Chapter 8 Co-operative Society Flashcards
Write down the merits of co-operative society.
(i) Elimination of middlemen
(ii) Promotion in savings
(iii) Better standard of living
(iv) Equal distribution of wealth
(v) Less prices for members
(vi) More employment
Write down the demerits co-operative society.
(i) Less finance (ii) Inefficient management
(iti) Absence of discipline (iv) Unlimited liability
(v) Lack of legal governance (vi) Lack of secrecy
List down any five kinds of co-operative society.
(i) Producer’s cooperative society
ii) Consumer’s cooperative society
iii) Marketing cooperative society
iv) Insurance cooperative society
(v) Housing cooperative society
What are the objectives of co-operative society.
i) Sale of goods at reasonable price
(ii) Elimination of middlemen
iti) Welfare of low income people
iv) Increase in saving and capital
(v) Mutual cooperation
(vi) Issuance of loan at low rate of interest
How does the membership of a co-operative society attained.
The membership of society is open for all adult persons.
For this purpose, the purchase of one share is sufficient.
How does the co-operative society run/handle its business affairs/matters.
The members elect the managing committee to carry on day to day affairs of the society. The managing committee carries out the policies as laid down in the general meeting of the society, but every important matter is always decided by the majority of members.
How does the profit of a co-operative society distributed.
Ans. The objective of cooperative organization is the provision of service to its members. Whatever a little profit it earns is also spent for the welfare of its members after distributing not more than 10% among members and keeping at least 1/10” of the profit (1/4” in case of producer’s society) as reserve.
How does co-operative society play its role in the economic development of a country.
Cooperative society is one type of the business units. It also contributes towards the economic development by increasing output and providing employment etc. In the presence of cooperative societies, the balanced growth of country is possible.
What is meant by producers co-operative society.
This society is formed by small workers, industrialists and crafts men. The membership is limited to the producers of specific goods. All the necessary activities like production, management and marketing are performed by members themselves.
What are the sources of capital of a cooperative society.
The capital of the society is contributed by the members through purchase of shares and paying membership fee.
What is the basic objective of formation of cooperative society.
The main objective of the formation of cooperative society is the welfare of members and is to work on the principle “All for each and each for all”.
What is the number of members in a cooperative soriety.
In Pakistan, the minimum number of members required fer the establishment of a cooperative society is 30 (for producers or housing society) and 50 for other societies.
However, there is no restriction of maximum number of members.
The basic aim of a co-operative society is:
(a) To store goods
(b) To earn profit
(e) The welfare of members of society
(d) All the above
Co-operative society started in:
(a) 1840
© 1844
(c) 1845
(d) 1850
In Pakistan, a co-operative society is established under the following act:
(a) 1920
(6) 1925
(c) 1930
(d) 1935
Who provides the capital for co-operative society:
(a) Government
(b) Members
(c) Banks
(d) None of these
What are the capital sources of co-operative society:
(a) Fee of members
(b) By selling shares to members
Both (a) and (b)
(d) National and international institutions
A co-operative society is established by: (a) Government institutions
(b) Capitalists
(e) Financially weak consumer
(d) All the people
The minimum number of members in a co-operative society:
(a) Two
(b) Five
(c) Twenty
(d) Thirty
What is excluded from a co-operative society:
(a) Consumer
(b) Retailer
(c) Wholesaler
(d) Capitalist
The price of the share of society is:
(a) Equal to the face price
(b) Above the face price
(c) Less than the face price
(d) All the above
The management committee of society is elected by:
(a) Members
(b) Government
(c) The will of one person
(d) All are correct
If a co-operative society is working in more than one province, then it is registered under the Act of:
(a) 1925
(b) 1932
(c) 1913
(e) 1942
Who cannot be a member of co-operative society:
(a) Govt. Servant
(b) Illiterate person
(e) Minor person
(d) None of these
The liability of members in co-operative society is generally:
（a）
Limited
(b) Unlimited
(c). Both (a) and (b)
(d) None
The shares of co-operative society:
(a) Can be sold in market
6) Cannot be sold in market
(c) Can be used as security
(d) All are correct
Define cooperative society.
