A cooperative society is a voluntary association of persons of moderate means, who unite together to protect and promote their common economic interests.
Features:
Voluntary association: Everyone having a common interest is free to join a cooperative society and can also leave the society after giving proper notice.
Legal status: Its registration is compulsory and it gives it a separate identity.
Limited liability: The liability of the member is limited to the extent of their capital contribution in the society.
Democratic control: Management and control lies with the managing committee elected by the members by giving vote. Every member has one vote irrespective of the number of shares held by him.
Service motive: The main aim is to serve its members and not to maximize the profit.
State control: They have to abide by the rules and regulations framed by government for them.
Distribution of surplus: The profit is distributed on the basis of volume of business transacted by a member and not on the basis of capital contribution of members.
Merits-
Ease of formation: It can be started with minimum of 10 members. Registration is also easy as it requires very few legal formalities.
Limited liability: The liability of members is limited to the extent of their capital contribution.
Stable existence: Due to registration it is a separate legal entity and is not affected by death, lunacy or insolvency of any of its members.
Economy in operations: There is economy in operation due to elimination of middle man and voluntary services provided by its members.
Government support: Government provides support by giving loans at lower interest rates, subsidies and by charging less taxes.
Social utility: It promotes personal liberty, social justice and mutual cooperation. They help to prevent concentration of economic power in a few hands.
