Comparison of Cooperatives, Companies, Trusts, and Partnership Firms:

Feature Cooperative Company Trust Partnership

Firm

Formation Registered Registered No specific Registered

under the under the registration under the Indian
Cooperative Companies required Partnership Act,
Societies Act Act 1932

Objective Primarily for Primarily for Varies Primarily for

social benefit profit and depending on profit sharing
and mutual shareholder the trust's among partners
aid wealth purpose
maximization

Ownership Members hold Shareholders Trustees Partners share

democratic own shares, manage and ownership and
ownership, voting rights control the trust management
one vote per proportional to property for the responsibilities
member shareholding beneficiaries

Liability Limited or Limited for Trustees have Partners have

unlimited, shareholders limited liability, unlimited liability
depending on but may be for firm's debts
the type of liable for
cooperative personal
breaches of
trust
 Feature Cooperative Company Trust Partnership
Firm

Management Elected Board of Trustees Partners

committee of directors appointed by manage the firm
members elected by the founder or jointly or
shareholders by the through
beneficiaries designated
partners

Capital Share capital, Share capital, Donations, Partners'

raising deposits, loans, endowments, contributions,
loans, grants debentures investments loans

Profit Surplus Profits Profits Profits shared

distribution distributed to distributed to distributed to among partners
members shareholders beneficiaries according to the
based on as dividends according to partnership
patronage or the trust's agreement
other criteria terms

Regulation Regulated by Regulated by Limited Regulated by

the the Companies regulation by the Indian
Cooperative Act and the Indian Partnership Act
Societies Act Ministry of Trusts Act and courts
and Registrar Corporate
of Affairs
Cooperative
Societies

Taxation Varies Subject to Trusts may or Subject to

depending on corporate may not be partnership
the type of subject to
 Feature Cooperative Company Trust Partnership
Firm

cooperative income tax income tax income tax

and state laws depending on
their purpose
and activities

Additional differences:

 Cooperatives: Focus on providing services to members and promoting social

objectives. Members have a say in decision-making and share in profits or benefits.
 Companies: Profit-driven entities with separate legal personality from its owners.
Limited liability protects shareholders from personal liability beyond their investment.
 Trusts: Established for a specific purpose, such as charitable or educational goals.
Trustees manage the trust property and distribute its income or assets according to the
founder's wishes.
 Partnership Firms: Formed by two or more individuals to carry on a business
together. Partners share profits and losses according to their agreement.

Choosing the right form of organization:

The choice of business structure depends on various factors, such as the business's
objectives, ownership structure, liability preferences, and regulatory requirements.
Consulting with legal and financial professionals is recommended to determine the most
suitable form for your specific needs.

Comparing Cooperatives, Companies, Trusts and

Partnership Firms
Here's a comparison of these four business structures across key
aspects:
Aspect Cooperative Company Trust Partnership Firm
Ownership Members Shareholders Trustees Partners

Liability Limited or Limited Limited or Limited or

 unlimited, unlimited,
unlimited,
depending on depending on
depending on
type of type of
type of trust
cooperative partnership

Relatively Relatively
More complex,
simple, simple,
registered Varies
registered governed by
Formation under the depending on
under the the
Companies type of trust
Cooperative Partnership
Act
Societies Act Act

Board of
Elected Trustees Partners
directors
Management committee of manage the manage the
elected by
members trust's assets firm's business
shareholders

Primary motive Focused on

Can be profit-
is not profit profit Can be
making or for
Profit motive maximization, maximization charitable or
professional
but member for profit-making
collaboration
benefit shareholders

Through
Through share
issuing shares Donations, Partners'
capital,
Capital raising on the stock endowments, contributions
deposits, loans,
market or or investments and loans
and grants
privately

Subject to Subject to
Subject to income tax on income tax on
May receive tax
Taxation corporate income individual
benefits
income tax distributed to partners' share
beneficiaries of profits

Open to Limited to a
individuals, maximum
Open to
firms, Limited to number of
Membership individuals and
companies, individuals partners
entities
and even the (varies by
government country)

Transferability Shares are not Shares are Ownership can Partnership

 interests can
freely freely be transferred be transferred
of ownership
transferable transferable through a deed with consent of
other partners

No, dissolved
upon the
Perpetual death,
Yes Yes Yes
succession retirement, or
bankruptcy of
a partner

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Here's a summary of their key differences:

Cooperatives:

 Member-owned and democratically controlled businesses.

