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Difference between Joint Stock Company and Cooperative Society

Difference between Joint Stock Company and Cooperative Society

A cooperative society in Pakistan, India & Bangladesh is registered under the cooperative Act. The Act thus gives it a special status like a company. A cooperative society enjoys certain special privileges of a company. It is identical to a company in a certain respect but in many other affairs, they are different from each other. The identical points of a cooperative society and a joint stock company are as under.

Identical Points:

  1. A cooperative society gets its entity on registration. A company gets its entity on incorporation
  2. Both are artificial persons.
  3. Both enjoy perpetual succession
  4. Both can hold property in their names.
  5. Both can sue a third party and defend legal proceeding sin a court of law.
  6. Both can enter into contracts with other persons.

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The basis of Difference between Joint Stock Company and Cooperative Society.

The main points of difference between Joint Stock Company and cooperative society are as follow;


Basis of Difference

Joint Stock Company

Cooperative Society

1. Legislation It is incorporated under the companies ordinance 1984 It is registered under the cooperative Society Act of 1925
2 Objective The company is formed with the sole objective of earning profit The cooperative society is formed for the promotion of thrift, self-help, the social and economic welfare of its members. Profit in given lest importance in it.
3 Membership There should be at least seven members above the major age to form a public company and there is no maximum limit. In the case of private Ltd. The company the minimum number of members is 2 and the maximum number is 50 A cooperative society requires at least ten members above the age of 18 years to from a society.
4. Control The affairs of the company are managed and controlled by the board of directors. The society is managed by its elected executive body-with president and secretary as its main office bearers.
5. Operation Area Due to a large organization, the operation area of purchases, sale of commodities is very wide. Being a small organization, it operates within a limited area. it caters the economic needs of its members on a small scale
6 Profit Distribution The directors declare the dividend  and (after crediting a part of the profit in the reserve fund, if necessary) distribute the net profits in proportion to the share held by shareholders. Profits are given least importance in a cooperative society. In the case of consumers’ cooperative. The profit is distributed according to the transactions made by a member in a trading year.
7. Share transfer. The share can be easily sold or purchase in stock exchanges. A member can transfer his share to his nominee , heir, as per by-laws of the society in this office.
8. Capital formation The company can divide its ownership into shares of small denominations and can attract large capital from thousands of individuals of varying incomes. It cannot attract large capital as the business is carried on a small scale.
9. Borrowing Power. The company can raise funds subject to its rules of memorandum and Articles of Association . it can also borrow additional funds by the sale of debentures. It can borrow money from now- members only to a limited extent as may be prescribed by the rules and by-laws of the society.
10. Voting rights In a company the right to vote depends on the number of shares held by a shareholder. Cooperative society works on the principle of one man one vote. A member holding more share has only one vote.
11 Purchase of shares. In a company there is no restriction placed on the member for the purchase of shares by a person A member in a society cannot hold more than one-fifth of the share capital of share exceeding Rs.one Thousand.
12 Ownership and control In a public company ownership and control are separate. the board of directors controls the affairs of the company for the shareholders who are the real owners. In a cooperative society, the members take a keen interest in the affairs of the company ownership and control is very close in the conduct of society’s business. it is in the hands of the members of the society.
13 Privileges A company has no special privilege of reduction in co-operating tax or exemption form stamp duty etc A cooperative society generally enjoy certain privileges in registration fees exemption form stamp duty, provision of credit at a low rate of interest etc.
14 Liabilities In a joint stock company, the liability of each member, is limited to the extent his value of share held by him in the at company In a cooperative society the liability of the members is limited only when the society makes it limited.
15 Audit The accounts of the company are audited every year by a qualified auditor/auditors appointed in the general meeting of the company The accounts of the society are qualified every year by an auditor nominated in writing by the registrar coop. society.
16 Advice The auditor work is confined upto audit of account. It is no part of auditors’ duty to give advice either to directors or members. The auditor’s work is not confined up to the audit of the books of accounts. The auditors can give a suggestion for the proper maintenance of books. Account vouchers etc as a guide of the society.
17. Dissolution There are very few chances of the company being dissolved. it normally possesses a perpetual life. The life of the society is normally short. It is sometimes dissolved due to lack of interest by the members.



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Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

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