The Kenya Society of Professional Co-operators (KSPC) has called on all cooperatives in the country to come up with clear guidelines and policies regarding how shares can be transferred from one member to another.
In their routine Continuous Professional Development (CPD) forum which was held in Kisumu between March 25 and March 29 this year, the cooperative professionals recommended that every cooperative should have a well-defined policy procedure in place to facilitate shares transfer.
This is the process of transferring ownership or membership shares from one member to another while upholding cooperative values, principles and membership rights.
They noted that the share transfer policy serves as a linchpin in the framework of corporate governance, which will see the process done with transparency, fairness and stability.
The policy will provide clarity on the procedures and requirements for transferring shares, ensuring compliance with legal and regulatory obligations while maintaining the integrity of the cooperative membership structure.
Currently, specific processes and requirements for share transfers vary among cooperatives based on their individual bylaws, policies and jurisdictional regulations.
Preserving image
KSPC observed that over the years, many cooperatives have continued to hold share capital of individuals who exited the society, noting that this continues to stain the cooperative brand.
Regarding share capitalization, the professionals recommended that cooperatives should take advantage of economic member participation and aim to strengthen its financial position and enhance the equity base.
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In the cooperative sector, share capitalization refers to the process of converting the cooperative’s surplus or retained earnings into share capital. This is done by issuing additional shares to the cooperative members based on their existing shareholding or patronage of the cooperative.
Share capitalization in a cooperative may have specific requirements and considerations that are governed by cooperative laws and regulations in a particular jurisdiction. These requirements may vary depending on the cooperative’s legal structure, type, and the specific provisions outlined in its governing documents.
According to the professional body, the surplus or retained earnings, which are typically generated from the cooperative’s operations and activities, may be converted into additional shares held by members, which will allow members to participate in the cooperative’s financial growth, enhance member ownership, improve financial stability, and support the long-term sustainability of the cooperative.
The participants however recommended KSPC to create more awareness about its existence and educate and train cooperative practitioners in the movement, documenting the existing cooperative knowledge for posterity in a bid to promote an induction programme in cooperative theory and practice.
Cooperative identity
“It was observed that some of the national and county cooperative officers, leaders and managers of cooperative organizations have inadequacies on cooperative theory and practice. This has led to a management style that has metamorphosed cooperatives to undefinable institutions that can neither be categorized as cooperatives nor companies,” said KSPC in its monthly professional dispatch.
It also noted that it is essential for cooperatives to engage with stakeholders, including collaborative partnerships and affected communities, experts, advocacy groups, and industry representatives since it promotes transparency, inclusivity and the development of more robust and widely accepted solutions, urging policy makers to actively seek input, feedback, and diverse perspectives to inform their decision-making processes.
It further called for inclusion of cooperative education in school curriculum at elementary and secondary levels as a standalone subject or unit of study to offer significant benefits to students and prepare them for future careers while enriching their learning journey.
KSPC argues that cooperatives have employed more than 500,000 directly or indirectly, contributing approximately 40 per cent to GDP, with Commissioner for Cooperatives Development registering more than 30,000 cooperatives, which has been achieved without much education especially from the elementary school level.
Other recommendations include: need to come up with a mechanism and ways of evaluating the impact and distribution of cooperative education and training to ensure the societies get value for money spent, and formulation of a policy to outline the procedures, principles, and guidelines governing the process of separating a cooperative organization into two or more independent entities (demergers).
By Hezron Roy
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