The primary motive of co-operative society is to protect the interest of the economically weaker sections of the society. In every form of organization, whether it is a sole trader, partnership or joint stock Company the primary motive is to increase profits. This form of organization is considered as democratic set up run by its members for serving the interest. Behind this the main philosophy is "All for each and each for all". It is a self-help as well as mutual help.
Co-operative society is formed under the Co-operative Societies Act, 1912 or under the relevant state co-operative society's law. This type of organization can be formed by at least 10 adult members. Another requirement is that the members willing to form a society must have common bond among them. They may be the residents of same locality, colleagues, belonging to some group having affinity etc. Every person intending to form a society should have some common objectives to achieve.
Co-operative Society Membership is open to all those who have a common interest. Minimum 10 members are required to form a society. Maximum number of members are not specified under Co-operative Societies Act. However member may specify the maximum number of members after the formation of the society.
Co-operative societies are placed under state control through registration to protect the interest of members. Society has to submit details of the members while getting registered. Books of accounts are required to be maintained which are to be audited by government auditors.
Co-operative societies are managed by a group known as "Board of Directors". Board of directors are the elected representatives of the society. Irrespective of the number of shares held, each member has a single vote.
Members can voluntarily join co-operative society. A member can leave the society at will.
Under co-operative society, capital is contributed by all the members.However, loans and secure grants can be easily raised from government after its registration.
Like other forms of business organization, Co-operatives are not formed to maximise profit. Its main objective is to provide service to its members.
After registration under the Co-operative Societies Act, a Co-operative Society becomes a separate legal entity, with limited liability of its members. Death, insolvency or lunacy of a member will not affect the existence of a society. Members can enter into agreements with others and can purchase or sell properties under its own name.
Co-operative society also generates some profit while conducting business in addition to providing services to its members. Profits are not earned at the cost of its members. Unlike companies profit generated is not distributed to its members on the basis of the shares held by them but on the basis of their participation in the business.
The main principle of Co-operative Societies is mutual help. They are formed for the financially weaker sections of society. By adopting the principle of self-help through mutual co-operation, Co-operative Societies convert the weakness of members into strength.
Here are the following steps to register a co-operative society
1. To form a society, 10 individuals are required together who are desirous of forming a Society.
2. Need to form provisional Committee and a chief Promoter should be elected from amongst them.
3. Name of the Society has to be selected.
4. An Application is required to be made to the Registration Authority for name reservation and for confirming the name reservation, a letter to that effect has to be obtained. Reserved name is valid for 3 Months.
5. Entrance fees and share capital has to be collected from the prospective members.
6. As per the directions of the Registration Authority, a bank account has to be opened in the name of the proposed society. After this, entrance fees and share money has to be deposited in the bank account and the certificate from the bank has to be obtained in that respect.
7. After this, registration fees have to be deposited with the Reserve Bank of India and obtain receipted 1challan thereof.
8. For society registration, an application should be submitted to the Registrar of Societies of the concerned municipal ward.
Here are the following types of Co-operative Societies
Producers Co-operative Society is form mainly for the purpose of protecting the interest of small producers by making available items of their need for production such as raw material, tools & equipment, machinery etc.
Consumers Co-operative Society is form mainly for the purpose of protecting the interest of general consumers by making consumer goods available at reasonable price. By directly buying goods from the producers or manufacturer they thereby eliminate the middlemen in process of distribution.
Co-operative Marketing Societies are mainly formed by small producers and manufacturers who find it difficult to sell their products individually. Society collect products from individual members and take the responsibility of selling those products in market.
Co-operative Credit Societies are mainly formed for the purpose of providing financial support to the members. The Co-operative Credit Societies accepts deposits from members and grant them loans at reasonable rates of interest when required.
Co-operative Housing Society are mainly formed to provide residential houses to members. Under this, they purchase land, develop it and construct houses or flats and allot the same to members. Some these societies provide loans to members at low rate of interest to construct their own houses.
Co-operative Housing Society are formed by small farmers to work jointly and thereby enjoy benefits of large scale farming.