2. The general body of the members determines rules and regulations for the management, the managing committee functions within the framework of the principles framed by the general body. In this purpose cooperative united the weaker and guide them to go ahead with mutual cooperation which helps to endure social relationship.. Co-operate society helps to awake a new working spirit in the mind of those people who are defeated and spiritless in the struggle of life. 2. Members elect a board of Directors, who manage the affairs of the society on behalf of the members and are answerable to the members of the society. 2. A cooperative society enjoys perpetual succession. The number of members in private company minimum two and maximum fifty, in public company minimum seven and maximum limited with many shares. (ii) The members should be bound together by a common bond, e.g., they may belong to the same village or locality, tribe, or occupation, etc. Cooperative societies may be classified into different categories based on the objectives, purposes, and nature of activities performed by them. Equal Voting Rights- A cooperative society is based on the principle of one man one vote. Some societies also sell plots to their members for the construction of houses at their level. Cooperative society is considered to be a separate legal entity after registration. So forgery will be removed. Whatever little profit it earns is partly spent (10 % at the most) for the welfare of its members. The members elect the managing committee to carry on day to day affairs of the society. 2. For example, monopoly, the undue concentration of wealth in a few hands, profiteering, black-marketing, exploitation of workers and consumers, etc. In consideration that members pay the due price for the house may be on an easy installment basis spread over as long years. This is not possible in a company as shareholders are scattered all over the country; only the inner group can control the affairs of the company. To achieve a higher rate of return from economies of scale, small farmers and marginal farmers of a particular area may join their hands, form a cooperative society, and go for mass farming instead of individual farming. Hence, the cooperative society hardly comes across financial hardship because of the noncollection of sales dues. But this organization is based on help each other through available resources and also provide goods to society members without profit or at a lower price. It is usual for commercial concerns to distribute profit among the owners in the ratio of their capital contribution, or in an agreed ratio. 15. The basic aim of the cooperative society is mutual help. Perpetual Existence 13. (i) A co-operative society must have at least 10 members who have attained majority in age (i.e., are above 18 years of age). Cooperative Societies Act is discussed in a detailed manner in the following study notes. Ownership is a very important factor in the success of any cooperative. Spirit of Co-Operation 17. 3. Credit Cooperative Society: These cooperative societies are set up with the objective of helping people by providing credit facilities. 4. The success of a cooperative society depends on the sincerity and sacrificing mentality of Its people. A cooperative society enjoys perpetual succession. State Control 7. Individuals who wish to purchase products at reasonable rates most likely join consumer cooperative societies. 5. In a cooperative society, people can enter it as their wish, and also, they are free to leave a cooperative society, but they cannot transfer their share. It can file and defend suits. It is based on the principle all for each and each for all. The officers of cooperative societies are generally so much exposed to the members that it becomes difficult for them to maintain proper secrecy, and it is compulsory to advertise the annual account and annual reports in newspapers. Characteristic # 1. A group is known as the Board of Directors manages the society. Equal right contributes to establishing social order and justice. In this organization, nobody can control society based on his share capital. Definition, Characteristics, Advantages, Disadvantages, Private Limited Company: Definition, Advantages, Disadvantages, Public Limited Company: Definition, Features, Advantages, Disadvantages, Size of Business Unit: Definition, Measures, Factors, Concepts, Optimum Size of Business, Cooperative Society: Definition, Characteristics, Principles, Advantages, Limitations, Government Company: Definition, Features, Advantages, Disadvantages of Government Companies. 9. This society produces or collects goods from the manufacturer and supplies these goods to the members at a cheap rate. Elimination of Middlemen- The main object of the cooperative societies is to eliminate middlemen and to establish direct contact between members and customers. The members of the board of directors are elected representatives of the society. Most of the managers and constituents of cooperative society are inefficient. But they dont work without any interest. Remaining Profits are distributed based on dealings of members with the society. A co-operative society is organised primarily with the object of rendering maximum service to its members in a certain field. Limited Liability. A cooperative society is a special type of society, which is established by an economically weak person for the betterment and upliftment of their economic condition through mutual help. However, these societies are not barred legally to sell goods on credit. It does not aim at profit at the cost of its members, for it is formed basically for providing certain essential facilities to members. In a joint-stock company, there is a great divorce between owner and