So those who want to work together with some common economic objectives can form a society, which is termed as cooperative society.eval(ez_write_tag([[300,250],'commercemates_com-large-mobile-banner-1','ezslot_1',172,'0','0'])); The membership of cooperative societies is voluntary. Any ten adults can join together and form a cooperative society. It is not affected by the death , insolvency , lunacy or permanent incapacity of any of its members. Meaning Of Co-operative Society A cooperative society is a business organization and operated by a group of individuals for their mutual benefit. Co-operative societies are subject to excessive government regulation which affects their autonomy and flexibility. They cannot expand their activities beyond a particular level because of the limited financial resources. (Source: encryptedtbn0) 1. Any ten adult persons can voluntarily form themselves into an association and get it registered with the Registrar of Co-operatives. There is limited liability of the members of co-operative society. Co-operatives have benefited the rural rich and not the rural poor. Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages, What is Business? This motive does not encourage co-operatives to function effectively. Let us see why. The following are some of the important advantages of co-operative societies. Such Societies are organised by the consumers to avoid exploitation by the middleman and to ensure steady supply of consumer goods and services at fair prices. As per the prevailing legislation, cooperative society cannot be formed unless and … They do not have any surplus to market. These stores are, in fact, associations organised by consumers […] Voluntarily Organisation: Co-operative Organisation is a voluntarily association of individuals seeking to improve their economic conditions through joint efforts. Therefore all the members of the cooperative society are benefited. 2. The members of these societies consist of people want residential accommodation at lower costs. 5. The cooperative organisation is formed by the people who have limited resources and there is no compulsion to buy more than one share by each member. Hence , members are not inclined to put their best efforts . Religion, gender & caste do not matter in cooperative society. Co-operatives, are formed to render service to its members than to earn profit. Their object is to achieve economies of large scale farming and maximising agricultural output. At the same time, any member who wants to leave the society is free to do so. The Multi-state Cooperative Societies are registered under the Multi-State Cooperative Societies Act 2002. As it is a voluntary association, the membership is also voluntary. i. A person is free to join a cooperative society, and can also leave anytime as per his desire. Further there are legal restrictions regarding dividend and bonus that can be distributed to members. Such societies are formed to provide financial help in the form of loans to members. Their sources of financing are limited and they depend on government funds. Lack of Managerial Efficiency: They serve as a link between the government and agriculturists. The success of the co-operative society depends largely on the loyalty of the members. 9. All members have equal rights and can have a voice in its management. Disadvantages of Co-Operative Society: As against the above merits, there are sate draw­backs or limitations of co-operative associations. The funds are used in giving loans to needy members on easy terms. Therefore its continuance is in no way affected by the death, insanity or insolvency of its members. The rich farmers with vast tracts of land, produce in surplus quantities and the services of co-operatives such as processing, grading, correct weighment and fair prices actually benefit them. Infographic on Advantages & Disadvantages of Cooperative Societies They provide loans only for productive purposes and not for wasteful expenditure. At the end of financial year members get some return on their capital investment. Weaknesses in its Lending System. Cooperatives help people come together as a community. Thus, a producers ‘ society not only provides money and materials to the small artisans but also undertakes to sell their products. Membership is open to all the people. Therefore the funds available with the co-operatives are limited. ADVERTISEMENTS: Advantages: 1. Anypersonwithcommoninterest can become a member. The members get return on their capital investment in the form of dividend. Their scope is limited to only certain areas of enterprise. Lander Cooperative Society: Its purpose is to provide financial assistance to poor … Since registration of cooperative societies became compulsory. The reason is, in many of the co-operatives there is political interference and domination. It represents an attempt by poor and weaker persons to protect themselves against the exploitation and oppression of the economically strong . It assists the member who need capital, materials and equipment to use their skills for the production of goods and services. Membership in a co-operative organisation is open to all having a common interest. Co-operative societies cannot be introduced in all industries. These are generally formed by poor people or weaker sections of people in society. Many cooperative societies have faced financial troubles and closed down because of corruption and misuse of funds. Cooperative societies encourage the habit of savings and thrift among their members. 