AGMS ARE THE BACKBONE OF GOOD GOVERNANCE IN SACCOS

A member of Mentor Sacco participating in an AGM.
cropped-leaderboard-ad

During AGMs, members sit at the decision making table and mould the destiny of their Saccos

By Joseph Macharia

In line with their regulation and best practice, savings and credit co-operative societies (Saccos) hold Annual General Meetings.  They are commonly referred to as AGMs.    These meetings accord members an opportunity to get together and discuss issues pertaining to their Saccos.   Members   contribute   directly to the governance issues of their Sacco.  It is like the parliament of a Sacco where important matters are deliberated on  and  resolutions  made. Theprimary purposes of an AGM areto provide information to shareholders for approval, elect board of directors and appoint the auditor. An AGM guarantees that interests of the members are protected.  It is  the  supreme  decision   making   organ  of  a  Sacco.  The resolutions passed in an AGM are binding.

According to the laws governing co-operatives in Kenya, a co-operative society is required to hold an AGM of its members, to present them with information and approve important decisions.Co-operative societies comprise Saccos, housing, consumer, agricultural, producer, marketing and investment co-operative societies.

The Co-operative Act of Kenya Cap 490, section 27 stipulates that: “The supreme authority of a co-operative society shall be vested in the general meeting at which members shall have the right to attend, participate and vote on all matters.” In Kenya, both deposit-taking (DT) and non-withdrawable deposit-taking (NWDTS) Saccos are required to conduct their AGMs within four months after the end of the financial year.

In line with the Co-operative Act of Kenya Cap 490, members of a Sacco should be notified by written notice at least fifteen days before an AGM. This notice can be done in various ways, depending on the size and type of the society. Different Saccos have different policies outlining how the notices may be disseminated. Popular forms include:  posting notice on the society’s website and social media platforms, advertising in local dailies, use of a mail or hanging banners and posters in their offices.

Serious business

Besides sumptuous meals often served, members should attend AGMs for serious business matters. Given that a Sacco is owned by shareholders,  it is important for members to attend AGMs in order to actively take part in making key decisions that will impact the Sacco’s operations. Some of the key reasons for participating   in an AGM as a member are:

To be updated with information

A standard procedure of all AGMs is to provide annual reports on audited financial statements and reports from the top management. These reports offer shareholders insight into the performance, direction and stability of their Sacco. Reviewing these reports and asking questions helps ensure the business remains focused and healthy as well as fostering transparency.

The first report comes from the chairperson of the board who gives a detailed overall account on the performance of the Sacco. The chair takes time to discuss about growth in membership, financial stability of the Sacco in terms of income, assets, savings and the loan advanced. The chair also offers a forecast of the future, highlighting on strategic measures the Sacco has put in place for growth.

What follows is a supervisory report presented by the chairperson of the supervisory board. The main role of the supervisory board is to ensure that there are effective control systems in the society , besides  keeping    the board of directors in check. The chair of the supervisory board addresses critical issues like:  service delivery, member segmentation, market approaches and challenges that may have arisen in the previous year.

Approve resolutions

Before an AGM is held, shareholders will be invited to submit resolutions to the board (or resolutions committee). Resolutions received are discussed and voted at the AGM. A resolution is a directive, order or change in policy impacting aspects of the Sacco’s business or policy. While some resolutions would simply change the wording of by-laws, others may suggest shifting the focus of the  Sacco  to include new markets, investing in new initiatives, products or purposes.

Members of NewFortis Sacco following proceedings of an AGM.

Members are presented with audited accounts for consideration and approval by the appointed auditor of the respective year. Similarly, members are invited to approve dividend  and  interest  payment of the previous year. As a shareholder, you have the right to speak for or against any resolution, make suggestions and vote on its acceptance. In some cases, the board may call a special meeting of the members to vote on an important resolution like removal of a board member.

Appoint an auditor

Every Sacco is required to vote on a resolution to appoint an external auditor for the coming financial year to conduct the financial review. An auditor is a formal office that is held by an independent company or individual. An auditor should be a qualified and experienced accountant who is well versed with financial matters. The auditor will be responsible for producing an annual report that will be presented to the government as well as to members in the next AGM. Saccos have to present financial statements and at times undergo an audit for regulatory purposes.

An annual report is one  of   the most important documents   that members are presented with. It typically provides an overview of the Sacco’s assets, liabilities, revenue, expenses, and general financial health. However, a society’s treasurer may provide a supplementary report that offers further insight into the organization’s finances. Members have a duty to consider and adopt audited accounts.

Presentation of the following year’s provisional budget

Typically the chief executive officer (CEO) of the Sacco will present the proposed annual budget for the ensuing year. Members will be given an opportunity to adopt and approve the budget. The estimates highlight on the cash budget expected to be used, expected sources of incomes (like interest on loans, membership fees and other incomes) and operational expenditure. Some of the expenditure includes:  interest on deposits, administrative, personnel, and marketing, amortization and governance expenses.

Hold elections of the board

Members also approve the board of directors and committee members elected in a given year during an AGM. The board plays a pivotal role in governance and strategic   direction   of a Sacco. Board members create policies and make decisions affecting the day-to-day business of the Sacco. These decisions and policies have significant implications for individual shareholders, staff and the well-being of the Sacco.

As such, it’s important to hold the board accountable for the decisions and policies they make by asking questions and seeking clarifications. An AGM presents an opportunity for shareholders to ensure board members represent the interests of the shareholders.

Other keyreasons

Some equally important reasons for attendance are: To consider and confirm the minutes of the most recent AGM; where necessary, to determine the maximum borrowing power of the society; to determine the manner in which any available surplus is to be distributed or invested and to transact any other general business of the sacco of which notice has been given to members in a manner prescribed in  its  by-laws.

Roles in an AGM

To facilitate an effective AGM, there are various roles designated to people in charge of running it. A good understanding of these roles and responsibilities by members ensures a smooth meeting and minimal wastage of time.  It  is imperative to have a proper structure during  an  AGM  in order  to make sure that all the items    in the agenda are allocated sufficient time and get covered.These are some of the roles you will see at an  AGM of a Sacco:

In most cases, the chairperson or the vice chairperson will chair the meeting. This person develops the agenda and makes sure it is followed (strictly). The chair will lead the meeting, which includes introducing agenda items, calling for motions and declaring the outcome of votes.

The secretary records the minutes of the meeting, making a special point to capture the names of individuals who   move and second resolutions and the outcomes of votes.Most Saccos have the CEO as the secretary.

The treasurer presents the Sacco’s financial statement to members in an AGM. Finally, there is the auditor who presents audited accounts in an AGM. The auditor breaks down the financial statements in an easy-to-understand manner.

A typical AGM

An AGM is a busy event.  However, there is an order in which it is conducted. First, members’ identity and eligibility is verified at the entrance. Members are then counted to establish a quorum for voting. Once the quorum is established, the chairperson welcomes all and the meeting is called to order. Minutes of the previous year’s AGM are read, seconded and confirmed by the members.

What follows is a serious business of presenting an audited financial report for the last financial year to be approved by members. Resolutions concerning how surplus revenue shall be distributed are made and passed by members.

If necessary, members determine maximum borrowing and finally conduct any other business which due notice has been given to members. An AGM officially   ends with a vote of thanks.  As best practice, it   begins and ends with a word of prayer.

cropped-leaderboard-ad

LEAVE A REPLY

Please enter your comment!
Please enter your name here