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Cooperative Societies - An Outline

Aishwarya Lakshmi

Amul, Aavin, Indian Coffee House, Indian Farmers Fertilizer Cooperative Limited (IFFCO), Urban and Rural Cooperative Banks, Housing Cooperative Society, etc. are names we hear on a regular basis. What is common about them is that they are all Cooperative Societies. This article attempts to give an outline understanding of the characteristics of a Cooperative Society.


A cooperative as defined by the International Cooperative Alliance 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.”


A society which has its object to promote economic interests of its members may be registered under the Cooperative Societies Act, 1912. In India, ‘Cooperative Society’ is a state subject under Entry 32 of List II of the Seventh Schedule. Hence, every state has its own Cooperative Society laws. If the Cooperative Society is a part of multiple states it is governed by the Multi-State Cooperative Societies Act, 2002.


The following are the main characteristics of these Cooperative Societies:


  • Open Membership for all those with common interests.

  • ‘One Member, One Vote’ principle is followed i.e., every member is entitled to one vote irrespective of the number of shares held by them.

  • Service motive more than profit motive.

  • ‘Each for all and all for each’ principle enshrining mutual benefit.

  • Independent Juristic Personality to the Cooperative Society.

  • State Control (audit of accounts) and Assistance (loans at lower interest rates, tax benefits).

  • Education and training to the members, elected representatives, and employees.

  • It is an enterprise, but not a charitable association.

  • Capital is contributed by all the members.

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