Housing Society Share Capital Account in Cooperative Bank: Rules, Process and Management
The Share Capital Account is one of the most important financial components of a Cooperative Housing Society. Every member contributes a prescribed amount as share capital at the time of admission. This contribution represents the member's ownership stake in the society and is deposited in a Cooperative Bank. The account is maintained separately from maintenance funds, sinking funds, and repair funds.
What is a Share Capital Account?
A Share Capital Account is a dedicated account maintained by a Cooperative Housing Society to record the share contributions received from its members. The share capital forms part of the society's own funds and helps establish membership rights within the society.
Purpose of Share Capital
The primary purpose of share capital is to create a financial foundation for the society. It helps establish ownership rights, ensures compliance with cooperative laws, supports administrative activities, and facilitates the transfer of membership whenever a flat is sold or transferred.
Opening a Share Capital Account
After registration of the housing society, the Managing Committee passes a resolution authorizing the opening of a Share Capital Account with a Cooperative Bank.
The bank generally requires:
- Registration Certificate
- Approved Bye-laws
- PAN Card of Society
- Committee Resolution
- KYC Documents of Authorized Signatories
- Address Proof of Society
The account is usually operated jointly by authorized office bearers such as the Chairman, Secretary, and Treasurer.
Share Capital Contribution by Members
Every member is required to purchase shares of the society as prescribed under the registered bye-laws. In many housing societies, a member may be allotted a fixed number of shares with a specified face value.
For example:
- 10 Shares × ₹50 each = ₹500 Share Capital
The actual amount may vary depending on the society's bye-laws and applicable state regulations.
Is Share Capital Based on Flat Area or Flat Type?
In most Cooperative Housing Societies, share capital is generally allotted equally to all members irrespective of carpet area, built-up area, or flat configuration.
Whether a member owns a 1 BHK, 2 BHK, or 3 BHK flat, the number of shares is usually the same. This follows the cooperative principle of one member and one vote.
Share Certificate
After payment of share capital and approval of membership, the society issues a Share Certificate containing:
- Member Name
- Share Certificate Number
- Number of Shares
- Face Value of Shares
- Society Seal
- Authorized Signatures
The Share Certificate serves as proof of membership and ownership rights.
Role of the Managing Committee
The Managing Committee is responsible for:
- Collection of Share Capital
- Maintenance of Share Register
- Issue of Share Certificates
- Updating Membership Records
- Compliance with Cooperative Laws
- Presentation of Accounts Before AGM
The committee acts as a trustee of society funds and must ensure transparency in financial management.
Utilization of Share Capital Funds
The Share Capital Fund may be used only for purposes permitted under cooperative laws and society bye-laws.
Such purposes may include:
- Society Formation Expenses
- Administrative Expenses
- Statutory Obligations
- Approved Investments
Proper accounting records must be maintained for all transactions.
Withdrawal of Funds
Withdrawal from the Share Capital Account requires:
- Managing Committee Resolution
- Joint Signatures of Authorized Office Bearers
- Proper Documentation
- Compliance with Society Bye-laws
Individual members cannot withdraw share capital during active membership except in situations specifically allowed under law.
Transfer of Shares
When a flat is sold or transferred, the shares held by the outgoing member are transferred to the incoming member after approval by the Managing Committee.
The process generally includes:
1. Transfer Application
2. Verification of Documents
3. Committee Approval
4. Updating Society Records
5. Issue of New Share Certificate
Conclusion
The Share Capital Account is a vital component of every Cooperative Housing Society. It represents the ownership contribution of members and helps build a strong financial foundation for the society. Proper management of share capital, maintenance of records, compliance with bye-laws, and responsible utilization of funds ensure transparency, accountability, and smooth functioning of the society.
Sample copy: sample copy of share certificate issued by society as below: