This document defines companies and cooperatives. It states that a company is an artificial person created by law to conduct business for profit, while cooperatives are formed by individuals with common economic needs controlled by elected boards. The document outlines different types of companies and cooperatives, including incorporated/unincorporated companies and consumers', producers', and credit cooperatives. It notes key differences between companies and cooperatives like separate legal entity, member ownership, and allocation of earnings. Finally, it discusses some advantages and limitations of cooperatives.

1. COMPANY AND
COOPERATIVES

2. COMPANY
 MEANING OF A COMPANY
 A COMPANY IS AN ARTIFICIAL PERSON CREATED BY THE LAW.
 IT IS A VOLUNTARY ASSOCIATION OF INDIVIDUALS FOR PROFITS
 A company, abbreviated co., is a legal entity made up of an association of people, be they natural,
legal, or a mixture of both, for carrying on a commercial or industrial enterprise.

3. DEFINITION
 According to Prof. L.H. Haney, “Company is an artificial person created by law
having separated entity with a perpetual succession and common seal”
 According to Justice Lindley a company means association of persons who
contribute in shape of money or money’s worth to a common stock and employ it
for some specific purpose.
 An organization of individuals conducting a commercial or industrial enterprise. A
corporation, partnership, association, or joint stock company

4. CLASSIFICATION OF COMPANY

5. CLASSIFICATION (CONT.)
 INCORPORATED COMPANIES : THESE ARE THE ASSOCIATIONS OF
THE PERSONS WHO CONTRIBUTE MONEY TO A COMMON STOCK
KNOWN AS CAPITAL OF THE COMPANY. THEY HAVE EXISTENCE
INDEPENDENT OF THEIR MEMBERS.
 UNINCORPORATED COMPANIES : THESE ARE THE MERE COLLECTION
OF THE PERSONS WHO HAVE AGREED TO JOIN IN PARTNERSHIP TO
RUN A BUSINESS AND SHARE THE PROFITS.
 CHARTERED COMPANIES : A chartered company is an association
formed by investors or shareholders for the purpose of trade,
exploration, and colonization.

6. CLASSIFICATION (CONT.)
 STATUTORY COMPANY : A COMPANY MAY BE
INCORPORATED BY MEANS OF A SPECIAL ACT OF THE
PARLIAMENT OR A ANY STATE LEGISLATURE. SUCH
COMPANIES ARE CALLED STATUTORY COMPANIES. SUCH
COMPANIES ARE GENERALLY FORMED TO CARRY OUT
SOME SPECIAL PUBLE UNDERTAKINGS.
 REGISTERED COMPANIES : COMPANIES ARE REGISTERED
UNDER COMPANIES ACT,1956,OR EARLIER COMPANIES ACT
ARE CALLED REGISTERED COMPANIES. SUCH COMPANIES
CAME INTO EXISTENCE WHEN THEY ARE REGISTERED
UNDER COMPANIES ACT.

7. CLASSIFICATION (CONT.)
 GOVERNMENT COMPANIES : IT IS A COMPANY OF WHICH
51% OR MORE EQUITY SHARE CAPITAL IS HELD BY
GOVERNMENT. REST OF THE SHARES CAN BE HELD BY
PRIVATE INDIVIDUALS OR BUSINESSMEN.
 FOREIGN COMPANIES : ITS IS INCORPORATED OUTSIDE
INDIA BUT HAS A PLACE OF BUSINESS IN INDIA. SOME
POPULAR MNC’S OPERATING IN INDIA ARE COCA
COLA(USA),SONY(JAPAN),ETC.

8. REGULATING ACT
 PARTNERHIP FIRM COMPANY
 INDIAN PARNERSHIP ACT, COMPANIES ACT,
 1932 1956

9. NUMBER OF MEMBERS
 PARTNERSHIP FIRM COMPANY
 MINIMUM-2 PRIVATE COMPANY :
 MAXIMUM-20 IN ODINARY BUSINESS MINIMUM-2 , MAXIMUM-50
& 10 IN BANKING BUSINESS. PUBLIC COMPANY :
NUMBER OF SHARES DIVIDED
BY LOT OF MINIMUM NUMBER OF
SHARES.

10. SEPARATE ENTITY
 PARTNERSHIP FIRM COMPANY
 NO SEPARATE LEGAL ENTITY FROM SEPARATE LEGAL ENTITY FROM
THAT OF ITS PARTNERS. THAT OF ITS MEMBERS.

11. TRANSFER OF INTEREST
 PARTNERSHIP FIRM COMPANY
 NOT POSSIBLE WITHOUT THE CONSENTS FREELY TRANSFERABLE EXCEPT IN
OF ALL PARTNERS. CASE OF PRIVATE COMPANY.

12. FINANCIAL RESOURCES
 PARTNERSHIP FIRM COMPANY
 CAN RAISE LIMITED RESOURCES. CAN RAISE LARGE FINANCIAL
RESOURCES

14. DEFINITION

15. Cooperatives
 Are primarily controlled by a board of directors
elected by and from members
 Derive equity from member owners
 Operate for the benefit of member owners
 Allocate earnings to members based on use
 Earnings from member business is taxed once
 Have perpetual existence

16. A Co-operative Societycan be formed as per the provisions of the Cooperative Societies
Act, 1912.
 At least ten persons having thecapacity to enter intoa contract with common
economic objectives, like farming, weaving, consuming, etc. can form a Co-operative
Society.
 A joint application along with the bye-laws of the society containing the details
about the society and its members, has to be submitted to the Registrarof Co-
operative Societies of the concerned state.
 Afterscrutinyof the application and the bye–laws, the registrar issues a
Certificateof Registration
Formation of a Co-operative
Society

18. Types of Co-operative Societies
 1. Consumers’ Co-operative Society: to protect the interest
 of general consumers by making consumer goods available at a
 reasonable price.
 2. Producers’ Co-operative Society: to protect the interest of
 small producers by making available items of their need for
 production like raw materials, tools and equipments, machinery, etc.
 Bayanika, Haryana Handloom, is example of producers’co-
 operative society.
 3. Co-operative Marketing Society: These societies are
 formed by small producers and manufacturers who find it difficult to
 sell their products individually.

19. Types of Co-operative Societies
 4. Co-operative Credit Society: to provide financial
support to the members. The society accepts deposits from members and grants them loans at
reasonable rate of interest in times of need.
 Examples: Village Co-operative Society, Urban Cooperative Banks
 5. Co-operative Farming Society: These societies are
 formed by small farmers to work jointly and thereby enjoy the
 benefits of large-scale farming. Examples: Ex: Pani-panchayats
 6. Housing Co-operative Society: to provide
 residential houses to members they purchase land, and construct
 houses or flats and allot the same to members. Some societies also
 provide loans at low rate of interest to members to construct their own houses.

20. ADVANTAGE
 Easy formation
 Open membership
 Democratic control
 Limited liability
 Elimination of middleman’s profits
 State assistance
 Stable life

21. LIMITATIONS
 Limited capital
 Problems in management
 Lack of motivation
 Lack of cooperation
 Dependence on government

22. TAX SHELTER FOR CO-OPERATIVE
SOCIETIES
While a co-operative society is treated under the
Income-tax Act, 1961, as an assessee for extending
certain concessions in computing taxable income, the
income of a co-operative society is not exempt in its
entirety.

23. User-Benefit Principle
The cooperative’s sole purpose
is to provide and distribute
benefits to members on the
basis of their use

24. Cooperative Functions
Three Core Functions
 Marketing - extend control of members’ products through
processing, distribution, and sale
 Purchasing - providing affordable supplies and goods
 Service - provide needed services