Wednesday, October 11, 2017

Recent changes in Maharashtra Coop Society Act

Recent changes in Maharashtra Co-op Society Act

Following are some of the important changes done in the MCS Act, 1960 and also in the Model Bye-laws of Cooperative Housing societies.

Condition for membership- Applicant to take 10 shares of Rs.50 each as against 5 shares. Bye law No.22 on rights of membership talks about the right to receive the notice of demand from society if there is increase in minimum contribution of member in share capital.

Classification of Active and Non-Active members.

Associate member definition- ownership in the property individually or jointly with others is must and whose name does not stand first in the share certificate.

Co-operative .Education and training to members, committee members ,officers and employees.

Education and Training fund of Rs.10 per member per month to be collected as against Rs.3 per member per annum.

Sinking fund can be utilised by the society and no permission of the Registrar is needed-General body permission however, is must.

NOC of society for transfer of flat or property is not required.However, Rule 24 and Bye law No.38 on transfer of shares and interest wants the transferring member to give 15 days notice to the society of his intetion to do so alongwith the consent of the transferee member.

Elections of management committee must be notified six months in advance and to be held under the supervision of the newly constituted State Co-operative Election Authority (SCEA).-Sec.73CB

Casual vacancy in management committee to be informed to Election Authority and co-option is not allowed.

Disqualification of committee and its members- Sec.77-A & 78

Strength of Management committee and Reservation of seats for Women and for members of SC,ST & OBC category with Expert and Functional Directors appointment possible subject to conditions.- Sec.73AAA & bye law No.113

Last date for conducting AGM is 30th against 14th Aug.

Appointment of Auditors ,their Remuneration, Rights and Responsibilites ,removal etc.-Auditor should be a panel auditor and Maximum appointment for consecutive three years and maximum 20 audits excluding for societies with paid capital of less than Rs.1 lac.-Additional responsibility to file FIR if mispappropriationetc etc is noticed –Special & Specific Reports to be filed with Registerar- Sec.81/R- 69/Bye la 150-152

Cash expenses limit Rs.1500/- as against Rs.4500/-in Bye laws.-Bye law No.144 /R-107D

Cash in Hand at the close of the day limit increased from Rs.300 to Rs.5000/-Bye law 143/R-107C

For encroachment of common areas by members to be charged at 5 times the monthly maintenance charges for the period of such encroachment.-Bye law No.168

Applicability and adoption of Accounting standards prescribed by state government and by ICAI-Sec.81 & notification dtd.29th Oct.2014.

Filing of Annual Mandatory Returns with the Registrar.-Sec.79(1A) & 79(1B)

Penalties prescribed for various offenses and consolidated penalty for all defaults to be Rs.5000/- maximum in any financial year.-Bye law No.164(a)

Concept of Emergency Planning Scheme and Fire Safety Audit introduced.-Bye law No.75*The Maharashtra Fire Prevention and Life Safety Measures Rules, 2009, made it mandatory for building owners and residents to conduct half – yearly fire safety audits and submit the report to the fire department. As per the directive of Directorate of Maharashtra Fire Services, the safety audit has to be conducted by the ‘Licensed Agency” approved by them.

Other imp bye law provisions auditor should know:

Structural Audit –once in 5 yrs for Bldg ageing 15-30 years and once in 3 years if Bldg ageing more than 30 year by BMC approved structural engineers.

One time limit for repairs and maintenance expenses management committee can decide is Rs.1 lac Max.-else General Body permission must.

Cheques should be signed by Secretary And Chairman/Treasurer and same with the vouchers.

Creating Awareness regarding Nomination to be filed.

Mandatory filing of Annual returns and auditors appointment should be insisted for.

Security bond for holding cash from the employee and officer -500 and 1000 if paid up capital is less than 1.50 lacs and Rs.1000 & 2000 if it is more than 1.50 lacs R-107B

The word “Administrator” has been removed and now the term is “authorized officer”

Audit rectification memo needs to be submitted to Registrar in O form within 3 months from the date of the audit report and even auditor has to give remarks on that-Penalty for society of Rs.5000 u/s 147

Introduction of sec.146 offences and 147 which talks about penalties

Dismissal of committee if the election due date is not intimated or mandatory returns are not filed & non submissiom of audit rectification report etc.

Copy of Bye laws ,list of members to be kept open for inspection to public free of charge- Sec.39

Monday, January 9, 2017

Market Outlook for Equities in 2017 - AMC Viewpoint

Please find below a brief summary of Market Outlook for Equities in 2017 from various AMCs. 

Birla Sun life AMC

In the next two to three quarters, macro data and companies’ results could be volatile. However, as things stabilize in H2-FY18, earnings could recover.  We expect the earnings of Nifty companies to grow at 19% in FY18 led by financials and autos. The year 2017 will see lower bond yields and fixed deposit rates. It will see falling real estate and gold prices. It is equities that is providing a good alternative for investment with a medium term horizon. The valuations are reasonable & the base for sustained earnings growth is being set up.

