According to the Indian Cooperative Societies Act, 1912 “Cooperative organisation is a society which has its objectives for the promotion of economic interests of its members in * accordance with cooperative principles.”
Features of a cooperative society are
(i) Voluntary Membership The membership of a cooperative society is voluntary. There is no compulsion for anyone to join or quit a society. Membership is open to all, irrespective of their religion, caste and gender.
(ii) Legal Status Registration of a cooperative society is compulsory. This accords a separate identity to the society which is distinct from its members.
(iii) Limited Liability The liability of the members of a cooperative society is limited to the extent of the amount contributed by them as capital.
(iv) Service Motive The primary aim of a cooperative society is to provide service to its members.Its motto is to earn some profits for the benefit of its members.
Merits of cooperative society are
(i) Equality in Votes Cooperative society is governed by the principle of ‘one man one vote’. Each member is entitled to equal voting rights irrespective of the amount of capital contributed by a member.
(ii) Limited Liability The liability of members of a cooperative society is limited to the extent of their capital contribution and hence, the personal assets of the members cannot be used to repay business debts.
(iii) Continuity Death, bankruptcy or insanity of the members do not affect continuity of a cooperative society.
(iv) Ease of Formation The cooperative society can be started with a minimum of ten members and by undertaking the registration procedure under Cooperative Societies Act, 1912.
Limitations of cooperative society are .
(i) Limited Resources Capital contributions in a cooperative society are from the members with
limited means. "
(ii) Lack of Secrecy It is difficult to maintain secrecy about the operations of a cooperative society due to open discussions in the meetings and disclosure obligations as per the Societies Act, (7).
(iii) Government Control Cooperative societies have to comply with several rules and regulations related to auditing of accounts, submission of accounts, etc and also work under control of state cooperative departments.
(iv) Internal Conflicts They arise when personal interests start dominating the welfare motive.