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Cooperative Society

Cooperative Society..What does it mean?

• It means working with others together for a common purpose.• Its united voluntarily to meet their common economic, social and cultural

needs and aspirations through a jointly-owned and democratically-controlled.

• The cooperative society compulsorily required to be registered under the Cooperative Societies Act 1912.

• Setting up of this business is simple, but the most required is that minimum 10 adults should form this business.

• The capital is raised from its members through issue of shares.• After registration, the company acquires legal identity.

Features of Cooperative Society..The characteristics of cooperative society, follows:

Voluntary Membership : - The membership of this business is voluntary. - A person is free to join to this business and can also leave as per his wish. There cannot be any compulsion for him to join or quit this business. - But, the person should serve a notice before leaving the business. - Membership is open to all, irrespective of their religion, caste and gender.

Legal Status : - Registration of this business is compulsory. - It gives separate identity in society. - The society can enter into contracts and hold property in its name, sue and be sued by others. - as a result of being a separate legal entity, it is not affected by the entry or exit of its members. Limited Liability : - the liability of the members of this business is limited to the extent of amount provides as capital. - this is the maximum risk the member should bear.

Control : - In this business, the power to take decisions lies in the hands of elected member. - ‘’The right to vote’’ gives the other members to select managing member of the business. This makes this business democratic and the selected member will take decisions. Service Motive : - The cooperative society through its purpose lays emphasis on the values of mutual help and welfare. - Hence, the motive of service dominates its working. - If any surplus is generated as a result of its operations, it is distributed amongst the members as dividend in conformity with bye-laws of the society.

Merits of Cooperative Society..The business offers many benefits to its members. Some of the advantages follows: Equality in voting status : every members have equal voting

right. Limited Liability : liability is limited to the extent of their capital

contribution. Therefore, safe from being used to repay dept. Stable Existence : death, bankruptcy or accidents in members

don not effect the business. It always be unaffected with out any change in membership.

Economy in operations : the members generally offer honorary services to the society. This helps for reducing the costs. The customers/producers themselves are members of the society, and hence the risk of bad debts is lower.

Limitations of Cooperative Society…This business suffers from some limitation, that follows: Limited recourses : resources of this business consists of capital

contributions of the member with limited means. Inefficiency in management : this business are unable to attract

and employ expert managers because of the inability to pay salaries.

Lack of Secrecy :

Support from government : this business brings the idea of democracy and finds support from government in form of low taxes, subsidies, and low interest rates on loan.

Ease of formation : this business can be started with a minimum of ten members. The way of registration is simpler, only few legal formalities.