Co-operative Society

A co-operative society is a voluntary association of persons who join together on the basis of equality to promote their common economic and social interests through mutual help and self-help, rather than to earn profit for a few. Its guiding motto is 'Each for all and all for each.' In Maharashtra co-operative societies are registered and governed under the Maharashtra Co-operative Societies Act, 1960 (societies working across more than one state come under the Multi-State Co-operative Societies Act, 2002).

Co-operative societies take many forms according to the need they serve — consumers' co-operatives (fair-price shops), producers' / industrial co-operatives, farmers' / agricultural credit societies, housing co-operatives, credit co-operatives (urban co-operative banks) and marketing co-operatives.

Features

• Voluntary association — anyone with a common need may join or leave freely; there is no compulsion and no discrimination of caste, creed, religion or gender.
• Open membership with a minimum number — a minimum of 10 members is required to form a society; there is generally no maximum.
• Compulsory registration — a society must be registered with the Registrar of Co-operative Societies, after which it becomes a separate legal body with perpetual succession.
• Democratic management — the society is managed by a managing committee elected by the members, on the principle of 'one member, one vote' — voting power does not depend on the number of shares held.
• Service motive, not profit motive — the primary aim is service to members and to society, not maximum profit.
• Limited liability — members' liability is normally limited to the capital they contribute.
• Limited interest / return on capital and distribution of surplus — any surplus is not shared as ordinary profit; it is distributed as a limited dividend and mainly as a bonus/patronage refund in proportion to the members' dealings, and a part is kept in reserve.
• State control / support — societies work under the supervision of the government through the Registrar and enjoy various concessions and support.

Merits

• Easy formation — only 10 members and simple registration are needed.
• Open and democratic — equal voting rights; controlled by ordinary members, not by the wealthy.
• Limited liability protects members' personal property.
• Perpetual succession / stability — continues despite change of members.
• Eliminates middlemen — members get goods, credit or services at fair prices, raising their real income.
• Serves weaker sections and promotes self-reliance, thrift and mutual help.
• Government support — tax concessions, subsidies and financial help.

Limitations

• Limited capital — members are usually people of small means, so funds are limited.
• Weak / inefficient management — the committee is made of ordinary members who may lack business expertise, and honorary work reduces drive. …