2. The management of co-operative society is based on democratic lines. The funds of these societies consist of share capital contributed by the members and the deposits made by them and outsiders. Since the management is taken care of by the managing committee, no individual can be made accountable for in efficient performance. Building cooperative Members of a building cooperative (in Britain known as a self-build housing co-operative) pool resources to build housing, normally using a high proportion of their own labour. A co – operative society is a voluntary association and may be formed with a minimum of ten adult members. There can be no use of force in it. Disadvantages of cooperative society: Inspire of various advantages claimed of cooperatives. The co-operative society is a separate legal identity to the society. Adhering to various regulations takes up much of the management’s time and effort. They do not have to bear personal liability for the debts of the society. Maintenance of business secrets is the key for the competitiveness of any business organization. co operative societies, features, advantages, disadvantages Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The main principle of co-operative society is “one man one vote”. Right now, one of the surest routes to owning a home in Nigeria is to go the cooperative society way. It is based on the principles of collective effort, mutual self – help, equality, democracy, distributive justice and freedom. The liability of the members in a cooperative society is limited to the extent of their capital contribution. It is open to … 1. Its registration is very simple and can be done without much legal formalities. A consumer cooperative is a retail business which is owned by the consumers themselves. Irrespective of their religion, gender & caste, membership is open to all. The term cooperation is derived from the Latin word ‘co-operari’, where the word “co” means ‘with’ and “operari” means ‘to work’. A future sale of a unit can result in significant financial gains, even though owners aren’t building equity. Once the society registered, the Society becomes a separate legal entity. Thus, the members are protected from the exploitation of money lenders, who charge exorbitant rates of interest Another important purpose of creditco – operatives is to encourage the habit of thrift among their members. Formation of a cooperative society also does not involve long and complicated legal formalities. There are no entry or exit barriers. Co-operative societies enjoy the benefit of certain preferences being shown towards them by tax authorities. Advantages In some cases, co-ops offer a less expensive housing option. It promotes saving habit, self-help and other moral values in the society. Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. They operate in the traditional mold which may not be suitable in the modern business environment and therefore suffer losses. They promote self help, moral value among the members. Features: Voluntary association: Everyone having a common interest is free to join a cooperative society and can also leave the society after giving proper notice. It is based on the principle of one – man-one-vote. The members are from different sections of society. It does not enjoy professionalism as they cannot employ professionals at initial stages due to limited funds. Cooperative societies are based on the principles of co-operation and therefore harmony among members is important. Co-operative societies are formed on the basis of self help and mutual help. They can cooperate and manage the activities of the society in a more effective manner. But in practice, there might be internal politics, differences of opinions, quarrels etc. This approach to financing is an advantage when members are buying in and making contributions, but it can be a disadvantage when member-owners leave and the business has to pay back their investments. The rich people elect themselves to the managing committee and manage the affairs of the co-operatives for their own benefit. Advantages and Disadvantages of co-operative societies . The objective is to improve their economic status and protect themselves from exploitation by businessmen. Public confidence in the co-operative societies is low. Members can give their suggestions, opinions and problems. Co-operative societies give loans only for productive purposes and not for personal or family expenses. They also help to prevent concentration of economic power in few hands. When you think of all the largest companies in the world, these are not proprietorships or partnerships. The membership of a cooperative society is open to all. If the members of the managing committee are corrupt they can swindle the funds of the co-operative society. Limited liability: In most cases, the liabilities of the members of the society is limited to the extent of … Cooperatives can be formed much easily when compared to a company. A person is free to join a cooperative society, and can also leave anytime as per his desire. Irrespective management of a co-operative society is democratic. The reason is, in many of the co-operatives there is political interference and domination. Irrespective management of a co-operative society is democratic. Co-operative societies are managed by the managing committee elected by its members. This is one of the most prominent objectives of all co-operative societies. It does not get affected by the entry or exit of its members. In co-operative farming societies, small farmers join together and pool their resources for cultivating the land collectively. Lack of managerial skills results in inefficient management, poor functioning and difficulty in achieving objectives. Therefore information relating to activities, revenues, members etc becomes public knowledge. 2. If you continue browsing the site, you agree to the use of cookies on this website. It is compulsory for the co-operative society to get registration. A cooperative organization is owned and controlled by members. A person can become a member at any time he likes and can leave the society by returning his shares without affecting its continuity. To promote the co-operative movement and also because of the fact that it is a non-profit enterprise, government provides various exemptions and tax concessions. Cooperative businesses can be financed in part by their members, whose buy-in equity can go towards working capital and expansion. Its objects to serve their members and not to maximize the profits. A cooperative society has to transfer at-least one-fourth of its profits to general reserve. Disadvantages Of Co-operative Societies. A co-operative society is run on the principle of ‘one man one vote‘. The system of owning a house through a housing cooperative society in Nigeria has its own perks and advantages on a good day, but it also has its disadvantages. The government with a view to promote the growth of cooperative societies extends all support to them. They cannot be personally held liable for the debts of the society. Cooperative Society is very important for small business. In the Western countries, co-operative societies were voluntarily started by the weaker sections. Protection from exploitation: One of the most obvious advantages of a co-operative society is the fact that the members are protected from exploitation from middlemen. प्रकार (Types) 4. 3. Earlier, money lenders used to charge high rates of interest and the earnings of the villagers were spent on payment on interest alone. The surplus generated by the cooperative societies is distributed in an equitable manner among members. The aim is to solve the housing problems of the members by constructing and giving the option of paying in installments. Co-operative societies operate with limited financial resources. Co-operatives have not been successful in freeing the rural poor from the clutches of the money lenders. 1. The procedure involves in the registration of a cooperative society is very simple and easy. Members would be interacting with each other. 4. They are usually cheaper, per square foot than condos in the same area, with the added benefit of lower closing costs. A co-operative society is managed in a democratic manner. Therefore members contribute their efforts to promote their common welfare. are distributed by the government through the cooperatives. A cooperative society is a voluntary association started with the aim of the service of its members. It reflects the desire of the poor people to stand on their legs or own merit. Co-operative marketing societies are voluntary associations of small producers, who find it difficult to individually sell their products at a profit. Co-operative societies distribute their surplus equitably to all members and not based on the efforts of members. When dealing with business on a fairly large scale, a joint stock company is the most suitable form of business organisation. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies. A body of members is elected to conduct and control the business. The main purpose of such a society is to ensure a steady and favourable market for the output of its members. The agricultural produce of the small farmers is just sufficient to fulfill the needs of their family. Housing Cooperative Society: This committee is formed to help the members who need lands and houses. List of the Advantages of a Cooperative 1. A person can join cooperative society anytime or leave as per his desire. A cooperative society enjoys separate legal entity which is distinct from its members. The liability of the members of a co – operative society is limited to the extent of capital contributed by them. Further, reports and accounts have to be submitted to the Registrar of Co-operative Societies. Among the mem… The cooperative form of organization offers the following advantages: 1. Thus, the term cooperation means working together. The society supplies these things to the members and takes over their purchases for sale. Therefore they cannot recruit the best talent, acquire latest technology or adopt modern management practices. Advantages and disadvantages of Cooperative Business. The funding and the amount of funds that would be released by the government are uncertain. Definition, Nature, Types, and Objective, Advantages and Disadvantages of Joint Hindu Family Business, Merits and Demerits of Joint Hindu Family Business, Advantages and Disadvantages of Limited Liability Partnership. Further the society is also benefited because a sum not exceeding 10 per cent of the surplus can be utilized for promoting the welfare of the locality in which the cooperative is located. 4. Commerce Mates is a free resource site that presents a collection of accounting, banking, business management, economics, finance, human resource, investment, marketing, and others. There cannot be any compulsion for him to join or quit a society. Cooperatives societies can deal directly with the producers and with the ultimate consumers. The profits made by the society during a year are utilized for strengthening the reserve fund of the society, for declaring a moderate rate of dividend and for declaring a bonus to members according to the purchases made by them from the cooperative store. It has a fairly stable life and continues to exist for a long period. The sale proceeds are distributed in proportion to the contribution of the members to the pool. It implies that all members have equal rights in managing the affairs of the enterprise. सहकारी समितियों का अर्थ (Meaning of Cooperative Societies) 2. Limited […] Co-operative societies have aided the government’s efforts to increase agricultural production. Cooperative societies are unable to attract and employ expert managers because of their inability to pay them high salaries. There is no incentive for working efficiently. All important decisions are taken by majority. High yielding seeds, fertilizers, etc. There is no legal binding or coercion from any corner for a person to become a member. Advantages. हानियां (Disadvantages… Therefore the rural poor continue to depend on the money lenders for meeting expenses of marriage, medical care, social commitments etc. After the establishment of co-operatives, the rural people were able to come out of the grip of money lenders. Public confidence in the co-operative societies is low. Feature # 1. It enjoys perpetual existence. Co-operatives provide loans at cheaper interest rates and have benefited the rural community. These societies procure land from the government and construct flats or provide plots to members on which the members themselves can construct the houses as per their choice. They have improved the life of the people in rural areas. Bulk purchases and sales ensure fair prices and good quality. A cooperative society is a voluntary association of persons of moderate means, who unite together to protect and promote their common economic interests. The members of the managing committee may not have the required qualification, skill or experience. Disadvantages Therefore co-operatives are not able to plan their activities in the right manner. Cooperative housing societies are established to help people with limited income to construct houses or flats at reasonable costs. It is because there is very little link between effort and reward. among members which may lead to disputes. Voluntary organization. 2. The members who offer honorary services on voluntary basis are generally not professionally equipped to handle the management functions effectively. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. he philosophy of the formation of a cooperative society is “all for each and each for all”. 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