The Formation of Cooperative Society is a simple matter and there is no complicated procedure for its registration. The formation of the cooperative society is governed by the provision of the cooperative society Act 1925 in our country. It can be formed with limited or unlimited liability.
To get a cooperative society registered, an application on the prescribed form must be submitted to the Registrar of the cooperative societies in which the society’s office is t be located.
8 Pre-Registration Conditions for Formation of Cooperative Society
- There must be at least 10 members above the age of 18 years. But there is no restriction on the maximum number of members.
- The member must be resident of the same town or village or in the same group of villages.
- There must be an in name of the society.
- Every society with limited liability must have the word “limited” after the name of society.
- The application must be signed by the promoters/secretary/officers. Moreover, such an application must be accompanied by the following documents:
- Memorandum of the Society.
- Articles of the Society.
- Two copies of the by-laws (internal working rules) proposed to be adopted by society.
After proper verification of the application according to law, the Registrar will give his approval to the formation of the society and will record the name of the society in the register. Generally, Registrar issues a certificate of registration which is conclusive evidence that the society is duly registered.
After its registration, the cooperative society can invite new members and can conduct the particular business for which it has been organized and registered.
18 Features of Cooperative Societies
Elimination of Middlemen
The management of the consumer cooperative society directly purchases the finished goods from the manufacturer and producer. Producer Cooperative society procures the raw material from the producer. Thus they try to free themselves from the grip of the middlemen and make the goods available to consumers at lower prices.
Saving in Management Expenses
A cooperative society enjoys some economics in the field of management due to voluntary services performed by the members themselves. Thus, it is possible to minimize the expenses of management and supervision.
Society Purchases the same goods which are actually demanded by its members. Thus there is a need to have minimum stock at hand due to constant and regular demands.
Economy in Distribution and Production Expenditure
Society is saved from any distribution and production expenses. It has got its regular customers, therefore society has not to face any trouble for marketing its goods. Thus it has not to incur any expenditure for publicity and advertisement, which is a big item in the budget of the capitalist producer.
Under this type of organization, complete integration between producers, wholesalers, and retailers is always possible. This is thus a clear advantage over a capitalist economy.
Thousands of people are engaged in different types of cooperative small scale and cottage industries. Most of them are not familiar with writing a perfect job application, Thus it removes the problem of jobless persons in developing countries.
Equal Distribution of Wealth
With the growth of the cooperative society, wealth has not been concentrated into a few hands. Thus this factor tends to equalize the distribution of wealth in society.
Educative and Social Value
Spirit of sacrifice, sense of mutual help, and self-help are developed among the members. They are able to adopt the principles of honesty and unity. It thus creates the economic and social aspects of human life among the members.
It renders financial services for its members for the purchase of seeds, manures, implements, and houses, etc. It thus removes the financial problems of the member of the society.
The government provides certain concessions to this class of organization i.e. exemption from stamp duty, super tax, income tax, and business registration fees.
Improvement of Standard of Living
Its main aim is to bring about greater benefit for its members. It supplied daily necessities of life to its members at the lowest prices. Thus it is helpful for the improvement and progress of standard of living.
It is a democratic organization where members enjoy an equal voice in the management of the cooperative business.
As the goods are supplied to its members at cheaper rates, the general public is attracted to become the shareholders of the society.
Cooperative organization renders public utility services such as village communications, sanitation, water supply, drainage, education and undertakes the supply of various implements to the farmers.
Encouragement of habit of Saving
A cooperative society supplies the goods to its members at cheaper prices. It thus creates the attraction in the general public for becoming shareholders of the society. This tendency encourages the habit of saving and investment.
- It helps to eliminate the evils of capitalism from the society.
- It increases the business and economic activities in the country.
- It promotes the welfare of the community.
Seven Types of Cooperative Societies
1. Producer Cooperative Societies
These are formed to eliminate the middlemen and capitalist groups from industrial production. Its main purpose is to produce goods for the requirements of its members. Surplus productions are also supplied to outriders in the open market at profit.
All the necessary activities as production, management, and marketing are performed by the members themselves. Its members get dividends on the basis of the capital invested by them.
Objectives of Producer Cooperative Society
- To purchase the raw materials and other factors at most economical prices.
- To produce the goods at the most economical level.
- To supervise the production most efficiently and effectively.
- To dispose of the surplus production to
non membersat maximum prices.
- To eliminate the middlemen and capitalists.
- To remove the worker’s grievances in respect
ofworking conditions, wages etc.
- To arrange for the democratic control of the industrial unit.
