Share capital is the member’s equity contribution to a SACCO. It helps capitalise the institution and gives the member an ownership interest under the co-operative structure. It is different from money placed in a savings or deposit account.
What your shares may do
- Help the SACCO build its permanent capital base.
- Meet a minimum shareholding required by the by-laws.
- Support membership rights, while the general co-operative voting principle is usually one member, one vote rather than votes proportional to wealth.
- Qualify for a dividend when one is lawfully declared and applicable conditions are met.
Why share capital is not an ordinary savings balance
The Deposit-taking SACCO Business Regulations state that a SACCO prescribes a minimum number of shares at a par value. They also state that a member may transfer shares to other members on leaving, while the SACCO does not refund shares. The precise process must still follow the law, the society’s by-laws and approval and registration requirements.
Questions to ask before paying
- What is the minimum shareholding and can it change?
- What is the par or nominal value?
- Can additional shares be purchased and do limits apply?
- What dividend policy applies and what deductions may occur?
- What are the transfer and exit procedures?
- Can any amount described as “shares” actually be a non-withdrawable deposit? Ask for the written classification.
Primary sources
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