What are cooperative societies? Explain

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Que: What are cooperative societies? Explain to them their advantages and disadvantages.


A Cooperative Society:

It is a voluntary association of persons joined together on the basis of equality for the fulfillment of their economic and business interests.

To protect the interest of weaker sections, a cooperative society is formed.

A group of ten persons can form a cooperative society.

On the basis of objectives, various types of cooperatives are formed. They are consumer cooperatives, producers cooperatives, marketing cooperatives, housing cooperatives, and credit cooperatives.

Features of Cooperative Societies:

As it is a voluntary association, the membership is also voluntary.

It is compulsory for the cooperative society to get registration.

It does not get affected by the entry or exit of its members.

There is limited liability of the members of cooperative society. Liability is limited to the extent of the amount contributed by members as capital,

An elected managing committee has the power to take decisions.

The cooperative society works on the principle of mutual help and welfare.

Advantages of Cooperative Societies:

 It is easy to form a cooperative society.

The liability of every member is limited to the extent of capital contributed by him.

Any individual can be a member of any cooperative society.

Cooperatives get financial assistance from the state government to enjoy exemptions and concessions in taxes.

The middleman’s profit is eliminated as the consumers control their own supplies through cooperative societies. Each member has only one vote.

It has got perpetual succession and enjoys a legal entity.

Disadvantages of Cooperative Societies:

Cooperatives do not function efficiently due to lack of managerial ability  It does not enjoy the profession as they cannot employ professionals in ad initial stages due to limited funds, Cooperatives are formed to render service to its members than to earn profit.

Among the members, there exists a lot of conflicts due to personality differences, ego, etc.

Secrecy cannot be maintained in cooperative societies.

Cooperative societies mostly depend on the government for financial assistance.