According to The Indian Co-operative Societies Act, 1912, “Co-operative organization is a society
which has its objectives for the promotion of economic interests of its members in accordance with
Features of a Co-operative Society
`(i)` Voluntary Membership :The membership of a co-operative society is voluntary. There is no
compulsion for anyone to join or quit a society after serving a notice procedurally. Membership is
open to all, irrespective of their religion, caste and gender.
`(ii)` Legal Status Registration of a co-operative society is compulsory. This accords a separate identity
to the society which is distinct from its members. The society can enter into contracts and hold
property in its name, sue and be sued by others. As a result of being a separate legal entity, it is not
aected by the entry or exit of its members.
`(iii)` Limited Liability: The liability of the members of co-operative society is limited to the extent of the
amount contributed by them as capital.
Merits of Co-operative Society:
`(i)` Equality in Votes Co-operative society is governed by the principle of ‘one man one vote’. Each
member is entitled to equal voting rights irrespective of the amount of capital contributed by a
`(ii)` Limited Liability: The liability of members of a co-operative society is limited to the extent of their
capital contribution and hence, the personal assets of the members cannot be used to repay
`(iii)` Continuity Death, bankruptcy or insanity of the members do not act continuity of a cooperative society.
Limitations of Co-operative Society:
`(i)` Limited Resources :Capital contributions in a cooperative society are from the members with
`(ii)` Inefficient Management :The members of co-operative societies are not professionals and are
honorary services on a voluntary basis.
`(iii)` Internal Conflicts Internal conflicts arise when personal interests start dominating the welfare.
Types of Co-operative Societies
`(i)` Consumer’s Co-operative Societies The consumer co-operative societies are comprises to protect
the interests of consumers as its aim is eliminating middlemen to achieve economy in operations
and provide good quality products at reasonable prices. It purchases goods in bulk directly from the
wholesalers and sells goods to the members.
`(ii)` Producer’s Co-operative Societies These societies are comprise to protect the interest of small
producers and are set up to provide the supplying of raw materials, equipment and other inputs to
the members and buying their output for sale. Profits among the members are distributed on the
basis of their contributions to the society.
`(iii)` Marketing Co-operative Societies Such societies consist to help the small producers who wish to
obtain reasonable prices for their output and want to market their products. Its members jointly
perform marketing functions like transportation, warehousing, packaging, etc to sell the output at
the best possible price and profits are distributed according to each member’s contribution to the
pool of output.