Cooperative society is formed for the promotion of thrift, self help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business and better methods of production and for that purpose to consolidate sources.
LONG. Define cooperative society. Discuss its characteristics.
COOPERATIVE SOCIETY
INTRODUCTION:
The cooperative movement is the outcome of economic and social imbalances created by the industrial revolution. The industrial revolution led to the division of society into capitalist and labor classes. Capitalists started exploiting labor and other weaker sections of society for selfish gains. The weaker sections started the cooperative movement to protect and promote their interests against such exploitation.
• The main objective of sole tradership, partnership, and joint stock companies is to earn profit, but a cooperative society is formed to protect the rights of the poor and to provide goods and services at the lowest price to the members. In 1844, the cooperative movement was started by Robert Owen in England with 28 flannel weavers and decided to establish a store named “Rochdale Society of Equitable Pioneers.”
• It was a consumer cooperative society, which increased the trend of establishing different societies. After this, in 1846 and 1851, the Agriculture Credit Cooperative Societies and Cooperative Banks were established in Germany. The cooperative society is established on the principle of self-help to increase the feelings of mutual cooperation.
In the Sub-continent, the movement of cooperative society was started in 1895. The Government passed the Cooperative Credit Act 1904 for the proper supervision and guidance of cooperative societies. The main objective of the cooperative movement in the sub-continent was to free the small and needy farmers from the clutches of moneylenders and sahukars, who used to give loans at high rates of interest and inhuman terms. In case of non-payment of loans, the farmers had to lose the ownership of their lands. Therefore, the government appointed an officer, Mr. Nicholson, to prepare a report on this issue, and the Act 1904 was promulgated in the light of his report.
“Cooperative society is formed, for the promotion of thrift, self-help, and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business, and better methods of production and for that purpose to consolidate resources.” (Cooperative Society Act 1925)
ORGANIZATIONAL PRINCIPLES OF COOPERATIVE SOCIETY
1. Voluntary Membership: 2. Motive: 3. Democratic Style: 4. Non-political Institution: 5. Character Building:
COOPERATIVE SOCIETY ACT
According to the Cooperative Credit Act 1904, the societies only related to the agricultural sector could be formed. Therefore, a new Act in 1912 was passed in order to broaden the scope of the previous Act. When the Act 1912 failed to achieve the desired objectives, the third law of society Act 1925 was introduced (promulgated on December 4, 1925, and consisted of 73 sections and one schedule). Pakistan also adopted the same Act at the time of its independence, and a cooperative society was established and run according to the provisions of the said Act (1925).
The societies, which want to operate in more than one province, have to get registration under the Multi-Unit Societies Act 1942 (promulgated on March 2, 1942 – amended Ordinance in 1979). The Government of Pakistan established a Federal Cooperative Bank in 1976 through an ordinance to accelerate the process of investment. The said bank used to provide loans or finance to provincial cooperative banks.
Formation of Cooperative Society
In Pakistan, the minimum number of members required for the establishment of a cooperative society is 30 (for producers or housing society) and 50 for other societies. However, there is no restriction on the maximum number of members. The members who work for the formation of society are called promoters. A special meeting of promoters is necessary to elect or choose a chief promoter within 20 days of the preliminary idea of establishing a society, and primary documents like the memorandum and articles of the society are prepared for the registration of society.
The chief promoter submits or deposits the said documents along with the application for registration in the registrar’s office of the area or locality. The staff of the registrar scrutinizes the documents and ascertains that:
1. The required minimum number of members of society is available.
2. The name and address of the registered office of society have been proposed or suggested.
3. The word “limited” is written at the end of the name of the society.
The society, which fulfills the above-mentioned requirements, is considered registered and receives a registration certificate. An ordinary meeting of the members is compulsory within 30 days of the registration to elect the members of the managing committee.
FEATURES OF COOPERATIVE SOCIETY
Membership:
Registration:
Capital:
Voluntary Association:
Management:
Equal Rights:
Motive:
Distribution of Profit:
Honesty:
Number of Members:
Liability:
Audit of Accounts:
Transfer of Shares:
Cash Transactions:
Withdrawal of Capital:
Corporate Body:
LONG. What are the various types of cooperative society. Discuss their objects.
