Long answer type question. Define Co-operative society. Explain its features.

ANSWER:

The word “co-operative” means “an organisation wherein the stakeholders work with one another”. Thus, a co-operative society is a voluntary association of individuals who work together to protect or promote their common interests.

Features of a co-operative society:

i. Separate legal entity: The registration of a co-operative society is compulsory under the Co-operative Societies Act 1912. Once the registration is complete, the company is granted the status of a separate legal entity. This implies that it can hold properties in its name and enter into contracts. Also, the company can sue others and can be sued by others.

ii. Management and control:  In a co-operative society, the management and control lie in the hands of a managing committee formed by its members.

iii. Democratic Management: A co-operative society is a democratic form of organisation, as it is managed and controlled by a managing committee formed by its members following the principle of “one member, one vote”.

iv. Equal voting rights: A co-operative society grants equal voting rights to all its members. This implies that each member in the society has an equal voting right, irrespective of the amount of capital contributed by him/her in the society.  

v. Limited liability: In a co-operative society, the liability of all members is limited to the amount of capital invested by them in the business. In other words, the personal property of the members cannot be used for paying off the liabilities of the business.

vi. Service motive: The primary objective of a co-operative organisation is to provide services to its members, while its secondary objective is to earn profit. Thus, it works in the interest of its members and provides goods and services to them.