In Focus

Valuating, transferring shares as per MCS Rules

By Gajanan Khergamker

The procedure to valuate a share is laid down in Maharashtra Cooperative Society Rule 23, according to which:

(1) Where a member of society ceases to be a member thereof, the sum representing the value of his share or interest in the share capital of the society to be paid to him or his nominee, heir or legal representative, as the case may be, shall be ascertained in the following manner namely:
(i) In the case of society with unlimited liability, it shall be the actual amount received by the society in respect of such share or interest;
(ii) In the case of a society with limited liability, it shall be the amount arrived at by a valuation based on the financial position of the society as shown in the last audited balance sheet preceding the cessation of membership:
Provided that the amount so ascertained shall not exceed the actual amount received by the society in respect of such share or interest.

(2) Where a person is allotted a share by a society, the payment required to be made therefor shall not exceed the face value of the share notwithstanding anything contained in the bye-laws of the society.

(3) When a share is transferred by a member to another member duly admitted as a member of a society, the transferee shall not be required to pay anything in excess of the value of the share determined in accordance with sub-rule (1).

Rule 24 lays down the procedure to transfer shares. Accordingly:
(1) No transfer of shares shall be effective unless, -
(a) It is made in accordance with the provisions of the bye-laws;
(b) A clear fifteen days’ notice in writing is given to the society indicating therein the name of the proposed transferee, his consent his application for membership, where necessary and the value proposed to be paid by the transferee;
(c) All liabilities of the transferor due to the society are discharged; and
(d) The transfer is registered in the books of the society

(2) Any changes in favour of the society on the share so transferred will continue unless discharged otherwise.

To avail a legal service, an expert opinion or an appointment with Solicitor and Property Law Expert Gajanan Khergamker, call 8080441593