Understanding Society Share Certificates in India

The society share certificate in India is a very vital document meant for all the members of the housing society. It serves to act as legal proof that describes ownership and membership in the housing society. It performs an important role in maintaining the legal and financial stability of the housing cooperatives, besides helping in the working of the community in an orderly manner.

Share certificates in India cover every aspect of their issuance, including their importance, legal implications and the process for issuing them, all of which have been clearly defined and explained.

Share Certificate of Housing Society in India

Housing societies in India are generally cooperative societies formed by individuals who hold or manage residential buildings or complexes jointly. These societies are governed by the Cooperative Societies Act of the State and are made to promote and protect the interests on behalf of its members. The moment a person becomes a member of a housing society, he is issued a society share certificate.

This certificate is an official paper that indicates the shareholding in the society, and it confirms membership in the same. In this regard, the property is owned by the housing society as a legal entity, and the members hold shares in it. Society share certificates depict ownership of the shares, which do not represent ownership of the actual unit of property itself but rights attributed to it.

For example, society share certificates in the state of Maharashtra are regulated by the Maharashtra Cooperative Societies Act 1960. When a person purchases a flat in a cooperative housing society in Maharashtra, the society releases a society share certificate, proving his membership in that society.

Importance of Society Share Certificates

These share certificates are very important to the housing cooperatives in terms of their working and management. They give rights and protection to members and they have legal implications for any given transaction or decision about the housing societies.

In that context, the importance of society sharing certificates can be well explained as follows:

• Legal Proof of Membership

  The share certificate of the flat is proof that the member has an interest in the housing society. It formally declares that a person is a legitimate member of society and is entitled to the rights and obligations that come with membership.

• Vote Rights

  They can vote in society elections for election in various decision-making processes such as electing the management committee or approving financial budgets. A share certificate is necessary to exercise this right.

• Availment of Common Facilities

  Society share certificate holder members are allowed to use the common facilities and amenities offered by the society like parks, community halls, parking areas and maintenance services.

• Facilitates Sale or Transfer of Flats

  In case the flat is sold, a society share certificate works as an important document. Share certificate needs to be transferred to the new buyer who would then become a member of society and enjoy all rights and obligations linked with it.

• Necessary for Loan Applications

  Most banks and financial institutions demand a society share certificate as a part of the documentation when giving loans for homes. The intention behind the certificate is to prove ownership in the housing society, which is an essential requirement for lending money.

Process of Issuing Society Share Certificates

The process of issuing society share certificates normally commences after the formation of a housing society and afterward, approvals are accorded to membership applications. Usually, such certificates are issued by the management committee in charge of the housing society.

Below is an overview of the standard procedure for issuing society share certificates:

• Submission of Membership Application

  When an individual purchases a flat or becomes a member of a housing society, he or she needs to make a formal application for membership with the society, accompanied by required documents such as identity proof, address proof and proof of ownership of the flat.

• Approval of Membership

  It scrutinises the membership application and verifies the documents. After due verification, the membership is accepted in the general body meeting or management committee meeting.

• Payment of Share Capital

  Once membership has been granted, the new member is expected to pay the share capital amount that may differ in size according to the society and the rules stated in its bylaws. The share capital represents the financial contribution of the member to the society.

• Society Share Certificate Issuance

  After accepting the payment, the housing society issues a share certificate to the member. This is issued in the name of the member and carries all the vital details about membership and shareholding in the society.

• Recording in Society's Register

  The society maintains the details of the share certificate issued in a register of members that is intended to be a valid record of all the members of the society and their shareholding in the matter.

Contents of a Society Share Certificate

A share certificate issued by the society consists of essential information related to the member along with their interest in the housing society. Below are the general contents of a society share certificate:

• Name of the Society and its Registration Number: The share certificate bears the full legal name of the housing society and its registration number under the relevant Cooperative Societies Act.

• Member's Name and Address: The name of the member or joint member to whom the share certificate is being issued, along with his or her residential address within the society.

• Share Certificate Number: Every share certificate has a unique number that will make all the difference in the identification of the certificate and the member who is attached to it.

• Number of Shares: The share certificate holds the amount of shares a member owns in the housing society. The number of shares issued per member by a housing society is often low (5 or 10 shares) and the value of each share is minimal.

• Issue Date: The date of its issue is mentioned on the share certificate. This data is used both for record-keeping purposes in account books and legal activities.

• Signatures: The share certificate must be authenticated through the signatures of the authorised members of the management committee of the society, including a chairman, secretary and treasurer. Above that, there is an application for the official stamp of the society on the certificate.

