September 13, 2012   by

Becoming an Investment group

We have tackled a lot on the investment packages being offered by several of our commercial banks. But before a group can go the lengths of savings up to an investment, it is very important to carry out due diligence and sort of ”put your act together’

Chamas, Go big!

Transforming from Merry go round to Investment group

 Since many people are already in a social group for one reason or another, it is advisable to upgrade the existing Chama into an investment club instead of forming a new group.This is because old groups have gone through the teething problems associated with new associations and members are well acquainted with each other. With years of helping each other in merry go rounds or social welfare groups, this groups can easily graduate into investment clubs. This ‘upgrade’ has an advantage of having previous financial interaction enabling members to know how each other can commit financially, credit worthiness or even their levels of commitment to responsibility.

Blossom into a Big Group!

Remember to keep off family and close relatives in an investment club as they may bring along some vested interests. However, its also important to note some social based groups have at times done very well.

Key steps in Becoming an Investment group

In case you want to form a new investment club it is advisable to bring together comrades with common interests, for instance minded workmates, friends or business associates.

Make decision on Membership

A club should decide on how many members they want on board and whether or not additions members can be incorporated made along the way.

Get a Chama Constitution

Once a Chama has been formed, the next step should be drafting a constitution which should define the rules of the game. All members must agree on the terms and conditions of the constitution and must be ready to comply with it.  To be on the safe side  tackle various issues as  may arise in the draft copy and also sample  copies of  constitutions from other groups before making the final draft. To make it formal ,the constitution document should be written down with each member being given a copy of the same.

It serves more purpose than laying the rules as it is also demanded by government authorities during registration and the bankers while opening an investment group account.

Choose your Leaders, Wisely 🙂

The next step should be assigning of responsibilities to officials who run the club  on behalf of the members. Their duties responsibilities should be well spelt out and agreed upon by all members. They may include but not restricted to the chairman, the secretary, treasurer among other offices that members agree upon.

Choosing office bearers may also involve and include creating several committees, eg Investment committees, finance committee and even welfare committees. These again may also have a  leader, who may or may not be a part of the group officials.

Become Legit

With the like minded members in place,  a constitution and  office bearers agreed upon, the group can move on to seek legal documentation. There are several options available to register a group either as welfare or social group, community based organisation, partnership or a business. Group members depending on the size, financial muscule, or  group investment plan can make a decision on which option to go for. Small groups may register with the department of the social services while big investment groups may decide to register a company with the registrar of businesses.

Of course, make sure you also engage a lawyer during the registration process for more advice. An accountant or Auditor may also be a useful resource since he/she will advise on the what will be the best structure for your group, based on your investment and financial objectives.

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