3.2.13 Official documents
The FCA requires that the rules state whether the society intends to have a ‘common seal’, a device for stamping official documents such as share certificates, and if it does have a common seal, to state how it will be used. Most societies make provisions for a common seal or its equivalent.
The law does not require societies to have a common seal, or to issue share certificates, although if a society decides against issuing share certificates it should make alternative provisions so that members know how much share capital they hold.
Societies that intend to pay interest and/or dividends, or that plan to charge members an annual subscription fee, should consider introducing individual share accounts for members. Instead of sending out cheques for interest and/or dividend payments, or share certificates worth the same amount, the society could send members an annual statement of their share account, listing all receipts, withdrawals and charges. This would mean all interest and dividend payments are automatically re-invested, as well as enabling a society to charge an annual subscription fee without having to get members to make an annual payment. In order to manage share accounts this way, a society would need to have a ‘lien on shares’, which is the right to offset a member’s debt against their share capital. The rules would also have to state that any payments to members will be automatically credited to their accounts, unless they already hold the maximum individual shareholding allowed.
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