• Society Seal: The official society seal is pasted on the share certificate. It authenticates the document and proves that it was really issued through the housing society.

Legal Consequences And Rights Conveyed By Society Share Certificates

A society share certificate is something more than just a paper for owning property. It conveys many legal consequences with certain rights in the hands of the member. Some of the most considerable legal implications or rights associated with society share certificates are:

• Ownership of Shares

  The share certificate of the society shows ownership in shares in the housing society. It does not mean that one owns the flat in physical terms but ownership in the society in terms of the entity involved. Hence, the flat is considered to be a part of the society property along with its members having a share of the society collective assets.

• Voting Rights

  A member holding a share certificate enjoys the right to decide on the housing society by voting in elections, passing resolutions and approving financial accounts.

• Right to Transfer Shares

  Members may transfer their shares to another person, for instance, when a member sells his or her flat. The transfer has to be lodged in the society's register and a fresh share certificate has to be issued to the member.

• Right to Attend General Meetings

  The members entitled to be present at any general body meeting of the housing society are the members holding certificates of society shares because the important decisions regarding operations and policies of the society are made.

• Legal Protection

  The share certificate becomes a legal document which may prove helpful in case of a dispute with the housing society. It is proof of membership and stake in society, meaning it cares for the rights of the member.

Transfer and Surrender of Society Share Certificates

In any of these cases, a housing society member has to transfer or surrender the society share certificates, such as the sale of the flat, transfer of ownership or leave the society. The procedures for transferring and surrendering a society share certificate follow these lines:

• Transfer of Share Certificates

  However, when one sells his flat to a new owner, the share certificate of the flat needs to be transferred to him. A formal application for such transfer must be made to the housing society along with a copy of the sale deed and the original share certificate. On perusal of the application by the management committee, a fresh share certificate is issued in the name of the new owner.

• Surrender of Share Certificates

  The member may withdraw their share certificate if they do not want to remain a part of the housing society. This happens mainly when the member moves out or does not own a flat anymore. The member needs to submit a formal resignation and return the original share certificate to the society. Upon acceptance, the membership is cancelled and if applicable, the share capital is returned.

Why Do You Need a Society Share Certificate?

You need a society share certificate for many reasons. The share certificate proves membership in a society formally, and due to this certificate, the member receives a number of rights and benefits, which include:

• Documentary Proof of Membership

  A share certificate is the most important document that gives out the proof of a person being a valid member of the housing society. Without the share certificate, no one is allowed to claim the rights of a member or engage himself in other social activities.

• Legal Protection

  In cases of disputes related to ownership, membership or rights in the housing society, the share certificate acts as proof in a court of law and protects the rights of the member.

• Not Transferable for Property Dealings

  A share certificate is a very important document to sell a flat, in the sense that without it, the sale cannot be completed because it is used to authenticate and prove the membership of the buyer in that particular society.

• Services from the Society

  The share certificate is essential for any member to acquire all services and facilities offered by the housing society, like maintenance, security facilities and common-place facilities.

How to Apply for a Society Share Certificate: The Step-by-Step Approach

You are a new member of a housing society or have just purchased a flat. You are, therefore, required to apply for a society share certificate. This guide simplifies the process and ensures that your application is without a hitch:

Step 1: File a Membership Application

Begin by making an application to the housing society. You would be required to furnish documents such as identity proof, address proof and proof of ownership of the flat through a sale deed, for instance.

Step 2: The Society Meeting

The management committee of your society may forward your application on to its membership list at a general body meeting. It is likely that you may need to be present there itself in case questions have to be raised or further clarification is sought.

Step 3: Pay Share Capital

After your membership is accepted, the next course of action is to pay the share capital as determined by the society. The amount needs to be paid through a prescribed mode: cheque, demand draft or money transfer in the bank.

Step 4: Share Certificate

While processing your payment, your housing society will issue your society share certificate. You can receive the same either personally or through a registered post.

Step 5: Verify the Certificate

As soon as you get the share certificate, ascertain all the details carefully, including your name, share number, issue date and the signatures of authorised persons. All information must be correct.

Step 6: Entry into the Register of the Society

Membership details and shareholding will be entered in the society's register. You will make sure that all your shareholding records are correctly spelt and appear in society's official records.

Conclusion

A society share certificate is a must for any member of the housing society in India. It not only serves as a source of information about membership but also gives people the right to vote, enjoy services and even get legal remedies.

By understanding the value of society share certificates, members can ensure that they are legally protected and make decisions related to their housing society. If you're a member looking to transfer your shares or are new to the housing society, obtaining and managing a society share certificate is an important part of cooperative living in India.