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Starting a Business
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starting a Business Creating a Business Plan
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Starting a Business
Choosing a Form of Business Organisation:
Co-operatives
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Co-operative organisation is a society which has as its objectives the promotion of the interests of its members in accordance with the principles of cooperation. It is a voluntary association of ten or more members residing or working in the same locality, who join together on the basis of equality for the fulfillment of their economic or business interest. The basic feature which differentiates the co-operatives from other forms of business ownership is that its primary motive is service to the members rather than making profits.

There are different types of cooperatives like consumer co-operatives, producer's co-operatives, marketing co-operatives, housing co-operatives, credit co-operatives, farming co-operatives etc. The aim of all such co-operatives is to promote the welfare of their members. Its main features are :-

  • It is a voluntary organisation as a member is free to leave the society and withdraw his capital at any time, after giving a notice.

  • The minimum number of members is 10, but there is no limit to the maximum number of members. However, the members must be residing or working in the same locality.

  • Registration of a co-operative enterprise is compulsory. A co-operative society may be registered with the Registrar of Co-operatives Societies.

  • After registration a co-operative enterprise becomes a body corporate independent of its members i.e. a separate legal entity.

  • It is subject to the provisions of the Co-operative Societies Act, 1912 or State Co-operative Societies Acts. It has to submit annual reports and accounts to the Registrar of Societies.

  • The liability of every member is limited to the extent of his capital contribution.
  • The shares of co-operative society cannot be transferred but can be returned to the society in case a member wants to withdraw his membership.

  • Being a separate legal entity a co-operative enjoys continuity of existence which is not affected by death, insolvency, retirement, etc. of the members.

Advantages

  • Greater amount of capital

  • Reasonable price, good quality or better service

  • Better conditions of service to employees

  • Continuity of existence

  • Limited liability

Disadvantages

  • Inability to collect sufficient capital

  • Inability to provide efficient managerial services

  • Organisational limitation

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