BYLAWS OF MUDI SAVINGS AND CREDIT COOPERATIVE SOCIETY LIMITED REGISTRATION DATE: DECEMBER 1990 ADDRESS: P.O.BOX CHICHIRI BLANTYRE 3.

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1 BYLAWS OF MUDI SAVINGS AND CREDIT COOPERATIVE SOCIETY LIMITED REGISTRATION NUMBER: REG./385 REGISTRATION DATE: DECEMBER 1990 ADDRESS: P.O.BOX CHICHIRI BLANTYRE 3.

2 TABLE OF CONTENTS PAGE SCHEDULE FORM 1 APPLICATION FOR REGISTRATION 3 CHAPTER 1 SACCO PARTICULARS 5 ARTICLE 1 INTERPRETATION 5 ARTICLE 2 NAME AND AREA OF OPERATION.. 5 ARTICLE 3 REGISTERED OFFICE / POSTAL ADDRESS. 5 ARTICLE 4 OBJECTIVES 5 CHAPTER 2 MEMBERSHIP 6 ARTICLE 5 CONDITIONS FOR MEMBERSHIP 6 ARTICLE 6 MEETING OF MEMBERS 7 ARTICLE 7 ELECTIONS 9 CHAPTER 3 LEADERSHIP. 9 ARTICLE 8 BOARD POSITIONS 9 ARTICLE 9 EXECUTIVE COMMITTEE 12 ARTICLE 10 CREDIT COMMITTEE 13 ARTICLE 11 EDUCATION COMMITTEE.. 13 ARTICLE 12 SUPERVISORY COMMITTEE. 13 CHAPTER 4 SOURCES AND APPLICATION OF FUNDS

3 ARTICLE 13 FUNDS 14 ARTICLE 14 RECEIPTING AND PAYMENT FOR MONEY 14 ARTICLE 15 DEPOSITS AND INVESTMENTS. 15 ARTICLE 16 CUSTODY OF FUNDS 15 ARTICLE 17 LOANS 15 ARTICLE 18 LIENS. 16 CHAPTER 5 APPROPRIATION OF SURPLUS 16 ARTICLE 19 STATUTORY RESERVES. 16 ARTICLE 20 DIVIDENDS.. 17 CHAPTER 6 GENERAL PROVISIONS.. 17 ARTICLE 21 DISPUTES. 17 ARTICLE 22 AMENDMENTS OF BYLAWS 17 ARTICLE 23 LIQUIDATION 18 ARTICLE 24 COMMON SEAL.. 18 ARTICLE 25 AUTHORITY. 18 CERTIFICATE OF REGISTRATION. 20 SCHEDULE FORM 2 CERTIFICATE OF AMMENDMENT. 21 2

4 SCHEDULE FORM 1 THE COOPERATIVE SOCIETIES ACT 1998 TO THE REGISTRAR OF COOPERATIVE SOCIETIES MINISTRY OF COMMERCE AND INDUSTRY P.O. BOX LILONGWE Dear Sir, We the undersigned, hereby apply for the society, the particulars of which are set out hereunder, be registered as a cooperative society under The Cooperative Societies Act, No. 36 of 1998: 1. Name MUDI SACCO. 2. Address of the society P. O BOX 31229, CHICHIRI, BLANTYRE 3 3. Area of Operation OPPOSITE CHICHIRI PRIMARY SCHOOL, NEAR INDEPENDENCE ARCH 4. Type of Society FINANCIAL COOPERATIVE. 5. Whether Limited or Unlimited LIMITED.. 6. Language in which the books of the society and accounts will be recorded ENGLISH 7. Names of persons elected as directors at the Annual General Meeting We attach true copies of the proposed Bylaws of society duly signed: Name Occupation Age Place of Residence 1. Journalist 44 Ndirande - Duncan Wright Mlanjira Malabada 2. Manager 42 Chigumula Zadziko Alex Mankhambo 3. Accountant 49 Chilimba Martha Zilambalala 4. Secretary 41 Naperi Suzane Chifundo Mbejere 5. Journalist 43 Naperi George Damaseke Kasakula Signature 6. John Chimombo Syrup Maker 39 Ndirande 7. Hamid Mponda Environmental Officer Healthy 32 Chikwawa 3

