2. Definition
A cooperative is defined as
an autonomous association of
persons united voluntarily to
meet their common
economic, social, and cultural
needs and aspirations
through a jointly-owned and
democratically-controlled
enterprise.
A cooperative society may
also be defined as a business
owned and controlled equally
by the people who use its
services or who work at it.
3. Formation of a Co-operative
Society
A Co-operative Society can be formed as per the provisions
of the Cooperative Societies Act, 1912.
At least ten persons having the capacity to enter into a
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 Registrar of Co-operative
Societies of the concerned state.
After scrutiny of the application and the bye–laws, the
registrar issues a Certificate of Registration.
4. 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.
5. 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.
Examples: The Employees’ Housing Societies , Metropolitan
Housing Co-operative Society
6. Characteristics of Co-operative Society
I. Open membership: A minimum of ten members are required to form a co-
operative society. The Co–operative societies Act does not specify the
maximum number of members for any co-operative society.
ii. Voluntary Association: Members join as well as leave the co-operative
society voluntarily, that is by choice.
iii. State control: To protect the interest of members, co-operative societies
are placed under state control through registration.
iv. Sources of Finance: In a co-operative society capital is contributed by all
the members. However, it can easily raise loans and secure grants from
government after its registration.
v. Democratic Management: The society is managed by a group known as
“Board of Directors”. The members of the board of directors are the elected
representatives of the society.
7. Characteristics
vi. Service motive: Co-operatives are not formed to maximize profit
like other forms of business organization.
vii. Separate Legal Entity: A Co-operative Society is registered under
the Co-operative Societies Act. After registration a society becomes a
separate legal entity, with limited liability of its members.
viii. Distribution of Surplus: Every co-operative society in addition
to providing services to its members, also generates some profit while
conducting business.
ix. Self-help through mutual cooperation: Co-operative Societies
thrive on the principle of mutual help. They are the organizations of
financially weaker sections of society.
8. Requirements for Registration:
1. Application with the signature of all members
2. Bye-laws of the society containing:
(a) Name, address and aims and objectives of the society
(b) Names, addresses and occupations of members
(c) Mode of admitting new members
(d) Share capital and its division
9. ADVANTAGE
Easy formation
Open membership
Democratic control
Limited liability
Elimination of middleman’s profits
State assistance
Stable life
10. LIMITATIONS
Limited capital
Problems in management
Lack of motivation
Lack of cooperation
Dependence on government
11. ROLE OF REGISTRAR OF COOPERATIVE SOCIETIES
Right from the Registration of a Cooperative Society
till the cancellation of its registration, the Registrar
acts as a friend, philosopher and guide to the
cooperatives and ensures that Cooperative Societies
function in accordance with the Cooperative Act.
12. The main functions of the Registrar
Registration of Cooperative Societies
Registration of amendments in the Bye-laws of
Cooperative Societies
Amalgamation, Division and re-organization of
Cooperative Societies
Ensure timely Election of the Managing Committee in
Cooperative Societies
Ensure proper investment of funds by Cooperative
Societies
13. The main functions of the Registrar
Conduct audit, order inspection, and enquiry.
Settle disputes of Cooperative Societies through the
process of arbitration.
Order winding up and cancellation of registration of
defunct/non-functional societies.
Issue Instructions for the promotion of business of
different types
To approve proposals for enrolment, resignation and
cessation of membership in Housing Cooperative; and
14. SOCIETIES TO WHICH THE ACT
APPLIES
• Charitable societies
• Military orphan funds or societies
• Societies established for promotion of science,
literature, or for fine arts
• Societies established for maintenance of libraries or
reading rooms for general public
• Societies established for Public museums and galleries
for paintings or other works of art.
15. Multi-state Cooperative societies:
Object of the Act
Serving the interests of members in more than one State,
to facilitate the voluntary formation and democratic
functioning of cooperatives .
Multi-State Cooperative Society can be formed under Multi
State Cooperative Societies Act.
Multi-State Cooperative Societies Act, 2002 has received
President’s assent.
The Act will supersede 1984 Act when brought into force.
Under the Act, there will be a Central Registrar overseeing
and regulating multi-state cooperative societies.
16. Duties, rights and liabilities of
members
Duty of every member - It is duty of every member of multi-state
cooperative society to promote and protect interests and objects of the
society.
Voting by members - Every member, including member who is
employee shall have one vote, irrespective of his shareholding.
Management of Society - Management of a multi-state cooperative
society will be a three tier structure. General body consists of all
members. They elect Board of Directors to exercise overall control over
operations. Day to day control is exercised by ‘Chief Executive’ who will
be employee of the multi-state cooperative society.
Chairperson/President of society - A multi-state cooperative society
can have Chairperson/President and Vice Chairperson/Vice President.
A person who is Minister in central or State Government cannot be
elected to the post. - A person can be elected as Chairperson/President
only for two consecutive terms, full or part.
17. OFFICE BEARERS OF SOCIETIES
1. Election of directors
2. Powers and functions of Board
3. Chief Executive
4. Privileges of multi-state cooperative society
5. Winding up of society
18. 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.
Tax shelter for co-operative societies
19. Examples:
Annapurna Mahila Credit Co-operative Society
Krishak Bharati Cooperative Limited (KRIBHCO)
Anwarde Crop Pritection Co-operative Society 195/1980
Co-operative Societies in Delhi
S.No. Registration No. Name of society Status of allotment of land Audit zone
1 121 RAILWAY CGHS YES NO SOUTH
2 158 ARVIND CGHS YES YES SOUTH
3 239 ALANKRIT CGHS YES YES SOUTH
