If he/sheis declared bankrupt.

(ix) If he/she becomes an official of or holds a political office at any level.

(x) If he/she is convicted of any offence involving dishonesty or is imprisoned for a period of three months or more.

(xi) If he/she acts in contravention of the provisions of the loan policy, these By-laws, Rules and the Act.

(xii) If he/she is removed by a two-thirds (2/3) majority of members of the Society present and voting at a General Meeting (Co-operative Societies Rules 2004 rule 23(4)).

(xiii) If he/she is suspended from duty by the Commissioner if/when charged in a court of law with an offence involving fraud or dishonesty pending the determination of the matter (Co-operative Societies Act 2004 section 28(7)).

c) If a General Meeting removes a member of a committee as per section 7.2(b) (xii) of these By-laws, it shall forthwith elect a new member to hold office for the remainder of the term of the member so removed, and where the entire committee is removed from office, the General Meeting may decide to elect or fix a day for election of an interim committee of not more than five (5) members to hold office for a period not exceeding ninety (90) days.

d) If during the term of office of a Committee, a vacancy occurs in the Committee, the Committee shall, if the number drops below five (5), co-opt a member of the Society to serve on the Committee until the next General Meeting of the Society (Cooperative Act 1997 Section 23(3)). Such a co-opted member must meet the eligibility criteria set out under section 7 subsection 7.2 of these By-laws


32

SECTION 8 - CENTRAL MANAGEMENT COMMITTEE

8.1 COMPOSITION

a) The CMC shall be elected by and from the Society’s membership at a General Meeting and shall consist of a minimum of five and not more than nine. All CMC members shall be at least 18 years of age and be members in good standing.

b) Not more than three (3) members of the CMC shall belong to the same organisation and not more than one individual contributor shall be elected into the CMC.

c) The CMC shall include the Chairperson, Vice Chairperson, Treasurer and the Honorary Secretary, all of who shall be elected from amongst and by the members of the CMC at a meeting of the CMC within seven (7) days after the General Meeting.

8.2 FUNCTIONS AND RESPONSIBILITIES

The CMC 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 Cooperative Society’s Act, SACCO Act 2008, the Rules and these By-laws.

b) Review and decide upon applications for membership during the monthly CMC meetings.

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 (SACCO Act 2008).

d) Decide the amount and kind of surety bond, or other security, which shall be required of the CMC, Manager, and any other officer or employee having the custody of, or handling funds or property of the Society, provided that it is in compliance with the SACCO Act or any other provisions established by the Regulatory Authority.

e) Develop and propose the Society’s procedures and policies such as lending, savings, personnel, financial management, financial statements, the annual budget, and the long- term business plan.

33


f) Employ and fix the compensation of a Manager and ensure availability of appropriate terms and conditions of service, job descriptions and specifications of the goals and objectives of the Society.

g) Perform an annual written appraisal of the manager based on goals established in the budget and business plan.

h) Review monthly delinquency reports, monitor the collection of loans to members and propose the write offs of uncollectible accounts.

i) 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.

j) Recommend to the Annual General Meeting the dividend rate to be paid on shares, bonuses to be paid to staff and honoraria to be paid to officers.

k) Fill vacancies occurring in the CMC between Annual General Meetings as set forth in section 7 subsection 7.2 (c) of these By-laws.

l) Control the investments of the Society, except to the extent that the CMC may have delegated this responsibility to an Asset Manager, Liability Management committee or to the manager.

m) Determine and impose fines as provided in these By-laws.

n) Affiliate and maintain liaison with Apex bodies and any other organization or institution approved by the General meeting.

o) Perform and authorize any actions or duties as are necessary to preserve the sound management of the Society consistent with the Act, Rules and these By-laws.

p) The SACCO Society shall, not later than three (3) months after the end of the each financial year, submit to the Authority, in the prescribed format (SACCO Act 2008):

(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.

q) Make disclosures in the financial statements of the SACCO Society which shall include disclosures on the following (SACCO Act 2008):


34

(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.

r) Appoint an external auditor who shall qualify under the SACCO Act 2008. The auditor’s duties and responsibilities are further defined in section 17.9 of these By-laws.

s) Authorise borrowing and lending operations of the Society in accordance with the Act, Rules and the loan policy.

t) File annual returns to the Commissioner in Form IVA appended to the rules.

u) File indemnity Form V on amounts determined by the General Meeting and file the same within fourteen (14) days of one’s election to the committee.

v) Institute and defend suits and other legal proceedings for or against the Society.

w) To coordinate all of the financial information or reports that are required by the external auditor and the regulatory examiner in the performance of the annual audit and the examination of Society’s books and records.

x) To ensure that any of the reports required from the Society are made available in a timely basis.

y) To review delinquent loans and ensure that no one from the CMC or staff are on the list and review Society members to ensure proper collections efforts are being performed.

z) Perform other duties consistent with the Act, Rules and these By-laws unless specifically reserved for the General Meeting.

8.3 DELEGATION OF DUTIES

a) The CMC may delegate, in writing, to an officer or employee of the Society such of its duties as it deems necessary (Co-operative Societies Act 2004, section 28(5)).

