Question

Mrs. Indu started a voluntary association of 10 peoples, who are also consumers. She collected the capital by selling shares to members and opened a retail shop so that they can eliminate middlemen and get the goods at low price.
(a) State the type of organisation mentioned in above case.
(b) State any 2 merits organisation.

Answer 1

(a) Co-operative Society :-

The word cooperative means working together and with others for a common purpose. The cooperative society is a voluntary association of persons, who join together with the motive of welfare of the members. They are driven by the need to protect their economic interests in the face of possible exploitation at the hands of middlemen obsessed with the desire to earn greater profits.

The cooperative society is compulsorily required to be registered under the Cooperative Societies Act 1912. The process of setting up a cooperative society is simple enough and at the most what is required is the consent of at least ten adult persons to form a society. The capital of a society is raised from its members through issue of shares. The society acquires a distinct legal identity after its registration.

(b) Merits :-

The cooperative society offers many benefits to its members. Two of the merits of the cooperative form of organisation are as follows :-

(i) Equality in voting status: The principle of ‘one man one vote’ governs the cooperative society. Irrespective of the amount of capital contribution by a member, each member is entitled to equal voting rights.

(ii) Limited liability: The liability of members of a cooperative society is limited to the extent of their capital contribution. The personal assets of the members are, therefore, safe from being used to repay business debts.