A presentation on

CO-OPERATIVE SOCIETY
 INTRODUCTION

The primary objective of this movement is ‘to protect

economically weaker sections of society’.
 In all forms of organisation, be it is a sole trade,
partnership or joint stock company, the primary motive
is to increase profits.
The businessman tries to promote his own interest
through all possible means including exploitation of
consumers.
The co-operative form of organisation is a democratic
set up run by its members for serving the interests of
themselves.
 DEFINITIONS

We can define the term ‘co-operative society’ as: Cooperation

means ‘living and working together for mutual
benefit/interest.’ Co-operative society/organisation is a
voluntary association of people, which is created for
promotion of their economic interest.
Finally, we can define the term as: A co-operative society is a
voluntary form of business organisation wherein persons
with common interest get associated voluntarily to fulfil
economic interest of the members. Co-operative spirit
among the members is the backbone of co-operative
organisation.
 FEATURES

 Voluntary Association: A co-operative society is a voluntary

association of persons. Any person – irrespective of caste, economic
condition, status, and religion – can join the society. He/she can join
with free will and can leave at any time after giving notice to the society.
In short, it is such an association where a person is free to join and
leave.
 Unity or Co-operation: Every co-operative society is working with
the motto of ‘Each for all and all for each’. It means that every members
of a co-operative organisation shall work for general interest of the
organisation as a whole and not for personal interest. Here, service to
others is a primary motive and self-interest is a secondary motive.
 Common Interest: Here, the principle of ‘common interest’ is to be
followed by co-operative organisations. The association work for the
community It may carry out any economic activity, such as
agriculture, finance, manufacturing, trade, etc.
 Finance or Capital: The capital is raised from the members by the way of
share capital. The share capital is generally limited to the members only.
Moreover, any co-operative society can raise funds by loans from State and
Central Co-operative Banks. Normally, price of share is kept low to help poor
and middle class people to be the members of the society.
 Democratic Management: A co-operative society is managed by the elected
representatives. Here, voting right is based on membership, and not on basis of
the number of shares. Thus, economic equality is fully ensured by a general rule
of ‘one man, one vote.’ In other words, each member is entitled to a single
vote, regardless of the number of shares he holds
 Open Membership: Membership is open for all adults, men and women,
without any discrimination of caste, creed, political affiliation, colour, or
religion. Rich and poor, educated and uneducated can join the cooperative
organisation by holding a small amount of share. One share is enough to be a
member. In co-operative form of organisation, there is no limit of number of
members.
Service Motive: The main purpose of co-operative society is to serve its
members. It focuses on providing better goods or services at reasonable
price. Economic upliftment of members through cooperation is the prime
motive. Profit is a secondary motive. It does not mean that the society is
not interested in profit. It should earn reasonable profit for sustainability
and development.
Compulsory Registration: It is mandatory that all the co-operative
societies to be registered under the Co-operative Societies Act, 1961 or the
relevant State Co-operative Societies Act. After registration, all the activities
are to be monitored by the Registrar.
Corporate Status or Separate Identity: The co-operative organisations
have to be registered under the Co-operative Societies Act. This provides a
separate legal identity to all the co-operative organisations, same as a
company. It has a legal status. It has its common seal and can transact on
its own name. Entry and exist of members do not affect its existence.
 ADVANTAGES

 Easy Formation: The formation of the co-operative society is simple. It requires

minimum ten adult persons who want to form the society. After completing
necessary formalities of the registration, the society is registered by the Registrar.
There are no further legal proceedings after registration.
 Helping the Poor: A co-operative society is suitable for poorer and middleclass
people, who have limited resources to solve their economic problems and improve
economic conditions. Needy people form a co-operative society to help themselves
solve their economic problems. The best example is: Dairy Co-operatives in India
have made such a revolution that has changed life of poor farmers.
 Separate Legal Status: Registration of the co-operative society is mandatory.
After registration, the society gets a separate legal identity or status. A co-operative
society is a legal person. A common seal can be treated as signature of the society.
All the operations of the society are made on the name of society itself.
 No Threat of Competition: A co-operative society has service motive and it
works for the poor and needy people of the society. Co-operative society
experiences a limited threat of direct competition with big business organisations.
Giant companies do not directly harm to such organisations.
Limited liability: The liability of its members is limited to the shares
they hold. In case of any extraordinary economic crisis, they are liable up
to their shareholding. Their personal property is not attachable.
Continuity (or Stability): A co-operative society has perpetual
existence. It has a separate legal identity, and the existence of the co-
operative society is not affected by the death, insolvency or retirement of
the member(s). The members and the society are two different parties.
Thus, any changes in membership do not affect the existence society.
Democratic and Less Expensive Management: In a co-operative
society, the general rule is: One man, one vote. Decisions are taken by the
majority rule. All members have equal right in the co-operative
organisation. Every member can contest the election. Similarly, each
member has the right to take part in discussion. A person with only one
share can also become the president of the society!
Government’s Aid and Assistance: A co-operative society
is entitled for the government assistance. The assistance is in
the form of grant, loan, or subsidy. Co-operative societies are
treated as social organisations. Therefore, the government
offers all kinds of assistance, like financial, managerial,
technical, etc., to them. Moreover, they can also get certain
privileges in the form of tax concessions, tax exemptions, etc.
Open Membership: In a cooperative form business
organisation, the membership is open for all. It promotes
communal harmony and co-operative spirit among differ
classes of people. Caste, creed, economic condition, etc.,
cannot be the obstacles.
 DISADVANTAGES