35


b) Nothing in (a) above shall absolve the CMC from its responsibility of running the affairs of the Society in proper and business-like manner (Co-operative Societies Act 2004, section 28(5)).

8.4 RECORDS OF CMC MEETINGS

a) All business discussed or decided at CMC meetings shall be recorded in a minute book which, within one week of the meeting, shall be signed by the Chairperson of the meeting, and at least one other CMC 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 Chairperson to sign and date the final record.

8.5 CMC SUB-COMMITTEES

The CMC may appoint and delegate to sub-committees some of its powers and duties. These committees maybe such as an Executive Committee, Credit Committee, Education Committee and/or any other types of sub-committees as the CMC shall determine.

8.5.1 EXECUTIVE COMMITTEE

a) The Chairperson, Vice-Chairperson, Treasurer and Honorary Secretary shall be termed “Executive Officers”.

b) The Executive Officers shall be elected at a meeting of the CMC in accordance with Act and the Rules and section 8 subsection 8.1(b) of these By-laws.

8.5.1.1 CHAIRPERSON AND VICE CHAIRPERSON

a) The Chairperson shall preside over all meetings of the members, and over all meetings of the CMC. He/she shall perform other such duties as he/she may be directed by the CMC, not inconsistent with the provisions of the Act, Rules and these By-laws.

b) The Vice-Chairperson shall perform the duties of the Chairperson during his/her absence, and shall perform other such duties as he/she may be directed by the CMC, not inconsistent with the provisions of the Act, Rules and these By-laws.


36

8.5.1.2 HONORARY SECRETARY

The duties and responsibilities of the Honorary Secretary shall be:

a) To take records of all Management and General Meetings.

b) To ensure that the Society’s correspondence is promptly and correctly attended to.

c) To ensure the communication of notices of meetings are given within the required time limit.

d) To perform other such duties as he/she may be directed by the CMC, not inconsistent with the provisions of the Act, Rules and these By-laws.

8.5.1.3 TREASURER

The Treasurer should have a financial management background. The powers and duties of the Treasurer shall be:

a) To manage or cause to be managed the financial affairs of the Society in a competent and efficient manner.

b) To ensure and maintain full and complete records of all assets, liabilities, income and expenses of the Society.

c) To ensure the safe-keeping of the Society’s money, securities and books of account.

d) To ensure that all payments and expenditures are duly authorized.

e) Provide information and documents to Supervisory Committee and the Society’s auditors as requested.

f) To ensure compliance with all directives of the CMC.

g) To perform other such duties as he/she may be directed by the CMC, not inconsistent with the provisions of the Act, Rules and these By-laws.

8.5.2 CREDIT COMMITTEE

a) The Credit Committee shall consist of three members of the CMC, and none of the committee members shall be in the Executive Committee.

37


b) The Credit Committee shall be elected from among the members of the CMC at a meeting of the CMC within seven (7) days after the Annual General Meeting.

8.5.2.1 DUTIES AND RESPONSIBILITIES OF THE CREDIT COMMITTEE

The duties and responsibilities of the Credit Committee shall be:

a) To hold such meetings at least once a month.

b) To review the loans applications submitted by members and appraised by the Society manager.

c) To review all loans to ensure that the lending policies were followed.

d) The Credit Committee shall approve/reject/reduce member’s loans as per the laid down procedures in these By-laws and the Society’s loan policy

e) To 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 (capital, collateral, conditions, character and capacity), 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.

f) To maintain the lending records on loans approved and declined and by types and shall report them to the CMC on a monthly basis.

g) To forward all loan appeals to the CMC for deliberation during the monthly CMC meeting.

h) To report to the CMC on delinquent loans during the monthly CMC meeting for appropriate action to be taken.

i) To perform other such duties as may be directed by the CMC, not inconsistent with the provisions of the Act, Rules and these By-laws.

8.5.3 EDUCATION COMMITTEE

a) The Education Committee shall consist of three members of the CMC.

b) The Education Committee shall be elected from among the members of the CMC at a meeting of the CMC within seven (7) days after the Annual General Meeting.


38

c) The Vice-Chairperson of the Society shall be the Chairperson of the Education Committee.

8.5.3.1 DUTIES AND RESPONSIBILITIES OF THE EDUCATION COMMITTEE

The duties and responsibilities of the Education Committee shall be:

a) To organise, facilitate and promote members’, staff and committee members’ education.

b) To ensure production and acquisition of literature including brochures, periodicals and magazines relevant to the progress of the Society and its members.

c) To promote distribution and interpretation of these By-laws to members.

d) To arrange for educational and/or recruitment tours in liaison with other members of the Management Committee.

e) To advise the Management Committee and update members on all matters of education and information.

f) To ensure allocation of funds for educational activities and information and publicize the same for the benefit of the Society’s members.

g) To identify, collect, disseminate and publish Co-operative news and alternative products for the benefit of the Society.

h) To research on policies and interpretations of these policies.

i) To perform other such duties as may be directed by the CMC, not inconsistent with the provisions of the Act, Rules and these By-laws.

