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 Literal Meaning-Cooperative

m Involving the joint activity of two or more; ´concerted

action.µ
m Done with or working with others for a common purpose

or benefit; ´a cooperative effort.µ

m Willing to adjust to differences in order to obtain

agreement.
 Cooperatives-Business Organisation

The representative body for cooperatives, the

International Cooperative Alliance (ICA),defines a
cooperative as:
An autonomous association of persons united
voluntarily to meet their common economic, social
and cultural needs and aspirations, through a jointly
owned and democratically controlled enterprise.
 Cooperatives: Features
mFormation under Act 1925
mFormation with at least 10
members
mVoluntary and open
membership
mDemocratic member control
mMember economic
participation
mAutonomy and independence
mEducation, training and
information
mCooperation among
cooperatives
mConcern for community
 Cooperatives Difference
Sole Proprietorship/Partnership
A business owned by one or more people, usually to provide employment and a return
on investment to the owners.

Investor-Owned Corporation
A business whose stock is traded publicly by any number of investors.

Cooperative
A member-owned and member-controlled business that operates for the mutual
benefit of all members.
 The 3 Unique Principles

Co-operatives are business enterprises and thus can be

defined in terms of three basic interests:
m User owner

m User control

m User benefit

Only in the co-operative enterprise are all three

interests vested directly in the hands of the user.
 UserðOwner Principle

m The people who

own and finance the
cooperative are
those who use it.
 UserðControl Principle

As owners, a
cooperative's members
control its activities.
 User Benefit Principle

m The cooperative·s sole

purpose is to provide
and distribute
benefits to members
on the basis of their
use.
 Types Of Cooperative Societies
m Consumer·s Cooperative Society
m Agricultural Cooperative Society
m Marketing Cooperative Society
m Credit Cooperative Society
m Distribution Cooperative Society
m Capital Cooperative Society
m Insurance Cooperative Society
m Producers Cooperative Society
m House Building Society
m Miscellaneous Cooperative Society
 Consumer·s Cooperative Society
m Purchase of consumer·s
goods at wholesale price.
m Provision of necessities of
life at cheaper price to its
members.
m Eliminates the services of
middleman.
m Promotes the welfare of its
members.
m To divide profit among its
members.
m To increase the purchase
power raising the standard
of living of its members.
 Agricultural Cooperative Society
m Provides consultancy services to its member
farmers.
m Provides financial assistance to its members.
m Arranges for machinery used in the field of
agriculture.
m Introduces the improved method of
cultivation for its members.
m Arranges for storage of agricultural produce
of its members.
m Arranges for sale of agricultural produce of
its members.
m Provides improved seeds and other necessary
material used in agriculture.
m Improves the irrigation system.
m Combines the small price of land for
collective mechanized farming
m Improves the living of standard of the
member farmers.
 Marketing Cooperative Society

m Arranges fair return to

their agriculturists for
their production.
m Removes middleman
profit.
m Provides storage
facilities
 Credit Cooperative Society
m Boost up the saving of its
members.
m Provide short term credit
facilities to its members.
m Promote the economic
welfare of its members.
m Creates the habit of mutual
aid.
m Provides investment to its
members from whom
society gets the loans.
 Distribution Cooperative Society

m Wholesale and retail sale

of goods.

m Divide profit amongst the

members in proportion to
the amount of their
purchases.
 Capital Cooperative Society
m ‰ets land for
construction on low rates
and provides to society
members at no profit
basis.
m Provides the facility of
water, gas, electricity and
transportation.
 Insurance Cooperative Society
m Provides insurance
facilities to its members.

m Promotes saving and

investment.

m Promotes economical and

social welfare of its
members
 Producers Cooperative Society

m Purchase of raw material at the possible lower price.

m Provision of effective works and employees.
m Provision of most efficient management.
m Eliminates middleman.
m Provision of goods and services to its member at cheap prices.
m Provision of goods and services to non-members at reasonable price
to earn profit.
m Provision of employment to its members.
m Division of profit amongst its members
 House Building Society
m Provides financial assistance
to its members for building
their houses at low rate of
interest.
m Provides land to build houses
at reasonable price.
m Provides constructed houses
to its members.
m Provides building materials at
cheaper rate.
m Renders technical services
for the construction of houses.
m Promote economic and social
welfare of its members.
 Miscellaneous Cooperative Society

m Provides financial
assistance and
technical and
consultancy services
to its members in their
specific field of life.
m Promote economic
and social welfare of
its members
 Merits and Demerits
MERITS DEMERITS
m Facility of information m Limitation of Capital
m Democratic management
m Excessive State
m Limited Liability Regulation
m Scope for internal
Financing
m Inefficiency of
m Continuity management
m Tax Concessions
m Coordination m Intrigue and bickering
among members
m State Assistance
 Cooperatives vs.
Joint Stock Company
Cooperatives
m LE‰ISLATION-It is controlled and supervised
by the Cooperative Society Act 1925.
m NUMBER OF MEMBERS-It must be formed at
least by ten members above the age of
eighteen years.
m LIABILITY-It may be established with or
without limited liability.
m OBJECTIVES-Its main aim is not to maximize
its profit. Service and welfare of the
members are regarded as its motto.
m RI‰HT OF TRANSFERABILITY-The shares of
the cooperative society cannot be transferred
to the non-members.
m BORROWIN‰ POWERS-It has no power to
sell debentures and borrow money from
non-members.
Joint Stock Company
m LE‰ISLATION-It is governed by the
company·s ordinance 1984.
m NUMBER OF MEMBERS-Public company is
formed at least by 7 members and private
company is formed by at least by 2 members.
m LIABILITY-It may be established with limited
liability.
m OBJECTIVES-Its main aim is to earn
maximum profit at any cost.
m RI‰HT OF TRANSFERABILITY-The share of
the public company can be transferred freely.
m BORROWIN‰ POWERS-Public Company has
power to borrow money from any source. It
can also issue debentures for this purpose.
 Cooperatives vs.
Joint Stock Company
Cooperatives
m PURCHASIN‰ LIMIT-It shares cannot be
purchased for more than thousand rupees.
m EXEMPTION FACILITIES-It enjoys certain
concession given by the state i.e. exemption
from income tax, duty and registration fee.
m MANA‰EMENT-As it is formed on the basis
of democratic principle, every member has
equal right in the management of business.
m OWNERSHIP POSITION-There is no
difference between man and man in the
society. All members enjoy equal rights of
ownership and control.
m ROLE-It eliminates the middleman and
capitalist group and it thus equalize the
distribution of wealth in the society.
m WITHDRAWAL RI‰HT-A member can
withdraw his capital on short notice.
Joint Stock Company
m PURCHASIN‰ LIMIT-Its members can
purchase its share of any amount.
m EXEMPTION FACILITIES-It does not possess
certain concessions and privileges by the
government.
m MANA‰EMENT-It is managed by the Board
of Directors and actual owners are not
allowed to participate in the management.
m OWNERSHIP POSITION-There is master
servant relationship between the ownership
and management.
m ROLE-It creates evils of monopoly and
capitalism in the society and it thus
concentrates the wealth into few hands.
m WITHDRAWAL RI‰HT-It is not convenient
for its shareholders to withdraw their capital
from the company.
 Reasons to Join

m ‰et access to great products and services.

m Be heard. Your voice counts ³ your co-op truly cares what you think.
m Be part of a values-based organization that puts people ahead of profit.
m Share in the financial success of the organization.
m Contribute to a thriving local economy.
m Invest in a business that is locally owned and democratically controlled.
m Be part of a strong and proud cooperative tradition.
m Help change the way business is conducted in America and around the
world.