5 CHAPTER 1: SACCO PARTICULARS ARTICLE 1: INTERPRETATION In these By-Laws, unless the context otherwise requires:- Act means the Co-operative Societies Act ( the Laws of Malawi); Registrar means the Registrar of Co-operative Societies of Malawi, appointed under the Act; Secretary to the Treasury means a representative from the Ministry of Finance; Rules means any rules made under the Act; SACCO means Savings and Credit Cooperative; MUSCCO means Malawi Union of Savings and Credit Cooperatives. ARTICLE 2: NAME AND AREA OF OPERATION a) The Society shall be called MUDI Savings and Credit Co-operative Society Limited (herein referred to as SACCO). b) The SACCO shall belong to a Chapter 1 and participate in the Chapter 1 activities, as that is its only representation in the MUSCCO Board. ARTICLE 3: REGISTERED OFFICE/POSTAL ADDRESS The registered office of the SACCO shall be at CHICHIRI and its postal address shall be BOX 31229,CHICHIRI, BLANTYRE 3. Any change thereof shall be notified to the Registrar and MUSCCO within fourteen days. ARTICLE 4: OBJECTIVES The SACCO seeks to improve the economic and social welfare of its members through: - (c) Acquisition of funds through shares contribution and acceptance of deposits from members; Encouragement of thrift savings and member shares by providing means whereby such savings may receive a market rate of interest and competitive rate of dividend; Provision of relief to members in need by enabling them to obtain loans for productive and provident purposes at competitive interest rates and terms of repayment; 4

6 (e) (f) (g) (h) Obtaining loans from MUSCCO and any other registered institution if desirable, with due regard to the provisions of Section 43 of the Act; Education of its members in the management and control of money; Development of a sense of self-reliance in its members; Development of a sense of honesty and responsibility in its members; Arousing interest in Community Development and in self-help programmes; CHAPTER 2 : ARTICLE 5 : MEMBERSHIP. CONDITIONS FOR MEMBERSHIP The applicant shall not be admitted to membership until s/he shall have been determined that s/he is eligible for membership. The application for membership shall have been by the affirmative vote of a majority of the Board of Directors present at the meeting at which the application is acted upon or determined by the membership officers. Minors may not acquire shares and make deposits in their own names in accordance with Section 14 of the Act. The field of membership shall be open to all salaried people, their spouses and children and other non-salaried people in form of groups and other non-financial cooperatives within Malawi (c) (e) (f) (g) (h) Each application for membership shall be in writing on an approved application form. Every member on admission shall pay a non refundable entrance fee set by the Board of Directors from time to time. No member shall exercise the full rights of membership in the affairs of the SACCO until s/he has acquired the minimum membership shares of the SACCO, as determined by the Board from time to time (which shall be paid either by monthly installments or outright and within 90 days of application). A member shall be entitled to acquire any number of shares provided that his total share holding shall not exceed 20% of the total paid up share capital of the SACCO. Societies, Associations, Clubs and Corporations composed solely of individuals who are eligible to membership in this SACCO may be admitted to membership in the same manner and under the same conditions as individual members. Every member may nominate in writing one person or more to whom, on his death his shares and/or savings shall be transferred. The member shall have power to change the name of the nominee. The name of the nominee shall be entered in the register of members, or recorded in a sealed envelope to be securely kept by the SACCO, and any alteration shall be signed by the member. If not admitted to 5

