A cooperative society is a voluntary association of individuals with a common economic purpose. It must have a minimum of 10 members and register under the Cooperative Societies Act of 1912. Cooperative societies have features like voluntary membership, limited liability, democratic control, and a service motive of mutual help rather than profit. They benefit members through equality, stability, lower costs, and government support, but can be limited by resources, management issues, and government control. Common types are consumers', producers', marketing, farmers', credit, and housing cooperatives.

1. COOPERATIVE SOCIETY

2. WHAT IS COOPERATIVE SOCIETY?
A co-operative society is often a voluntary association of
individuals who come together with the intention to work
together and to promote their economic interest

3. KEY POINTS
● WORKING TOGETHER
● COMMON PURPOSE
● WELFARE MOTIVE
● ECONOMIC & SOCIAL INTERESTS

4. FORMATION
● MINIMUM OF 10 INDIVIDUALS
● COOPERATIVE SOCIETIES MUST BE REGISTERED UNDER THE
COOPERATIVE SOCIETIES ACT, 1912
● REGISTRATION PROVIDES A DISTINCTIVE LEGAL IDENTITY TO
THE SOCIETY
● CAPITAL IS RAISED AMONGST THE MEMBERS THOUGH THE
ISSUE OF SHARES

5. FEATURES
1. Voluntary Association- The membership of cooperative societies
is voluntary. Any person who is above 18 years and has a common
interest is free to join a cooperative society. All individuals
irrespective of their gender,caste or religion can become a
member of cooperative society.The member can also leave the
society any time after giving a proper notice.

6. FEATURES
2. LEGAL STATUE-Registration of a cooperative society is
compulsory. This accords a separate identity to the
society which is distinct from its members. The society
can enter into contracts and hold property in its name,
sue and be sued by others. As a result of being a separate
legal entity, it is not affected by the entry or exit of its
members.

7. FEATURES
3.Limited liability: The liability of the members of a
cooperative society is limited to the extent of the
amount contributed by them as capital. This defines
the maximum risk that a member can be asked to
bear.

8. FEATURES
4. Control: In a cooperative society, the power to take
decisions lies in the hands of an elected managing
committee. The right to vote gives the members a
chance to choose the members who will constitute the
managing committee and this lends the cooperative
society a democratic character.

9. FEATURES
5. Service motive: The cooperative society through its
purpose lays emphasis on the values of mutual help and
welfare. Hence, the motive of service dominates its
working. If any surplus is generated as a result of its
operations, it is distributed amongst the members as
dividend in conformity with the bye-laws of the society.

10. Merits of Cooperative Society
1. EQUALITY IN VOTING STATUS- Cooperative society
functions on the basis of ‘One Man One Vote’. Every
member has the equal right to vote and elect members
for managing committee.
2. LIMITED LIABILITY- The liability of members of a
cooperative society is limited to the extent of their capital
contribution. The personal assets of the members are,
therefore, safe from being used to repay business debts.

11. MERITS
3. STABLE EXISTENCE- Death, bankruptcy or insanity of the
members do not affect continuity of a cooperative society. A
society, therefore, operates unaffected by any change in the
membership.
4. ECONOMY IN OPERATIONS : The members generally
offer honorary services to the society. As the focus is on
elimination of middlemen, this helps in reducing costs. The
customers or producers themselves are members of the
society, and hence the risk of bad debts is lower.

12. MERITS
5.SUPPORT FROM GOVERNMENT-The cooperative society
exemplifies the idea of democracy and hence finds support
from the Government in the form of low taxes, subsidies,
and low interest rates on loans.
6. EASE OF FORMATION-The cooperative society can be
started with a minimum of ten members. The registration
procedure is simple involving a few legal formalities. Its
formation is governed by the provisions of Cooperative
Societies Act 1912.

13. LIMITATIONS
(i) Limited resources: Resources of a cooperative society consists
of capital contributions of the members with limited means. The
low rate of dividend offered on investment also acts as a
deterrent in attracting membership or more capital from the
members.
(ii) Inefficiency in management: Cooperative societies are unable
to attract and employ expert managers because of their inability
to pay them high salaries. The members who offer honorary
services on a voluntary basis are generally not professionally
equipped to handle the management functions effectively.

14. LIMITATIONS
(iii) Lack of secrecy: As a result of open discussions in the
meetings of members as well as disclosure obligations as per the
Societies Act (7), it is difficult to maintain secrecy about the
operations of a cooperative society.
(iv) Government control: In return of the privileges offered by
the government, cooperative societies have to comply with
several rules and regulations related to auditing of accounts,
submission of accounts, etc. Interference in the functioning of
the cooperative organisation through the control exercised by the
state cooperative departments also negatively affects its freedom
of operation.

15. LIMITATIONS
(v) Differences of opinion: Internal quarrels arising as a
result of contrary viewpoints may lead to difficulties in
decision making. Personal interests may start to
dominate the welfare motive and the benefit of other
members may take a backseat if personal gain is given
preference by certain members.

16. TYPES OF COOPERATIVE SOCIETIES
(i) Consumers’ cooperative societies: The consumer
cooperative society are formed to protect the interests of
consumers. The society aims to provide the good quality
products at reasonable prices. The goods are purchased in a
bulk from wholesalers and then sold to the members. Bulk
buying and elimination of middleman reduces cost of
products. If society earns profit in the process of sale, it is
distributed amongst members in the capital contribution or
purchases made by the individual members.

17. TYPES
(ii) Producers’ cooperative societies: Producers cooperative
societies are formed with an aim to protect the interests of
small producers. These societies provide raw materials,
equipment and other inputs to the members at cheaper
rates. The output may be sold by the members of society and
the profit earned is shared by the members on the basis of
their contributions towards total production or sales of
goods. The society helps its members to fight against the big
producers with better bargaining powers.

18. TYPES
(iii) Marketing cooperative societies: Marketing cooperative
societies are established to help small producers in selling
their products. The society eliminates middlemen and helps
its producer members to secure a good market for their
products. This society takes care from packaging to
warehousing and transporting so that the products can be
sold at the best possible price. The profit earned from the
sale of products is distributed among the members as per
their individual contribution to the pool of output.

19. TYPES
(iv) Farmers’ cooperative societies: Farmers Cooperative
societies are formed by the farmers with an aim to get better
inputs at a reasonable cost. The societies provide individual
farmers the benefits of large scale farming and hence
increases productivity. The societies provide farmer
members better quality seeds, fertilizers, machinery and
other modern techniques at a reasonable prices. The main
aim of these societies is to provide directions to small
farmers to improve production and get better returns

20. TYPES
(v) Credit cooperative societies: Credit cooperative societies are
established to provide financial assistance to its members at
very reasonable terms. Members of credit cooperative societies
are all individuals who have difficulty in arrange credit and
loans. These societies collect money from its members as
capital or deposits and then use the same funds to provide loans
to its members at a very low interest rates. The main aim of
credit cooperative societies is to protect its members from
exploitation of money lenders who charge very high rate of
interest on loans.

21. TYPES
(vi) Cooperative housing societies: Cooperative housing
societies are established to construct houses for its
members at reasonable costs. Members of cooperative
housing societ pool in funds and acquire residential land
and then either construct houses or provide plots to
members so that they can construct house of their choice.
Members of cooperative housing society have the options
of paying in installments rather than lump some
investment

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