A cooperative society is one of the forms that many business organizations use. Some of the important features of a cooperative society are joint ownership and democratic leadership. Let us take a brief look at their features and some types of societies. Before discussing its features and types of cooperative society, one question must have arisen in your mind.

What is a Cooperative society?

A cooperative society is a voluntarily united association of persons to fulfill their economic, social, cultural needs. The Board of directors is elected with the help of democratic procedure. Each of the members has one vote. It works on the principle of mutual help and welfare.

Cooperative society act, 1912

The cooperative society act was formed in 1912 to form a cooperative society and regulate it properly.

  •  A cooperative society must have at least 10 members with more than 18yrs of age.
  • Members of the society must reside in the same town or village.
  • They must be of the same tribe, class, caste, or occupation.
  • Registrar of the cooperative society solely decides whether a person is an agriculturist or not. He also decides whether a person belongs to the same town, village, caste or tribe, or occupation.
  • While creating a group, two or more villages can be considered or not is also decided by the registrar.

After getting some sort of understanding about the meaning of cooperative society and the cooperative society act 1912. Let’s talk about the features of a cooperative society.

Features of a Cooperative Society

  • As we understand, cooperative society is a voluntary association, membership of society is also voluntary. A member and a person can leave the society and join the society respectively.
  •  It is compulsory to get registration to operate a cooperative society legally.
  •  It does not get affected by the entry or exit of its members.
  • The only liability for the cooperative society members is to contribute capital. The managing committee takes all the decisions.
  •  The elected managing committee has all the powers and authority to make decisions. The procedure of forming a Managing Committee is democratic. Members of the cooperative society exercise their right to vote, to elect members who will finally form a managing committee.
  •  The basic idea behind forming a cooperative society with the help of the cooperative society act 1912 is mutual help and welfare of society. Hence, providing service to society dominates the working of cooperative society. The principle of service dominates its work. If it makes any profit or surplus, it is distributed equally among society members.

There are five types of cooperative society

1] Producer Cooperative

Farmers, landowners, owners involved in fishing operations, and other small producers are part of producer cooperative society. To increase the production efficiency and optimum use of resources, these kinds of society foam.

They do several activities to optimize resources, like processing, marketing, and distributing their own products. With mutual help, they can reduce the cost.

2] Consumer Cooperative

Businesses under this category are owned and governed by consumers of a particular area. These businesses give mutual benefits to the consumers of that area. The basic idea behind the consumer cooperative society is to provide necessary daily commodities at the lowest possible price. Rather than making a profit, society provides services to its consumers.

3] Credit Unions

Generally, Credit unions are financial cooperatives owned by members themselves. Like other cooperatives, credit unions are also for helping people. They provide credit and financial services to the members at competitive prices. Every depositor can become a member of the union. The Board of members is elected by members of the cooperative society and members can attend annual meetings.

4] Marketing Cooperative Society

It helps small producers to sell their products at reasonable prices. All the producers who aim to obtain a better price for their product become members of this society.

It eliminates middlemen to create a better competitive market for the producer’s product. Marketing cooperative society collects the output of society members and does various marketing functions like transportation, packaging, warehousing, etc. to get better prices.

5] Housing Cooperative Society

People who have limited income and are looking to construct their own house. Housing cooperative society is the cooperative society to join. Housing cooperative helps their members to get residential houses at the lowest price possible.

It also constructs houses and sells them to members. Members have the freedom to pay for their houses in installments. Housing cooperative society also provides plots to members to construct their own houses.

Advantages and Disadvantages of Cooperative Society

Some of the advantages of a cooperative society are:-

  •  It is very easy to form a cooperative society.
  •  Membership of the cooperative society is open for all people with the same caste, tribe, locality, or occupation.
  •  It works on the principle of one member, one vote.
  • The liability of the members is limited to capital contribution.
  • It is stable not affected by the death or insolvency of any member.
  • As it eliminates middlemen, it is very economical.
  • Members of the cooperative society give voluntary service that helps in keeping the management cost less.

Some of the disadvantages of a cooperative society are:-

  • Capital invested by members gives very little return.
  • Because of the inexperienced and part-time managing committee cooperative society is very inefficient.
  •  It is formed for the mutual interests and benefits of the members. So afford is not directly proportional to benefits. Hence members don’t put the best affordable for the society.
  • It is difficult to keep all the members of the society at the same table. Conflicts between members make it difficult to serve its purpose.
  • Excessive Red-Tapism affects the flexibility of society.
  •   It doesn’t face much competition for its product and services.
  • Everything in the society is discussed in open meetings where all the members are available. So it is difficult to hide secrets of business.
  •  Weightage to Personal Gains 10. Lack of Incentive and Initiative
  • Corruption is the biggest hindrance to the growth and development of the cooperative society.

Conclusion:

Cooperative society helps in decentralising the power and work for the upliftment of specific small sections of the society. It empowers a particular area, class, caste, tribe to work for their own well-being under a government umbrella.