The primary motive of co-operative society is to protect the interest of the economically weaker sections of the society. In every form of organization, whether it is a sole trader, partnership or joint stock Company the primary motive is to increase profits. This form of organization is considered as democratic set up run by its members for serving the interest. Behind this the main philosophy is "All for each and each for all". It is a self-help as well as mutual help.
Co-operative society is formed under the Co-operative Societies Act, 1912 or under the relevant state co-operative society's law. This type of organization can be formed by at least 10 adult members. Another requirement is that the members willing to form a society must have common bond among them. They may be the residents of same locality, colleagues, belonging to some group having affinity etc. Every person intending to form a society should have some common objectives to achieve.
Characteristics Co-operative Societies
OPEN MEMBERSHIP
Co-operative Society Membership is open to all those who have a common interest. Minimum 10 members are required to form a society. Maximum number of members are not specified under Co-operative Societies Act. However member may specify the maximum number of members after the formation of the society.
State control
Co-operative societies are placed under state control through registration to protect the interest of members. Society has to submit details of the members while getting registered. Books of accounts are required to be maintained which are to be audited by government auditors.
Democratic Management
Co-operative societies are managed by a group known as "Board of Directors". Board of directors are the elected representatives of the society. Irrespective of the number of shares held, each member has a single vote.
Voluntary Association
Members can voluntarily join co-operative society. A member can leave the society at will.
Sources of Finance
Under co-operative society, capital is contributed by all the members.However, loans and secure grants can be easily raised from government after its registration.
Service motive
Like other forms of business organization, Co-operatives are not formed to maximise profit. Its main objective is to provide service to its members.
Separate Legal Entity
After registration under the Co-operative Societies Act, a Co-operative Society becomes a separate legal entity, with limited liability of its members. Death, insolvency or lunacy of a member will not affect the existence of a society. Members can enter into agreements with others and can purchase or sell properties under its own name.
Distribution of Surplus
Co-operative society also generates some profit while conducting business in addition to providing services to its members. Profits are not earned at the cost of its members. Unlike companies profit generated is not distributed to its members on the basis of the shares held by them but on the basis of their participation in the business.
Self-help through mutual cooperation
The main principle of Co-operative Societies is mutual help. They are formed for the financially weaker sections of society. By adopting the principle of self-help through mutual co-operation, Co-operative Societies convert the weakness of members into strength.
