The word "corporation" is derived from the Latin word "co-operator". The word ‘go’ means ‘with’ and ‘operator’ means ‘act’. Therefore, the word cooperation means working together. Therefore, those who want to work together for certain common economic goals can create a community, which is called a cooperative society.
A co-operative society is a voluntary organization of individuals working together to promote financial interests. It works on the principle of self-help and mutual aid. The primary goal is to provide services to members. The goal of a cooperative society is "for all and for all". People come forward to form a team, gather their personal resources, make the best use of them and achieve some common benefits.
Definition
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| Define Cooperative Societies, mention it's Features, Advantages & Disadvantages |
Section (4) of the Indian Co-operative Societies Act, 1912 defines a co-operative society as "a community".
H.C. Calvard defines a cooperative society as "an organization in which individuals volunteer as human beings on the basis of equality to advance their financial interests."
Features of Co-operative Societies
The following are the key features of the cooperative social structure of a business organization.
1. Voluntary Organization: Voluntary organizations were started with the objective of serving the members of the co-operative societies. Everyone can join or leave the cooperative as they wish. Individuals with common financial goals can join the community at any time. The main characteristic is the voluntary membership of the co-operative society.
2. Open Membership: In co-operative societies, membership is available to anyone interested in public finance. Anyone can join voluntarily irrespective of caste, religion, color and gender.
3. Number of members: At least 10 ordinary persons are required to form a co-operative society. In many state co-operative societies, if the members are individuals, the number of members should be at least 50 from each state. The Co-operative Societies Act, 1912 does not specify the maximum number of members in a co-operative society. However, once the community is created, members can specify the maximum number of members.
4. Registration of Societies: In India, Co-operative Societies are registered under the Co-operative Societies Act, 1912 or the State Co-operative Societies Act. Multi-State Co-operative Societies are registered under the Multi-State Co-operative Societies Act, 2002. Once registered, the community becomes a separate legal entity and acquires certain features. These are:
- The community enjoys permanent heirs.
- It has a public brand of its own.
- You can enter into agreements with others.
- This will cause others to file lawsuits.
- The object may be placed in its name.
5. State control: As the registration of co-operative societies is mandatory, each co-operative society comes under the control and supervision of the government. The Co-operation Department oversees the activities of the associations. Each community should audit their accounts from the government co-operative sector.
6. Capital: The capital of a co-operative society is provided by its members. Since the contribution of the members is very low, it mostly depends on the assistance of the government (debt), grants, supreme co-operative society or the state and central government.
7. Democratic Management: Co-operative societies are democratically managed. Each member has the right to participate in community management. However, the community chooses a board of directors for its efficient management. Board members are selected on the basis of 'one vote per person', regardless of the role of any member. The Public Organization Board of Community forms the broadest structure in which to function.
8. Service Purpose: The primary objective of each co-operative society is to provide services to its members. Its purpose is not to make a profit like all other types of business restrictions. Societies make small profits when they sell goods to non-members to cover administrative costs.
9. One vote per person: One vote per member irrespective of the contribution of the co-operatives to the capital. No one can control society by the power of his wealth. All members of the community administration have an equal voice.
10. Surplus Distribution: Surplus profits are distributed in the form of bonuses after the community members are paid a fixed dividend for their investment and a certain percentage is allocated for the common good of the community.
11. Income from investment: Members are entitled to income from their capital investment before the balance is paid in the form of bonus. This encourages members to keep money with the community.
12. Money Trading: One of the key principles of cooperation is to trade on monetary basis. Co-operatives will prosper when monetary policy is strictly adhered to. Money laundering stabilizes the co-operative economy and eliminates bad debts and collection costs.
Advantages and Disadvantages
Advantages of Cooperative Societies
The benefits of co-operative societies are as follows:
1. Simple work: Creating a partnership is simple and straightforward. Many legal entities, such as a joint stock company, do not have to comply. Any mature member can create a community. The registration process is very simple.