7 membership, the nominee shall be paid the full value of the shares and/or savings less any sum due from the deceased member to the SACCO. Such payment shall be made as soon as possible (within 90 days of notice of death of the member). (i) Membership shall be terminated by: - (1) Death (2) Ceasing to hold one full share as required by these Bye-Laws (3) Permanent incapacitation (insanity, permanent disability) (j) A member may be expelled from the SACCO if s/he:- (1) Is convicted in a court of Law for an offence of dishonesty e.g. theft, fraud, forgery, embezzlement, etc. (2) Acts in any way against the interests of the SACCO (k) (l) (m) A member may withdraw from the SACCO at any time after one month s written notice to the Board Chairman, provided that he is not in debt, or being surety for an unpaid debt to the SACCO. All amounts paid in on shares or deposits of any kind shall be paid to such withdrawing member as funds become available and only after deducting there from any amounts due from such a member to the SACCO. The shares and deposits may be transferred from one member to another in writing and such transfer will be effected on a form approved by the Board of Directors. A member may be expelled by a two third vote of the board members of the SACCO present at a special meeting called for the purpose but only after an opportunity has been given to the member to be heard and only if the member has been properly notified as in Article 5 (j) 1 and 2. (1) All amounts paid in on shares or deposits by an expelled member shall be paid to him/her only after deductions there from of any amounts due from such a member to the SACCO. (n) Subject to the conditions as herein contained, a member who ceases to be within the field of membership of the SACCO may retain his membership but not borrow in excess of his share holdings. ARTICLE 6: MEETING OF THE MEMBERS (c) The Annual General Meeting (AGM) shall be held within 90 days after the close of the SACCO financial year. The financial year of the SACCO shall begin on the 1st January and end on the 31st December each year. At least twenty one days before the date of any annual or special meeting of the members, the Secretary shall give written notice thereof to each member, or mailed to each member at his/her address as the same appears on the records of the SACCO; except that if in the SACCO regular 6

8 business hours are maintained, and the Board of Directors so determined, notice of the annual meeting may be given by posting the notice thereof, in a conspicuous place in the office of this SACCO where it may be read by the members at least 14 days prior to such meeting. Notice of any special meeting shall state the purpose for which it is to be held and no business other than that related to this purpose shall be tabled at the meeting. The order of business at annual meetings shall be:- 1. Ascertainment of a quorum 2. Reading notice/agenda of convention/annual General Meeting 3. Reading and Adoption of minutes of the previous meeting 4. Presentation of Directors Report (to include all Committees reports except the Supervisory, if the SACCO has no External Auditors report) 5. Presentation of Manager s Report 6. Presentation of Supervisory Committee s Report (in the absence of an External Auditor) 7. Consideration and adoption of estimates and expenditure (Business Plan and Budgets) 8. Consideration of Financial Statements and disposal of net surplus 9. Consideration of Audit Report and any inspection report made by or on behalf of the Registrar 10. Any other competent business 11. Elections of the office bearers (e) One quarter of the total membership of the SACCO shall form a quorum. (f) Special Meeting of Members shall be convened as stated in the Regulations of the Act, No. 21 to 23 summarized as follows: 1. A special meeting of members may be convened at any time by the Board of Directors on receipt of a demand from members stating the objective of the proposed meeting signed or attested by one fourth of members of the SACCO 2. Where the board of directors fails to convene the meeting within fourteen days from the receipt of the demand as foresaid, the members have the right to convene the meeting by notice which shall contain the objective of the proposed meeting and a statement to the effect that the meeting is convened on the failure of the Board of Directors to convene the meeting demanded. 3. The Registrar or MUSCCO may at any time summon a special general meeting in such manner and at such time and place as may be directed. They shall also specify matters that shall be discussed at any such meeting. 7

9 ARTICLE 7 : ELECTIONS (c) (e) (f) (g) (h) At least 30 days prior to each annual general meeting the Board of Directors shall appoint a Nominations Committee of not less than three members. It shall be the duty of the Nominations Committee to nominate at least one but no more than three for each vacancy for which elections are being held. After nominations of the Nominating Committee have been placed before the members, the Returning Officer shall call for nominations from the floor. When nominations are closed, monitors shall be appointed by the Returning Officer; ballots shall be distributed, the vote shall be taken and tallied by the monitors, and the results announced by the Returning officer. All elections shall be determined by majority vote, of members present, and shall be by ballot. Nominations shall be for Board of Directors and Supervisory Committee. Positions in the BOD shall be determined by the elected Board of Directors through elections amongst themselves. All nominations shall be within the SACCO s general membership. No member shall be entitled to vote by proxy, but a member other than a natural person may vote through an agent designated in writing for the purpose. A trustee or other person acting in a representative capacity shall not as such be entitled to vote. Irrespective of the number of shares held by him, no member shall have more than one vote. The supreme authority in the SACCO shall be vested in the general meeting of members, at which every member has a right to attend, participate and vote on all questions. In the case of an equality of votes, the Chairman shall cast a deciding vote. Within ten days after their elections, the names and addresses of all persons elected to office shall be forwarded to MUSCCO and the Registrar in such a manner as required. CHAPTER 3: LEADERSHIP ARTICLE 8: BOARD POSITIONS The Board of Directors shall consist of five, seven, nine or eleven members. Directors will choose amongst themselves members of the sub-committees. The number of Directors may be changed to an odd number not less than five and not more than eleven by resolution of AGM. No reduction in the number of Directors may be made unless corresponding vacancies exist as a result of death, resignation, expiration of office, or other actions provided for in these Bye-Laws. Vacancies in the board shall be filled within twenty one days. A copy of the resolution of the Board covering any increase or decrease in the number of Directors shall be filed with this copy of Bye-Laws by the SACCO. The Registrar and MUSCCO shall also be notified of the same in writing. 8

