Investment Club Leadership in Zambia (Board & Management)

 

 

“Governance is critical in the business of managing other people’s money;

no governance, no confidence.”

-James Mworia, CEO, Centum Investment Company (Kenya)

Everything rises and falls on leadership. It is important that the club is well run by committee leadership. A clear leadership structure, made up of advisors, managers, and committee members, and supported by professional consultants and service providers, will guarantee a corporate governance structure that attracts both investors, and new members, alike.

The table below is sample investment club administration organs.

Organ	Responsibility
Board Of Advisors	Provides professional advisory support & networking contacts
Club President	Maintaining vision, building networks and inspiring & empowering the team
Deputy President & Education Officer	Head of education and research program and deputizes the president
Secretary	In charge of communication with club members and between club and partners
Finance Officer	In charge of finances, and accounting issues
Social Secretary	In charge of social events, meetings and networking
External Auditor	Audits the club finances every quarter, or annually
Committees	Education Committee (headed by vice president, in charge of education programs) Social Affairs Committee (chaired by social affairs secretary, proposes social events) Finance & Investments Committee (proposes investment decisions, chaired by finance secretary) Disciplinary Committee (for dispute resolution, chaired by club chairman) Organising committee (chaired by secretary, to organise official events, meetings, etc)

 

£        Club Leadership/Advisory Board

The leadership and management of the club is essential information sought by new investors, since no one wants to put money in an organisation led by novices, and lacking oversight. Indeed, in most investment companies’ websites, the most visited web pages are those on “management” and “board”. The advisory is provided by a board of competent, respectable, and networked, but unpaid professionals, just like in companies limited by shares. The board should have at least five (5) members, and at most 7 (seven) members.

£        Club Officers/Management 

The management is composed of the officers, who take reigns periodically, with periodic changes. They should change leadership every two years, but at the end of first year, the club should elect leaders-in-waiting, so they learn how to run the club as assistants, and then, come in at the end of the second year.

An investment club should agree on what responsibilities there should be, and what kinds of officers will be needed to take on these responsibilities. The leadership and management of the club is essential information sought by new investors, since no one wants to put money in an organisation led by novices, and lacking oversight.

There should be a clear clarification of the responsibilities of the officers, as well as club members. After all, even regular, non-officer members have responsibilities. The club should elect/appoint officers in one of the first meetings.

It is important that all members of the club have the opportunity to serve in one post or another within a period of five years (usually most clubs have started achieving their financial goals after five years).  This therefore means that the club leadership should rotate annually. These officers should resign at the following Annual General Meeting, but should be eligible for re-election. If an officer should leave the club, die or otherwise be unable to continue to carry out his/her duties, a replacement may be elected at a subsequent Ordinary Meeting of Members.

In the alternative to having own investment administrator and managers, the club can outsource management and administration to a professional investment club advisory firm, which will offer a dedicated relationship manager to oversee the affairs of the club, including accounting, investments, reporting, minute taking, and overall communications.

The investments club should have the following club officers, who form the Club Management Committee: 

£        Club President

The president is also known as the presiding partner. S/he has the following roles and responsibilities:

¥        Presides over the meetings,

¥        Finalizes meeting agendas, helped by input from the members and secretary.

¥        Directs operations to ensure that all members stick to the clubs’ rules and constitution to keep the club on track and acting within the law.

¥        Manages the mechanics of the meetings ensuring that everyone sticks to the points at hand; give everyone the opportunity to speak and may have a second or casting vote when a majority decision cannot be reached.

¥        Guides the timing of the meetings by raising for discussion or contemplation, all agenda points, in a structured manner.

¥        Decides when the next meeting is going to take place (usually done with a mutual vote but made official by the president),

¥        Chairs the dispute resolution committee/mediation committee

¥        Attends all committee meetings.

¥        Signs as official signatory to the Club bank account, together with the finance secretary, and another member of the club.

£        Deputy President & Education and Research officer

“successful investment is the interaction between skill and capital”

-Rwoth Ramogi

The vice president can also be known as the assistant presiding partner, heads the education committee. The vice president is the member that stands in when the president is absent or needs help with presidential duties. The vice president is also the one responsible for organizing educational activities such as guest speakers, reading materials, field trips, assigned reading, and presentations that have to do with investing. Some skills required on the road from amateur to sophisticated investor might involve learning how to read an annual report, calculating financial performance ratios, and understanding various stock valuation methods.

£        Finance Officer

The finance officer is also known as the financial partner, heads the finance committee. The Finance Officer administers to the clubs finances and is responsible for the accurate reporting of the clubs financial position. In detail, her roles include:

¥        Recording all financial transactions and supplying a breakdown of the clubs Assets, Liabilities, Bank balance and Unit Valuations.