control and often a clash of interest. The co-operative societies are set-up by weaker sections of society to protect its members from the clutches of profit hungry businessman. The membership of the society is open to people of all caste, creed and religion, anyone may volunteer to become its members. A cooperative society is a voluntary association of persons and not of capital. Credit cooperative societies are two types: agriculture credit cooperatives and non-agriculture credit cooperatives. This can improve relationships between staff members and senior management, as well as between service providers and customers. In a company, the amount of investment determines the number of votes. Cooperative societies make no distinction among the members on the basis of their financial strength or the number of shares held by them. Copyright [2013-2024] [Bank of Info] | Powered by [Regal Solution], 19 Characteristics / Features of Co-operative Society. A cooperative society is a self-governing institution. Everything you need to know about the Features of Cooperative Society. Service before self, Service is of primary importance and Self Interest is of secondary importance. The main purpose of a co-operative society is to provide service to its members. 18. It can make agreements as well as purchase and sell property in its own name. It aims at encouraging self-help on the part of economically weaker sections of the society by looking after a truly cooperative society is the elimination of profit and provision of goods and services to members at cost. Cash Trading- Generally, a co-operative society buys and sells goods on cash basis. The importance is as follow: Creation of strong unity and self-realization: "Unity is strength" is the key point of cooperative society. The following are the characteristic features of a cooperative organisation: 1. Cooperative credit society, multipurpose cooperative society lend money to these people at a very low-interest rate. Limited liability: The members of a cooperative society will have limited liability. This cooperation resulted in the emergence of cooperative form of organisations, commonly known as cooperative societies, for various activities, including business activities. The Important Characteristics (or Principles) of a Co-operative Organization are listed below! The society has to maintain accounts, which will be audited by an independent auditor. It has a continuous existence because it is not affected by the death of any member of society. For pursuing common objective persons voluntarily come together and form an association. The following points describe some of the main objectives a cooperative society has. Cooperative society leads a great role by providing a training program for improving the skill of uneducated poor and unskilled 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. Registration 19. Profits are distributed among the members not on the basis of the capital holdings, but in proportion to the participation of each member in the functioning of the society. (a) Consumer cooperative societies: These are formed to provide consumer goods at reasonable prices to its members. It differs from other major forms of organizations as it in set up not to earn profit but to render services to its members. 4. A cooperative society must be registered under the Cooperative Societies Act, 1912, or respective state cooperative laws. A cooperative society is a self-governing institution. Everybody having a common interest is free to join a cooperative society. As per the prevailing legislation, cooperative society cannot be formed unless and until a minimum of 10 adult members is available. Capital Raising 18. Although voluntary in their basic character, the co-operative societies are subject to considerable State control and supervision. pooled resources, land, labor, and others. Our cooperative is usually seen in low or middle classes. The members also lack the managerial skill and intelligence because they generally belong to the lower class. But in tenant farming, society members enjoy the output produced in the land owned by others and only pay a certain amount of charges for cultivating the land of others. The member needs to serve a notice before deciding to end the association with the society. Discuss the characteristics, merits and limitations of the cooperative form of organization. While leaving, he can withdraw his capital from the society. The cooperative societies in Bangladesh are operating under several hurdles. Elected directors operate the society, but they do not get any salary. (i) As per the law, one fourth of the profits are transferred to the general reserve. A cooperative society requires at least ten members to form a society. Before publishing your Articles on this site, please read the following pages: 1. Marketing Cooperative Society: These societies are formed with the objective of providing small producers a platform to sell their products at affordable prices and also eliminate middlemen from the chain, thus ensuring adequate profits. Apart from rendering services to their members, cooperative societies also earn some profits, which are a by-product of their business activities. The transactions of the society are above board; the moral element in its aims is as important as the material.. By clicking Accept, you consent to the use of ALL the cookies. The government exercises its control on these societies from time to time by checking their accounts. The management of a cooperative society is inefficient because the working members of the managing committee may not show a keen interest in the working of society. The land is distributed among the nri6i*ribers, and they cultivate those lands and grow agricultural products. Registration