8.6 VACATION OF OFFICE

A member of the CMC or any other sub-committee shall cease to hold office if he/she ceases to be a member of the Society by resignation or by removal from the CMC as per the provisions in these By-laws.

8.7 AUTHORITY TO SIGN AND ENDORSE DOCUMENTS

a) Unless decided otherwise by the CMC, all documents, contracts and cheques shall be signed on behalf of the Society by any three of the following Society officers:

39


(i) Chairperson.

(ii) Vice Chairperson.

(iii) Honorary Secretary.

(iv) Treasurer.

b) Unless decided otherwise by the CMC, the documents of the Society shall be deemed official provided they carry the official stamp and any three (3) of the designated signatures referred to above in section 8.7(a).

8.8 MANAGEMENT COMMITTEE LEGAL STANDARD OF CARE

In the conduct of the affairs of the Society, the members of the Management Committee shall exercise the prudence and diligence of ordinary men of business and shall be held jointly and severally liable for any losses sustained through any of their acts which are contrary to the Act, Rules and the By-laws of the Society or the directions of any General Meeting of the Society (Co-operative Act 2004 section 28(6)).

SECTION 9 - SUPERVISORY COMMITTEE

9.1 ROLE OF THE SUPERVISORY COMMITTEE

a) The Supervisory Committee is the watch dog of the Society. The Supervisory Committee is responsible in ensuring that the Society is compliant with all Rules, Regulations and internal controls of all applicable laws and the Society’s By-laws.

b) The Chairperson 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. The Supervisory Committee shall have normal meetings monthly and quarterly and will report to the CMCon the internal control systems and the financial matters of the Society (SACCO Act 2008).

c) The Supervisory Committee shall submit a report of their audit findings with recommendations every quarter of the financial year to the CMC for deliberation and action.


40

9.2. ELECTION OF THE SUPERVISORY COMMITTEE MEMBERS

a) The Supervisory Committee shall be elected by the general membership at the Annual General Meeting. The Supervisory Committee shall consist of three members, all of whom shall not be employed by the Society or serve on the CMC.

b) The tenure of the Supervisory Committee Members shall be three years with a third of the committee members retiring each year on a rotational basis but shall be eligible for re-election.

c) The Supervisory Committee members shall choose among themselves, a Chairperson, 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 CMC.

d) Not more than one (1) members of the Supervisory Committee shall belong to the same organisation.

9.3 ELIGIBILITY FOR SUPERVISORY COMMITTEE MEMBERSHIP

a) The election and eligibility criteria for the Supervisory Committee shall be the same as that of the Management Committee as set out in section 7 of these By-laws.

b) In addition to the qualifications set forth in section 9.3 (a) above, qualifications for an individual to be elected as a Supervisory Committee member shall include, but not limited to, any two (2) of the following:

(i) Basic accounting knowledge.

(ii) Investigative audit knowledge.

(iii) Intelligence gathering knowledge.

(iv) Basic banking and finance knowledge.

41


9.4 POWERS, DUTIES AND RESPONSIBILITIES OF THE SUPERVISORY

COMMITTEE

The Supervisory Committee is the watch dog of the Society. The Supervisory Committee in conjunction and coordination with the internal auditor must ensure that the Society’s internal controls and financial matters of the Society are maintained in a safe and sound manner. The reports submitted to the Management Committee will contain any shortcomings, violations of policy, procedures or any applicable laws and recommendations will be made.

The functions of the Supervisory Committee shall be as per the Co-operative Societies rules (Rule 28) and shall include:

a) The Supervisory Committee is responsible in ensuring that the Society is compliant with all the Cooperative Society Act, rules, regulations and internal controls of the Society.

b) To verify all the transactions of the Society.

c) To investigate members’ complaints and submit a report of its findings with recommendations to the CMC for appropriate action.

d) To ensure that the Society complies with and that proper interpretations are made on loan policies and procedures, By-laws, the Co-operative Societies Act and Rules, Annual General Meetings’ resolutions and other policies of the CMC.

e) To review the internal controls of the Society in compliance with the SACCO Act.

f) To audit and investigate all the affairs of the Society.

g) To randomly perform or cause to be performed a surprise physical count of cash and/or review and verification of securities and investments held by the Society to determine that the amounts/securities/investments held correspond with the records of the Society.

h) To ensure investments being made by the Society comply with the Society’s investment policy.

i) Ensure that all of the Society’s investments practices comply with the following:

(i) The adequacy of investment policies, procedures, and internal controls.


42

(ii) The legality of investments, as well as compliance with related regulations, accounting procedures, and other guidelines.

(iii) The suitability of the investment and managements’ understanding of the investment.

(iv) The fair value of the investment portfolio and the effect of a potential loss on the Society’s earnings and financial position.