 Limitation of Capital: Here, the fund is raised by contribution of the

members. The members generally belong to the middle class or the backward
class people of the society. It is obvious that their contribution cannot provide
the required capital. Moreover, it is also not easy to get loans and subsidies
from the State Co-operative Banks or the Government. Limited fund means
limited operations/volume of business.
 Government’s Regulations: The co-operative societies have to follow rules
and regulation. It operates under the strict supervision and interference of the
Registrar. In some cases, the excessive control hinders the efficiency of the
management. Approval of the authority needs lengthy procedures.
 Inefficiency of Management: The Board of Directors of the co-operative
society is the main governing body. It may not have the knowledge and skill of
sound administration. In some cases, even the employees are not well-qualified
to tackle managerial complexities. It is also true that co-operative societies
cannot afford high-salaried and expert personnel.
Disputes among Members: A co-operative society is an
association of persons. It involves many persons with
different backgrounds. Equality and freedom promotes
rigourous discussion and arguments. Conflicts or disputes
among members spoil aim of co-operative spirit among
members and adversely affect the management of the
society.
Lack of Secrecy: It is compulsory for co-operative
societies to disclose financial information to its members.
Moreover, governing body consists of many members.
Thus, maintaining business secrecy in every decision is not
possible.
 Indirect Political Interference: This sector is not free from indirect
political influence. Its routine functions are influenced by political leaders.
Various political parties directly or indirectly attempt to get control over the co-
operative society. Elected MLAs and MPS, and other local political leaders
dominate functioning of co-operative societies.
 Insufficient Motivation: Rate of return to members is limited . The
members of managing committee do not feel strong motivation to make sincere
efforts for successful performance of co-operative organisations.
 FEDARAL CO-OPERATIE SOCIETY

 As per the definitions given in the Co-operative Societies Act, a federal co-
operative society means a co-operative society whose membership is
available only to (other) co-operative societies (but not to general public). A
federal co-operative society is formed with the main objective to promote
activities in the field of art, culture, education, IT, training, industry, etc.
 Individual co-operative society has many limitations, such as limited fund,
limited operations, limited political influence, and lack of professional
management.
 Individually, it cannot work effectively and efficiently. So, they join together
and form business federations.
 The federation has combined strength of member co-operatives. Generally,
such federations are formed at District level, State level, and National level.
It is an apex body of relevant co-operatives. Thus, a federal co-operative
society is an association of some co-operative societies working in the same
business line.
The business federations of co-operatives at the state level
and national level assist the member co-operative societies
in marketing and development of activities. The federation
generally functions on a large scale.
It also conducts its own business as registered co-operative
organisation, for example, NAFED (National Agricultural
Co-operative Marketing Federation), NCCF (National Co-
operative Consumers Federation), National Federation of
Industrial Co-operatives (NFIC), etc., have been doing a
sizable business, including exports. They become the
leaders of co-operatives in their respective areas of
business.
 In simple words, federal cooperative society is a society wherein only co-
operative societies can be the members.
 Generally, it serves as the highest level among all the co-operative
societies. Such federations are working at the state and national level.
 The main objective of such firms is to provide necessary financial,
marketing and other required operational assistance to the member co-
operative societies. Some of the examples of federal co-operative societies
in working in India are:
 Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF)
 Gujarat State Co-operative Cotton Federation Ltd.
 Himachal Pradesh Co-operative Marketing and Consumers Federation
(HIMFED)
 Indian Farmers Fertilizers' Co-operative (IFFCO)
 National Agricultural Co-operative Marketing Federation (NAFED)