CO-OPERATIVE SOCIETIES

Course: BBA ISubject : Introduction to Business Organization

Unit: I

‘Co-operation’ Derived from the Latin word ‘co-

operari’

‘co’ means ‘with’ and ‘operari’ means ‘to work’

‘Co-operation’ means working together

Open membership

Membership open to all with common interest;

Minimum of ten members; No restriction on the maximum number; Members may specify the maximum

number for their Society

Voluntary Association

• Members coming together voluntarily;

• by choice, not by force;• Continues for as long as he likes;• May leave at his will.

State control Registration compulsory; Statutes, Rules and Bye Laws to protect the

interest of members; Has to maintain books and records; Subject to statutory audit of books by

qualified Chartered Accountants; Functions under the regulatory supervision of

Registrar of Co-operative Societies

Sources of Finance

Capital contributed by all the members; May raise loans and secure grants from

government; after its registration.

Democratic Management Governed by a ‘Managing Committee’ or ‘Board of Directors’ elected by the members of the society; Managed on democratic lines; One member one vote, irrespective of no. of shares held;

Service motive

Co-operatives not to maximize profit but to provide service to its members;

A Consumer Co-operative Store sells quality goods to members at a reasonable price retaining a small margin of profit;

In a Housing Co-Operative, members reside by sharing expenses on maintenance and repairs.

Separate Legal Entity Separate legal entity; Limited liability of its members; Continuity of existence;

Death, insolvency or lunacy of a member not to affect the existence of a society

Can enter into agreements; Can purchase or sell properties in its own

name; Can sue and be sued.

Distribution of Surplus Distributes Profits earned among

Members on the basis of members’ participation in the business of the society;

Profits generated are not at the cost of its members; Example:– in a Consumer Society, profit generated by sale

of goods to general public is paid as purchase bonus to members on the basis of goods purchased by them from the society.

Self-help through mutual cooperation

• Co-operative Societies thrive on the principle of mutual help;

• They are the organizations of financially weaker sections of society;

• converts Weakness to strength by ‘self-help through mutual co-operation’;

• Fights exploitation and secure a place in society through “Each for all and all for each”.

Consumers’ Co-operative Society For protecting interest of general

consumers; by making consumer goods available at a

reasonable price; Source goods directly from the producers or

manufacturers; eliminates middlemen in the distribution

process. Some examples:- Kendriya Bhandar, - Apna Bazar- Employees consumer co-

operative societies; Etc.

Producers’ Co-operative Society

to protect interest of small producers; By making available raw materials, tools

and equipments, machinery, etc.; Arranging Marketing & Distribution

channels, etc.• Examples:

• Amul• APPCO, • Haryana Handloom,• Co-optex

Co-operative Marketing Society

Society of small producers and manufacturers; collects the products from members makes available better marketing & distribution

channels economically; sells in the market.

Examples: Anand Milk Union Ltd., (Amul); Co-optex UP Handloom

Co-operative Credit Society formed to provide financial

support to members

accepts deposits from members;

grants loans to members at reasonable rates of interest

Examples: Village Service Co-operative Credit Societies, Employees co-operative credit societies, etc.

Co-operative Banks formed to provide banking facilities to

members; accepts deposits; grants loans at reasonable rates of interest Examples:

Co-operative Farming Society formed by small farmers;to pool small holdings and work to benefits of large-scale farming;Examples:

Lift-irrigation Cooperative Societies;pani-panchayats

Housing Co-operative Society

provide residential accommodation to members

Constructs houses or apartments for members;

Provides amenities; Takes care of maintenance and repairs.

References1. Fundamentals of Business

Organization and Management by Y.K.Bhushan- Sultan

Chand publications2. Principles & Practices Of

Management by L M Prasad – Himalaya Publishing House

Thank You!!