How to Convert a Chama into a Cooperative Society in Kenya

To convert a chama (informal group) of 10 members into a cooperative society in Kenya, you must follow the procedures outlined in the Co-operative Societies Act, which involves a series of meetings, document preparation, and formal application to the Commissioner for Co-operative Development. 

Step-by-Step Procedure of How to Convert a Chama into a Cooperative Society in Kenya

Minimum Requirements:

• A minimum of 10 members, all of whom are qualified (age 18+, common bond/occupation).
• A common economic or social objective.
• A physical office address and a postal address. 

Phase 1: Preparation and Initial Meetings

1. Hold a formation meeting: All prospective members should meet to agree on the intention to form a cooperative society. During this meeting, the group should:
   • Agree on a name for the proposed society.
   • Discuss and approve the society’s objectives and the common bond among members.
   • Elect an interim committee, including a Chairperson, Secretary, and Treasurer, who will oversee the registration process.
   • Record detailed minutes of the meeting and have them signed by all members present.
2. Draft the cooperative by-laws and economic appraisal: The elected committee is responsible for drafting the society’s constitution/by-laws, ensuring they align with the Cooperative Societies Act and principles. A feasibility or economic appraisal report, detailing the business plan and projected financials, should also be prepared.
3. Gather required documents: Collect copies of the following from all members:
   • National Identity Cards (ID) or passports.
   • KRA PIN certificates.
   • Passport-sized photos.
   • Contact information (telephone numbers, physical addresses).
   • If applicable, a letter from the employer agreeing to check-off deductions. 

Phase 2: Application for Registration

4. Submit a letter of intent: The interim secretary should write a formal letter to the County Cooperative Officer, addressed through the Sub-County Cooperative Officer, indicating the group’s intention to register as a cooperative.
5. Meet with the Cooperative Officer: The Cooperative Officer will schedule a meeting with the group to verify its viability and provide pre-cooperative education. The quorum for this meeting is at least 10 members.
6. Complete and submit the application forms: Obtain the official application for registration form (Form I) from the local cooperative office, complete it in four copies, and submit it along with the following documents:
   • Four copies of the proposed by-laws.
   • Four copies of the pre-cooperative meeting minutes.
   • Four copies of the economic appraisal report/business plan.
   • Four copies of the supplementary information form (if any).
   • A bankers cheque for the application and registration fees, generally totaling around KSh 3,700 (KSh 200 for name search and KSh 3,500 for registration), addressed to “the state department for Cooperatives”.
   • All collected member documents mentioned in Step 3. 

Phase 3: Registration and Commencement

7. Receive a letter of recognition: If the application is satisfactory, the Registrar will issue a letter of recognition, allowing the group to operate as a pre-cooperative society for up to three years. During this period, the group must actively work to meet all conditions for full registration.
8. Obtain the Certificate of Registration: Once all conditions are fulfilled (which can happen immediately if all requirements are met), the Commissioner will issue a formal Certificate of Registration and a certified copy of the by-laws, granting the society legal existence.
9. Convene the first general meeting and open a bank account: The newly registered society must hold its first general meeting within one month of receiving the certificate to confirm officials. You can then open a bank account in the cooperative’s name using the certificate.
10. Comply with regulations: The cooperative must adhere to the Co-operative Societies Act, including maintaining proper accounts, submitting annual returns and audited financial statements, and complying with any regulatory authority requirements (e.g., SASRA for deposit-taking SACCOs).