10 Directors shall hold office until the election of their successors. The regular terms shall be fixed at the beginning or upon any increase or decrease in the number of Directors and that approximately an equal number of regular terms shall expire at each annual meeting. At the first annual general meeting, one third of the Directors shall be elected to serve for three years; one third to serve for two years and one third to serve for one year. During the next annual general meeting, one third of the positions shall be vacant and will be contested for, replacing those that were serving for one year. Those that had three years will now serve for two years; while those that had two years will now serve for one year. Newly elected Directors will therefore serve for three years (c) (e) Any vacancy on the Board falling before the Annual General Meeting shall be filled through appointment. Following the appointment, Directors shall fill vacant positions through voting. The Directors so appointed shall hold office only until the next Annual General Meeting, at which any unexpired terms shall be filled by vote of the members and these shall serve to complete the original term. Regular meetings of the Board of Directors shall be held as scheduled in the business plan and budget. The date, time and place shall be selected by the Directors. The Chairman, or in his absence the Vice Chairman may call a special meeting of the Board of Directors at any time, and shall do so upon the written request of any three Directors. The Chairman or in his absence the Vice Chairman, shall fix the time and place of the special meeting unless the Board, by resolution, prescribes otherwise. Notice of all meetings of the Board of Directors shall be given in such manner as the Board of Directors may from time to time, by resolution, prescribe. The Board of Directors shall be responsible for the overall management of the affairs of the SACCO. Among other duties, the Board of Directors shall:- 1. Act upon all applications for membership, except to the extent that it may delegate the approval of such applications to a Manager. 2. Fix the amount and character of the surety bond, which shall be required of the Treasurer and of every other officer having the custody of funds or property. 3. Determine from time to time the competitive interest rates on loans as advised by MUSCCO and as recommended by the SACCO Manager, the rate of interest refund, if any, to be made to members, the maximum maturities and terms of payment or amortization of loans to members, and the maximum amount that may be lent without security to any member. 4. The Board shall also establish all relevant policies to be followed in the SACCO. 5. Propose annual or interim dividends on member shares. 6. Ensure that competitive interest rates will be paid on deposit accounts. 7. Fill vacancies occurring between annual meetings in the Board as per 8 (c). 9

11 8. Have charge of the investments of the SACCO other than loans to members, except to the extent that the Board may have appointed an Executive Committee to act for it in the purchase and sale of securities. 9. Employ, fix and prescribe the compensation and duties of SACCO employees at the discretion of the Board as may be necessary and have power to remove such employees. However, these functions can be delegated to the Manager. 10. Authorize the conveyance of property. 11. Authorize borrowing and discounting operations on behalf of the SACCO within limitations prescribed by the Act. 12. Suspend until the next membership meeting any or all members of the Committees for failure to perform their duties. The general membership shall ratify, or not, the action of the Board of Directors. 13. Adopt a common seal. 14. Supervise the collection of loans from members and authorize charge-offs of uncollectible loans. 15. A majority of the number of Directors specified in these Bye-Laws (inclusive of any vacancies) shall constitute a quorum for the transaction of business at any meeting thereof. By inference, majority denotes availability of at least two thirds of the Directors. Fewer than two thirds shall necessitate the adjournment of a meeting. Written notice of an adjournment need not be given to the Directors. 16. If a Director fails to attend regular meetings of the Board of Directors or Committee meetings for three consecutive meetings, or otherwise fails to perform any of the duties conferred upon him/her as a Director or a Committee member, his/her office shall be declared vacant by the Board of Directors and the vacancy shall be filled as per 8 (c). 17. Perform such other duties as the members may from time to time require, provided they are consistent with the Act and these Bye-Laws The Board may remove any one of its members from office for failure to perform the duties thereof, after giving the officer a reasonable opportunity to be heard. If a Director or other elected officer of the SACCO becomes delinquent more than two months on the schedule of repayment of a loan, that position shall be declared vacant by the Board of Directors and the vacancy filled as herein provided under 8(c). 10