(v) That management quickly corrects investment related problems when any are noticed.

j) To check the effectiveness and adherence to the Society’s lending policy and procedures and ensure compliance.

k) To ensure loan applications are properly analysed and approved and all internal controls are being complied with.

l) To table periodic reports to the CMC at joint CMC and Supervisory Committee meetings detailing the activities undertaken by the Supervisory Committee, together with recommendations since the last report.

m) 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 CMC at least quarterly.

n) To receive and investigate any complaint or appeal by members concerning the operations of the Society.

o) To verify individual members’ accounts at least annually by checking the balances in the general ledger to ensure that it balances to the detail ledger on loans and savings.

p) To submit quarterly reports of its findings to the Commissioner.

q) To perform any other duties necessary for the benefit of the Society.

9.5 AUTHORITY OF THE SUPERVISORY COMMITTEE

Without performing any duties or exercising any of the powers of the Management Committee, the Supervisory Committee shall be responsible for the Society’s compliance and internal control. It shall also be responsible for the accuracy and control of the Society’s finances, conducive administrative procedures and safeguarding of the Society’s corporate image.

43


9.6 LIABILITY OF THE SUPERVISORY COMMITTEE

In spite of its total independence from the Management Committee, the Supervisory Committee shall be jointly liable for losses sustained through their lack of supervision or negligence in noticing illegal and fraudulent acts.

SECTION 10 - DUTIES AND RESPONSIBILITIES OF THE SOCIETY MANAGER

a) The manager reports directly to the CMC and is ultimately responsible for implementing all management policies, procedures, budgets and business plans. His/her roles and duties shall be assigned by the CMC and in particular:

(i) To manage the daily affairs of the Society in a competent manner.

(ii) To prepare and propose to the management policy and procedure changes with regards to all areas of the Society’s operations.

(iii) To participate in CMC meetings, but with no voting rights.

(iv) To represent the Society in business transactions and any other transaction authorized by the CMC.

(v) To report to the CMC monthly on the financial condition of the Society including the balance sheet, income statement, delinquency list and the PEARLS report.

(vi) To provide information required by the Regulatory Authority in a timely fashion.

(vii) To propose to the CMC the opening of new positions within the organizational chart of the Society.

(viii) To implement under the direction of the CMC the recommendations set forth in the audit reports and examination reports issued by the Regulatory Authority.

(ix) 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).

(x) Ensure that adequate insurance is in place if available for all employees, officials, and the business premise.


44

(xi) Undertake and supervise the administration and processing of loan applications by members in accordance to the credit administration policy and procedures manual that is approved by the CMC.

(xii) Assist the CMC in determining acceptable types of collateral that can be used to secure loans.

(xiii) Ensure there is adequate liquidity to meet loan demand, savings withdrawal, and operating expenses.

(xiv) Any other duties as may be assigned by the Society’s Management Committee.

b) The manager will ensure that the following requirements from the SACCO Act 2008 are in place (SACCO Act 2008):

(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 Manager will carry out the stipulated duties with the assistance of other administrative staff who may be hired by the Society as and when the need arises.

SECTION 11 - APPLICATION AND INVESTMENT OF FUNDS, CASH RECEIPTS, RESERVE FUND AND LIQUIDITY

11.1 APPLICATION AND INVESTMENT OF FUNDS

a) The funds of the Society shall be applied for the promotion of the stated objectives and purposes of the Society as set forth in these By-laws, and duly approved by the General Meeting.

b) The Society shall not invest in non-core business except with the approval of the Commissioner and the members in a special resolution at a General Meeting.

45


11.2 INVESTMENT OF EXCESS FUNDS

a) The Society may invest excess funds in interest earning investments; the Society will have a written investment policy; investments will be made in accordance to the SLY Principle (Safety, Liquidity and Yield). The funds of the Society may only be invested in: (SACCO Act 2008).

(i) Securities, obligations or other debt instruments issued or guaranteed by the government or any agency of the government.

(ii) Deposits, obligations or other accounts of deposit-taking institutions under the Banking Act.

(iii) Shares, stocks, deposits in, loans to or other obligations of any SACCO Society or Co-operative Society.

(iv) 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:

(a) Characteristics of the investments to be made, such as the issuer of the investment, and maturity period and expected rate of return.

(b) How the Society will manage the interest rate and risk, including the risk permitted in relationship to the Society’s net capital and earnings.

(c) How the Society will manage liquidity risk.

(d) How theSocietywill 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.

(e) How the Society will manage concentration risk, which can result from a single or related issuer, holding of bonds having the same trustees, holdings of securitized loans having the same originator, packager or guarantor.

(f) Which Society employee or official has been given the investment authority and the extent of that authority.

(g) If the Society uses third-party entities to purchase or sell investments, specify the broker and dealers to be used.


46

(h) If the Society uses third-party entities to safe keep investments, specify the entities to be used.

b) An investment made under this section shall not in the aggregate exceed such proportion of the total core capital and deposits of the Society as the Authority may prescribe. (SACCO Act 2008).

c) The Society 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).

11.3 RECEIPTING FOR MONEY

a) Money paid in or out on account of shares, deposits, loans, interest, fees, benevolent or fines shall be evidenced by an entry in the members’ personal accounts or issuance of an official receipt of the Society.

b) Should such a receipt be lost, the member shall immediately inform the Treasurer who may issue a duplicate receipt. The treasurer shall require the member to sign an indemnity to protect the Society against loss due to the issuance of such duplicate and charge a reasonable fee to cover the cost of the duplicate.

