November 23, 2013   by

One of the key items that your Chama needs from the onset is a good constitution. The Chama’s Constitutition provides the legal framework for The Chama’s organisation. The Constitution should be signed by every Chama member and can only be changed with the agreement of all members. Plus, a constitution is a very important document that helps you manage the Chama properly and also guides the members on what is expected of them as well as what the Chama hopes to achieve. In order to get it right, here are some pointers.

Involve everyone

For starters, make sure that every member in the Chama is involved in making the rules. If any member is left out, they may protest the rules as unfair or unreasonable for not giving them the same benefits or rights as others.

Make sure the rules are fair

Gather with all the members and discuss the rules and punishments. Make sure everyone agrees with them. Nobody will follow rules they believe to be unfair.

Make a final copy of the constitution

Type it up or even just hand write it. Post it up on the wall of your meeting spot. Make sure it is large and noticeable, so there is no confusion over rules when the time comes that one is broken.

Sign it

Each member should sign the constitution to show their agreement to follow the rules. When a rule is broken and the member refuses to take the punishment, you can point to their signature to show that they promised to follow rules.

Enforce the rules

The point of a constitution is to actually follow the rules. The leader of the Chama should make sure all rules are followed and all punishments are given. You can also have a certain member of the Chama make sure the rules are followed. This person should be fair and should not let people get away with breaking rules.

Make sure that there are no loopholes in the rules. Check that every rule is clear and fair, don’t be afraid to give exceptions when necessary. If you have a strict “no eating” rule in your Chama meetings and a diabetic member is eating something to keep their blood sugar at the proper amount, it would be unreasonable to administer punishment. Use your best judgment when deciding for or against an exception.

Favoritism should not come before fairness

While rules should not be overly strict, make sure that you do not let any rules be broken without punishment. Do not make any unreasonable exceptions. Unreasonable exceptions include: you like the member better than others, you’re too lazy to carry out punishment, the member didn’t mean to do it (though they were fully aware of the rules), etc. Use proper reasoning when carrying out punishment. Giving such exceptions will make members think that they can just do what they want and ignore the rules.

Here is a sample Constitution that you can adapt for your Chama:

Investment Chama Constitution

CONSTITUTION of the………………………………………………..Investment Chama

This agreement is made this…… of…………………… the year of …………. between the undersigned people as founder members for the purpose of joint investment in stocks, shares, bonds, options, securities and investments of a like nature for their mutual benefit and interest.

