Understanding Cooperative Societies Law : Student's Handbook

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The operation of co-operative societies is subject to control and regulation by the cooperative societies laws. The control and regulation are purposed to prevent fraud and to ensure that every member enjoys equal rights and benefits in respect of the business of the society. There are restrictions and principles on profit disposal and rules to sustain corporate governance. Hence, the readers will appreciate the importance of statute, common law and equitable principles have played a major role in the development of cooperative law.

This book entails the concept, origins, development and classification of the cooperative societies. Hence, it induces basic knowledge and understanding of the what are the cooperative societies, their origins, classification and purposes. In addition, it deals with beginning to the ending of the cooperative societies. It embraces registration issues of the cooperative societies, membership, management and administration as well as termination of the cooperative societies. It induces knowledge of how cooperative societies are formed, governed and terminated basing on the law governing the cooperative societies.


Cooperative societies are typically more economically resilient than many other forms of enterprise, with twice the number of co-operatives surviving their first five years compared with other business ownership models. Cooperatives frequently have social goals which they aim to accomplish by investing a proportion of trading profits back into their communities. This chapter intends to impart general understanding of
the cooperative societies. It covers concept, nature, characteristics, manifestation and significance of the cooperative societies.

1.1   Objectives

This chapter intends to cover the general understanding of the concept of the cooperative societies. Hence, at the end of this chapter, you should be able to:

Define and explain the concept of the cooperative societies;
Describe the nature and characteristics of the cooperative societies;
Demonstrate how the cooperative societies can be manifested; and
Discuss the significance of the cooperative societies

1.2   Cooperative Societies

The definitions of cooperative societies vary depending on whether you are looking at it from the perspective of a cooperative enthusiast, a corporate lawyer, or a tax lawyer.

Cooperative societies refer  to autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Cooperative SocietiesCooperative societies can be defined to mean jointly owned enterprises engaging in the production or distribution of goods or the supplying of services, operated by its members for their mutual benefit, typically organized by consumers or farmers.
Cooperative societies are private business organizations that are owned and controlled by the people who use its products, supplies or services.

Cooperative  societies  are  organizations  established  for  the  purpose  of purchasing and marketing the products of its members, and / or procuring supplies for resale to the members, whose profits are  distributed to the members not on the basis of the members’ equity investment in the cooperative, but in proportion to their contribution.

The international Labour Office (I.L.O) defines cooperative society as association of persons usually of limited means, who have voluntarily joined to gather to achieve a common economic end and through the formation of democratically  controlled  business  organization,  making  equitable contributions to the capital required and accepting a fair share of risks and benefits of the undertaking.

1.3   Nature of Cooperative Societies

All cooperative societies are formed to meet the specific objectives of members, and are structure  to adapt to member's changing needs.

Cooperatives are formed by individuals who coordinate among themselves to achieve vertical integration in their business activities.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and concern for others.

Cooperatives are useful for promoting the interests of the less powerful members of society. Farmers, producers, workers, and consumers found that they could accomplish more collectively than they could individually.

Most states have one or more statutes specifically designed for cooperatives. In many states, an organization that is not formed under a cooperative statute may not use the word cooperative in its name.

There is cooperation among the members and not competition. It aims at moral solidarity of the members and not of undercutting one another. The motto is each for one and all for each.

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