 Focus on member benefits, not just profit maximization.
 Simpler formation process.
 Can be limited or unlimited liability.

Companies:

 Separate legal entity owned by shareholders.

 Focus on profit maximization for shareholders.
 More complex formation process.
 Limited liability for shareholders.

Trusts:

 Legal entities established to manage assets for beneficiaries.

 Can be charitable or profit-making.
 Varying levels of complexity in formation and management.
 Limited or unlimited liability, depending on the type of trust.
 Partnership Firms:

 Businesses owned and managed by partners who share profits and

losses.
 Can be limited or unlimited liability, depending on the type of
partnership.
 Relatively simple formation process.
 Not a separate legal entity.

Comparison of Cooperatives, Companies, Trusts, and

Partnership Firms
Here is a comparison of cooperatives, companies, trusts, and
partnership firms across several key aspects:
Feature Cooperative Company Trust Partnership Firm

A voluntary
A separate legal A legal entity
organization
entity created by established for a
owned and An agreement
law, owned by specific purpose,
controlled by its between two or
shareholders governed by a
Definition members, who more individuals
who do not have trustee who
share the to carry on a
to be directly holds assets in
benefits and business together.
involved in the trust for
risks of the
business. beneficiaries.
organization.

Usually
No formal
Registered registered under
Registered registration
under the the Trust Act, but
Formation under the required, but a
Cooperative may not be
Companies Act. partnership deed
Societies Act. required in some
is recommended.
cases.
 Beneficiaries
have no
Members own Shareholders Partners own and
ownership of the
Ownership and control the own shares in control the
trust assets, but
cooperative. the company. partnership firm.
they have the
right to benefits.

Members may
Partners have
have limited or
Shareholders Trustees have unlimited liability
unlimited liability
Liability have limited limited liability for for the
depending on
liability. the trust's debts. partnership's
the type of
debts.
cooperative.

Partners govern
the partnership
Members elect a Shareholders Trustees govern firm by
committee to elect directors to the trust agreement, with
Governance
govern the govern the according to the each partner
cooperative. company. trust deed. having equal
rights unless
otherwise agreed.

May be
motivated by
profit, but also May be motivated
Not motivated by
by social goals by profit, but also
Primarily profit, but by
such as by other goals
Profit Motive motivated by fulfilling the
providing such as shared
profit. objectives of the
services to expertise or
trust deed.
members or resources.
promoting a
particular cause.

May be exempt
May be exempt Subject to from certain Subject to income
Taxation from certain corporate taxes depending tax on partnership
taxes. income tax. on the type of profits.
trust.

Raising Can raise Can raise capital Limited options Can raise capital
Capital capital through through the for raising through partner
membership issuance of capital, but may contributions and
 fees, loans, and receive
shares. loans.
grants. donations.

Beneficiary
interests in a
Membership in a Partnership
Shares in a trust can be
cooperative can interests can be
Transferability company can be difficult to
be transferred, transferred with
of Ownership freely bought transfer,
but there may the consent of all
and sold. depending on the
be restrictions. partners.
terms of the trust
deed.

The company The trust

The cooperative
continues to continues to exist The partnership
continues to
exist even if even if some firm dissolves if
Continuity exist even if
some beneficiaries die one partner dies
some members
shareholders sell or become or leaves the firm.
leave.
their shares. incapacitated.

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Additional Points to Consider:

 Cooperatives are often seen as more democratic and member-

oriented than other forms of business organization.
 Companies are generally more efficient at raising capital and
growing their businesses.
 Trusts are often used for charitable purposes or to manage
assets for beneficiaries.
 Partnership firms can be a good way for individuals to pool their
resources and expertise to start a business.