DEFINITION
Cooperative societies are a type of business organisation that are established with the purpose of assisting the members of the society.
CHARACTERISTICS
A cooperative society has a different legal identity from its members because registration is required. A cooperative society may own property in its name, enter into contracts, bring legal actions, and bring legal actions against third parties after being registered. In a cooperative society, the name of the society, not the names of its members, will be used in all transactions. The entry or exit of its members has no bearing on it because it has a distinct legal existence of its own.
Democratic
In a cooperative society, an elected managing committee is in charge of making important decisions. The managing committee members are electable by the cooperative society’s members, which enhances democracy’s function. As they have voting rights, the members can select their representatives.
Party Liability
A cooperative society is a practical type of cooperation where each member’s responsibility is only as great as the capital they have contributed. Therefore, a cooperative society allows each member to safeguard their economic interests with little danger.
Access and Exit Are Free
Since a cooperative society is a voluntary organisation, any individual is free to join or leave at any time. It is effective.It operates in accordance with a democratic society, meaning that anybody can participate, regardless of caste, religion, or gender.
Social Welfare
The economic well-being of the underprivileged or weaker segments of society is a goal of a cooperative society. Eliminating middlemen and defending the interests of its members and society are two of its key objectives. Consequently, it can be claimed that a cooperative society strives to provide a service. If there is any excess, it is divided as a dividend to the society’s members in accordance with its policies.
TYPES
Cooperative Producers
These organisations are established to safeguard the interests of small producers. Members of cooperative societies can be farmers, landowners, or proprietors of fishing businesses.
Producers choose to collaborate or operate as independent businesses in order to improve marketing opportunities and production effectiveness.
They carry out a variety of tasks, including processing, marketing, and distribution of their own goods. This benefits all producers equally by lowering prices and burdens in each area.
Consumer cooperative
Customers from a specific region own and run these enterprises for their mutual benefit. Their goal is to offer daily necessities at the best price. Instead of focusing on making a financial profit, they try to serve the customers.
Credit Unions
In general, credit unions are financial cooperatives owned by its members. People assisting people is their guiding principle. They provide members competitively priced credit and financial services. Everyone who deposits money has the option to join. Members have the opportunity to choose a board of directors at the annual meeting.
Society for Cooperative Marketing
These societies have been created with the intention of assisting small producers in marketing their goods. Members of this group are the producers who want fair rates for their products.
They cut out the middlemen to ensure a favourable market for the products and boost each member’s ability to compete. The output of every member is gathered. The cooperative societies carry out a variety of marketing tasks, such as shipping, packing, warehousing, etc., to sell the goods at the best price.
Housing Cooperative Society
These organisations are set up to aid those with low incomes in building homes at affordable prices. Their goal is to find solutions for the members’ housing issues. An individual who belongs to this society wants to buy a property more affordably.
Members have the opportunity to pay in instalments to purchase the homes after they are built. They build apartments or provide members sites on which they can build the homes of their choice themselves.
ADVANTAGES
- A voluntary association that can be created with a minimum of ten adult members is a cooperative society. Its registration is relatively easy to do and doesn’t require many legal
- Open Membership – Anyone with a shared interest is eligible to join a cooperative The society’s continuity is unaffected by a person’s decision to join at any time and quit at any time by returning his shares.
- Democratic Management – A democratic system of governance governs cooperative It is predicated on the idea of “one man, one vote.” Equal rights and participation in management are available to all members.
- Limited Liability – The co-operative society’s members’ liability is restricted to the amount of capital they have They are not personally responsible for the societal debts.
- A cooperative society has a separate legal existence, which increases its The passing away, bankruptcy, insanity, or permanent disability of any of its members has no effect on it. It continues to exist for a considerable amount of time and has a reasonably stable life.
- Economical Operations – Due to the lack of middlemen and the voluntary services offered by its members, cooperative societies are quite economical to
- Government Favoritism – The government offers co-operatives a variety of benefits, including loans with lower interest rates and tax
- Low Management Cost – The voluntary services provided by the members help to reduce some of the management’s They actively participate in society’s operations. Therefore, society is not required to spend a lot of money on managerial staff.
- Mutual Cooperation – Cooperative societies encourage the values of self-help,
self-government, and mutual understanding. They protect the less powerful groups in society from the exploitation of the wealthy. Cooperation’s guiding philosophy is “self-help via mutual support.”
- No Speculation – New members are always welcome to the share. Cooperative society shares are never sold for more than their face Therefore, it is free of the negative effects of share price speculation.
- Economic Benefits: Cooperative societies offer loans for business needs and financial aid to farmers and other people with lower
- Additional Benefits: In some states, cooperative societies are exempt from paying registration fees and stamp duties.These societies have precedence over other creditors when collecting what they are owed from debtors, and their shares cannot be ordered as payment for