Issues & Solutions to Society Issues

¯     Issues & Solution

v           When is the Share Certificate to be issued?

Ans.    Bye-Law No.9 directs the issue of share certificate to every member who has paid share capital amount at the time of formation or thereafter within 6 months of formation of the society.

  

            The Share Certificate should bear the seal of the society and be signed by the chairman, the secretary and one member of the committee, duly authorised by the committee on its behalf.

v           One of our members has purchased 2 flats in his name from the builders. After the registration of the society, is it necessary for the society to issue 2 Share Certificates for 2 Flats?

Ans.    The case in point is one where a member is holding more than one flat. Since the said member has been issued the minimum number of qualifying shares for the membership of the society, it is not necessary to issue him additional shares for the second flat, but if he desires, the society can issue additional five shares and 2 Share Certificates.

v           A society has not taken any steps to issue share certificates. Can the society issue certificate to the existing members or old members’ who have sold the flats. Please suggest line of action?

Ans.  The society can not issue share certificates directly in the persons who have acquired right over the flat by transfer (Existing members who have purchased flats).

            The Society normally issues the share certificate in the name of original members. In case where transfers of flats take place, the society has to issue the share certificates in the name of the original members and make endorsement of transfers on back side of the certificate in favour of the transferees. If procedural details have been followed while transferring flats, the society can issue share certificate firstly in the name of the transferees and make endorsement on backside of the share certificates. If however, the required procedure has not been followed and if it is not possible for the society to regularize the cases, in the absence of whereabouts of the transferrers, the society may call upon the transferrers to make affidavit indicating how they come into possession of the flats and also should furnish indemnity bonds, indemnifying the society against any claims made to the shares and interest of the transferees in the flats by any other persons at any time. On compliance of this requirement the society may issue share certificates directly in name of transferees.

v           Investments in Limited Companies and even in the Mutual Funds fetch a higher rate of returns than co-operative banks on fixed deposits. Why should a Society not invest funds in these so as to maximize benefits?

 Ans.    Section 70 of the MCS Act has prescribed the made of investments of funds by co-operative societies. The prescribed modes of investments are in State Co-operative Bank, District Central Co-operative Bank, Trustee Securities, etc. Investments in companies and Mutual Funds Deposits are not permitted under the above provisions of law although they may fetch higher earnings. However it is to be noted that the interest earned on deposits with Co-operative Banks are fully exempt from income tax while others are taxable.