Posted by / Thursday 19 October 2017 / No comments

The characteristics of a co-operative society

Co-operatives describes a form of business organisations where a group of consumers or producers come together voluntarily or out of their free will to form an association with the aim to produce, distribute or consume a particular good or service. A co-operative can therefore be seen both as a business organization and an association. 

In a co-operative, the owners are united often by the fact that they have a common interest. One main reason why people form co-operative is because they believe that by coming together, they can better protect their interest.

A co-operative is owned by the members who formed it. Like many other business organisations, a co-operative belongs to its members. No one can claim ownership of a co-operative business unless that person is a members of the co-operative society. 

A co-operative is usually managed by its owners. However, sometimes the members can employ someone to provide some services to the organization. When it does not wish to employ a paid manager, then the co-operative is managed by a committee of members. This committee of members is  appointed at the co-operative’s annual general meetings. The management of a co-operative society comprises the board of directors and officers.

Democratic Decision-Making 
When the co-operative Society has to take decision, each member of the co-operative has one vote, no matter how many shares they have. This makes decision-making very democratic in a co-operative. 

Voluntary membership
Any person whose interest is similar to the interest of the members of the co-operative may decide to join the society at any time. The person however, must be ready to obey the rules of the co-operative society. This person can decide to remain a member for as long as he wishes and leave anytime he wants to. However, when a member leaves or dies, the co-operative society must not cease to exist. 

Distribution of surplus
Unlike other business organisations where profit making is the prime purpose, a co-operative does not share its profit to members according to the amount of shares they have in the society or in a pre-arranged ration. Usually, 25% or more of the profit made by a co-operative must be transferred to a reserve account. Similarly , some of the profit (not more than 10%) must be used in aid of the welfare of the community in which the co-operative is situated. 

Liability of Its Members 
The liability of the members who formed the co-operative is limited to the investment they made into the co-operative. This means that owners are not obliged to pay if the co-operative incurs any debt in the process of doing business.

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