Cooperatives mean joined efforts. The society created as a result of the joint cooperation of a poor or lower class of a society or region for their economic development is known as cooperative. The labor class and the lower middle class usually face problem to support them in the face of exploitation of the rich and the rich capitalist. As a result, the poor class tries to protect and developed themselves through self-refortify. According to rules, the relevant act, in Bangladesh, ten person of majority age can from a cooperative society. Cooperative society is run on ‘ All for each & each for all ‘ principle.
According to Mr. Culvert, “It is a form of organization, Wherein persons voluntarily associate together as human beings, on a basis, of equality, for the promotion of economic interest of themselves. ”
Acceding to P.R. Chambers,” Cooperative society is an association for supplying goods or for carrying on some branch of industry, the profit of which go to the numbers.”
Cooperative society must be registered and operated following the Cooperative Act, 1940. The principles are equity, unity, cooperative, demarcation, coordination, and austerity. Thus cooperative society formed by a group of persons for their mutual economic assistance at any level of production and distribution.
Characteristics of Cooperative Society
- Free membership: An individual of the age of majority of the same locality, or class may be member of a cooperative society on the basis of consent of the members.
- Number of members: For formation of a primary cooperative society, fifteen persons of majority age are necessary. Maximum number is not mentioned in the act.
- Objective: The objective of cooperative society is not earning profit, but to achieve economic welfare through mutual cooperation.
- Entity: A cooperative society has a society, independent form its members.
- Formation: A group of persons can from a cooperative society. It must be registered and formed according to Cooperative Act. 1940. For registration, cooperation must be under observation for six month.
- Collection of Capital: The capital of cooperation must be collected from the members. Capital should be divided into a number of shares. According to Cooperative Act, 1940 a number can’t purchase share of a value of more than TK. 5,000 or one fifth of the share capital of the society. Any person can be a number or transferees according to the treating members.
- Democratic Leadership: A cooperative society is run in democratic way. Every number has one vote irrespective of number shares purchased. The board of directors is elected in democratic way.
- Limited Liability: The liability of the member’s society is limited by the value of the shares purchased by them.
- Transferability of Shares: The share of any members is transferable to any member freely and to at the consent of all members of the society. Any members can withdraw his capital by a short noise.
- Distribution of profit: From the profit of the society. 25% is to be kept in the reserve fund and the rest is distributed among the members. The Board of Directors may approve maxim um 9% & the register may 20% divide on the share capital.
- Government Control: Government ensures ad equations control over the accounts. Audit meeting and decision of the cooperatives.
- Principles of Cooperatives: cooperative is run on the principles of equity. Honesty, equally, Coordination and cooperation.
- Audit of Accounts: The government’s departmental auditions must compulsorily audit the accounts of a cooperative society.