Principles of Cooperative Society
According to the cooperative society’s act 1925. “Cooperative society is a society which has its objectives the promotion of the common interest of its members in accordance with cooperative principles.” The fundamental principles of cooperative Society are as under.
- Voluntary Membership:
The members of a cooperative society are voluntary. The individuals who have a common interest in a society can buy the shares and be enrolled as a member of the society.
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All the members of the society enjoy equal rights and status. Each shares holder in a cooperative society has only one vote in the management of the business and no weight age is given to a member who owns more than one share. One man one vote is the guiding principle of a cooperative society.
- Decision democratic:
The society is organized on the principles of democracy every shareholder has equal say in the affairs of the society. No member can dictate terms. The decision of the majority is binding on others.
- Spirit of Cooperation.
All the members of the society are to extend full cooperation in achieving the objectives of the society. There should be no ill-will, hatred, jealousy among the members. All for each and each for all is the basic principle of a cooperative society.
- Welfare Objective:
The primary objective of a cooperative is to provide goods and services to the members at a fair price. The profit at the end of the year is distributed among the members on the basis of their transactions with the society. The cooperative Act provides that one-fourth of the profit can be kept in the reserve. The present of the profit can be used for providing amenities and facilities to the member.
The elected executive members of the society who manage the affairs of the society should be men of character and a symbol of honesty.
- Mutual Confidence:
The co-operatives should have mutual confidence and trust in each other. They should work as a team in achieving the objectives of the society.
The members should try their utmost in avoiding wastes both in the purchase and sale of commodities. The money should be spending economically and in the best interest of the society.
- Payment of Dividend:
A cooperative society cannot pay dividend more than 10% per annum to its members on the paid up share capital of the company.
In a case of consumer, cooperative society, the profit is distributed among the members on the basis of individual purchases made by them in a trading year.
- Sales on cash.
As the resources of the society are limited, the society sells goods on the cash basis only. No credit transaction is entertained.
- The market price of the commodities.
The society charges prevailing market prices of the goods from non-members. However, the members of the society are given a discount on the goods purchased. The society earns only nominal profit from them.
Note: the societies which are operating in Russia, china or in other communist countries cannot be called cooperative societies. They lack the basic principles of cooperation, for instance.
- The membership is not voluntary
- Decision in purchase or production or marketing are centrally controlled and are no democratic
- The ownership belongs to the state.
- The profit is not distributed to the workers but the wages are paid to them