Q: What is a Permanent Share?
A: It represents a member’s ownership of, or member’s equity in the Credit Union. This amount cannot be withdrawn while the person remains a member.
Q: Why is it necessary for the Credit Union to implement Permanent Shares?
A: This gives the Credit Union another option for raising capital. It is also in keeping with the International Financial Reporting (Accounting) Standards that require equity to be treated in a certain way.
Q: Since voluntary shares are not considered capital, permanent shares represent members’ equity in the Credit Union.
Q: How is a Permanent Share different from voluntary shares?
A: The money in voluntary shares can be withdrawn, subject to a notice period if necessary. Permanent shares cannot be withdrawn; they can only be transferred when the member decides to give up membership.
Q: How does a member benefit from having Permanent Shares?
A: It represents your part ownership or equity in the Credit Union and is used for the growth and development of your Credit Union.
Q: How does the Credit Union benefit?
A: Permanent shares increase the capital of the Credit Union and allows it to undertake expansion and enhancement of services to the members.
Q: Will I get dividends on my Permanent Shares?
A: Dividends may be paid on permanent shares if recommended by the Board of Directors and approved by members in an annual meeting.
Q: Can I use my Permanent Shares as collateral?
A: Permanent shares are not intended to be used as collateral. Members have the option of using their voluntary shares to provide collateral for their loans.
Q: Who and what will determine how much Permanent Shares members will need to have?
A: These decisions will be made by members in general meetings on the recommendation of the Board.
Q: Can Permanent Shares ever be withdrawn?
A: No. they cannot be withdrawn but they can be transferred to other members. In case of death or resignation as a member; the Credit Union may buy back the shares using a special fund called the share transfer fund.