Registering a Chama (self-help group) in Kenya

Self-help groups commonly referred to as ‘chamas’ are the prevalent saving means in Kenya today. Previously, chamas were considered a women’s affair, but this has evolved as we are seeing more men engaging in self-help groups. Additionally, chamas are now more of investment vehicles as opposed to the famous merry-go-rounds. For this reason, chamas have transformed the lives of many in the society. This is because these groups enable persons from varying income brackets to face difficulties and opportunities as a group as opposed to individuals.

How to Register a Chama Group

You might be involved in a merry-round form of Chama with your acquaintances and would like to, transform it into an investment so you might be wondering what the requirements for registering a chama in Kenya. Self-help groups can be registered with Ministry of Gender, Children and Social Development in two main ways.

• Registration as an association or as a Self Help Group
• Certification as a Limited company or Partnership

Whenever formalizing a Chama as a limited company or partnership, the group has to perform a name search on eCitizen or at a nearby Huduma centre at the cost of Ksh 150. To save time, one must submit at least three names at once in case any of the names are already taken by other. When successful, the business name is reserved for 30 days during which the chama can then register the business name.

After this, all the requirements of registering a limited company or partnership apply. In case you want to register a chama as an association, you need at least five members and not more than forty participants. The process also begins with conducting a name search as proposed by the chama members. The chama must have Articles of association and Memorandum of Association documents in place as these are vital requirements for registering a chama.

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Moreover, for a successful legal formalization, a chama must have officials, a postal address as well as a physical address with a plot number. The primary officials must be members of the chama to avoid any conflict of interest among the associates. Furthermore, chama members must have an agreement to evade future misunderstandings, and each person must be allowed to voice out their opinions concerning the registration of the chama.

Process of Registering a Chama

Documents Required

• Some documentation is needed to formalize a self-help group legally. These include;
• The objective of the company and the activities to be conducted by the business.
• Full ID names of the members.
• Full names of the Directors if different from the shareholders.
• Postal addresses. Email, telephone details of the shareholders, and directors.
• Number of shares for each stakeholder
• Copy of national ID/passport of the investors and directors
• A copy or KRA PIN certificate for all the members and directors.

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Requirements of Registering a Chama in Kenya

The following are what you must have as a chama before you can be registered with the Ministry

Before the formalization of the group, all the participants in the chama must share mission, vision, and objectives.

• You need to have ten members or more to register the chama group.
• Your chama must have a constitution that guides its activities as well as membership directives including how to nominate officials.
• A small fee of Ksh 1000 is needed to register the chama.
• Every year the registered chama must file its annual returns by paying Ksh 100 to the registrar. Failure to submit the returns can result in deregistration of the chama.
• The chama must give a two weeks’ notice to the registrar whenever they need to change the names of the officials or office posts. Please note that this notice of change must be signed by at least three officials.
• Also, if the chama wants to change its constitution or name, it must apply in writing to the registrar. This compliance must be signed by the chairperson, secretary, and treasurer. Additionally, a copy of the minutes verified by the three officials must be attached to the letter.
• Every registered chama is required by law to hold an annual general meeting inviting all its participants.
• Besides the yearly returns, your chama has to pay various fees from time to time such as change of officials, postal address, and application for constitution adjustment, request for change of officials, name search, and request for disbanding of the self-help group.

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Benefits of Registering a Chama in Kenya

There are several merits of registering a chama. Firstly, the Kenyan constitution will recognize it as a body; hence it can conduct various business activities under its name. Secondly, the self-help group can own assets on behalf of the participants. As such, the members feel a sense of security contributing their hard-earned cash to the chama.

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Thirdly, registering a chama helps the members be conversant with tax implications of their property dealings. This is especially true when the group intends to sell and distribute the cash among the associates. Members in a chama need to realize that they are jointly responsible for all debts and financial obligations of the group; hence, all need to agree with the intentions to take a loan.

Jackline Wangare (Lifestyle writer) Jackline Simwa is a content writer at Tuko.co.ke, where she has worked since mid-2021. She tackles diverse topics, including finance, entertainment, sports, and lifestyle. Previously, she worked at The Campanile at Kenyatta University. She has more than five years in writing. Jackline graduated with a Bachelor’s degree in Economics (2019) and a Diploma in Marketing (2015) from Kenyatta University. In 2023, Simwa finished the AFP course on Digital Investigation Techniques and Google News Initiative course in 2024. Email: simwajackie2022@gmail.com.