Many housing societies face situations where companies purchase multiple flats for their employees. While this is legally permitted, there are specific rules and limits that societies must follow before granting membership or clearance. Understanding these provisions is crucial for protecting the society’s structure, ensuring fair representation, and complying with the Maharashtra Co-operative Societies (MCS) Act, 1960 and government orders.
Can a Company Become a Member of a Housing Society?
Yes, a company can become a member of a cooperative housing society, subject to certain conditions. The company’s Memorandum of Association (MoA) and Articles of Association (AoA) must clearly mention that the purchase is for providing residential accommodation to its employees. The head office of the company must also fall within the society’s area of operation.
Shareholding Requirements for Company Membership
A company is required to purchase at least 20 shares of the society to become a member. This ensures that the company has a financial stake in the society and shares equal responsibility for its functioning.
Limit on Number of Company Memberships
As per the cooperative housing society rules, the number of firms and companies admitted as members cannot exceed 50% of the total number of members in the society. This provision is meant to maintain a fair balance between individual and institutional membership and prevent companies from dominating the society’s decision-making process.
Verification Before Granting Clearance
Before approving a company’s membership, the society should:
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Obtain and verify the company’s MoA and AoA to ensure it includes a clause for employee housing.
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Confirm that the head office is within the society’s area of operation.
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Ensure the total company memberships do not exceed 50% of the society’s membership strength.
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Collect the minimum required shares (20 shares) and update the society’s share register accordingly.
Company Representation in Managing Committee
A company, as a member, has the right to nominate a representative who can participate in the society’s managing committee. However, there is a limit to representation — not more than one-fourth of the total strength of the managing committee can be company representatives. This is based on Government of Maharashtra Order No. CHS-179/CG148/14C dated 9.11.1993.
Purpose of Company-Owned Flats
A company is allowed to purchase flats or land only for providing residential accommodation to its employees. Using such flats for commercial or rental purposes not connected to employee housing may violate society by-laws and cooperative principles.
Conclusion
While companies can legally purchase flats and become members of cooperative housing societies, societies must carefully check all documents and observe the 50% membership cap to ensure compliance. Companies can participate in governance but cannot dominate the managing committee beyond the one-fourth limit. Proper verification and adherence to rules will help maintain balance, transparency, and smooth functioning of the society.