11.4 RESERVE FUND AND LIQUIDITY

a) In pursuance to the Cooperative Act 2004 Section 47 Rule 37(1), the Society shall pay into the reserve fund one-fifth (20%) of its net surplus resulting from its operation during the financial year.

b) The reserve fund of the Society shall be invested or deposited in the manner provided for it in the Cooperative Act 2004 Rule 37(2).

c) No withdrawals shall be made from the Reserve Fund of the Society without consent in writing of the Commissioner and any such withdrawals shall be made good from the net available funds accruing to the Society.

d) The reserve fund shall be indivisible and no member shall be entitled to claim a specified share of it.

e) The reserve fund shall be kept in separate account to be known as Reserve Fund account.

f) The Society shall cause an annual audit account of the Reserve Fund account.

47


g) On dissolution of the Society, the Reserve Fund shall be applied for in the manner provided for in the Act and Rule 38.

h) The Society shall maintain liquid funds equal to 30% of the total assets. Liquid funds are cash deposits with a maturity of not more than 30 days. The Management Committee may raise liquidity from time to time to meet seasonal demand as they might arise.

i) The Management Committee shall ensure on a monthly basis that the allowance for loan loss account is equal to the required percentage of net new loans in addition to enough funds to cover all potential delinquent loans loss as identified upon the review of the delinquent loan list. Delinquent loans are those loans in which payment of principal or interest is more than 30 days late.

SECTION 12 - PAYMENT OF SOCIETY EXPENSES AND

DISPOSAL OF SURPLUS

12.1 SOCIETY EXPENSES

a) These shall include all the expenditures incurred in conducting the normal business of the Society. The detailed expenditure items shall be presented to the members of the Society in a General Meeting for approval before being expended.

b) The Society shall cause proper records of all its expenses to be kept by maintaining proper books of accounts in accordance with the Cooperative Act 2004 Section 25.

12.2 DISPOSAL OF SURPLUS

Subject to the Act and Rules and resolutions approved by the General Meeting, the net surplus resulting from the operations of the Society during any financial year shall be disposed of as follows;

a) Not less than 20% (one-fifth) shall be credited to the statutory reserve fund.

b) The balance may be disposed of as the General Meeting may decide e.g.

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

(ii) Paying it into the institutional capital to which no member has a claim.


48

(iii) Be carried forward to an Education Fund or other funds of the Society including the appropriation of accounts.

(iv) Not more than 10% of the remaining balance may be paid to a charitable organization.

(v) Pay gratuity or honoraria, bonuses allowances and other commissions to officers or employees of the Society as determined by the General Meeting.

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

SECTION 13 - LOANS

13.1 LOANS TO MEMBERS

a) All loans shall be approved by the Credit Committee in accordance with the Society’s loan policy and shall be restricted to members only.

b) The maximum loan amounts, loan repayment period(s) and rate of interest on loans shall be fixed by the General Meeting.

c) All loan applications shall be made on loan forms provided by the Society for this purpose.

d) All applications for loans and the reports of the Credit Committee shall be filed as a permanent record of the Society.

e) Loan application shall be considered by the Credit Committee in the order in which application is made unless the loan is deemed by the committee to be an emergency loan.

f) The Credit Committee may summon or cause to be summoned an applicant to appear personally to be interviewed in respect of his/her loan application.

g) The loan application form shall clearly state the amount of the loan, the rate of interest, the terms and period of repayment and security if any.

h) Loans may be granted to the CMC members and employees of the Society only if:

(i) The loan complies with these By-laws, the Society’s loan policy and is not on terms more favourable than those extended to other members.

(ii) The Credit Committee approves the loan, and thereafter by a full Management Committee Meeting.

49


i) A loan may not be granted if:

(i) The conditions of membership as provided in these By-laws are not fulfilled.

(ii) The member is overdue by three (3) months on a repayment of a previous loan and its interest.

(iii) The applicant has not completed six (6) months of membership.

(iv) The financial position of the Society does not allow the granting of loans.

(v) The amount of delinquent loans exceeds twenty five per cent (25%) of the total amount of loans outstanding in the Society.

(vi) The loan is in excess of five per cent (5%) of the Society’s total assets.

(vii) The loan repayment period(s) exceeds that fixed by the General Meeting.

(viii) The applicant has not contributed regularly for a period of three (3) months at the minimum rate fixed by the General Meeting.

j) Under (v) and (vi) above, the Management Committee shall convene a Special General Meeting and submit an explanatory report to it.

k) The Management Committee reserves the right to ask for a premature reimbursement, of all loans, if the financial standing of the borrower becomes reasonably doubtful.

l) A decision in respect to (k) above shall be taken by simple majority vote of the Management Committee.

m) The Management Committee may draw further regulations in respect to granting of loans provided such regulation shall not come into force until approved by the General Meeting.

13.2 SECURITY FOR LOANS

a) Guarantors and members deposits shall form the core of loan security.

b) The Credit Committee shall ask for such other security for loans as it may consider necessary.

c) In the event of delinquency of loans for ninety (90) days, the Committee may:


50

(i) Freeze the loan account.

