Frequently Asked Questions - Cooperation / Cooperative Societies
1. What is ‘Cooperation’?
According to economic historian, Charles Guide "Cooperation is self-help and each for all (mutual-aid)". Self-help means the pride of supplying one's own needs by one's own resources, of being one's own merchant banker, money lender and employer. "Each for all", means to seek liberation, not only for oneself but for and through others”.
The International Cooperative Alliance (ICA), at its Manchester Congress held in September, 1995 adopted a Statement on Cooperative Identity. The Statement included the definition of Cooperatives, a list of "Cooperative Values and a set of "Cooperative Principles”. According to ICA, "a cooperative is an autonomous association of persons united voluntarily to meet their common, economic, social and cultural/needs and aspirations through a jointly owned and democratically -controlled enterprise".
2. What are the principles of cooperation?
Cooperative Principles are guidelines by which cooperatives put their values into practice.
The Cooperative principles are:
(1) Voluntary and open membership
(2) Democratic member Control
(3) Member economic participation
(4) Autonomy and Independence
(5) Education, Training and Information
(6) Cooperation among Cooperatives
(7) Concern for community
3. What are the origins of cooperative movement in India?
During the British Rule in India, Nicholson a British Officer in India suggested `Find Raiffersen in India', i.e. introduce Raiffersen model of German agricultural credit Cooperatives in India. As a follow-up of that recommendation, the first Cooperative Society Act of 1904 was enacted to enable formation of "agricultural credit cooperatives" in villages in India under Government sponsorship. With the enactment of 1904 Act, Cooperatives were to get a direct legal identity as every agricultural Cooperative was to be registered under that Act only. The 1904 Cooperative Societies Act, was repealed by 1912 Cooperative Societies Act which provided for formation of Cooperative societies other than credit. Under 1919 Administrative Reforms, Cooperatives was made a provincial subject making each province responsible for Cooperative development.
In 1942, the Government of India enacted the Multi-Unit Cooperative Societies Act, 1942 with an object to cover societies whose operations are extended to more than one state. Armed with an experience of 42 years in the working of Multi Unit Cooperative Societies and the Multi-Unit Cooperative Societies Act, 1942, the Central Government enacted a comprehensive Act known as Multi State Cooperative Societies Act, 1984, repealing the Act of 1942.
Based on the recommendation of the Mirdha Committee and the "Model Cooperative Societies Act", this Government of India enacted the Multi State Cooperative Societies Act, 2002 which provided for democratic and autonomous working of the Cooperatives. The Multi State Cooperative Societies Act, 2002 came into force with effect from August 19, 2002.
4. Which are the institutions working for the development of cooperative movement in India?
National Cooperative Union of India (NCUI) and National Cooperative Development Corporation (NCDC) are the important agencies working for promotion of cooperative movement in India.
5. Who can become members of a cooperative society in India?
Persons who may become members of a Cooperative society at State level (as per the State Act)
(a) an individual competent to Contract, attained majority and is of sound mind and belongs to a class of persons if any for whom the society is formed as per its bye-laws;
(b) a society registered or deemed to be registered under the Cooperative Societies Act;
(c) the Government;
No individual shall be eligible for admission as a member of a federal society
Persons who may become members of a Multi-State Cooperative Society: (As per Multi-State /cooperative Societies Act, 2002).
(a) an individual, competent to contract under section 11 of the Indian contract Act, 1972.
(b) any multi-state Cooperative society or any Cooperative society.
(c) the Central Government
(d) a State Government
(e) National Cooperative Development Corporation (NCDC)
(f) any other Corporation armed or controlled by the Government.
