Cooperative organization
Meaning and Definition
We know that STC, partnership firm as well as Joint Stock Company are established for the maximization of profit by providing services. first priority of those companies is profit and second to the service. To avoid the drawback of those companies, a new distinct type of organization was made by local people for to provide service to the member is known as cooperative organization.The word cooperative is derived from the latin word 'Co-operari' which means work, working together for common objectives. all the members work together for the welfare of the members. the modern cooperative organization was established in 1844 AD at Rochadale of England name 'Rochadale society of equitable pioneer.' it's main objectives is to kick out the middleman from business society. in context bof Nepal, first cooperative was established in 2013 BS at chitwan district named 'Bakhanpur Saving and Credit Cooperative Society' Co operative organization is service oriented is established by the lower sector of the society who have common problem. The fundamental concept of the cooperative is 'All for each and Each for all'
According to Nepal Cooperative Act 2048 BS, "Society or Union means a primary cooperative society or union registered under this act."
In conclusion, a cooperative organization is a voluntary association which serves the common interests of the members from weaker section of the society. cooperative organization is guided by service motive where capital is contributed by members where management is chosen in democratic method. All the members participate top fulfill their economic and social objectives.
Characteristics of cooperative organization
Voluntary association
cooperative organization is a voluntary association there is no any restriction to the members. Anyone can be members and any members can leave the organization. they can leave or leave according to their will and interest.
Equality
All the people are equal in the eye of cooperative organization. it takes no difference between poor, rich, literate, illiterate, caste, status, position, amount invested and so on. Equality is the main characteristics of cooperative organization and is possible in only.
Democratic management
Just like the joint stock company, management and control of cooperative organization is held by Board of Directors (BOD) who are elected by shareholders. 'One man One vote' system is implemented in the voting process.
Service motive
cooperative organization is service oriented organization. the main objective of cooperative organization is to provide maximum service to the member. STC, Partnership firm and Joint stock company's objective is to maximize profit (First profit then service) but cooperative organization says first service and then profit. the profit of the cooperative organization is also divided to the members at last.
Separate legal entity
Similar to the joint stock company, cooperative organization also has separate legal entity. the life of cooperative organization does not depend upon the life of any board of director or members.
Limited liability
all the members of cooperative organization have limited liability they are responsible only up to their investment. if the assets of the organizations are not sufficient to settle all dues they should not use their private properties.
Cash Trading
All the transactions of cooperative organization are done in cash. there is no facility of credit which reduces the risk associated with bad debts and no expense for collecting bad debts.
Distribution of profits
if the cooperative organization goes on profit, the cooperative organization distribute 15% of total invested as a profit to its members. For example: if any person invested 100000 he will get 15000 as the interest or profit. Employees are paid bonus after deducting taxes.
