Organisation of Commerce and Management · Ch 5 — Forms of Business Organisation – II
Comparing the Institutional Forms
7
Comparing the Institutional Forms
7. Comparing the Institutional Forms
Co-operative Society vs. Joint Stock Company:
Note
Co-operative Society vs. Joint Stock Company
| Basis | Co-operative Society | Joint Stock Company |
|---|---|---|
| Primary motive | Service to members (mutual welfare) | Profit for shareholders |
| Governing law | State Co-operative Societies Act | Companies Act, 2013 (central) |
| Voting right | One member, one vote (regardless of capital) | Voting proportional to shareholding |
| Minimum members | Commonly 10 (varies by state Act) | 2 (private) / 7 (public) |
| Surplus distribution | Broadly by patronage (business done with the society) | Dividend proportional to shares held |
| Registering authority | Registrar of Co-operative Societies | Registrar of Companies |
| Capital-raising capacity | Limited | Can be very large, especially for a public company |
How the corporate/institutional forms (this chapter) differ from the non-corporate forms (Part I — Sole Proprietorship, Partnership, Joint Hindu Family Business):
- Separate legal entity — a Co-operative Society and a Joint Stock Company are each distinct legal persons from their members; a Sole Proprietorship has no legal identity apart from its owner, and even a registered Partnership firm is not, in Indian law, a person separate from its partners in the same full sense.
- Liability — members/shareholders of a Co-operative Society or Company enjoy limited liability (capped at capital contributed/unpaid share value); a sole proprietor and (ordinary) partners bear unlimited personal liability for business debts.
- Continuity — a Co-operative Society and a Company both enjoy stable/perpetual existence unaffected by a change in individual membership; a Sole Proprietorship ends with the proprietor, and an (ordinary) Partnership is, in principle, dissolved by the death or exit of any partner unless the partnership agreement/remaining partners provide otherwise.
- Formation formality — both corporate forms require formal registration under their respective governing Acts before they can lawfully commence and enjoy these advantages; Sole Proprietorship needs no such registration to exist, and Partnership registration (while …
Definition 1Unlimited Liability (contrast)
The condition — applicable to a Sole Proprietorship and an ordinary Partnership, but NOT to a Co-operative Society or a Company — where an owner/partner's personal assets can be used to pay off busines …