(ii) Offset the value of delinquency exceeding ninety (90) days from the member’s deposits.

(iii) Recover the balance of any delinquency under (ii) above from the guarantors or any other security provided.

d) The Committee may refuse to accept as a guarantor a person who himself/herself is in receipt of a loan, and may decline to grant a loan subsequently to a member while he remains liable as guarantor.

e) A borrower or guarantor may apply to the Credit Committee for a change in guarantorship and the Credit Committee shall consider such an application provided that there is a valid reason for such change.

13.3 REPAYMENT OF LOANS

a) A borrower on any day on which the Society is open for business, may repay his/her loan in whole or in part prior to maturity.

b) Only in very exceptional cases shall an extension of a loan repayment period be considered. Any extension so granted shall be treated as though it were a new loan and an extension agreement shall be executed and signed.

c) At every regular meeting of the Management Committee, the item “LOANS” shall appear on the agenda. At the meeting, the Treasurer shall present an up-to-date listing of delinquent loans showing;

(i) Name.

(ii) Account number.

(iii) Date of loan.

(iv) Date of last payment.

(v) Unpaid balance on loan and interest accrued.

(vi) Number of months delinquent.

(vii) Borrower’s share balance.

(viii) Guarantors and security if any.

The Management Committee shall thereupon take appropriate action to collect the overdue accounts.

51


d) Loan repayments should be made either through check-off system, cash, bank standing order, banker’s cheque/draft or electronic money transfer.

f) Any loan that remains unpaid for a period of three (3) months from the date of issue, or remains un-serviced for three (3) consecutive months during its repayment period shall attract accrued interest at the rate of one point five per cent (1.5%) provided that:

(i) Such default is not caused by the employer.

(ii) Such default is not as a result of an administrative omission on the part of the Society.

g) Any default caused by the employer shall attract compound interest at a rate not less than five per cent (5%) per month (Co-operative Societies Act 2004 section 35(1)).

SECTION 14 - CONFLICT OF INTEREST AND CONFIDENTIALITY POLICY

14.1 CONFLICT OF INTEREST

a) Every official and employee is required to sign a conflict of interest policy when they are either elected or hired, and in addition make an annual disclosure on any changes on the possibility of conflicts that may arise.

b) Every official 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 official 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 officials 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 Management Committee.


52

14.2 CONFIDENTIALITY POLICY

a) The members of the Management Committee and the employees of the Society shall hold in the strictest confidence all transactions of the Society with its members, and all information in respect to their personal affairs, except to the extent deemed necessary by the Management Committee.

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.

SECTION 15 - BENEFICIARIES

15.1 BENEFICIARY NOMINEES

a) Every member may appoint his or her beneficiary nominee or nominees in writing in order of priority to whom upon his/her death, his/her shares, deposits or any other interest shall be transferred and/or refunded.

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/deposits to be transferred and/or refunded 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 member’s file.

15.2 PAYMENT TO A BENEFICIARY

The value of a deceased member’s shares/deposits or interest, less any uninsured liabilities or guarantees will be paid to a beneficiary by the Society within sixty (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.

53


SECTION 16 - FINANCIAL YEAR

The financial year of the Society shall be the same as the calendar year that is from 1st January to 31st December.

SECTION 17 - SOCIETY PAYMENTS AND BOOKS OF ACCOUNT

17.1 PAYMENTS

(a) The Society may, upon approval of the General Meeting pay any of its officers or members such honorarium, salary, commission, bonus or other payment subject to the limits and provision of the approved budget for the respective financial year, provided that no expenditure shall be authorized by the Management Committee for payment unless it is provided for in the estimates formally approved by the General Meeting.

(b) Any officer or member of the Society who receives any remuneration, salary, commission or other payment in contravention of these By-laws and the Act shall be guilty of an offence and liable to a fine not exceeding One Hundred Thousand Kenya Shillings (KES 100,000/=) or to imprisonment for a term not exceeding two years, or to both such fine and imprisonment; and shall, if the offence is a contravention of this By-law, be ordered to repay the amount of the remuneration, salary, commission, or other payment received from the Society in addition to or in lieu of any other punishment, and in default such payment shall be dealt with in the same manner as default in paying a fine imposed by a court (Co-operative Act 2004 section 89).

17.2 BOOKS OF ACCOUNTS

The Society shall keep up-to-date and in a proper business-like manner such books of accounts and records as the Act and Rule requires, or which the Commissioner may recommend from time to time, in pursuance to section 25 of the Co-operative Act.

(a) For each financial year, the committee shall cause to be prepared estimates of the Society’s income and expenses including recurrent and capital estimates for approval by the General Meeting at least three (3) months before the closure of the preceding financial year.

(b) The Society shall keep proper accounts which shall be prepared in accordance with international Accounting and Reporting Standards, reflect true and fair state of the Society’s affairs and explain the Society’s transactions including sums of money received and paid by the Society and reasons thereto, and all assets and liabilities of the Society.


54

(c) The books of account shall be kept at such place as may be determined by the General Meeting and shall at all times be available for inspection by members of the Supervisory Committee, auditor and the Commissioner.

