Characteristics of cooperative societies

Cooperative societies are a unique type of business organization designed to benefit their members, especially those from less privileged backgrounds. These societies aim to protect their members from exploitation by wealthier segments of society. Here’s an overview of what makes cooperative societies distinct and how they operate:
To operate legally, cooperative societies must be registered under the Cooperative Societies Act of 1912. Members of the society contribute the capital needed to fund the organization.
Characteristics of Cooperative Societies
- Voluntary Association
Membership in a cooperative society is entirely voluntary. Individuals choose to join and can also leave if they wish, provided they give proper notice. This freedom allows people to engage with the cooperative at their discretion.
2. Open Membership
Cooperative societies are inclusive and open to all individuals, regardless of caste, creed, or religion. This open membership ensures that anyone who wants to participate can do so.
3. Registration
For a cooperative society to be recognized as a legal entity, it must be registered. Once registered, it can enter into contracts and own property in its own name.
4. Limited Liability
Members of a cooperative society have limited liability, which means they are only responsible for debts up to the amount they have invested. This limits their financial risk.
5. Democratic Management
Cooperative societies operate on a democratic basis. Members elect a managing committee to make decisions about the society’s operations. Each member has an equal vote, reflecting the cooperative’s commitment to democratic governance.
6. Service Motive
A cooperative society’s primary goal is to serve its members’ needs, particularly those from weaker sections of society. Any profits earned by the society are shared among the members as dividends.
7. State Supervision
The state government regulates and supervises cooperative societies to protect members’ interests. They are required to maintain proper accounts, which are audited by an independent auditor to ensure transparency and accountability.