September 27, 2016   by
Registering and formalizing your group

Registering and formalizing your group

Registering and Formalizing your Chama

Do you want to register and formalize your group? We delve into how you can legally go through the registration process for your group.

Chamas are widespread because they collectively allow members of different income brackets face problems and opportunities as part of a group rather than individually.

Formalizing your Chama will enable the entire group to move steps ahead and gain in the future. A Chama can be formalized in two main ways

  1. Registering as an association or as a Self Help Group
  2. Registering as a Limited company or Partnership

In order to achieve the formalization, a Chama needs to consider officials, a postal address and physical address including a plot number. The officials need to come from within the Chama to avoid any conflict of interest among the members. Agreement among the members also needs to be reached to avoid any misunderstanding for the future of the Chama. Each individual should be allowed to voice out his /her opinion about the options of formalization of the Chama.

You can read our initial research  on formalizing your chama which we had written sometime back.

Information and documentation needed to formalize a Chama

a) Objectives of the Company, the nature of Business / activities the company shall
b) Names of the shareholders in Full.
c) Names of the Directors in full if different from the shareholders.
d) Postal addresses, Email address and Telephone Number of the shareholders and Directors.
e) Number of shares to be held by each shareholder.
f) Copy of ID / Passport of the Shareholders / Directors.
g) Passport photos of the Shareholders / Directors.
h) Copy of iTax PIN certificate of the Shareholders / Directors.

Legal formalization and registration of your group

Use a lawyer to formalize and register your group

Registering the Chama as Self-help group or an Associations

Self-help groups have become a common way to collectively accumulate money and use these funds to benefit member. Many groups have graduated from just the normal contributing groups to investment clubs. This is an indication that Chama’s’ have discovered that there is potential to transform the lives of members in different perspectives.

In order to move your Chama there are a few considerations that need to be addressed by the members’. Before you register your Chama, there needs to be an agreement among members; that all the members share the mission, vision and objectives of the group to change the Chama and will take full responsibility. This way the Chama members are sure of achieving their desired goals.
There are some sound similarities when registering a Chama to a Self Help Group or an Association .

A Chama group will only be registered if it has ten or more members. The group should have by-laws or a constitution that guides its activities and outlines its membership including the officials of the group.

Ensuring that the constitution is clear and indicates desired objectives agreed upon by the members is mandatory. A registration fee of 1,000 Ksh is required. Every registered group must furnish the registrar with their annual returns at a fee of Ksh100. In the case where the group overtime faces changes like; of change of group officials or office titles, a group must notify the registrar within two weeks’ notice. This must be signed by three known officials. Any group planning to amend its constitution or name must obtain permission from the registrar by putting the application in writing and must be signed by three officials — the Chairperson, Secretary and Treasurer.

The letter of intent must be accompanied with a copy of minutes, which must be certified by the as a true copy of the minutes of the meeting at which the resolution to make the intended change was passed. Every registered group is required to hold an annual general meeting once a year and all members must be invited. The group should also be aware that as they change they will be required to file tax returns thus members need to be informed collectively of the tax laws and any futuristic implications. Failure to file returns is an offence and a group that fails to do the same faces a penalty and can be de-registered .Apart from the annual returns, a group is required to pay other different statutory fees from time to time. These include change of postal address, change of officials, certified copy of a certificate, application for constitution amendment, application for dissolution of group, application for confirmation letters of group officials and name search. These fees vary from time to time.

Registering a Chama as a Limited Company or Partnership

e-citizen portal Registration documentation apply across for companies, partnership, association and or Self Help group .When registering a business in Kenya the first thing needed is to conduct a name search. This is a must for all businesses. The cost incurred for each name search will be Ksh. 100 per name and one receives immediate response. To save on time it is advisable to have three names and search them all at once. The company name reservation lasts 30 days and can be renewed for a similar period. The Company Registry requires that a name search be conducted and approved before the registration process of any local business. One can do it online through the e-citizen portal or manually at the various Huduma Centers all over the country.

Limited Company registration process

A Chama needs a memorandum and articles of association which sets out the objectives of the Chama (company) and the internal constitution of the Chama. These documents should be drafted by a registered lawyer who is a current practitioner and is in the current roll of lawyers at the Law Society of Kenya. This costs between varies and the current charge is Ksh. 4,500 – Ksh. 100,000.

Forms  to be filled out by a Lawyer

Form 208 is a compliance form and should be signed by the lawyer registering the company. Form 201; notifies the registrar of the registered office address of the company, and to be signed by one director or the company secretary.
An additional form to be filled is form 203; which is filled and signed by a Certified Public Secretary of Kenya (CPS) who must be a current member of the Institute of Certified Public Secretaries (ICPSK). This form covers the particulars of the Chama (company) directors and company secretary.
Note: Only companies with a Nominal capital of over Kshs 500,000 are required to have a Company Secretary.

Stamp Duty

Once the memorandum & Articles have been prepared, all documents should be presented to the registrar of companies for payment of stamp duty. This takes between 1-3 days. Stamp duty will cost from Ksh. 3,150 depending on the Nominal Capital of the Chama (company). Once the stamp duty has been paid, all the documents should be presented to the Registrar of Companies together with forms Form 203, Form 201 and Form 208. Payment of Ksh. 2,800 will be needed and formal registration will takes between 3to 4 weeks.