The Indian markets are in a consolidation phase due to two major reforms in the form of Demonetization and GST. One may go with a base case estimate of 10-15% returns from Nifty Index in the year 2017. The next six months would be a good time to build the portfolio in a staggered manner. The large cap, multi cap and balanced funds should be considered for investment. In case of investors following SIPs – keep them going in which ever fund and category you have chosen.

DSP Blackrock Mutual Fund

We expect corporate earnings growth to improve from the second half of FY2018 as the headwinds of the last few years (lower commodity prices, higher banking system NPLs and lower Government/private capital expenditure) could turn into tailwinds. On equity markets, we believe 2017 will be a strong year after almost two years of negative returns. Attractive equity valuations relative to bonds, stable currency, policy reforms and stabilizing global growth bodes well for equity returns this year. A pick up in corporate earnings growth, full transmission of lower interest rates and expanding return on equity (ROE) for corporate India will be the medium to long term drivers for equity markets. Within portfolios, we expect value stocks to outperform growth stocks in 2017. In summary, we believe that the Indian equity market is a good structural opportunity and our outlook is positive for 2017.


In the last two-three years, all but three sectors in Nifty delivered reasonable growth in earnings and the three sectors where earnings have not grown are corporate banks -- both public and in private sector, metals and engineering and construction companies. Each of these three sectors had challenges specific to them. Banks were grappling with high provision costs. Metal prices were quite low till last year. They have recovered of late. As for engineering, the capex was quite weak. And these are the three sectors where earnings have actually fallen by 50 odd per cent and that is the result of weak aggregate earnings growth and that is what we have always said that aggregates hide a lot and you cannot really focus too much on the aggregate.

As we look forward to the next two years we see interest rates moving lower. Almost 50-60% of the bank deposits have been lent to the companies. This is a massive number – around Rs 50 lakh crore. If you save 2% on that, it is Rs 1 lakh crore a year, which is a very large percentage of the profits of Indian companies and that will flow through. I think lower interest cost will itself support significant improvement in earnings. Each of these sectors are likely to see a return to normal profitability over the next two years. In metals, we are sharply moving in that direction and we should see it in the next few quarters itself. For corporate banks, most people agree that the worst of NPAs, the provisioning cost is over. They may still remain higher than normal but over the next two years, one should see a return to normal levels of profitability. In engineering and construction, we are seeing great improvement in roads, railways, power T&D. I believe even in that we are moving in the right direction. If you look at market cap to GDP in India, we are trading near all-time lows of market cap to GDP. But PEs are not close to all-time lows and the reason is because corporate profitability is still a near a cyclical bottom. Over next two years, we should see improvement in aggregate profitability and earnings will catch up. Equities should be considered with an investment horizon of 5 years.

ICICI Prudential AMC

There is a case for being moderately overweight on equities with 2 year view.

·         This is with an understanding that volatility is likely to prevail up to next March 2017
·         Post that we believe de-leveraging cycle may start playing out and capacity utilisation may increase leading to improvement in earnings
·         Valuations have turned reasonably attractive and one should invest lump-sum in pure equity funds in a staggered manner upto March 2017
·         We like Largecap and Multicap funds over pure Midcap funds. Dynamic Asset Allocation Fund remains good investing avenue for conservative equity investing


Interest rates in India, will remain a hotly debated argument. Unfortunately, inspired by the bellicose electronic media’s style of discussion, this too appears to cut a deep wedge between the two opposing sides. While slower economic growth and a drop in credit growth may be the reasons for a sharp drop in interest rates, the looming danger of higher crude oil prices as well as of other industrial commodities and the hike in US 10 year and the narrowing gap between the India and US 10 year yield will be touted as the reasons for maintaining or marginal interest rate drop. Either way it will be a shrill and deeply contested debate all year through. Finally, will Nifty earnings growth cross the double digit “barrier”. Save FY 14 (also an election year), Nifty earnings growth rate has been subdued (< 6%). Will the economy get the double benefit of de-monetization (greater tax compliance) and GST, or, like the last three years, the street will start projecting 20% growth in FY 20!

Lastly, a general comment. Investing in equity is always a leap in faith as it is an exercise to predict the future. Forecasting future correctly is a low probability exercise. More important for an investor is the time spent invested in the market rather than timing the market. In a similar vein, while trying to forecast key events may help in timing the market, most beneficial for investors would be to remain invested in the market. Hence, while being aware of key events and their impact will make you an informed investor, staying invested in the market through time will boost your chances of transforming one into a high return generating investor.


The Indian equity markets have seen some correction in recent times due to uncertainty created on account of demonetization along with a risk off trade impacting emerging markets as a whole. This has led to some good franchises being available at better price points. In our view, the Indian economy has a limited impact from the US election outcome and global risk-off events are good entry points into the Indian markets. The domestic economic growth is likely to resume upward trend post the near term challenge thrown up by demonetization which in turn might lead to improvement in corporate earning cycle in 2017. The inflows in domestic funds are likely to remain undeterred given low exposure of domestic household savings in equity funds and the unattractiveness of other investment avenues. We believe that the current weakness in equity markets could provide a favorable opportunity to investor to further their exposure towards Indian equities from a medium to long term perspective. Markets are currently trading at 18.9xFY17E EPS and 15.5xFY18E EPS (Nifty valuations, free float⁠⁠⁠⁠)

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