Cooperative Society

A business organization can take many forms. One such form is that of a cooperative society. Such societies have unique features of joint ownership and democratic leadership. Let us take a brief look at their features and some types of societies.

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Introduction 

A cooperative society is not a new concept. It prevails in all the countries, this is almost a universal concept. The cooperative society is active in all countries worldwide and is represented in all the sectors including agriculture, food, finance, healthcare, etc.

To protect the interest of weaker sections, the co-operative society is formed. It is a voluntary association of persons, whose motive is the welfare of the members.

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Features of a Cooperative Society

(Source: encryptedtbn0)

• As it is a voluntary association, the membership is also voluntary. A person is free to join a cooperative society, and can also leave anytime as per his desire. Irrespective of their religion, gender & caste, membership is open to all.
• It is compulsory for the co-operative society to get registration. The co-operative society is a separate legal identity to the society.
• It does not get affected by the entry or exit of its members.
• There is limited liability of the members of co-operative society. Liability is limited to the extent of the amount contributed by members as capital.
• An elected managing committee has the powers to take decisions. Members have the right to vote, by which they elect the members who will constitute the managing committee.
• The cooperative society works on the principle of mutual help & welfare. Hence, the principal of service dominates it’s working. If any surplus is generated, it is distributed amongst the members as a dividend in conformity with the bye-laws of the society.

What are the Advantages and Disadvantages of  Cooperative Society?

Types of Cooperative Society

1] Producer Cooperative

To protect the interest of small producers, these societies are set up. The co-operative society members may be farmers, landowners, owners of the fishing operations. To increase the marketing possibilities and production efficiency,  producers decide to work together or as separate entities.

They perform several activities like processing, marketing & distributing their own products. This helps in lower costs and strains in each area with a mutual benefit to each producer.

2] Consumer Cooperative

These businesses are owned and governed by consumers of a particular area for their mutual benefit. Their view is to provide daily necessary commodities at an optimum price. Rather than earning a pecuniary profit, their aim is towards providing service to the consumers.

3] Credit Unions

Credit unions are generally member-owned financial cooperatives. Their principle is of people helping people. They provide credit and financial services to the members at competitive prices. Each and every depositor has the right to become a member. Members attend the annual meeting and are given rights to elect a board of directors.

4] Marketing Cooperative Society

With an aim of helping small producers in selling their products, these societies are established. The producers who wish to obtain reasonable prices for their output are the members of this society.

For securing a favourable market for the products they eliminate the middlemen and improve the competitive position of its members. It collects the output of individual members. Various marketing functions like transportation, packaging, warehousing, etc are performed by the cooperative societies to sell the product at the best possible price.

5] Housing Cooperative Society

To help people with limited income to construct houses at reasonable costs, these societies are established. Their aim is to solve the housing problems of the members. A member of this society aims to procure the residential house at lower cost.

They construct the houses and give the option to members to pay in installments to purchase the house. They construct flats or provide plots to members on which the members themselves can construct the houses as per their choice.

Solved Example for You

Q: In a co-operative society, the principle followed is:

1. One man one vote
2. No vote
3. Multiple votes
4. One share one vote

Answer: (a) one man one vote. A cooperative society is democratically managed and follows this system completely. Unlike in a company, the votes are not according to shares. Rather every member represents one vote. So option A is correct.