Cooperative Society

The word ‘cooperative’ refers to work with combined initiative or effort. Cooperative has evolved to proceed with the inspiration and belief of combined effort. Because of Industrial Revolution and technology base large scale of business, the more the base of capitalism increases, the more the economic discrimination in the society is amplified. Lower and middle income group of professional and businessmen starts to face economic destitution. Cooperative society starts to evolve in different countries for emancipation from economic differences and destitution created by capitalism. At first, Cooperative revolution started in Western Europe, America and Japan. But, Rochdale Equitable Pioneers Society established in 1844 at a place named Rochdale located at North England leads is the pioneer in establishing cooperative society. This is considered the first cooperative society in the world formed by 28 weavers with 28 pound sterling of capital. The financial condition of this society member was not well to do. They were incapable to buy food and other necessities with their small wages. With the help of cooperative they collected the regular necessities at a lower cost and used to sell among the members.

Rochdale Pioneer Equitable Society: First Cooperative organization of the world Established 1844

They had taken the policy of democratic mentality, trust and honor to each other and honesty to operate this business. In this way the journey of cooperative society starts.

After completing this chapter, we shall be able to

·         Differentiate between public and private limited company Describe the idea and features of cooperative society.

·         Explain the formation and principles of a cooperative society

Characteristics of Cooperative Society

Generally, several low and middle income group of people with similar mentality willingly come together to form cooperative society to fulfill their economic objective. They invest money equitably, operate the organization democratically, and are agreed to justly bear the risk and share the advantages and disadvantages of the business. Cooperative Society has some features which are analyzed below:

·         Generally, lower class and middle class people of similar mentality and profession willingly forms this type of organization. The objective of the society is to enhance the socio economic standard of the members in a legitimate way. The main objective of this business is to gain self-dependency, not profit.

·         Cooperative Act 2001 has delineated three types of cooperative business; these are

         i.            Primary Cooperative Society which shall have minimum 20 members and objective is to enhance the socio-economic condition of the members in a legal way. Maximum number of member is not specified.

       ii.            Central Cooperative Society which will be formed with the 10 primary cooperative societies with the objective to cooperate and coordinate the activities of the member society.

      iii.            National cooperative society which will be formed by comprising 10 central cooperative societies with the objective to cooperate and coordinate the activities of the member society.

·         Cooperative society is formed under cooperative society Act having a nonperson and separate identity which has fixed continuous existence, shall have the right to acquire, hold and transfer assets and ability to enter into contract. The society shall have a seal and has the ability to sue and be sued.

·         The total capital of the Cooperative Society is divided in to small number of shares. A person can be a member through buying a share, but, any member cannot buy more than one fifth of the total share of the organization. Liabilities of the members are limited by the value of share.

·         Cooperative society is operated and managed following a democratic rules and procedures. For all kinds of cooperative society, a member is eligible to cast only one vote in decision making process of the society. To cast the vote the member must be present because no proxy is allowed.

·         If the cooperative society is not registered or approved as per Cooperative Act 2001, any person, club, organization or cooperative cannot use the word ‘Cooperative’ in its name. It means, without registration, using the word ‘cooperative’ is prohibited.

Though cooperative has similarity with other types of business, it has some different features.

Types of Cooperative Society

Cooperative is in fact an organization of the poor and destitute group of people in the society. But, at present people from various profession and class with their own initiative or government assistance forms different types of cooperative society to be self-dependent by economically and socially. Cooperative Rules 2004 has stated the following profession based cooperative societies:

·         Agriculture or Farmers’ Cooperative Society

·         Fisheries or Fishermen Cooperative Society

·         Labors Cooperative Society

·         Potters Cooperative Society

·         Weavers Cooperative Society

·         Cooperative Society of Landless People (Maximum land owned by the member is 40 decimal)

·         Poor Cooperative Society

·         Women Cooperative Society

·         Cooperative Society of Auto Rickshaw Puller, Drivers of Auto Tempo, Taxicab, Motor, Truck, Trunk Lorry, etc.

·         Hawker’s Cooperative Society

·         Transportation Owner or Labor Cooperative Society

·         Workers Cooperative Society

·         Milkmen Cooperative Society

·         Freedom Fighters Cooperative Society

·         Youth Cooperative Society (for the men and women aged from 18 to 35)

·         Housing Cooperative Society

·         Apartment or Flat Owners Cooperative Society

·         Shop Owners / Businessmen / Market Cooperative Society

The main objective of all the cooperative society is to develop the socio-economic standard of its members. Though cooperative society was evolved for the lower class, at present various people of different groups or profession has the opportunity to form cooperative society. As a result, we can hope that thousands of educated and semi-educated young people of the country shall be motivated to establish cooperative society to be self-employed and shall significantly contribute to the economic development of the country.

Formation of Cooperative Society

Since, Cooperative Society is formed and operated under a set of legal procedures. As per Cooperative Society Act 2001, Cooperative Society is formed at the following three stages:

Initiation Stage

To form a Cooperative Society, at least twenty people must come together from similar class, profession, status or similar mentality. Among these originators, a management committee of six people is formed. This committee outlines by-laws to form the Cooperative Society with the registration. The By-Laws consists the name of the society, address, objective, full description of capital, value of share and number, Method of selling share, initiators name, address and position, method of operating the society, etc.

Registration Stage

At this stage, steps are taken for registration of the society. For registration, Form -1 is to be collected from the government approved local authority and to be submitted along with fees and three (3) copies of By-laws to the registrar. To form the Primary Cooperative Society by the Poor, Landless and Shelter less people under the government Poverty Alleviation Program, a treasury of $.300.00, for central Cooperative Society $.1000.00 and for National Cooperative Society $.5000.00 should be submitted along with the application form. Amount of share capital for registration of Cooperative Society is fixed. For registration of Primary Cooperative Society formed willingly to alleviate poverty or under government program paid up capital of at least $.3,000.00, Other Primary cooperative society except Credit Co-operative Society $.20,000.00, for registration of Credit Cooperative Society paid up capital of at least $.100,00,000.00 and for central and national cooperative society paid up capital of $.1,00,000.00 is required. After scrutinizing all the documents and By-laws in details, the registrar enlists the name of the society in his Registration Book and returns 2 (two) copies of By-laws with registration number to the society. The registration process is completed in this way.

Business Commencement Stage

After registration, the society gets legal existence. Without registration no association can use the cooperative word. After getting the registration, the originators of the society can start various economic and social activities.

Principles of Cooperative Society

Cooperative society is formed with a different ideology and objective of than the other business organization. Generally, people of same class, same profession, primarily with the objective to develop their own socio-economic condition and on the basis of some principles cooperative society is formed. The basic principles of cooperative are described below:

·         The main principle of cooperative is the unity of the people of similar mentality, profession and class based on economic condition. Actually, the business was formed on the principle of unity is strength.

·         Another important principle of cooperative is equality or equal participation of all the members. All the members are entitled of similar honor irrespective of their economic, social, political and religious status.

·         Another principle or ethics of cooperative is to cooperate among the members. Member’s cooperation and sympathy to each other contributes significantly towards the development of the cooperative society. It is the key to success of the cooperative society.

·         Trust and faith of each member on others is considered to be another important principle of cooperative society. This makes them vigorous, interested and confident.

·         Its democratic value and concept is a further fundamental principle. All the members of the cooperative society have the right to cast vote and every member has a single vote. All the members have equal rights to express opinion and cast vote irrespective of their paid up capital or amount of share in the society.

End

More topics about Business Entrepreneurship…