Question

Attempt the following:

Explain the merits of a Co-operative Society.

Answer 1

The merits of a Co-operative Society are as follow:

1. Easy Formation: It is easy to form a Co-operative organisation. Minimum ten members are needed to form the organisation. It does not involve many legal formalities. It is compulsory to register the organisation However, the procedure for registration is simple and the fees are nominal.
2. Tax Concession: Co-operatives always get support from the government. As they play an important role in economic and social development, the government gives them concessions in payment of tax.
3. Open Membership: Membership of a Co-operative organisation is open to all. A person can become a member by purchasing shares. No difference is made on the basis of language, religion, caste, etc. A person can become a member whenever he wants and terminate membership at his own Will. Membership is voluntary.
4. Stability: A Co-operative organisation enjoys a long and stable life. The life of the organisation is distinct from the life of its members. If any member dies, becomes insolvent or insane, business is not closed.
5. Financing and Charity: After providing a 15% dividend to members, the surplus amount is used for self. Financing by the Co-operative Societies. Some amount of leftover profit is used for charity, social activities, and for the growth of the co-operative society.
6. Less Operating Expenses: Cost of operation is low as salary is not paid to members who manage the business. Members of Co-Operative organisations work on an honorary basis. They are not given any remuneration for their services. There are no expenses for advertising and publicity. This helps to increase profit.
7. Limited Liability: The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, people are interested in investing in a Co-operative organisation.
8. Democratic Management: Democracy is followed in the management of the co-operative organisation. All members are equal. The principle of “One member One vote” is followed. Members elect representatives who form the managing committee. They work according to laws. The managing committee looks after the day to day administration. Decisions are taken collectively in meetings.
9. Supply of Goods at Cheaper Rate: Goods are sold at a lesser price through a Co-operative store. This is because the organisation is service-oriented. The store does not make use of the services of middlemen and there are no expenses on advertising. So goods are sold at cheap rates.