Explain the difference between the cooperative organisations and company form of business.
Difference between cooperatives and companies.
1. Objectives:
There
is a difference in basic objectives of cooperatives from companies. The basic
objective of a cooperative organisation is to provide essential service for the
benefit of members.
On
the other hand, a company is a business organisation with the objective of
earning profit.
2. Membership:
The
membership of a cooperative society is generally drawn from a particular
locality while the shareholders of a company are drawn from all over the
country. The minimum number of members required for the registration of a
cooperative is 10 while the Companies Act requires at least 7 persons for the
formation of a public limited company and at least 2 persons for the formation
of private limited company.
3. Members’ Liability:
The
liability of members of a company is limited but the liability of the members
of cooperative society is generally unlimited.
4. Capital:
A
cooperative society may or may not have share capital. A member cannot transfer
the shares of the society. On the other hand, a company must have capital
divided into shares by its shareholders. The shares of a company are freely
transferable.
5. Surplus:
n a company,
the profits are distributed among members by way of dividend which varies
according to the amount of capital by individual members. But a cooperative
society does not distribute its profit according to the capital held by the
shareholders. The surplus or profit earned by a cooperative is given away to
the members on tine basis of the purchase made by them.
Difference between cooperatives and companies.
1. Objectives:
There is a difference in basic objectives of cooperatives from companies. The basic objective of a cooperative organisation is to provide essential service for the benefit of members.
On the other hand, a company is a business organisation with the objective of earning profit.
2. Membership:
The membership of a cooperative society is generally drawn from a particular locality while the shareholders of a company are drawn from all over the country. The minimum number of members required for the registration of a cooperative is 10 while the Companies Act requires at least 7 persons for the formation of a public limited company and at least 2 persons for the formation of private limited company.
3. Members’ Liability:
The liability of members of a company is limited but the liability of the members of cooperative society is generally unlimited.
4. Capital:
A cooperative society may or may not have share capital. A member cannot transfer the shares of the society. On the other hand, a company must have capital divided into shares by its shareholders. The shares of a company are freely transferable.
5. Surplus:
n a company, the profits are distributed among members by way of dividend which varies according to the amount of capital by individual members. But a cooperative society does not distribute its profit according to the capital held by the shareholders. The surplus or profit earned by a cooperative is given away to the members on tine basis of the purchase made by them.
