“A cooperative is an autonomous association
of people who voluntarily cooperate for their
mutual social, economic, and cultural
“An association or corporation established
for the purpose of providing services on a
nonprofit basis to its shareholders or
members who own and control it.”
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
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
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
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 and 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.
1. Easy formation
2. Democratic Management
3. Open Membership
4. Limited Liability
5. Service Motive
6. Stability and continuity
7. Economic operations
8. Surplus shared by members
1. Lacks of Capital
2. Inefficient Management
3. Lacks of Business Secrecy
4. Cash trading
5. Lacks of Motivation
6. Political Interference
7. Lacks of Public Confidence
8. Limited Scope for Expansion
• What act is applicable for a co-operative in
In Tamil Nadu, co-operatives are governed by the The Tamil
Nadu Co-operatives Act 1961 and the rules framed there
• Should a co-operative be registered with the
A co-operative starts functioning legally after it is registered
with the state government. The by-laws for the society can be
made by its members but the by-laws also have to be
registered with the state government.
To what extent does the government interferes in the formation and
functioning of a co-operative society?
Among many government roles, typical matters are listed here:
• The Registrar of co-operatives (a public authority appointed by the state
government) has to approve the by-laws of the society.
• Any change in the by-laws have to be re-approved by the Registrar.
• The Registrar has the powers to conduct financial audit, conduct inquiry
and inspect the functioning of the society.
• The Registrar has the powers to direct appropriate committee of the
society to suspend any erring paid servant of the society.
• The Registrar has the powers to override the erring managing committee
and appoint a special officer to manage the affairs of the society.
• The Registrar has the powers to order winding up of the society and
cancel registration of the society after an inquiry.
• How can a member know about the by-laws of a
Each co-operative society should have a registered address
and a copy of the by-laws of the society is to be kept for free
• Whom to approach in case of disputes within a
The aggrieved party can approach the co-operative tribunal
appointed for this purpose.
Examples of some co-operative societies in
• Tamil Nadu Co-operative Milk Producers' Federation
Limited (AAVIN MILK)
• The Tamil Nadu Handloom Weavers’ Co-operative Society
Limited (Co-Op Tex)
• Tamil Nadu Industrial Cooperative Bank Limited