What is Cooperative Society?
Cooperative society is a special form of organization. It differs from other major forms of organizations as it in set up not to earn profit but to render services to its members.
A cooperative society is defined as an association of individuals who voluntarily pool their resources for carrying on a certain business for the mutual welfare of the members themselves.
The international Labour Office (I.LO) defines a cooperative as “an association of persons usually of limited means, who have voluntarily joined to gather to achieve a common economic end and through the formation of democratically controlled business organization , making equitable contributions to the capital required and accepting a fair share of risks and benefits of the undertaking.”
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In the words of Calver, “a cooperative society is a form of organization wherein persons voluntarily associate together as human beings on basis of equality for the promotion of economic interest of themselves”.
From the definitions of cooperative given above, we find, that the foundations of cooperative organization is based on rendering service to the members of the organization and not earning of profit.
There is cooperation among the members and not competition. It aims at moral solidarity of the members and not of undercutting one another. The motto is “Each for one and all for each”.
Characteristics of Cooperative Society:
The chief characteristic or features of a cooperative organization are as follow;
- Body corporate:
The cooperative society is registered under the cooperative societies, Act 1925 being a corporate body like a company; it enjoys certain privileges which are subject to control and supervision of the state. A cooperative society enjoys perpetual succession. It has its own common seal.
It can hold property in its name. it can enter into contract with other persons. It can file and defend suits. A cooperative society requires at least ten members to form a society.
- Voluntary association:
The membership of cooperative society is voluntary. Any person have a common interest can become the member of a society. He can also leave the organization by giving due notice to the society.
- One man one vote:
In a cooperative society, a member has only one vote irrespective of a shares held by him. The principle of one man one vote makes the society truly democratic.
- Service motive:
A cooperative society is primarily setup for rendering service to its members in a particular in a particular field. A society is, however, not debarred to earn profit on the service provided to the non-members.
- Distribution of Profit:
The objective of cooperative organization is the provision of service to its members. Whatever little profit it earns is partly spent (10 % at the most) for the welfare of its members. The society also keeps one fourth one fourth of the profit as reserve.
- Control and management :
Each member has vote in a cooperative society. The members elect the managing committee to carry on day to day affairs of the society. The managing committee carries out the policies as laid down in the general meeting of the society.
- Cash transaction:
According to rules, a cooperative society does transaction on cash basis and no credit transaction is entertained.
- Religious and political neutrality.
A cooperative society , without considering religious faith and political difference works for the social and economic betterment of its members.