(d) The Society shall cause its accounts to be audited at least once every financial year, and within four (4) months after the end of accounting period.

(e) Where the Society fails to cause its accounts to be audited within the four months after the close of the financial year, members of the Management Committee shall automatically lose their positions at the next General Meeting and shall not be eligible for re-election for a period of three (3) years unless the Commissioner is satisfied that the failure was due to circumstances beyond their control.

(f) The accounts referred to in this section shall include the following records: a balance sheet, an income and expenditure account and a cash flow statement.

(g) Accounts shall be approved by the Management Committee and be authorized by at least three committee members including the Chairperson and the Treasurer of the Society.

(h) The Society shall cause the audited accounts to be publicized or displayed in a conspicuous place at the registered office and branches at least two weeks before presentation of the same to the General Meeting.

(i) The books, accounts and all documents of the Society shall be permanently available to the Management Committee, Supervisory Committee and the Commissioner. However, confidentiality shall be maintained.

SECTION 18 - SOCIETY BOOKS AND RECORDS

The Society shall keep the following books and records:

(a) A register of members showing the following in respect to each member:

(i) The name, age, date of application for membership, address and occupation.

(ii) Membership cessation date.

(b) Minute book giving details of proceedings of the Management and Supervisory Committees meetings.

(c) A minute book giving details of proceedings at the General Meeting.

55


(d) A cash book giving details of all moneys received and expended or paid out by the Society.

(e) A ledger containing such accounts as are necessary to properly record the transactions of the business of the Society.

(f) A personal statement for each member showing his/her transactions with the Society.

(g) An asset register.

(h) A register of charges showing in respect of every charge created by the Society, the amount of the charge and the person entitled thereto.

(i) A register of loans to members showing in respect each loan the name of the borrowers, the amount borrowed, guarantors names, the type of the loan, the purpose of the loan, the due date of repayment, and the date of full repayment.

(j) A ledger showing deposits and withdrawals made by members.

(k) A guarantor’s control register showing loan, interest rates and collaterals.

(l) A copy of the Act 1997 and the amendments (2004) thereof.

(m) A copy of Co-operative Rules, 2004.

(n) A copy of these By-laws and other relevant internal regulations, policies and procedures.

(o) A certificate of the registration of the Society.

(p) Copies of approved final accounts.

(q) Copies of the loan policy.

(r) Copies of monthly financial statements.

(s) Copies of insurance policy or any other risk management documents.

(t) Such other books and records as the General Meeting or the Management Committee may decide or the Commissioner may prescribe.


56

SECTION 19 - APPOINTMENT OF AUDITORS(a) Pursuant to section 25 of the Act, the auditor shall be appointed at the

General Meeting from a list of auditors approved by the Commissioner and presented by the Management Committee.

(b) Where at a General Meeting no auditor is appointed, the Commissioner may appoint a person to fill the vacancy and the remuneration of such a person so appointed shall be borne by the Society

(c) No auditors shall present the audited accounts of the Society to the General meeting unless the accounts have been submitted and approved by the Commissioner in such form as prescribed

(d) The auditors shall submit the audited account to the General Meeting within four months after the closure of the financial year and shall include in his opinion as to whether or not the Society’s business has been conducted:

(i) In accordance with the provisions of the Act and, whether the books of account kept by the Society are in agreement therewith and give a true and fair view of the state of the affairs of the Society and

(ii) In accordance with the Society’s objectives, By-laws and all other resolutions made at a General Meeting of the Society.

(e) The auditor shall have the right to:

(i) Attend the General Meeting(s) of the Society and be heard on any matter which concerns him/her as an auditor.

(ii) Receive all notices and other communications relating to any General Meeting(s) of the Society.

(iii) Access at all times any accounting records, books or documents of the Society as may be necessary for the purpose of carrying out his/her duties as an auditor.

SECTION 20 - INDEMNITY

a) All Management and Supervisory Committee members shall, within fourteen (14) days of their election to office, be required to sign an indemnity form indemnifying the Society against any losses that may occur.

b) The amount of the indemnity will be determined from time to time by the General Meeting of the Society.

57


SECTION 21 - SOCIETY BORROWING POWER

a) The Society may receive loans or deposits from non-members subject to the maximum limit set by the General Meeting which shall be filed with the Commissioner in Form VIII in the Rules.

b) For the necessary security of any loans received by the Society under paragraph (a) above, the Society may grant charge over any of its assets, subject to a special resolution by the General Meeting.

c) The particulars of every charge over any asset of the Society shall be registered with the Commissioner within thirty (30) days in Form IX to which every officer shall be liable for a fine not exceeding Two Thousand Kenya Shillings (KES 2,000/=) for every day in default.

d) The rate of interest on deposit, or loans, shall not exceed the current market rates.

