Funds of the Society

   25-05-2019 -       UMESHCHANDRA YADAV -       no comment.

Share this Article

1. How is the Sinking Fund created?

Ans: The Society can create and establish the Sinking Fund at the rate decided at the meeting of the General Body, subject to the minimum of 0.25 percent per annum of the construction cost of each flat, excluding the proportionate cost of the land.

2. How is the Sinking Fund utilized?

Ans: The Sinking Fund may be used by the society for reconstruction of its building/buildings or for carrying out such structural additions or alterations to the building/buildings, as in the opinion of the Society’s Architect, would be necessary to strengthen it/them or for carrying out such heavy repairs as may be certified by the Architect and on approval of General Body after passing an appropriate resolution at the meeting of the General Body of the society.

3. What are the various funds which can be constituted by a Society?

Ans: The following funds can be constituted by a Society:

(a) Reserve Fund,

(b) Repairs and Maintenance Fund,

(c) Sinking Fund,

(d) Major Repair Funds,

(e) Corpus fund,

(f) Common welfare fund, etc.

4. What is Working Capital?

Ans: The term Working Capital is defined under the Bye-law No. 3(xxviii) of the Model Bye-laws of the Society. “Working Capital” means the funds which are at the disposal of the society and is inclusive of the paid up capital, share capital, funds created out of profits and money raised by borrowing or by any other means.

5. What are the various funds which can be constituted by a Society?

Ans: The following funds can be constituted by a Society:

(a) Reserve Fund,

(b) Repairs and Maintenance Fund,

(c) Sinking Fund,

(d) Major Repair Funds,

(e) Corpus fund,

(f) Common welfare fund, etc.

6. For what purpose is the Reserve fund utilized?

Ans: The reserve fund of the society is to be utilized for the expenditure on repairs, maintenance and renewals of the Society’s property.

7. What do you mean by a Sinking Fund?

Ans: The term “Sinking Fund” is defined in the Bye-law No. 3(xvii) of the Model Bye-laws of the Society as the fund constituted under the Bye-law No. 13(c). The society can create and establish the Sinking Fund as and when required and decided by the General Body at the rate fixed on the basis of the area.

8. How is the Major Repairs Fund created?

Ans: The Society can create and establish the Major Repairs Fund by collecting contributions from its members as and when required and decided by the general body at the rate fixed on area basis.

9. How is the Repairs and Maintenance Fund created?

Ans: The Society can create and establish the Repairs and Maintenance Fund by collecting contributions from its members at the rate fixed at the meeting of the general body from time to time, subject to the minimum of 0.75 percent per annum of the construction cost of each flat for meeting expenses of normal recurring repairs.

10. How can a Corpus Fund are utilized?

Ans: The Society may create and utilise the Corpus Fund by making Rules with the approval of the General Body. However, such fund cannot be taken from a person who is transferring his flat/tenement/right to share/share capital in the society.

11. Which funds the Co-operative Societies have to be raised?

Ans: The Housing Societies have to raise funds as follows:

1. Repairs and maintenance fund is to be raised by collecting money from the members at the rate decided by the general body meeting from time to time to meet the expenditure incurred on frequent repairing However this rate should minimum 0.75 percent every year of the construction cost of each flat in the name of members.

2 . To meet the expenses on important repairing, the general body meeting will determined the amount to be collected by each member as per area of the gala as per requirements.

3 . Sinking fund is raised by collecting the amount from members at the rate determined by the general body meeting However this rate should minimum 0.25 percent of the construction cost of each galas every year.

12. What is a Reserve Fund?

Ans: The term Reserve Fund is defined under the Bye-law No. 3(xviii) of the Model Bye-laws of the Society. “Reserve Fund” is the fund which is constituted by the Society under the provisions of Section 66(1) & 66(2) of the Act and Bye-Law No. 12(i). The Reserve Fund of the society comprises of the following amounts:

(a) The amounts carried to the said fund, from year to year, out of the net profit of that year, subject to the provisions of Section 66 (1) and (2) of the Act;

(b) all entrance fees received by the society from its members;

(c) all transfer fees received by the society from its members on transfer of the shares, along with the occupancy rights;

(d) all premium received by the society from its members on transfer of their interest in the capital or property of the society;

(e) all donations received by the society, except those received by it for the specific purpose.

The society while finalizing the accounts for the preceding Co-operative year has to appropriate all the amounts referred to in the Bye law No. 12(i) (b) to (e) to the Reserve Fund of the Society.

13. What are the different modes of raising funds of the Society?

Ans: The funds of the Society may be raised in one or more of the following ways:

(a) by entrance fees,

(b) by issue of shares,

(c) by loans and subsidies,

(d) by deposits,

(e) by voluntary donations, (except from the Transferor and the Transferee); ( f) by contributions towards cost of building or buildings,

(g) by fee on transfer of shares, along with the occupancy right,

(h) by premium on transfer of occupancy rights over the flats, [As per G.R.];

(i) by any other mode permitted under these bye-laws;

(j) by corpus fund from the Developer (however, such fund cannot be taken while transferring tenement, flats, and right of society to the capital);

(k) by way of statutory requirement.

14. Can a Co-operative Housing Society accept donations?

Ans: Yes, Co-operative Housing Society can accept donations. However it could not be accepted from the transferee and transferor.

15. What do you mean by Major Repairs Fund?

Ans: The term Major Repairs Fund is defined in the Bye-law No. 3(xviii) of the Model Bye-laws of the Society. “Major Repair Funds” means a fund which is created by the society for the purpose of Major Repairs to be done to the Society building, such as plastering, building of compound wall, pavement, total painting, reconstruction, etc.

16. How are the amounts to the reserve fund of the Society appropriated?

Ans: The Society, while finalizing its accounts for the preceding Co-operative year, can appropriate all amounts referred to in the bye-law No. 12 (i)(b) to (e) to the Reserve Fund of the society.

17. How is the Sinking Fund utilized?

Ans: The Sinking Fund may be used by the society for reconstruction of its building/buildings or for carrying out such structural additions or alterations to the building/buildings, as in the opinion of the Society’s Architect, would be necessary to strengthen it/them or for carrying out such heavy repairs as may be certified by the Architect and on approval of General Body after passing an appropriate resolution at the meeting of the General Body of the society.

18. Is there any restriction on incurring liabilities by the society?

Ans: Deposits from members and loans may be received by the Society for such period and at such rate of interest and up to such amount and on such terms and conditions as may be determined by the committee, provided that at no time, the total amount of such liabilities shall exceed the limit as prescribed under Rule 35 of the MCS Rules, 1961.


Share this Article

Leave a Reply

Your email address will not be published. Required fields are marked *