of a cooperative society is compulsory. Besides, they have to be studied in cooperative education. It also uses its surplus profit for social advantages by way of establishing charitable hospitals, schools, etc. Cash Trading 9. It has limited share capital. This cookie is set by GDPR Cookie Consent plugin. The ultimate control of a cooperative society lies with its members. It suffers from inefficiencies in management. Definition: As the name suggests, cooperative society refers to that type of business organization, wherein people work together, for a common goal, i.e. It also helps the economic enlistment of the people. Voluntary Association- The membership of cooperative societies is voluntary. Since most of these societies operate on a local scale, the meetings of the members are generally well attended. The basic aim of the cooperative society is mutual help. To protect the interests of the weaker sections of the society, the concept of cooperation emerged which has the motto, each for all and all for each and self- help through mutual aid. Political and religious neutrality:Co-operative societies are neutral far as political and religious affiliations are concerned. The managing committee is formed so as to take important decisions regarding the operations of the society. The main objective of this society was to save poor people providing goods at a lower price from the market price and eliminate the middle mad and supply better services to its members. Planning is the base of success. 5. A cooperative society enjoys lifelong existence. The bonus may be paid to the members in proportion to purchases made during the year in the case of a consumers cooperative store, or in proportion to the goods delivered for sale to the society in the case of a producers co-operative store. Students will be happier with their accommodation and the staff remembers will find their working life much easier. Internal quarrels and rivalries among members is another limitation of cooperative organization. It is an organisation wherein persons voluntarily associate together as human beings on a basis of equality, for the promotion of economic interests of themselves. Those hurdles create some problems as follows:-. The liability of members of a cooperative society is limited to the extent of the capital contributed by them. 12. 2. A cooperative society is the peoples movement. The profits are then transferred to the general reserve and used for the welfare of members. Thus, a co-operative society runs on democratic principles. Moreover, there is no incentive to contribute more capital as it earns limited returns and is not considered for distribution of profits. Cooperative organizations work on the principle of open membership; therefore, many persons can become members. Service motive: Co-operatives are not formed to maximize profit like other forms of business organizations. Each member, whatever be his stake in the society, has one vote and hence an equal right to participate in the management of the society. Stable existence. It also avails loans from state cooperative banks. 6. Dividend Distribution from the Surplus: In co-operative, return on capital investment to its members is given in the form of dividend from its surplus after meeting its trading liabilities. Another reason for a low price at a cooperative society is that it eliminates the middleman from a chain of distribution i.e., goods are directly purchased from the manufacturers or producers and sold to the customers. Thus, it has perpetual existence. Members of the society raise the capital within themselves. Registered co-operative gets an independent status and can own its assets, enter into contracts can sue and be sued. A cooperative society , without considering religious faith and political difference works for the social and economic betterment of its members. Therefore, personal assets of members cannot be used to repay business debts. all information mentioned in easy and simple way. It helps to the members of society and tries to remove sorrows . The Co-operative Organisation is run on democratic lines. Principle of Self and Mutual Help- Cooperative society promotes the common interests of its members through self-help and mutual help. Voluntary Association: The membership of a cooperative society is voluntary in nature, i.e it is as per the choice of people. The managing committee carries out the policies as laid down in the general meeting of the society. It can also sue other people and organisation in a court of law. It provides an effective means of pooling together the resources of the weaker sections of the society. A cooperative society is seen on a democratise pattern. Profit is not at all on the agenda of the cooperative society. 11. These cookies track visitors across websites and collect information to provide customized ads. (b) Types of co-operative society are: (i) Consumer cooperative society is formed by consumers who pool their resources together to enable them to buy goods directly from manufacturers at a cheaper rate. But opting out of some of these cookies may affect your browsing experience. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_770593760") }), Sole Proprietorship: Definition, Features, Characteristics, Advantage, Disadvantages, Partnership: Definition, Features, Advantages, Limitations, What is a Company? Farmers get higher output by utilizing the same. All this ultimately brings the cooperative society to ruin. However, like any other forms of business entities, they are required to observe the laws and regulations framed by the government. (iv) A copy of the bye-laws and the scheme of organisation should be submitted to the Registrar. The co-operative structure is designed on the principles of cooperation, mutual help, democratic decision making and open membership. Following are the important advantages or merits of cooperative societies; It is very easy to form a cooperative society as compared to a joint-stock company. Democratic Management: Co-operative societies are managed on democratic lines. The land is owned by the society. The cooperative society can be classified from different points of view. Equal Voting Rights 3. Democracy is the key-note of the management of a co-operative society. Registration provides it a separate legal entity. In other words to uplift economically weaker sections of society. A cooperative society is influenced by government law. Learn how your comment data is processed. The cookie is used to store the user consent for the cookies in the category "Analytics". Voluntary Membership The membership of a cooperative society is voluntary in nature. Some of the disadvantages of cooperative societies are: 1. The members of this committee are selected jointly by all members. It has its own common seal. iv. They provide loans at a minimal rate of interest and flexible repayment tenure to its members and protect them against high rates of interest that are charged by private money lenders. For instance, student accommodation units may be cooperative societies. In a producers cooperative society, the value of goods delivered for sale forms the basis of distributing bonus. One of the basic principles of co-operative organisation, laid down by the pioneers of the co-operative movement like Rochdale and Owen, was that a fixed or limited return on capital subscribed to the society must be paid out of the surplus to the members. Making the payment of fixed interest on paid-up capital definitely a first charge on the trading surplus, gave those who joined the society a solid reason for leaving their saving in deposit with it.. Essentially giving each individual within a firm a small piece of it raised productivity, as people gained the sense that they were very much part of the organization, rather than just somebody working for it. But there is a lack of unity and cooperation in poor people in Bangladesh. The prime objective of the cooperative would be to this common interest. It has its separate legal entity and perpetual succession. Consumer and purchasing cooperatives are businesses owned and managed by their customers. It does not have financial, managerial, and technical resources. By developing agricultural and irrigation systems and to give loans and counseling for small industries and cottage. A cooperative society form of business organisation exemplifies the two distinct characteristics of our constitution 1. democracy and 2. secularism as described below . Features of co-operative society 1. There are some important characteristic features of co-operative society which are given below: 1. Analytical cookies are used to understand how visitors interact with the website. asked Mar 24, 2021 in Business Studies by Ekaa (26.8k points) forms of business organisation; class-12 +1 vote. Voluntary membership: This is the first cardinal principle of co-operation. It creates self-employment opportunities and encourages the members to compete with others. It never allows the principles of credit in its trade practice. Many cooperative societies are essentially out to make a profit and believe that enhancing relationships will lead to high-profit levels. If a cooperative starts and operates solely owned, from borrowed capital, it violates the managed, principle of self . A cooperative society is established just for bringing the economic and social welfare for its members. It also promotes a sense of cooperation and brotherhood among the people of the locality. In a cooperative society, the minimum is twenty, and the maximum is unlimited. The original group consisted of 28 . The fund so collected are used in providing loans to the needy people, generally to the members as loans and advances on easy terms and conditions. These cookies ensure basic functionalities and security features of the website, anonymously. The cooperative society is a voluntary association of persons, who join together with the motive of the welfare of the members. Ease of formation. Lack of Incentive and Initiative- In a cooperative society form of organisation everybody is the owner of the society and over a period of time it becomes lifeless due to a lack of incentive and initiative as everybody is the owner, but business does not belong to any one of them. In this purpose, cooperative society develops thinking working attitude as well as the mental condition of the constituents. The followings are some of the principles on which a cooperative society stands: The membership of a cooperative society is voluntary and open to all adult persons having common interests. However, capital rewarded with a small rate of interest. The co-operative societies are to follow certain rules and regulations formed by the Government of Bangladesh. The principle of one man one vote makes the society truly democratic. They led to the practice of private companies being split into shares, which were given to employees at various levels of the company. It is a form of business where individuals belonging to the same class join their hands for the promotion of their common goals. I so in this country, the development of a cooperative society is slow. Voluntary association: The membership of cooperative society is voluntary. 14. Distribution of Surplus: Every co-operative society, in addition to providing services to its members, also generates some profit while conducting business. Thus, it helps society to have good wording capital and maintain short-term solvency. Members cannot vote by proxy. Cooperatives Banks are registered under the Cooperative Societies Act, 1912. But proper planning isnt followed In bang in case of cooperative society. Cooperative societies originally came about to unite business owners with their staff members. