Selling SACCO shares

SACCO shares are a fundamental aspect of the cooperative movement, representing an individual’s stake in a Savings and Credit Cooperative Organization (SACCO). These shares grant members ownership and access to benefits such as loans, dividends, and voting rights in the SACCO’s decision-making processes. However, there may come a time when a member decides to sell their shares. Understanding the process, implications, and best practices for selling SACCO shares is essential for making informed decisions.
Reasons for Selling SACCO Shares
Members may choose to sell their SACCO shares for various reasons, including:
- Financial Needs: Members may need immediate cash to address personal or business emergencies.
- Exit from the SACCO: A member might relocate, join another SACCO, or no longer find the SACCO’s services beneficial.
- Investment Diversification: Some members sell shares to reinvest in other financial instruments or ventures.
- Change in Financial Goals: As priorities evolve, members might shift their focus from SACCO investments to other long-term financial plans.
Process of Selling SACCO Shares
Selling SACCO shares typically involves a structured process governed by the SACCO’s bylaws and the Cooperative Societies Act. Here’s how the process of selling the shares.
- Review SACCO Bylaws: Each SACCO has specific guidelines on the transfer or sale of shares. Members should familiarize themselves with these regulations to ensure compliance.
- Obtain Approval: Members must formally notify the SACCO of their intention to sell their shares. This usually requires submitting a written request to the SACCO’s management or board.
- Identify a Buyer: Most SACCOs only allow existing members to purchase shares. In some cases, the SACCO may facilitate the process by matching sellers with buyers.
- Valuation of Shares: The value of SACCO shares depends on factors such as the SACCO’s financial performance, reserves, and market demand. SACCOs often have a predetermined share value, but this can be subject to change based on circumstances.
- Transfer of Ownership: Once a buyer is identified, the SACCO facilitates the transfer of ownership. This involves updating the SACCO’s share registry to reflect the new shareholder.
- Completion and Payment: After the sale is approved, the seller receives payment for the shares, and the transaction is officially completed.
Considerations Before Selling
Selling SACCO shares is a significant financial decision that requires careful consideration. Key factors to evaluate include:
- Loss of Benefits: Selling shares means losing access to dividends, loan eligibility, and other member privileges.
- Market Demand: The availability of buyers within the SACCO can influence how quickly shares can be sold.
- Share Value: Members should assess the current value of their shares to ensure they receive fair compensation.
- Tax Implications: In Kenya, income from selling SACCO shares may be subject to taxes. Consulting a financial advisor or tax expert is advisable.
Alternatives to Selling
Before selling SACCO shares, members might explore alternatives, such as:
- Borrowing Against Shares: Many SACCOs allow members to use their shares as collateral for loans. This option retains membership benefits while addressing financial needs.
- Partial Sale: Instead of selling all shares, members can consider selling a portion to meet immediate financial needs while maintaining partial ownership.
- Transferring Shares to Family Members: In some cases, members can transfer shares to family members rather than selling them outright.