12 ARTICLE 9: EXECUTIVE COMMITTEE The Executive Committee member of the SACCO shall be the Chairman, Vice Chairman, Treasurer and Secretary all of whom shall be elected by the Board from their number. The Manager shall be an ex-officio member of the Committee. If more than one Vice Chairman is elected, the Board shall determine their ranks as first Vice Chairman, second Vice Chairman etc. Unless sooner removed as herein provided, the Committee members elected at the first meeting of the Board shall hold office until the first meeting of the Board following the first annual meeting of the members and until the election and qualification of their respective successors. (c) The officers are elected at the meeting of the Board following the annual meeting of the members, which shall be held not later than seven days after the annual meeting, and shall hold office for a term of one year (provided, however, that any person elected to fill a vacancy caused by death, resignation or removal of an officer shall be elected by the Board to serve the unexpired term of such officer and until next annual membership meeting). The executive officers will hold their offices for a term of one year but will maintain their directorship until the end of their term. The Chairman shall preside over all meetings of the members and at all meetings of the Board of Directors unless disqualified through suspension by the Board of Directors. The Chairman together with the Treasurer shall sign all conveyance of property. The Chairman shall ensure that all resolutions passed by members at a general membership meeting are performed provided such resolutions are not inconsistent with the provision of the Act or Bye-Laws. (e) (f) In the absence of the Chairman, the ranking Vice Chairman shall have and exercise all the powers, authority, and duties of the Chairman. The Treasurer shall be the Executive Director of the SACCO under the control and Directorship of the Board of Directors. Subject to such limitations and control as may be imposed by the Board of Directors, the Treasurer shall have the custody of all funds, securities, valuable papers and other assets of the SACCO. Except as provided in Section 13 (f) of this Article, he shall sign all cheques, drafts, notes and other obligations of the SACCO. He shall provide and maintain full and complete records of all assets and liabilities of the SACCO. Within 10 days after the close of each month, he shall prepare and submit to the Board of Directors a financial and statistical report showing the condition of the SACCO as at the end of a month, and shall promptly post a copy of monthly financial and statistical report on a conspicuous place in the office of this SACCO, where it shall remain posted until replaced by the financial and statistical report for the next month. He shall prepare and forward to the Registrar and MUSCCO, such financial reports. If however the SACCO engages a full time Manager, the functions provided herein shall be delegated to the manager. The Board of Directors may appoint one or more assistant Treasurers (none of whom may also hold office as Chairman or Vice Chairman, and authorize them) under the direction of the Treasurer to perform any of the duties developing on the Treasurer, including the signing of cheques. When designated by the Board, any assistant Treasurer may also act as Treasurer in the absence of the Treasurer or in the event of the Treasurer s inability to act. 11