Registering a  Chama as a Partnership

The partnership act allows up-to 20 partners to be listed in the partnership . In order to register the Chama as a partnership, the members need to proceeded as follows:
a) After the name search, if your chosen name is available for registration you will get a form (Form BN/2) from the registrar of companies.
b) You will need to fill out Form BN/2.

Once completed the form, it should be taken it back to the Registrar of Companies and a fee of Ksh. 800 will be paid .Registration takes between 2 to 3 weeks.

Registration of a Chama as an Association

Associations are registered under the Societies Act in Kenya by the Registrar of Societies. Consists of at least five persons and not more than forty persons. The members of the association have a common agenda which the association seeks to satisfy. The association by law is required to, within a period of sixty days from the date of its formation, make an application for registration.

Steps to Register

The Chama will go through the same process like a company by conducting a name search as proposed by the Chama. They will also need to draft a constitution and Key officials who include the Chairman, Secretary and Treasurer who have been appointed and approved by the Chama members need to be included in the constitution.

Difference between an Article of association and Memorandum of Association

An MOU document contains the basic information which is required for the Chama to operate while the articles of association are the rules and regulations that govern the Chama.

Various company registration documents and sample formats can be obtained from the Attorney Generals website .
Please note that the registration fee is subject to change depending on government reviews.

Benefits of registering and formalizing your group

The benefit of registering and formalizing your group into a  company or association is that the Chama will be recognized by law and can transact various businesses of choice. The group can also own property on behalf of the members. This gives members a sense of security even as they contribute their money to the group activities and legally binds them to a common goal. It is also important for every registered Chama to be informed about tax implications of their property transactions, especially when they sell it and intend to split the cash.

Debts and other group obligations are a responsibility of each one in the Chama thus if they intend to get any financial aid all members’ should be in agreement.



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This post was written by Anne Oyoo

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    Peterson Mwiti
    on May 4, 2017, 7:22 PM

    Good and informative article. Interested in name search and registration of our Chama as an association or partnership.

      Martin Njuguna
      on May 8, 2017, 10:37 PM

      Hi Peterson, thanks for the comment. Go ahead and rack up your mind….I am sure you will come up with a good name. Best of luck

    on July 18, 2017, 8:48 AM

    Is it a must for the chama to be registered as a company or partnership if it is already registered as a self help group for it to own property legally. What are the tex implications

      Martin Njuguna
      on July 27, 2017, 11:05 PM

      Thank you Ann for the comment. It would be advisable to consult your chama constitution or contact a lawyer with regard to joint property ownership. Some Chamas register a limited company and members own shares within that company based on their contributions.The company then acquires the properties. It would be prudent for you to involve your chama members and consult external experts(tax consultants, lawyers etc) on this matter. All the best with your investments

      on February 5, 2019, 6:30 PM

      Hi Ann, the main challenges is trading for profits . many institutions prefers to work with registered partnership, sole proprietorship or registered private company. A registered chamaa or self help group can own proprieties with officials or selected members as trustees. As per the Act minimum of ten members are required during registration.

    on September 20, 2017, 11:15 AM

    I loved the article,
    We are two, does that mean we can register as a Chama as a partnership?

    on January 17, 2018, 6:43 PM

    After registration of a chama as an association, is there a certificate or some kind of documentation that is supposed to be issued? Please assist.

      Martin Njuguna
      on March 7, 2018, 9:48 AM

      Yes, Liase with Social services to do the same

    on January 27, 2018, 12:16 PM

    Is it a must the chama members to be 10 in order to register as a self help group or a partnership?

    on July 9, 2018, 9:59 AM

    how much would you need for a renewing of a registered self-help group

    Mwangi Chege Pius
    on August 13, 2018, 4:34 PM

    Useful information but the bureaucracy involved when you go government offices is sickening!

      Martin Njuguna
      on September 25, 2018, 7:58 PM

      Thanks Mwangi. Just get going by opening a chamasoft account and you formalize as you along.

    on August 30, 2018, 5:41 PM

    Am peter my question is we are 15 people and we are planning to register our chama .what are the option you can advice us in this case BTW association and self help group?

    Which offices should we go bcoz last time I tried in e citizen its flop kindly I need your guidance.

      Martin Njuguna
      on September 25, 2018, 8:03 PM

      Dear Peter, thanks for writing. Best thing would be to consult group members and at the same time a legal advisor/lawyer

      on February 5, 2019, 6:36 PM

      Hi peter, go for self help group. is easier and faster. for Association , officials are vetted , a process that takes very long and can turn out negative. Self help group you will be able to do gainful activity /business but for Society is not easy but in the event you do business the profit is return back to meet the institution financial obligations

        on January 19, 2020, 6:09 AM

        Hey Wycliffe, you say its easier registering a self help group. What do i need to do/have to get that? please help.

    on March 25, 2019, 5:05 PM

    hi, we are a register self help group. can we upgrade to a sacco or limited? And if yes ! what are the steps

    Mercy Mugure Ngethe
    on April 13, 2019, 1:22 PM

    Am Mercy,thanks for the knowledge.
    Are self help groups required to have a KRA PIN?
    If so,what for.
    Thank you.

      Martin Njuguna
      on May 15, 2019, 5:47 PM

      Hi Mercy,
      Thanks for the comment. You would have to seek legal guidance on this. All the very best

    on June 30, 2020, 2:20 PM

    My name is Charles. We are a group of 12 members. With the objective of pooling savings for possible future investing.

    We could register as a partnership or as an Association.
    I just wonder could be advisable to start off as an association then later convert to partnership or we just go right into partnership?

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