Co-Operative Society

The co-operatives are formed primarily to render services to its members. Generally it also provides some service to the society. When the purpose of business is to provide service than to earn profit and to promote common economic interest, the co-operative society is the only alternative.

The main objectives of co-operative societies are:

-rendering service rather than earning profit

-mutual help instead of competition

-self help in place of dependence

On the basis of these objectives, various types of co-operatives can be formed with the objective of providing different benefits to their members. Some types of co-operatives are outlined below.

Types of Cooperatives

Consumer co-operatives  

These are formed to protect and strengthen the specific interests of ordinary consumers of society by making      consumer goods available at a fair price.

Producer co-operatives

These societies are set up to strengthen producers who operate on a small scale who face challenges related to resources for raw material and available markets for finished goods.

Marketing co-operatives

These are formed by producers and manufactures. Marketing co-operatives eliminate exploitation of the middlemen when marketing their product.

Credit Co-operatives

These societies are formed to provide financial help to its members.

Farming Co-operatives

These are formed by small farmers who carry on work together to operate on a larger scale and thereby share the benefits of large scale farming.

Besides these types, other co-operatives can be formed with the objective of providing different benefits to its members, like the construction co-operatives, transport co-operatives, co-operatives to provide education etc.

Characteristics of Co-operatives

Members Voluntary Association

Individuals with common interest may come together to form a co-operative society. Any person can become a member of such a co-operative.

Membership

The minimum number of individuals required to form a co-operative society is ten and the maximum number is unlimited.

Body Corporate

Registration of a society under the Co-operative Societies Act is a must. Once it is registered, it becomes a body corporate and enjoys certain privileges just like a joint stock company.

Some of the privileges are:

-It can sue others in court of law.

-It can enter into contract with others

-It has its own common seal.

-It can own property in its name.

-It can enter into contract with others.

-The society enjoys perpetual succession

-It has its own common seal.

-It can own property in its name.

Service Motive

The main motive of any co-operative organization is to provide specific services to its members in particular and to the society in general.

Democratic Set Up

Every member has a right to take part in the management of the society. Each member has one vote. The Executive Committee, who is elected and responsible to members, look after the daily operations of the organization.

Sources of Finances

Co-operative organizations have units of investments called shares which are contributed by members It can also raise loans and obtain grants from the government.

Return on capital

The profit earnings on capital subscribed by the members is in the form of a fixed rate of dividend after deduction from the profit of the co-operative.

Advantages of Co-operative Society

Easy Formation

Formation of a co-operative society is relatively easy as compared to a company. Any 10 persons can form an association and get the entity registered.

Limited Liability

The liability of the members is only limited to the extent of capital contributed by them.

Open Membership

Any member of society may become a member of a co-operative.

State Assistance

Co-operatives may have the advantage of patronage in the form of exemptions and tax concessions and financial assistance from the governments.

Middleman’s Profit Eliminated

Consumers benefit and the profit is maximized. Through the co-operative the consumer members control their own supplies and by this means the middleman’s profit is eliminated.

Management

Decision making by members on specific terms are democratized.. Each member has only one vote.

Winding up

A co-operative has a fairly stable life.  The dissolution of a co-operative firm is quite difficult. It does not cease to exist in the case of the death, or insolvency or resignation of any member.

Disadvantages of Co-operatives  

Limited Capital

Due to the specificity of co-operatives the amount of capital that can be generated may sometimes be limited. This is because of the membership remaining confined to a geographic area or a particular group of people.

Lack of Motivation

Co-operatives are basically service oriented more than profit motivated. There might not be sufficient motivation to manage the co-operatives effectively.

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