What is the minimum share capital in a Sacco? a key element of ownership and finance

Share capital serves as a cornerstone in the structure of Savings and Credit Cooperative Societies (Saccos), offering members equity ownership and annual dividends. It plays a pivotal role in shaping the financial landscape of a Sacco, with various implications for members and the organization as a whole. Therefore, it is important to understand what is the minimum share capital in a Sacco.
What is the minimum share capital in a Sacco?
Minimum share capital varies in various Saccos in Kenya starting from from Ksh15,000 to Ksh30,000.
Also Read: How to choose a Sacco in Kenya
It’s important to note that this share capital cannot be utilized as security for loans, emphasizing its distinct purpose in fostering member participation and financial stability.
Advantages of Share Capital
Share capital holds significant advantages within the structure of a Sacco, contributing to the overall well-being and functionality of the organization:
- Authorised Share Capital
- Authorised share capital represents the maximum number of shares a Sacco is entitled to issue to its members. It is stipulated in the Memorandum and Articles of Association, acting as the constitutional framework for the organization.
- Issued Share Capital
- Issued share capital comprises shares that have been allotted or issued to Sacco members. This allocation can occur for various reasons, including new investments, amendments to share rights, resolution of disputes, succession planning, or the creation of a group structure.
- Increasing Authorised Share Capital
- Saccos can increase their authorised share capital with shareholder approval. This requires the passing of ordinary and special resolutions, with the process governed by relevant company laws. The submission of necessary documents to regulatory bodies ensures compliance.
- Rights Attaching to Share Capital
- Different classes of shares may have varying nominal values and rights attached to them. Ordinary shares typically grant shareholders rights such as voting at general meetings, participation in profits through dividends, and entitlement to capital surplus in case of liquidation.
- Transfer of Share Capital
- Shareholders have the flexibility to transfer all or part of their shareholding through a regulated process involving a stock transfer form. This mechanism allows for changes in ownership, subject to pre-emption rights or transfer restrictions outlined in the Memorandum and Articles of Association.
- Raising Finance Through Share Capital
- Saccos can issue additional shares as a means of raising finance through equity. This avenue provides an alternative source of business finance and aligns with the organization’s growth and operational requirements.