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. The training facility is indiscernible for better results. A non-agricultural society is meant for urban masses and meets its short-term financial requirement. Service Motive: The formation of a cooperative society is for the welfare of the weaker sections of the community. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". Open membership: The membership of a co-operative society is open to all those who have a common interest. Profit distribution is not based on capital contribution. A co-operative society differs from the trading companies in this respect. 10. The constituents cant show their required responsibility as they are inexperienced. This also inculcates the habit of saving among the members. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that youve provided to them or that theyve collected from your use of their services. (iii) The members should present a joint application to the Registrar of Co-operative Societies furnishing important particulars like membership, share capital, objects, etc. This also led to the emergence of two distinct classes in the society, industrialist and labour. In the case of society, a small portion of the earned profit is to be given as dividends. The death, insolvency or lunacy of a member does not affect its existence. If the govt, patronizes the promoters with granting more capital and information, people will encourage in forming this org. Democratic Management- Annual General Meeting (AGM) of co-operative society is held every year in which the managing committee is elected, which manages the affairs of the co-operative society. Separate Legal Entity 4. After registration it can enter into contracts and acquire property in its name. The surplus if any, is shared amongst the members as dividend in compliance with the bye-laws of the society. The voluntary character of the co-operative association has two major implications- (a) none will be denied the right and opportunity to become its member, and (b) the co-operative society will not compel anybody to become a member. Management of Affairs of Co-Operative. By checking extravagance, it inculcates the habit of savings among the people. Cash trading spares the cooperative societies to avoid bad debts and credit collection expenses. Spirit of Cooperation: Bulk of the funds is raised in the form of loans and grants. The philosophy of cooperative society is to serve the common man and to liberate him from the oppression of the economically strong people and organizations. Besides, high-level executives and govt should be more expert. Members work collectively on the land. A distinctive feature of cooperative societies is that almost all transactions are in cash. It aims at moral solidarity of the members and not of undercutting one another. The scope and meaning of cooperatives has undergone radical change. The society mainly deals with its members. Thus, cooperative societies are truly democratic organisations. For that reason, sufficient capital cant be supplied. While a co-operative society is essentially a business unit established primarily for organising and providing some service to the members and the community on a continuing basis, co-operation is not a mere form of business or economic organisation. Cooperative societies need to be registered under the Cooperative Societies Act, 1912 in order to function as a legal entity. The dealings primarily take place in commodities like food grains, jute, cotton, sugar, milk, fruit and nuts. Cooperative societies, at times, arrange finance/loans for the members from different financial institutions to bear the cost of the house. Voluntary Association 2. In such type of societies, there are no middlemen involved, the product is purchased directly from the producer and sold to consumers. One member one vote is the rule, and thus members can have a voice in management. For example, in a consumer co-operative society, goods are sold to its members at a reasonable price by retaining a small margin of profit. It can file and defend suits. State control: To protect the interest of members, co-operative societies are placed under state control through registration. A cooperative society operates within a limited area, and so all the members can attend its meetings and exercise their control. If the members of the managing committee are corrupt they can swindle the funds of the co-operative society. Share Your Word File In this organization, all members will be equal and free for their rights. it can enter into contract with other persons. In the case of a cooperative society, no member detects the terms and conditions of the functioning because one man one vote is the thumb rule. Under state control: In order to safeguard the interests of society members, the cooperative society is under the control and supervision of the state government. It is a socio-economic movement inspired by the ideal of organising and uplifting the weaker sections of the society through collective action. Profit generated is distributed to its members not only on the basis of the shares held by the members but on the basis of the members participation in the business of the society. State Control 7. But success depends on these principles. Equality of Vote 26. The liability is limited to the amount of capital contributed by the member. Disclaimer Copyright, Share Your Knowledge And solutions to the members of the members and customers mutual welfare and not the object! 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