Cooperative Society

Meaning

It is a VOLUNTARY group of people.

They have COMMON problems.

They join together to solve their problems.

Main aim is to protect the members.

Characteristics of a cooperative society(VVOSSM)

a. Voluntary association : A member can join the society as and when he likes.

b. Open Membership :Membership open to all who have common interest.

c. Separate Legal Entity : A cooperative society must be registered under the COOPERATIVE SOCIETIES ACT 1912 or under the cooperative Societies Act of the State government

d. Source of Finance : The capital is raised from the members in the form of share capital

e. Motive : Main aim is SERVICE MOTIVEf. Voting Power : Each member may hold many shares but he/she has only one vote

Types of Cooperative Societies

• Consumer’s Cooperative Society:It helps the consumers.It makes consumer goods available at fair(not very high) prices.Eg. Apna Bazaar, Super Bazar

• Producer’s Cooperative Society:It helps the producers.It makes available items needed for production like raw materials, tools, machinery etc.Eg APPCO, Haryana Handloom etc

• Marketing Cooperative society:It helps producers and manufacturers to sell their products.They collect products from the producers.Then they arrange to sell them in the market.

Eg. Gujarat Co-operative Milk Marketing Federation that sell Amul milk products.

• Thrift and Credit Cooperative Society:It gives financial help to its members.It accepts deposits.Grants loans at reasonable rates.Eg. Urban Cooperative Bank.

• Cooperative Group Housing Societies:These are residential societies.They provide residential houses to members.They purchase land, construct houses and allots the houses.

ConsumerCooperative Society

Producer Cooperativesociety

Marketing Cooperative Society

Thrift and CreditCooperative Society

Cooperative Group Housing Society

Help Consumers Help Producers

Helps Producers and Manufacturers

Give Financial Help to members

Helps Members of a Housing society

Makes goods available at fair price

Makes items available for production

Collect products from producers and sells them in the market

Accepts deposits Grants loans at reasonable rates

Provides housing to members

E.G. Apna Bazaar E.G. APPCO E.G. AMUL E.G. Urban Cooperative bank

E.G. Any housing Society

Advantages of a cooperative society (VO(T)DES)

• Voluntary Organisation

• Open Membership

• Democratic control (Voting system)

• Elimination of Middlemen’s Profit (No middle men)

• Stable Life

Limitations

• Problems in Management

• Limited Capital

• Lack of Motive

• Lack of Commitment

• Lack of co-operation

Fill in the blanks with suitable word(s) in the following statements:i. A co-operative society is a _______ association of individuals whocome together to achieve common _______ objectives.

ii. The motive(aim) of cooperative society is to provide ________ to themembers.

iii. A cooperative society have separate ________ from the members.

iv. Consumers’ co-operative societies help to eliminate _______ in theprocess of distribution goods.

v. Apna Bazar and Kendriya Bhandar are example of _____ co-operativesocieties.

(i) Voluntary , Economic (ii) Services (iii) Legal entity (iv) middlemen (v) Consumer

JOINT STOCK COMPANY

Meaning

The companies in India are governed by the Indian Companies Act 1956.

A Joint Stock Company is an - artificial person created by law,- having separate legal entity, (company is separate

from its members)- perpetual succession,(not affected by death of a

member- and common seal 9being an artificial person it

cannot sign for itself)

• In a partnership, there can be a maximum of 20 people. • Because of this limit, the amount of capital that can be generated is limited. • Also, because of the unlimited liability of partnerships, the partners may be

discouraged from taking huge risks and further expanding their business. • To overcome these problems a public or a private company may be formed.• Private and public companies are much better investments because of

“Limited liability”. This means that if an investor has invested Rs.1000/- in a particular company, and the company goes bankrupt, the investor only looses the money he has invested. To pay of the debt, the investors property, bank accounts etc. are "not" used.

• Because of this limited liability, many investors are interested in investing in these private or public companies. Hence, a large capital can be generated and a huge business can be run.

• The major disadvantage of Private and Public companies, is that they have a costly and elaborate process of setting up.