13 (g) The Secretary shall prepare and maintain full and correct records of all meetings of the members and the Board of Directors. He shall give or cause to be given, in the manner provided in these Bye-Laws proper notice of all the meetings of the members and shall perform by resolution of the Board of Directors provided such resolution is not inconsistent with the provisions of the Act or these Bye-Laws. If however the SACCO engages a full time Manager, the functions provided herein shall be delegated to the manager. ARTICLE 10: CREDIT COMMITTEE (c) (e) (f) (g) (h) (i) The Credit Committee must consist of not less than three members nor more than five members, appointed within the Board of Directors as guided by article 8 of these Bye Laws. The Credit Committee shall meet as often as necessary (as directed by the Board of Directors) to promptly process members applications for loans unless called upon by the Manager. Approval of a loan must be by a majority decision of the Committee. A Committee meeting must have a quorum to act. A quorum shall consist of a majority (at least two) of its members. Each application for a loan shall be in writing and shall contain, in reasonable detail, the purpose for which the loan is desired, the security offered and such other information as may be required by the Committee. The Credit Committee shall inquire carefully into character, capacity, collateral, credit history and capital of the borrowers to ascertain their ability to repay fully and promptly the loans given to them and whether the loans are for provident or productive purposes. The Credit Committee shall determine the security or guarantors which shall be required for each loan and the terms upon which it shall be repaid. The loan becomes effective as soon as the loan contract form is properly signed and funds are disbursed. The Credit Committee shall report to the Board of Directors at the Board of Directors meeting. The Committee shall adhere strictly to the Loan Policy established by the Board of Directors. ARTICLE 11: EDUCATION COMMITTEE The Members of the Board will appoint among themselves an Education Committee responsible for a continuous education of the members of the SACCO and dissemination of the ideals of the SACCO among the existing and potential members ARTICLE 12: SUPERVISORY COMMITTEE The Supervisory Committee must consist of not less than three members nor more than five members, appointed from outside the Board of Directors at the annual general meeting based on desired competencies. 12

14 (c) In the process of their examination and audits, the Supervisory Committee shall examine applications for loans made during the period under examination and satisfy themselves that for each loan made an application states the purpose for which the loan was made, a description of the security offered and that it bears the approval of at least two thirds of the members of the Credit Committee. The Supervisory Committee shall regularly verify all accounting procedures i.e. cash reconciliation, balances in the members ledger, etc. The Supervisory Committee shall examine the delinquency and confirm whether the allowance for doubtful loans has been fully provided, provide course of action for delinquent members and determine charge offs of loans. (e) (f) Regular meetings of the Supervisory Committee shall be held as determined by the Board of Directors. At least one member of the Committee shall attest the financial statements which the Treasurer/Manager is required by these rules to prepare each month. CHAPTER 4: SOURCES AND APPLICATION OF FUNDS ARTICLE 13 : FUNDS The funds of the SACCO shall consist of:- (1) An undetermined number of shares of the value of K each (2) Deposits from members (3) Trust Funds (4) Statutory and other reserves (5) External Credit (6) Donations and Grants The purposes to which funds may be applied are:- (1) To any purpose in pursuance of or towards the attainment of the objectives defined in Article 4, and; (2) To any purpose authorized by the law for the time being in force relating to Co-operative Societies. ARTICLE 14 : RECEIPTING AND PAYMENT OF MONEY Money paid in or paid out on account of shares, deposits or thrift clubs, loans, interest, fees or charges shall be evidenced by a form of receipts to be determined by the Board of Directors. Every person receiving or paying out, on behalf of this SACCO, any money shall be identified on the form of receipt as determined by the Board of Directors. 13

15 Deposits will be entered in a pass-book and no withdrawal on deposits will be made unless the pass book is produced for the purpose of making any entry therein. If the pass-book is lost, immediate (within 14 days) notice must be given to the SACCO and written application made for the issue of a duplicate pass-book, for which a charge will be fixed from time to time by the Board of Directors. (c ) Money paid in on shares, or installments of shares is not withdraw able unless on grounds of article 5 (i & j) but the Board of Directors shall have the right to require members to give 30 days notice of intention to withdraw the whole or any part of the amounts. No member may withdraw any share holding below the amount of his total liability to the SACCO as borrower, endorser, co-maker, or guarantor. Neither shall shares be used to repay loans except on grounds Article 18. All SACCO members who are employed and receive a salary shall be required to use payroll deduction for saving money, buying shares and repayment of loans plus interest. Any deductions made in respect of such members shall be adequate to cover loan repayment plus interest and the balance to go to a savings account and/or buy shares. Direct cash transactions from such members will however be encouraged in addition to utilising a payroll deduction facility. ARTICLE 15 : DEPOSITS AND INVESTMENTS The SACCO may invest or deposit its funds:- (c) With MUSCCO Central Finance and/or with any other registered financial institution in Malawi. However, priority shall be given to MUSCCO Central Finance (SACCOs bank) In any Malawi Government Treasury Bills, or in any securities issued by the Government of Malawi which is due for payment on maturity within one year, or in any other securities which have been approved for the purpose by the Minister for the time being responsible for finance. With any other registered SACCO approved for this purpose by MUSCCO/Registrar or; In any other mode approved by MUSCCO/Registrar. ARTICLE 16 : CUSTODY OF FUNDS All money of the SACCO must be kept in a safe. All funds of the SACCO, except for petty cash and cash change funds, shall be deposited in such qualified depository or depositories as the Board may from time to time by resolution designate; and shall be so deposited not later than the second banking day after their receipt. ARTICLE 17: LOANS Loans shall be limited to productive and provident purposes to deserving members The maximum amount which may be lent to a member of this SACCO shall not exceed 10% of the total assets. When there are more loan demands than money available, the smaller loans shall be given preference provided the security offered shall be equally good. 14