2. Democratic Management: Each member of a co-operative society has only one vote, regardless of the number of shares he / she holds. Attend meetings well and do not allow people to vote by proxy. The conduct of society is democratic.
3. Service Purpose: Co-operative societies are started not for profit but for service. Provides products at low prices to members. Provides financial assistance to members at low cost. A sense of cooperation developed among the members.
4. Minimum operating cost: The administrative cost of a co-operative society is generally low. Management of a co-operative society in the hands of individuals selected by the shareholders. Some work to see the day-to-day activities of communities. Many members offer management services as services. Therefore, unions do not have to spend large sums on administrative staff.
5. Limited Liability: The liability of each member is limited to the extent of his capital contribution. The private property of the members cannot be used to cover the loss of the co-operatives.
6. Sustainability and Continuity: A co-operative society becomes a separate legal entity after registration. The death, bankruptcy, punishment and pension of any member shall not affect the stability and continuity of the co-operative society. These communities enjoy stability and continuity of activities.
7. Social Aspirations: Co-operative societies work for the social development of the economically backward sections of the society. Provides education and training in a co-operative form of organization, democracy, autonomy, self-help, mutual aid and service-mindedness. Such companies are socially desirable to protect the weaker sections from the exploitation of those who aim to increase their profits.
8. Tax Benefits: A co-operative society is exempted from income tax and levied an additional amount on its income up to a certain limit. It is exempt from stamp duty and registration fee.
9. State Support: The Government has adopted a policy of assisting co-operatives as a tool for socio-economic development of the weaker sections of the society by providing financial assistance in the form of loans and grants. The State Government offers concessions and incentives to co-operative societies and encourages the formation of such societies.
10. Shares are not traded: In a co-operative society, any person can buy shares at any time. Membership is always available to new members. Therefore, shares of co-operatives cannot be traded.
11. Removal of Intermediaries: Co-operatives procure goods directly from the manufacturer so that they remove the intermediaries from the dealer channel and sell them to the members cheaply and with quality. Consumption exploitation is avoided.
12. Check other businesses: When businesses try to exploit customers by increasing the price of their goods, co-operatives offer goods at reasonable prices. Cooperation is the test of other businesses. While co-operatives offer these products at lower prices, other companies need to lower their prices.
13. Purpose of Mutual Development: Co-operatives work on the principle of "One for All, One for All" with the aim of mutual development.
Disadvantages of cooperative societies
The disadvantages of co-operatives are:
1. Inefficient management: Management team members do not show proper interest in management because they only pay for their services. In addition, a co-operative society cannot employ people with the necessary skills, knowledge and experience without an organizational structure.
2. Limited financial resources: Special control and the principle of "one member, one vote" prevent the rich from joining society. Due to lack of funds, there is limited opportunity for expansion and growth.
3. Lack of unity among members: Members belong to different sections of the society. There is no reconciliation between them. Members do not understand the activities of the community, so they begin to doubt each other. Many co-operatives fail due to constant group competition and quarrels between members.
4. Lack of motivation for hard work: Management team members do not take an active role and interest in management and social issues because their service brings great benefits to the community.
5. Cannot transfer shares: A member of a co-operative society may not transfer his shares freely but may be allowed to withdraw his capital.
6. Strict State Regulation: As all co-operative societies are registered under the Co-operative Societies Act, 1912, these societies are required to comply with the law of the Co-operative Societies and the laws and regulations of the State.
7. Non-confidential: Community members choose individuals to control their communities. These individuals change over time. The affairs of a co-operative society will be disclosed to all members. So it is very difficult to keep business matters secret.
8. Lack of loyalty: The loyalty of the members of the co-operative society is not always firm and it cannot be enforced.
9. Political Intervention: Recommends Government Members to Management Committees. Each government seeks to send its own party members to these associations.
10. Lack of competitive power: Co-operatives with limited resources cannot compete effectively with large manufacturers.
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