What is a Co-operative Society?
A co-operative society is entirely different from all other forms of business organization. It protects the interests of the weaker sections of the society. It is a voluntary association of persons joined together on the basis of equality for fulfillment of their economic and business interests.
Who can form Co-operative Societies?
A group of ten persons can form a co-operative society. In India, such societies function under the Co-Operative Societies Act, 1912 and other State Cooperative Societies Acts.
The main objectives of co-operative society are
- To render service rather than earning profit,
- To provide mutual help instead of competition. and
- To offer self help
Why are Co-operative Societies formed?
Co-operative societies are formed with the principles of co-operation. It is formed primarily to render services to its members. It also provides some service to the society.
On the basis of objectives, various types of Co-operatives are formed. They are Consumer co-operatives, Producers co-operatives, Marketing co-operatives, Housing Co-operatives and Credit Co-operatives.
Features of Co-operative Societies
1. It is a voluntary association of persons. Individuals having common interest can join together to form a co-operative society.
2. To form a co-operative society, there has to be a minimum number of 10 members. It can have unlimited members at maximum.
3. Co-operative societies has to be compulsorily registered under the Co-operative Societies Act..
4. Co-operative society can enjoy perpetual succession.
5. It has its own common seal.
6. It can own property in its name and enter into contract with others.
7. It can sue others in court of law.
8. The aim of any co-operative society is to provide service to its members and to the society in general.
9. Each member has got the right to vote and can take part in the management of the society.
10. A co-operative society starts with a fund contributed by its members in the form of units called shares. The capital of the co-operative society is the funds provided by the members by purchasing shares. It can also raise loans and obtain grants from the government easily.
11.Members of a Co-operative society enjoy a fixed rate of dividend after deduction from the profit for the capital subscribed.
Advantages of Co-operative Societies
1. It is easy to form a co-operative society. Any ten persons can join together and voluntarily form an association. They can register themselves with the Registrar of Co-operative societies.
2. The liability of every member is limited to the extent of capital contributed by him.
3. Any individual can be a member of any co-operative society.
4. Co-operatives get a financial assistance from the State governments and enjoys exemptions and concessions in taxes.
5. The middleman’s profit is eliminated as the consumers control their own supplies through co-operative societies.
6. Each member has only one vote. Hence, it is managed in democratic manner.
7. It has got perpetual succession and enjoys legal entity.
Disadvantages of Co-operative Societies
1. The amount of capital generated by co-operative society is limited because of the members belonging to same locality or region or a particular section of people.
2. Co-operatives do not function efficiently due to lack of managerial abilities.
3. It does not enjoy professionalism as they cannot employ professionals at initial stages due to limited funds.
4. Co-operatives, are formed to render service to its members than to earn profit. This motive does not encourage co-operatives to function effectively.
5. Among the members, there exists lot of conflicts due to personality differences, ego etc.
6. Secrecy cannot be maintained in co-operative societies.
7. The co-operative societies mostly depend on government for financial assistance.
8. Co-operative societies are not suitable for business organizations that has objective to earn profit..