LONG. Describe the merits and demerits of cooperative society.
ADVANTAGES OF COOPERATIVE SOCIETy 1. Elimination of Middlemen:
In cooperative societies, consumers themselves produce the goods or services and supply them to the market without the involvement of middlemen. This results in the reduction of production costs.
2. Minimum Inventories:
Constant and regular demand from the members facilitates maintaining inventory at the minimum possible level. Hence, there is no risk of loss due to speculative buying.
- Improved Standard of Living:
With increased incomes of the members and availability of better quality goods at the lowest possible prices, their purchasing power and standard of living improve.- High Morale:
Members of the society enjoy the dual positions of employer and employee. This raises their morale, making them work with honesty, sincerity, and determination, which increases the society’s profit and goodwill. - Fair Distribution of Wealth:
A cooperative society protects its members from capitalist exploitation. Profits are distributed among members as per rules, ensuring equitable wealth distribution without favoring any special class of investors. - Promotion of Savings:
Cooperative societies promote saving among members by offering reasonable returns on their investments or capital in addition to other cooperative benefits. - Lower Prices:
The society aims to provide goods and services to its members at cost price without any profit margin, enabling members to access quality products at reduced rates. - Equal Status:
All members of the society enjoy equal status because every member has one vote regardless of the number of shares they hold. - Employment Opportunities:
Cooperative societies play a significant role in reducing unemployment. The society opens its doors to all members, providing employment opportunities based on their abilities. - Honorary Services:
As a social welfare institution, cooperative societies receive honorary services from their members, saving the society from heavy salary expenses. - Economy in Expenditure:
There is no need for highly paid specialists for production, distribution, and management, ensuring reduced expenditures for the society. - Economies of Scale:
By producing on a large scale, the society achieves economies in production and distribution, increasing its volume of profit. - Tax Advantages:
Cooperative societies enjoy tax benefits and incentives as their primary objective is to support poor members rather than earning profits. - Economic Development:
Cooperative societies contribute to economic development by increasing output and providing employment. In their presence, balanced growth in the country becomes possible. - Abolition of Monopoly:
The establishment of a cooperative society ends monopoly practices. It challenges monopolistic control over markets and prices, restoring competition by offering goods at lower rates. - Long Life:
A cooperative society is a legal entity and an artificial person, ensuring its continuity regardless of retirement, insolvency, or death of its members.
- High Morale:
DISADVANTAGES OF COOPERATIVE SOCIETY
1. Inefficient Management:
Members elect managers, but they may lack training and expertise. Furthermore, cooperative societies struggle to attract skilled and talented professionals, which limits innovation and profitability.
2. Limited Finance:
Cooperative societies often face financial constraints due to limited member contributions and voting rights, which also restrict their borrowing power and limit their business growth.
3. Lack of Discipline:
Every member considers themselves an owner of the business and interferes unnecessarily, creating indiscipline and irregularities within the society.
4. Unlimited Liability:
If the liability of members is unlimited, potential investors hesitate to join, depriving the society of talented individuals and capital.
5. Absence of Profit Motive:
Cooperative societies are established for the welfare of members rather than profit generation. Due to limited scale and poor management, their profit margins remain low, hampering growth.
6. Delayed Decisions:
The management committee consists of many individuals, leading to delays in decision-making due to the need for consensus.
7. Lack of Mutual Cooperation:
Initially, cooperative societies operate smoothly. However, over time, members may form groups, causing divisions and reducing cooperation and self-help.
8. Lack of Interest:
Limited objectives and low profit potential discourage members from taking interest in expanding the society’s business activities.
9. Defective Services:
Due to limited capital, cooperative societies often rely on substandard and second-rate services from outside agencies.
10. Lack of Legal Governance:
If a society is not registered, its contracts are not legally enforceable, as there is no proper mechanism to monitor or supervise its operations.
11. Lack of Secrecy:
Cooperative societies lack secrecy in business affairs, as all information is disclosed to the registrar and members.
12. Lack of Innovation:
Small capital and non-professional management hinder the introduction of innovation and advanced technology.
LONG. Make a comprehensive comparison between J.S.C and cooperative society.