16 (c ) The SACCO shall charge a competitive rate of interest on the unpaid loan balance. (e) (f) A member may not borrow from the SACCO unless he is a fully paid up member and in good standing. If he is delinquent (has failed to repay any previous loan, or if he is in arrears in the payment of any current loans or installment thereof), he is ineligible for another loan. A member shall apply for a loan by filling out a loan application form giving full information as to the amount required, purpose of the loan, security offered, etc. Loans shall be approved by the Credit Committee according to the Loan Policy established by the Board of Directors the BOD can also delegate the manager to approve loans up to a specified amount (g) (h) (i) (j) (k) (l) An approved loan shall be disbursed after a loan contract has been dully signed both by the SACCO and the applicant A credit committee member must withdraw whenever the Credit Committee considers his application or his being a proposed surety. If by reason of sickness or some other cause, a member finds that he will be unable to discharge his obligation to the SACCO and notifies the Credit Committee in writing before an installment is due, the Credit Committee may extend the time fixed for repayment of the loan as guided by the Loan Policy. All applications for loans and the reports of the Credit Committee and any loans offers shall be filed as permanent records of the SACCO. A loan to a member is not a right but a privilege Every SACCO shall provide for an adequate allowance for doubtful loans every month in accordance with approved standards i.e PEARLS monitoring tool. ARTICLE 18: LIENS A SACCO shall have lien (right to withhold) on shares and/or deposits of a defaulting member or past or deceased in lieu of debts (if not claimable from insurance). CHAPTER 5: APPROPRIATION OF SURPLUS ARTICLE 19: STATUTORY RESERVE The statutory Reserve shall be calculated at 10% of gross income or 25% of net surplus, which ever is higher, shall be transferred to the reserve account until an equivalent of 10% of total assets is reached. An equivalent of the balance in the reserve account shall be deposit and maintained with MUSCCO or registered financial institution at all times. The reserve fund shall belong to the SACCO and shall be used with the consent of the Registrar and MUSCCO. 15

17 (c) In addition to the statutory reserve, special reserves may be established from time to time by the Board of Directors or by the members. As a limited liability entity (limited by shares), the liability of each member shall be limited to the book value of the share capital subscribed by him. The liability may only be extended by the SACCO (on a liquidator s advice) at its annual general meeting and with the Registrar s and MUSCCO s written approval, in respect of a specific sum on specific terms. ARTICLE 20: DIVIDENDS The Board of Directors shall recommend dividends to be paid on shares each year and after provisions for required reserves is met. The rate of dividend shall be competitive and in accordance to surplus made. The close of the annual dividend period shall be December 31st. Upon the determination of the net surplus by the general meeting of the SACCO, the net surplus shall be disposed of annually in the following manner:- 1. First to the statutory reserve as per article To the special reserve, if any. 3. To dividends as in above. 4. An amount not exceeding 5% of the net surplus shall be allocated to the Education Committee for its use in pursuance of the Bye-Laws and as the Directors may determine. 5. The balance (at least some amount) shall be maintained in the Retained Earnings Account. CHAPTER 6: GENERAL PROVISIONS ARTICLE 21. DISPUTES The Board of Directors shall settle all disputes between the SACCO and its member(s), or any party. Un resolved disputes shall be referred to the Chapter, MUSCCO and/or the Registrar for redress. ARTICLE 22: AMENDMENTS OF BYE-LAWS Additions and amendments of these Bye-Laws shall be made by resolution at the annual general meeting of the SACCO and/or at the annual general meeting of MUSCCO. Any such amendments done at the SACCO annual general meeting must be forwarded to MUSCCO for concurrence before submission to the Registrar. The SACCO resolutions must receive the assent of three fourths of the membership present after notice of amendments has been sent to all members fourteen days prior to the general meeting, provided those present constitute a quorum according to these Bye-Laws. Amendment of the Bye-Laws shall become effective when approved in writing by the Registrar. 16

