Co-operation · Ch 2 — Comparative Study of Various Forms of Business Organisations
Comparative Study — How the Forms Differ
Comparative Study — How the Forms Differ
Having studied each form, we can now compare them side by side. The table below sets out the main points of difference across all four forms.
| Basis | Sole Proprietorship | Partnership Firm | Joint Stock Company | Co-operative Society |
|---|---|---|---|---|
| Governing law | No special Act | Indian Partnership Act, 1932 | Companies Act, 2013 | Maharashtra Co-operative Societies Act, 1960 |
| Number of members | Only one | Minimum 2, maximum 50 | Private 2–200; Public min 7, no maximum | Minimum 10, generally no maximum |
| Registration | Not compulsory | Optional | Compulsory | Compulsory |
| Legal status | No separate entity | No separate entity | Separate legal entity | Separate legal entity |
| Liability | Unlimited | Unlimited & joint | Limited | Limited |
| Capital | Very small | Moderate | Very large | Limited (small savings of members) |
| Management | Owner himself | All partners / by agreement | Board of Directors | Elected managing committee |
| Voting / control | Owner alone | By mutual agreement | By shares held (one share, one vote) | One member, one vote |
| Main motive | Profit | Profit | Profit | Service & mutual help |
| Distribution of surplus | Whole profit to owner | Shared in agreed ratio | Dividend on shares held | Limited dividend + bonus on dealings |
| Continuity | Uncertain (ends with owner) | Unstable (death/exit dissolves) | Perpetual succession | Perpetual succession |
| Transfer of interest | Not applicable | Only with consent of all | Freely transferable (public co.) | Transfer restricted, with society's approval |
| Secrecy | Full | Fairly good | Poor (accounts published) | Poor (open to audit) |
How the co-operative form especially differs from the other three
The sole proprietorship, partnership and joint stock company are all profit-seeking forms in which control ultimately rests with ownership of capital — the more you own (or the more shares you hold), the greater your claim on profit and, in a company, your voting power. The co-operative society breaks from all three on several fundamental points:
- Motive — its aim is service and mutual help, not maximum profit. The other three exist to earn profit for their owners.
- Basis of control — it works on 'one member, one vote', so control rests with people, not with capital. In a company, in contrast, votes go with shares, and in a proprietorship or partnership control follows ownership.
- Distribution of surplus — surplus is returned mainly as a bonus/patronage refund in proportion to a member's dealings with the society and as a limited dividend on capital, whereas the other forms distribute profit in proportion to ownership or shares. …
Sole proprietorship, partnership and joint stock company are formed to earn profit for their owners; a co-operative society is formed to serve the common interest of it …
In a company control is exercised through shares (one share, one vote), so capital controls; in a co-operative society control is 'one member, one vote', so people …