When can you withdraw your SACCO shares?

Shares in a Savings and Credit Cooperative Organization (SACCO) are one of the most important components of membership. They represent your ownership stake and give you the right to vote, earn dividends, and participate in the cooperative’s decisions. However, unlike ordinary savings deposits, SACCO shares cannot be withdrawn at will. They are designed to remain within the institution as part of its permanent capital base.

Understanding when and how you can withdraw your shares is crucial, especially if you plan to leave the SACCO, transfer your investment, or change your financial commitments.

Below is a detailed explanation of the circumstances under which you can withdraw your shares and the considerations that apply.

1. Table of Contents

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   Shares Are Generally Non-Withdrawable

To begin with, SACCO shares are non-withdrawable while you are still an active member. This rule is meant to protect the cooperative’s capital structure and ensure its long-term sustainability.

Shares form part of the SACCO’s core capital, which is used to finance member loans, investments, and operations. Allowing members to withdraw their shares at any time could destabilize the SACCO’s financial base.

Therefore, even if you need urgent cash, your shares remain locked in the cooperative unless specific withdrawal or transfer conditions are met.

2. Withdrawal Upon Membership Termination

You can only withdraw your shares after officially terminating your SACCO membership. This usually happens when a member voluntarily resigns, retires, relocates, or passes away.

Upon resignation, you must write a formal notice of withdrawal to the SACCO’s management committee, stating your intention to exit and request for your share refund. The cooperative then processes your application according to its bylaws.

In most SACCOs, the refund is only made after the SACCO finds a replacement member to take up your shares or when the cooperative’s finances allow it. This process can take several weeks or even months, depending on liquidity.

3. Transfer of Shares to Another Member

While direct withdrawal may not be possible, SACCOs allow members to transfer their shares to another active member or a new applicant approved for membership.

This process involves:

• Submitting a written request to the management committee.
• Identifying a willing buyer (within the SACCO).
• Receiving approval from the SACCO for the transfer.

Once the transaction is approved, the new member pays the equivalent value, and your shareholding is formally transferred. This option provides an alternative exit route for members who want to recover their investment without waiting for the SACCO to refund the amount.

4. Withdrawal After Death of a Member

In the unfortunate event of a member’s death, the SACCO refunds the deceased member’s shares to the next of kin or nominated beneficiary.

The family or beneficiary must provide the necessary documentation, such as:

• A death certificate,
• Proof of nomination (as filed by the member during registration), and
• Any additional documents required by the SACCO.

Once verified, the SACCO releases the deceased’s share capital and other eligible benefits to the rightful heir or nominee.

5. Conditions That May Delay Share Withdrawal

Even when a member qualifies to withdraw or transfer their shares, several conditions can delay the process. These include:

• Outstanding Loans: If you have any active loans, your shares are used as collateral. The SACCO will not release them until you clear all your loan balances and accrued interest.
• Pending Guarantees: If you have guaranteed another member’s loan, your shares remain tied to that obligation until the borrower repays their loan in full.
• Financial Constraints: The SACCO may postpone payments if releasing your share capital would disrupt its liquidity or operations.

For this reason, it is advisable to plan your withdrawal carefully and communicate with the SACCO’s management well in advance.

6. SACCO By-Laws and Withdrawal Procedures

Every SACCO operates under a set of by-laws that guide membership terms, share capital rules, and withdrawal procedures. These by-laws outline the notice period, approval process, and timelines for refunding shares.

Typically, members are required to:

1. Submit a written notice of withdrawal (usually 60 to 90 days in advance).
2. Clear all outstanding obligations.
3. Return any SACCO-issued items, such as membership cards or check-off authorizations.
4. Wait for management approval before the refund is processed.

It’s advisable to familiarize yourself with your SACCO’s specific by-laws before initiating any withdrawal request.

7. Difference Between Shares and Deposits During Withdrawal

Many SACCO members confuse shares with deposits, but these two are treated differently during withdrawal.

• Deposits are savings that can be refunded in full when a member leaves, provided there are no outstanding loans or obligations.
• Shares, on the other hand, are part of the SACCO’s capital and are not refundable on demand. They can only be withdrawn or transferred under specific conditions as outlined above.

Understanding this distinction prevents frustration and helps members plan their finances more effectively.

8. Possible Deductions During Withdrawal

When withdrawing your shares, some SACCOs may deduct certain administrative fees or penalties, depending on their policies. These may include:

• Processing or administrative fees for handling the withdrawal request.
• Penalty charges for early withdrawal (if stated in the by-laws).
• Loan balances or guarantees attached to your membership.

Always request a clear breakdown of deductions to ensure transparency and accuracy in the refund process.

9. Rejoining After Withdrawal

If you later decide to rejoin the SACCO after withdrawing your shares, you will be required to buy new shares and pay the applicable registration or membership fees. The previous shareholding cannot be reinstated automatically.

Rejoining may also be subject to board approval, depending on the SACCO’s policies and the reasons for your earlier withdrawal.

10. Seek Guidance Before Withdrawal

Before deciding to withdraw your shares, it’s advisable to seek financial or cooperative advice. You may find that transferring your shares, reducing your deposits, or taking a short break from active contributions is a better alternative.

Withdrawing shares should be the last resort, especially if the SACCO is financially sound and offers long-term benefits such as dividends, affordable loans, and investment opportunities.

Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. satrendmagazine@gmail.com