2. Consumer Cooperative Societies
Society is the voluntary association of ordinary people formed with the object of obtaining the daily requirements of the members. It directly purchases the goods at a large scale from the producer or wholesalers at wholesale price.
It thus eliminates capitalists, retailers, and other middlemen from the channel of distribution and members are in a position to make their purchase at a cheaper rate.
Anyone can become a member by purchasing one share of the society.
Sometimes goods are also supplied to non-members but they do not share in the profit of the society. Profit earned by the store is distributed among the members according to the value of the purchases conducted by the manager who is elected by the members. Generally, its two types are popular in the world.
- Retail cooperative store
- Wholesale cooperative store
Objectives of Consumer Cooperative Society
- To eliminate the retailers, capitalists and wholesalers.
- To promote the welfare of the members.
- To supply the daily necessities of life to its members at market price.
- To increase the purchasing power an standard of living of the members of the society.
3. Marketing Cooperative Society
It is the voluntary association of producers formed for the object of arranging the disposal of their output. It pools together the output of the individual members and arranges to supply the product at the highest possible price.
The profit of the sale of the ~ products is distributed among the contributing producers according to their individual contribution to the pool. This kind of society is particularly useful for small producers and agriculturists. It can be formed in two organizations according to the local condition of the country i.e.,
- Single purpose society
- Multi purposes society
Objectives of Marketing Cooperative Society
- To eliminate the middlemen who are liable
ofthe high cost of marketing.
- To pool together the output of the individual members.
- To grade and process of the pooling products of the members.
- To dispose of the product at the maximum price.
- To adjust supply to demand.
- To provide storage facilities to its members.
- To procure the information relating to market for the member’s product.
- To provide the financial facilities to its members
4. Insurance Cooperative Society
This type of cooperative society is formed for the objects of providing group insurance facilities to its members. It makes the contract with the sound insurance company on collective terms and conditions and thus pays a lower premium rate to the insurance company as compared with ordinary policyholders.
2 Forms of cooperative Insurance
In the Mutual office, the policyholders are the owners and the profit of the insurance company is utilized in the following ways:
- To strengthen the financial position of the company.
- To decrease true amount of premium.
- To distribute bonus to its members.
A cooperative society is organized to provide insurance facilities like the private insurance company and issued policies to its members for a reasonable amount.
Objectives of Insurance Cooperative Society
- To provide insurance facilities to its members.
- To charge the low rate of premium.
- To promote the welfare of the members.
- To encourage the habit of thrift and investment.
- Housing Cooperative society
It is an association of middle and
In order to become a member of society, one must buy at least one share of
- Housing Building Society
- Land Society
- Finance Society
Objectives of Building Society
- To receive deposits from its members.
- To make loans to its members for the construction of
houseat lowrate of interest.
- To render technical services for its members.
- To purchase building materials at
- To perform the welfare activities as water supply, roads, sewerage, electricity etc.
- Cooperative Farming Society
This form of Society is formed with the object of obtaining the benefits of large-scale farming and maximizing agricultural products. It is basically an agricultural cooperative that is confined to agricultural countries. Its members generally relate to the former including those owning land.
The Cooperative Forming are of the following types
- Cooperative collective farming Society.
- Cooperative joint farming society.
- Cooperative better farming society.
- Cooperative tenant farming society.
Objectives of Cooperative Forming
- To consolidate holding.
- To introduce
newtechnique of cultivation.
- To improve the irrigating system.
- To increase the area under agricultural operations.
- To make necessary steps for the improvements of the standard of living of the farmers.
- To increase the production per acre.
- To provide seeds manures and implements to its members.
- To dispose of agricultural output.
7. Credit Cooperative Society
Credit cooperative society is the voluntary association of the financially weak persons organized with the object of providing short-term financial requirements to them.
This society performs an important role in the rural areas where the dishonest money lenders have been exploiting simple villagers by charging a high rate of interest.
The Funds of the Society Consist of
- Membership fees
- Dispose of shares
- Deposits from members and non-members
- Loan from govt. and semi govt.
The liability of members is unlimited. This assists society in raising funds and ensures that every member will take a keen interest in the activities of the society.
Society prefers the poorer members in granting loans and charges a low rate of interest from them. Generally, society advances the amount for productive purposes but some loans are also given to members for unproductive purposes. Credit cooperative society may be divided into two types:
- Agricultural Credit Society
- Non-agricultural credit Society
Objectives of Credit Society
- To get rid of the pressure of money lenders.
- To provide the financial facilities for
shortterm to its members.
- To keep the minimum rate of interest on
- To develop the habit of thrift and saving among the members.
- To encourage the habit of mutual aid.
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