Credit Union Annual Report 2021 V2 - Flipbook - Page 73
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2021
21. Capital management
The Credit Union’s objective when managing capital is to safeguard the Credit Union’s ability to continue as a going
concern in order to provide a return in the form of dividends to members. The Credit Union accepts deposits and shares
from members for various periods, and seeks to earn reasonable interest margins by investing these funds in loans to
members. In addition, the Credit Union seeks to maintain sufficient liquidity by investing excess funds in cash deposits
and short-term fixed deposits in order to meet all claims that might fall due in the ordinary course of operations.
As per Article XIV of the Rules, the net surplus of the Credit Union shall be applied as follows:
i.
at least 20% of net income shall be carried to the Reserve Fund in accordance with Article XIV (Note 10);
ii.
the remainder shall be utilized as the AGM may decide in any one or more of the following ways:
•
to pay to members a dividend not exceeding what is prescribed by Act (at present 6% per annum) on fully paid
shares provided that fully paid shares for any one month may include payment received within the first seven
days of that month;
•
to promote co-operative education among members; and for any social, charitable or cultural purposes, subject
to Section 36 of the Act;
•
to create any Special Reserve;
•
agreed to pay fees;
•
to create and maintain a Share Transfer Fund to be used as prescribed in Rule 15 and the By-Laws.
In order to maintain or adjust the capital structure, the Credit Union may, by way of resolution of the members at the
AGM, adjust any of the matters specified in (ii) above.
Management consider that the Credit Union has complied with these requirements during the years ended July 31,
2020 and 2021.
The capital of the Credit Union is defined as the Reserves as shown on the Statement of Financial Position.
22. Financial risk management
The Credit Union’s activities expose it to a variety of financial risks including credit risk, liquidity risk, market risk and
geographic concentration risk.
i.
Introduction and overview
The business of the Credit Union is overseen by the Board of Directors. The Board along with independently
elected committees (Supervisory and Credit) is responsible for the adherence with the Act, the Rules, and established
policies and procedures. All committees report regularly to the Board on their activities. The Board has the general
direction and control of the affairs of the Credit Union and more particularly, act for the Credit Union and provide for
the management and development of the Credit Union. The Board meets as often as the business of the Credit Union
may require, and in any case not less frequently than once per month.
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