¥        Handling all Tax affairs for the club.

¥        Compiling and presenting monthly and year end reports covering the ins and outs of the clubs funds in the Cash Account, the Capital Account and the Asset Register.

¥        Dealing with the brokerage firm and buying and the selling of stock.

¥        Keeping accurate records of the financial holdings of the club, the financial contributions of each of the members, and any other records that concern with money and financial matters.

£        Investment Club Administrator - The Engine of The Club

The investment club administrator is the soul of the club. The engine of the club. The fuel of the club.

The investment club administrator is also known as the Recording Partner, heads the management committee, or staff of the investment club, and is in charge of operations of the club.

The investment club secretary can be seen as the chief operations officer. The one who knows everything, the laws, the policies, the membership, the contributions, the entrants and exits, everything.

Most investment club members are very busy, and may forget activities, duties, roles, or to attend meetings of pay their dues. It is the role of the secretary/administrator, to make this happen.

Consequently, it is advisable to remunerate/ pay the secretary an allowance or salary from the get-go.

Further, it is advisable that once the club is big enough, the secretary should be a non-member, an employee, a third party, purely working for the club.

From experience, clubs with administrators who are paid to follow up on the members learn more, network more, invest more, and generally, achieve more.

  The secretary is responsible for the following duties:

¥        Making sure that all documentation are available, and upto date, including club policies, by laws, legal registrations, and related documents like membership forms, loan forms, investment forms, etc.

¥        Update member details, including next-of-kins, beneficiaries, contributions, dividends, loans, portfolio, etc.

¥        Ensure communication is sent to all members, stakeholders, and regulators, including lawyers, auditors, accountants, and banks, such as meeting dates and venues, agenda for meetings, minutes of meetings, thank you notes to visitors and trainers, and partners, etc.

¥        Ensure regulatory compliance such as taxes, legal, return fillings, member tax returns and filings, licenses, etc.

¥        Carry out accounting, banking, reconciliation, and reporting, helped by the club advisors such as auditors, accountants and lawyers.

£        Social Secretary

Social secretary is also known as events secretary, heads the social events committee. She has the following roles:

¥        Organizing social event for the club, including sports, parties, orphanage visits and fun activities.

¥        In charge of advertising.

¥        In charge of public relations.

¥        In charge of forging relations and communicating with partners and sponsors.

£        Auditor (External)

The role of the Auditor is to check for accuracy and sign off everything the Finance Officer has done over the year. The specific roles will be to take care of and report the following issues;

¥        Ensuring that the actual share/investment vehicle value-holding is correct as measured against the share index listings at the time.

¥        Confirming that all reported Bank Balances are correct by checking against monthly Bank Statements. (Copies of all Bank Statements should be sent to the Auditor, monthly).

¥        Ensuring that all assets checked against supporting purchases, sales, capital gains and dividends annually, and liabilities are checked against assets.

¥        Checking receipts and receipting member’s subscriptions, interest from bank deposits and dividends paid, Bank and Stockbroker statements from share ownership etc

¥        Validating and checking accuracy of Payments for Shares etc against monthly meeting minutes and Stockbroker statements. Any other expenditure should be checked against supporting documentation and authority given.

¥        Reporting on the unit value to the assets statement of the previous month.

¥        Checking the calculation of units bought/sold and value per unit.

¥        Confirming that the total value of the investments appears reasonable (a full valuation is only performed annually or on a member leaving the club)

¥        Agreeing the issued units to the total of the members capital accounts

£        Investment Strategy Committee

An Investment Strategy Committee of at least 3 members, and at most five members, including the finance secretary, takes investment decisions between meetings. Reasons for these investment decisions could include:

¥        The sale of underperforming equity or other holdings.

¥        To act quickly on buy, hold or sell recommendations from the club’s Stockbroker or other information source.

¥        The discovery of an investment vehicle that would complement the club’s portfolio or increase the chances of success of the club’s overall investment strategy.

£        Decision Making

Decisions made at all meetings will be made on a one member one vote basis. However, in case of a tie, then the chairman/president may cast deciding vote.

£        Club Member Responsibility/Participation

When I join an investment club, (an optimal number of which usually should range from 8 to 18 members), each participant assumes a particular role. I may be the group leader, or part of a stock selection committee. The club should give every member the responsibility of researching a specific stock or an entire market sector and making a report at each meeting.

Each member of an investment club is expected to participate by:

¥       Attending each meeting;

¥       Making monthly contributions

¥       Researching and following the progress of a particular stock or family of stocks that the Club has bought or is considering for purchase.

¥       Researching securities and presenting the data to the rest of the group.

¥       Participating in ongoing buy and sell decisions.

¥       Tracking and reporting overall portfolio performance.

¥       Accurate management and reporting of personal taxes.

 

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