SECTION 22 - PENALTIES FOR VIOLATION OF THE LAWS

22.1 PENALTIES FOR VIOLATION OF THE SACCO ACT AND BY-LAWS

a) Any member who wilfully acts in violation of these By-laws or regulations made hereunder or acts in breach of any instructions issued by the General Meeting shall be liable to a fine not exceeding Twenty Thousand Kenya Shillings (KES 20,000/=) notwithstanding any other action that may be taken against him/her in accordance with the Act, Rules, these By-laws or any other law.

b) The Management Committee of the Society shall have power to hear and determine matters relating to any alleged violation of theseBy-laws by a member. Any member aggrieved by the decision of the committee may appeal to the General Meeting whose decision shall be final provided this provision should not prejudice a member’s right to refer the matter to the Tribunal, if the issue translates into a dispute.

c) Notwithstanding clauses (a) and (b) above, no such fine shall be imposed upon any member until a written notice of intention to impose the fine and the reason therefore has been served on him/her and he/she has been accorded an opportunity to show cause as to why the fine should not be imposed.

d) 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.


58

22.2 PENALTIES FOR NON-REMITANCE OF DEDUCTIONS

In accordance with the Cooperative Societies Act 2004 section 35:

a) Where an employer of a person who is member of this Society makes deductions from the employee’s emoluments for remittance to the Society but fails to remit the same within seven (7) days after effecting such deductions, the employer shall be liable to pay the sum deducted together with compound interest at a rate of not less than five percent (5%) per month.

b) Such cases may be referred to the Commissioner, without prejudice to other modes of recovery, to take necessary action as provided for under section 35 of the Act. Pursuant to this section of the Act;

(i) Every member of the Society may fill a deduction authorization form (VIA) as set out in the schedule to the Rules (Rule 31).

(ii) The Society receiving deductions from employers shall file monthly remittance returns to the Commissioner not later than the fifth (5th) day of every month in prescribed form VI B in the rules.

SECTION 23 – THE SOCIETY COMMON SEAL

a) The Society may adopt and use a Common Seal bearing the words “SEAL OF KANISA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LTD” which shall be different from the ordinary name stamp of the Society.

b) The Seal shall be kept under lock and key by the Secretary and/or Treasurer and shall be used only by, and in the presence of the officers, authorized to sign documents on behalf of the Society.

SECTION 24 - INSPECTION OF DOCUMENTS

All books of accounts and all other records of the Society shall at all times be available to the members, the Management Committee and Supervisory Committee of the Society and the Commissioner. A copy of the Act, registration certificates, these By-laws and a list of its members excluding details of nominees and shareholdings or loans shall be available for inspection by any member of the Society free of charge at all reasonable times during business hours.

59


SECTION 25 - DISSOLUTION OF THE SOCIETY

(a) The Society may be dissolved in accordance with the procedures set forth in the Co-operative Societies Act and Rules.

(b) In the event of liquidation, with the assets of the Society as realized, all liabilities shall be paid, all savings shall be refunded to the members and any surplus or deficit thereafter shall be apportioned to each member in a pro rata basis as per each members shareholding.

SECTION 26 - AMENDMENTS, AQUISITIONS AND REGULATIONS OF THESE BY-LAWS

26.1 AMENDMENT OF BY-LAWS

These By-laws may further be amended in accordance with the procedures set forth in the Act, Rules and these By-laws, but no amendment shall become effective until approved by the General Meeting and registered by the Commissioner.

26.2 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 General Meeting. For purposes of this provision, a copy of the By-laws shall be deemed duly certified provided it is endorsed in compliance with these By-laws.

26.3 OTHER RULES AND REGULATIONS

The CMC may make such rules and/or regulations not inconsistent with these By-laws, as they may deem necessary for the conduct of the Society’s business. Any such rules and/or 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 CMC.


�0

SECTION 27 - REPEAL AND BINDING CLAUSES

Notwithstanding the amendment of these By-laws to conform to the current Act, the Society shall be bound by all contracts, agreements, documentation, liabilities and any other relevant issue executed under the previous Act.

�1


SECTION 28 - ACCEPTANCE

We the undersigned Executive Officers of the Society named herein do hereby accept and adopt these By-laws for and on behalf of KANISA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LTD together with any changes or alterations therein.

NAME SIGNATURE

Chairperson: ______________________ _________________

Vice-Chairperson: __________________ _________________

Secretary: ________________________ _________________

I certify that the aforegoing By-laws of KANISA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LTD have been approved by me and duly registered.

Given under my hand at NAIROBI this ____________ day of ______________

COMMISSIONER FOR CO-OPERATIVE DEVELOPMENT


�2

FORM III (r.8 (3))

THE CO-OPERATIVE SOCIETIES ACT

CERTIFICATE OF AMENDMENT OF BYLAWS

We Boniface Maina and Syphrose Bitinyu

Chairman and Secretary of Kanisa Savings and Credit Co-operative society limited hereby certify:-

I. That the enclosed amendment for the by-laws was made at a general meeting held on 15th October 2011

II. That on that date there were 459 number of members in the society register of whom 152 were present in the meeting

III. That 152 members voted for the amendment

IV. That proper notice of the meeting and the proposed amendment were issued to all members of the society

Chairman....................................................Date...............................................

Secretary......................................................Date.............................................

kanisa savings and credit co-operative …...kanisa savings and credit co-operative society limited...

Documents