18 SACCO Bye Laws from affiliates of MUSCCO will have to be amended in consultation with MUSCCO. Any member of the SACCO is entitled to have access to these Bye-Laws. ARTICLE 23: LIQUIDATION If the SACCO, on the decision of the Registrar is to be liquidated, members shall be liable for debts of the SACCO only to the extent of their paid in and subscribed shares as stipulated in the Act. ARTICLE 24: COMMON SEAL The SACCO shall have a common seal which may be a rubber stamp with words Common Seal and the full name of the SACCO embossed thereon. Not more than one seal, which shall be kept in a locked receptacle, shall be existent at any time. The common seal shall not be affixed to any deed or document of any description except:- In pursuance of a resolution of a majority of the members of the Board of Directors two of whom shall sign such deed or document to which the Common Seal is so affixed in their presence. ARTICLE 25: AUTHORITY a) All powers, authority, duties and functions of the members, directors, and employees of the SACCO, pursuant to the provisions of these Bye-Laws shall be exercised in strict conformity with the Act. b) The officers, directors, members of the committees and employees of the SACCO shall hold in strict confidence all transactions of the SACCO with its members and except to the extent deemed necessary by the Board in connection with the making of loans and collection thereof. c) Notwithstanding any other provisions in these Bye-Laws, the Directors, committee members, officers of the SACCO may be removed from office by the affirmative vote of two-thirds of the members present at a special meeting called for the purpose but only after an opportunity has been given to them to be heard. d) When an Executive Committee member or Manager is absent, disqualified or otherwise unable to perform the duties of this office, the Board may, by resolution, designate another member of the SACCO to act temporarily in his place. The Board may also, by resolution, designate another member or members of the SACCO to act on the Credit Committee when necessary in order to obtain a quorum. e) No director, officer, agent or employee of the SACCO shall in any manner, directly or indirectly participate in the deliberations upon the determination of any question affecting his pecuniary interest or the pecuniary interest of any corporation, partnership, association (other than this SACCO) in which he is directly or indirectly interested. In the event of the disqualification of any Director respecting any matter presented to the Board for deliberation or determination, such Director shall withdraw from such deliberation, or determination; and in such event, the remaining qualified directors present at the meeting, if constituting a quorum without the disqualified Director or Directors, may exercise with 17

19 respect to this matter by majority vote all the powers of the Board. In the event of the disqualification of any member of any committee, such committee member shall withdraw from deliberation or determination. (f) All books of accounts and other records of the SACCO shall, at all times, be available to the directors and committee members of the SACCO. These Bye-Laws are supplementary to the provisions of the Act and the SACCO shall be guided by the Act, the rules and these Bye-Laws read together. Notwithstanding any other provisions in these Bye-Laws, Board of Directors shall exercise their authority and power in carrying out their duties and responsibilities of this SACCO collectively and not as individuals. CHAIRMAN: DATE: SECRETARY: DATE: TREASURER: DATE: RECOMMENDED FOR REGISTRATION MUSCCO CHIEF EXECUTIVE OFFICER 18

20 I certify that the above Bylaws of: MUDI Savings and Credit Cooperative Society Limited are not contrary to Provisions of the Cooperative Societies Act 1998 or the Regulations made there under and hereunder and hereby register the Society. Registered No 385. Date Signature Stamp REGISTRAR OF COOPERATIVES 19