  1. The first principle of the Chama shall be that no member shall be deprived of his/her equitable share in the assets of the Chama.
  2. Members of the Chama shall make regular contributions in such amounts and on such basis as is from time to time agreed or required by the rules.
  3. Members shall be bound by the rules to be determined by members. Such rules may be varied by majority resolution at a properly convened general meeting but the rules shall not at any time contravene the principles of this constitution. The constitution cannot be altered without the agreement of 75% of the Chama for the time being.
  4. The Chama shall deal solely with investments on behalf of its own members and shall neither deal on behalf of nor advise any persons other than its members in relation to investments of any kind. All its activities will be confined to the mutual benefit and interest of its members.
  5. Chama membership shall be restricted to a maximum of 20 people. New members shall only be admitted after being proposed and seconded by two existing members and there being no objection from any other member of the Chama.
  6. No member shall assign, pledge, transfer, mortgage or sell any part of his/her interest in the Chama to another member or to anyone else except as permitted by the authorised procedure for selling back all or part of his/her interest to the Chama itself.
  7. No member shall be compensated for services rendered to the Chama and no member shall bind or obligate the Chama or any member of the Chama to any matters outside the affairs of the Chama, and in respect of the Chama’s affairs they shall only enter into agreements on the authority of a resolution properly passed by members.
  8. The rules shall determine the procedure whereby a member may resign from the Chama and withdraw his/her equitable share of the Chama’s assets but the maximum period to elapse between the date of resignation and the date of full repayment shall not exceed 90 days.
  9. The Chama shall hold a general meeting once in every calendar year as its annual general meeting provided that every annual general meeting shall not be more than 15 months after the preceding annual general meeting. The Chama’s first annual general meeting shall be within 15 months of its inauguration.
  10. At each annual general meeting, the members shall elect a chairman, treasurer and secretary who will resign at the following annual general meeting but be subject to re-election. Members will also elect the Chama’s auditors. If the auditors are members of the Chama they shall be at least two in number and shall not be executive officers of the Chama.
  11. At each annual general meeting, a statement of account shall be given by the treasurer, together with the report of the auditors. The treasurer’s report shall include a full record of the Chama’s income and expenditure; a list of the Chama’s assets together with its end-of-year valuation; also a capital account for each member showing his/her total contributions and withdrawals together with the current value of his/her holding.
  12. Upon the death of any member the value of his/her equitable share in the Chama shall be paid to the executor of the estate in accordance with the Chama’s rules for dealing with a member leaving the Chama.
  13. The Chama’s investments shall be registered through a nominee company provided by a reputable source such as a bank or stockbroker OR such investments shall be held in the names of trustees, of whom there shall be at least two, who will sign a Declaration of Trust and who shall be appointed by a resolution of a majority of Chama members.
  14. The Chama shall open an account with a bank or building society and all Chama monies shall be paid into this account except in so far as monies from disposal of investments may be retained by the Chama’s stockbroker pending reinvestment. At least two of the Chama’s officers or other members nominated by the Chama for this purpose must sign all cheques and the bank/building society shall be instructed accordingly.
  15. If any member should assign, charge or otherwise encumber his/her share in the Chama as prohibited by clause 6 of this agreement, he/she shall be expelled from the club. If any member shall become bankrupt, insane or otherwise incapable of taking part in the Chama’s business, OR shall act in any manner inconsistent with the good faith observable between members, OR shall be guilty of any conduct which could injure the good name of the Chama, OR bring about its dissolution or fail to attend at least 25% of properly constituted meetings in any one financial year, it shall be lawful for other members to notify the offending member in writing that members shall consider his/her expulsion from the Chama. A member being issued with such a warning shall be given an opportunity to offer other members any explanation as he/she considers desirable.
  16. A member shall be expelled if ALL other members present at a properly constituted meeting of the Chama support a resolution to that effect. A member who is expelled shall be notified in writing and shall have his/her equitable share of the Chama assets returned in accordance with the rules of the Chama.

IN WITNESS whereas the undersigned have set their hands

this………… of…………………………………….in the year of …………

NAME …………………… SIGNATURE ……………………WITNESSED BY ……………………

NAME …………………… SIGNATURE ……………………WITNESSED BY ……………………

NAME …………………… SIGNATURE …………………… WITNESSED BY ……………………

NAME …………………… SIGNATURE ……………………WITNESSED BY ……………………




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This post was written by Chamasoft

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    on June 23, 2015, 3:39 PM

    Were just starting our chama and i find this site very helpful. thank you very much for posting this.

      Diana Wangari
      on July 29, 2015, 1:07 PM

      Thanks, glad we can help you Joseph and all the best in your chama

    on November 28, 2015, 3:42 PM

    Very Helpful Thanks. Just what we needed,you pointed us on the right direction.

    on January 18, 2016, 12:12 PM

    A very good example and a good guide. God bless

    on March 5, 2016, 8:54 AM

    Quite an insight and helpful indeed. Advise if need be for further consultation on a different forum.

    sospeter mwania
    on April 15, 2016, 10:26 AM


      Martin Njuguna
      on July 14, 2016, 5:31 PM

      We dont have a formal draft since that will depend on your constitution and bylaws. search for constitution templates on our blog

    on November 27, 2016, 7:44 PM

    Very helpful,thank

    on September 14, 2017, 11:46 PM

    A gud one.

    on November 30, 2017, 11:13 AM

    Wow…. These is exactly what was looking for thanks for it

      Martin Njuguna
      on January 8, 2018, 6:04 PM

      You are most Welcome Edna! Let us know hear how your chama progresses

    on February 23, 2018, 9:27 AM

    i love the sight have gained good idea

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