A Credit Union is a group of people who pool their monies to assist each other financially. Thus, the main objective of a Credit Union is to assist its shareholders with their financial needs. One of the most important opportunities that Credit Unions offer is the opportunity for shareholders to own and manage their financial institution.
Each shareholder is a part owner of the Credit Union and monies they deposit with the Credit Union are called shares. At the end of each financial year, a rate of dividend is declared which will be paid to the shareholders. The rate to be paid is dependent on the profits the Credit Union made during the financial year. Although all shareholders receive the same dividend rate, the total monies received by a shareholder depends on the amount of shares owned. However, regardless of the number of shares owned by a shareholder, each shareholder has equal rights and is entitled to only one vote at the Annual General Meeting (AGM).
As part owners, shareholders of Credit Unions assist to create more opportunities for themselves, such as starting small businesses, building family homes, and educating their children. While it is important for a Credit Union to be financially sustainable, it is not driven by profit. Credit Unions are only like for-profit corporations in that they also seek to generate profits for the benefit of the owners. However, unlike private commercial banks and other for-profit institutions, the members of Credit Unions serve as both owners and recipients of the CUs’ services. Therefore, when Credit Unions maximize their profits, it results in lower interest rates on loans, lower service fees and higher dividends for the members. In addition to this unique aspect, Credit Unions are democratic institutions, where a single shareholder receives a single vote, regardless of their financial stake in the organization.
The ultimate mission of Credit Unions is to serve their shareholders; in turn shareholders are entitled to be involved in the management of the organization. They can do this by being a voter, a member of a committee, or a director since every shareholder of a Credit Union, regardless of account size, is eligible to cast a vote in the elections of officers and directors, and they may also contest for a seat on the Credit Committee (CC), Supervisory Committee (SC), or Board of Directors (BOD), respectively.
Guided by the Credit Union Act (CUA) of 2002, all Credit Unions are required to hold an AGM to report on the year’s operation, financial audits, and other issues of the Credit Union. It is at this meeting that members can become aware of the activities of the Credit Union during the previous year and become involved in deciding who manages their Credit Union on their behalf.