ORIENTATION PROSPECTIVE CANDIDATES

DUTIES AND
RESPONSIBILITIES OF THE
BOARD AND STATUTORY
COMMITTEES OF A CREDIT
UNION
 OUTLINE
Definition of a Co-operative Society
 Definition of a Credit Union

 The Co-operative Principles

 Legal Structure of the Board

 Idealised Functions of the Board

 Credit Committee

 Supervisory Committee
DEFINITION OF CO-
OPERATIVE SOCIETY
A co-operative is an autonomous
association of persons united voluntarily
to meet their common economic, social
and cultural needs and aspirations
through a jointly owned and
democratically controlled enterprise.
DEFINITION OF A
CREDIT UNION

Credit Union means a society which has

as its objectives the promotion of thrift
and the creation of a source of credit
for its members, the majority of whom
are not agriculturists, for provident or
productive purposes.
STRUCTURE OF A TYPICAL
CREDIT UNION
MEMBERS IN
GENERAL MEETINGS

CREDIT BOARDS OF DIRECTORS (9) (12) SUPERVISORY

COMMITTEE COMMITTEE
PRESIDENT, VICE PRESIDENT,
(5) (3) (5)
TREASURER, SECRETAY

EDUCATION COMMITTEE MANAGER

ANNUAL GENERAL
MEETING
BYE-LAW REVIEW ETC.
EMPLOYEES
AD HOC COMMITTEES
PRINCIPLES
The Co-operative principles are
guidelines by which Co-operatives put
their values into practice.
FIRST PRINCIPLE:
VOLUNTARY AND OPEN
MEMBERSHIP

Co-operatives are voluntary organisations,

open to all persons able to use their
services and willing to accept the
responsibilities of membership, without
gender, social, racial, political or
religious discrimination.
SECOND PRINCIPLE:
DEMOCRATIC MEMBER CONTROL

Co-operatives are democratic

organisations controlled by their
members, who actively participate in
setting their policies and making
decisions.

Men and women serving as elected

representatives are accountable to the
membership.
SECOND PRINCIPLE:
DEMOCRATIC MEMBER CONTROL

In primary, Co-operative members have

equal voting rights (one member, one
vote) and Co-operatives at other levels
are also organized in a democratic
manner.
THIRD PRINCIPLE:
MEMBER ECONOMIC
PARTICIPATION
Members contribute equitably to, and
democratically control, the capital of
their co-operative.

At least part of that capital is usually the

common property of the co-operative.
THIRD PRINCIPLE:
MEMBER ECONOMIC
PARTICIPATION

Members usually receive limited

compensation, if any, on capital
subscribed as a condition of
membership.
THIRD PRINCIPLE:
MEMBER ECONOMIC PARTICIPATION

Members allocate surpluses for any or all

of the following purposes:

 developing their co-operative, possibly

by setting up reserves, part of which at
least would be indivisible;
THIRD PRINCIPLE:
MEMBER ECONOMIC
PARTICIPATION

 benefiting members in proportion to

their transactions with the co-operative;
and

 supporting other activities approved by

the membership.
FOURTH PRINCIPLE:
AUTONOMY AND INDEPENDENCE

Co-operatives are autonomous, self-help

organisations controlled by their members.

If they enter into agreements with other

organisations, including governments or
raise capital from external sources, they
do so on terms that ensure democratic
control by their members and maintain
their co-operative autonomy.
FIFTH PRINCIPLE:
EDUCATION, TRAINING AND
INFORMATION
Co-operatives provide education and training
for their members, elected representatives,
managers and employees so they can
contribute effectively to the development of
their Co-operatives.

They inform the general public – particularly

young people and opinion leaders – about the
nature and benefits of co-operation.
SIXTH PRINCIPLE:
CO-OPERATION AMONG CO-
OPERATIVES

Co-operatives serve their members most

effectively and strengthen the co-
operative movement by working
together through local, regional and
international structures.
SEVENTH PRINCIPLE:
CONCERN FOR COMMUNITY

Co-operatives work for the sustainable

development of their communities
through policies approved by their
members.
IDEALIZED FUNCTIONS OF
THE BOARD

1. Supreme Decision Centre

2. Advisory
3. Trustee
4. Perpetuating
5. Symbolic
CREDIT COMMITTEE

Regulation 50, 3(c) (i) – Authority (Legal

Status)

Regulation 34 – Approval of Loans

Role of Credit Committee

DUTIES
Regulation 34

“In the case of a Society whose primary

objective is the granting of loans to its
members and in which name the words
“Credit Union” appear, loans shall be
approved by the Credit Committee.”
PRIMARY DUTIES
 Responsibility for the approval and
general supervision of all loans to
members.

 Act in accordance with the loan policy

set down by the Board of Directors.
SUPERVISORY
COMMITTEE

REFER TO REGULATION 50 (3) (c) (ii) –

LEGAL STATUS
ROLE OF SUPERVISORY COMMITTEE
SUPERVISORY
COMMITTEE
Regulation 50 3 (d)

“A member of the Supervisory

Committee shall not be eligible for
membership to the Board of Directors
or to the Credit Committee.”
SUPERVISORY
COMMITTEE
APPOINTMENT
Regulation 50 3 (c) (d)

PURPOSE
To keep an eye on the operation of the
Credit Union on behalf of the
membership.
SUPERVISORY
COMMITTEE
ROLE

To ensure compliance with the laws of

the Credit Union.
Fit and Proper

Here are some questions that

prospective and current board
and committee members should
think about:
WHY HAVE I BEEN ASKED TO JOIN THE BOARD?

Is it because of my industry expertise or

business acumen, or is it because I have
credentials that will be impressive to
investors and the world at large?
 Does management truly value and
encourage constructive debate and
criticism, or is the prevailing mentality that
the primary role of the board is to monitor
the performance of the Manager and to
compensate him or her appropriately?
2. What do current directors say
about the “culture” of the
Co-operative?
 How interested do the other directors
seem to be ?

 Are directors given an adequate education

about the business of the Society and the
industry in which it operates?
 3. How frequent are executive sessions
of the board?

 4. Does the society take full advantage

of the protections allowed to directors
under the law
5. Is the Society’s insurance
adequate to protect me? Reg.31
 Are the policy limits adequate in the judgment
of a reputable insurance consultant?

 Have I received and/or reviewed a copy of the

application and the policy?

 Have I had the terms of the policy reviewed by

a lawyer with experience with respect to
coverage issues?
6. Does the Society have an
experienced internal audit staff and
a strong outside auditor?
 What do the outside auditors say
about the willingness of management
to follow its advice and to adhere to
the best accounting practices?
 Does management insist on
compliance with “best practices” in
the areas of financial reporting and
controls?
7. Compensation issues are
especially important

 Does the Society have a compensation

philosophy discussed and approved by
the full board?

 What procedures are followed in

approving transactions with
management?
 Stipend –vs- Honorarium
8. Does the general counsel attend board
meetings and is he or she available to
answer questions?

 Is the Society represented by counsel

that is experienced and
knowledgeable about the co-
operative?

 How important is the Society to the

law firm’s overall financial well-being?
9. Will I have free access to key
members of management ?

 or will all of my information about the

Society essentially come from the
Manager?
10. Am I willing to be unpopular or
“controversial” if being so is
necessary to do what is right for
shareholders?

 Am I willing to resign from the board

or committee if my efforts are
unsuccessful?