No individual person shall be eligible for admission as a member of a national Cooperative society or a federal Cooperative
6. What are the steps / check list for forming a cooperative society?
Steps involved for forming a Cooperative Society under a state act:
(i) Prescribed application duly filled in shall be made to the Registrar of Cooperative societies;
(ii) the application shall be accompanied by four copies of the proposed Bye-laws of the society;
(iii) Where all the applicants are individuals, the number of applicants shall not be less than ten;
iv) the application shall be signed by every one of such applicants if the applicants are individuals;
v) if the applicant is a society, by a member duly authorised by such society;
To form a Multi-State Cooperative society,
(i) An application for registration of a Multi-State Cooperative society shall be made in the prescribed form;
(ii) the application shall be signed by;
(a) In the case of a multi-state Cooperative society of which all the members are individuals, by at least fifty persons from each of the states concerned.
(b) In case the members are Cooperative Societies, by duly authorised representatives on behalf of at least five such societies as are not registered in the same state;
(c) In case the members are other Multi-State Cooperative Societies and other Cooperative Societies, by duly authorised representatives of each of such societies;
(d) If the members are cooperative societies or multi-state Cooperative societies and individuals, by at least (i) fifty persons, being individuals from each of the two states or more and; (ii) one Cooperative society each from two states or more or one Multi-state Cooperative society.
(e) The application shall be accompanied by four copies of the proposed Bye-laws.
(f) (i) Name of the proposed multi-state cooperative society;
(ii) Head Quarters and address to be registered;
(iii) Area of operation;
(iv) Main objectives
(v) a certificate from the Bank
(vi) Stating credit balance there in favour of the proposed Multi-State Cooperative Society. you.
7. Which are the laws that regulate cooperative societies in India?
Laws regulating Cooperative Societies in India are:
(a) State Cooperative Societies Acts of individual states
(b) Multi-State Cooperative Societies Act, 2002 for the multi-state Cooperative societies with Area of operation in more than one State.
8. What is 'Multi-state Cooperative Act'?
A multi-state Cooperative Society means a society registered or deemed to be registered under the Multi-State Cooperative Societies Act, 2002 and includes a national Cooperative society or a Federal Cooperative.
9. How does a multi-state cooperative society differ from a company?
Broad differences between a cooperative and a company
| S. No |
Item |
Cooperative Society |
Company |
| 1 |
Object |
Interest of members and community |
Self interest either of management or the share holders |
| 2 |
Number of members |
Minimum number of members should be 50 for a multi state cooperative society from each state in case of individual membership
In case societies are members of a Multi State Cooperative Society, two societies from different states should sign the application of registration of the society
If a Multi State Cooperative Society is a member then the multi state cooperative and a society should sign the application of registration |
In a public limited company, minimum number of members should be 7 and in a private limited company minimum number of members should be 2 |
| 3 |
Management |
Chairperson is elected by the Board of Directors from among themselves. The Managing Director / Chief executive is appointed by the Board of Directors |
Usually, Chairperson / Managing Director are persons with maximum number of shares in the company |
| 4 |
Share Capital |
The shares of cooperative society are not issued to general public by advertisement and can be issued any time. Shares can be withdrawn member / society as prescribed by rules in their byelaws. |
Shares are issued to general public or by invitation. In a company shares cannot be withdrawn by a share holder. |
| 5 |
Types of shares |
Only equity shares are available |
Equity and preferential shares may be issued |
| 6 |
Voting Power |
Member of a cooperative society have right of only one vote, irrespective of the number of shares held of any denomination |
Voting rights depend directly on the holding of shares |
| 7 |
Distribution of Profits |
Minimum 25% of net profits should be transferred to the General reserve and the maximum dividend cannot exceed 20% |
No restrictions on a company |
| 8 |
Taxes |
Cooperatives are exempt from few taxes in some states like stamp duty. Tax rates also vary |
No exemptions provided |
| 9 |
Workers participation |
Provision for workers participation in the management through a representative exists |
No such provision for workers |
| 10 |
MRTP Act |
Not applicable to Multi State Societies |
Applicable |
| 11 |
Control |
The Central registrar of Cooperatives advises in the affairs of a multi state society |
Companies are governed by the Company Registrar of the states where its registered office is located |
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