• They are also closely regulated by the government.

• What this means is that, the company “is different” from the investors. The investors put in money and capital is raised. But the company is treated as a virtual person. The company is treated as a person who is different from it’s investors. The company has an identity of it’s own. If some one sues the company, he does not sue the investors, he sues the virtual person that is the company.

http://www.indiahowto.com/understanding-joint-stock.html

Types of Companies

• On the basis of ownership companies are of four types:-

• i) Private Limited Company• ii) Public Limited Company• iii) Government Company• iv) Multinational Company

Features of Private Limited Company

Capital - Has a minimum capital of 1 lakh.Members - Maximum 50 members- Does not allow its members to transfer their shares.- Cannot raise money from the public.- Can accept deposits only from its members, directors or their relatives.

Features of Public Limited Company

Shares - Its shares can be transferred freely.Capital- Has a minimum capital of 5 lakhs. Members have limited liability. Members : Minimum number of shareholders

is 7 Maximum number of shareholders

up to the number of shares issued.

Private Limited and Public Limited Company

Basis Pvt Ltd Public Ltd1. Membership Min 2 Max 50 Min 7 Max unltd2. Capital Min 1 Lakh Min 5 Lakh3. Share Transfer not allowed freely transferable4. Raising Funds cannot raise can raise5. Directors Min 2 Min 36. Time of Commencement after getting cert after getting

Of incorporation cert from ROC7. Statutory meeting no need to hold must hold

meeting and file statutory report

8. Attendance 2 must be present 5 must be present

Features of a Joint Stock Companya. Artificial Legal Person – Its birth, life and death are regulated by law.b. Separate Legal Entity – It can own property. - It can enter into contracts

in its name. - It can sue and be sued.

c. Perpetual Succession - Its life not affected by anything that happens to the members.d. Limited Liability – Liability of members is limited to the shares they own.

e. Common Seal – It has common seal as it cannot sign for itself.

f. Transferability of shares – Shares of a Public Limited Company are freely

transferable.g. Separation of ownership and management – All

the members cannot take part in running the company.

The board of directors take care of the company.

Advantages of Joint Stock Company

a. Limited Liability – Liability of members is limited to the shares they own.b. Large Financial Resources – The capital of the company is divided into shares. - Each share is of a very low value. - People with small income can also buy it. - Hence it is possible to raise huge funds.c. Continuity – Company lives as long as it follows the law. Life not affected by anything that happens to the members.d. Transferability of Shares – Shares of a Public Limited Company are freely transferable.e. Diffused Risk – Risk is shared by a large number of members.f. Social Benefits – Savings of people are used to buy shares. Savings are used to invest in industry. This leads to industrial development.

Limitations of a Joint Stock Companya. Difficulty of Formation – There are lots of legal rules and

expenses to form a company.

b. Excessive Government Control – Government controls everything a company does.

c. Oligarchic Management – The company is run by a few.

d. Delay in Decision – Too many levels of management. Fast decisions cannot be taken.

e. Lack of Secrecy – A company must inform the public about its working.

This is as per the Companies Act, 1956.

Extra info….

• A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.

• The management-ownership divide inherent in a company is not there in a limited liability partnership. • LLP will have more flexibility as compared to a company. • LLP will have lesser compliance requirements as compared to a company.

• Fill in the blanks with suitable word(s) in the following statements:

• 1. There should be at least __________________ members in a Private

• Limited Company.• 2. Freely transfer of shares from one member to another is not

possible in• case of _____________ Limited Company.• 3. Hindustan Machine Tools is _______________ Company.• 4. Minimum amount of capital required to start a private limited

company• is Rs _____________.

• (i) two (ii) private (iii) Government (iv) one lakh

• Fill in the blanks with suitable word(s) in the following statements:• i. The liability of members of a joint stock company is limited to the• extent of the ____________.• ii. A joint stock company form of business organization is managed

by• ____________.• iii. The cost of formation of a company is very ____________.• iv. Indian Oil Corporation and ONGC are the example of

____________.• v. The risk of loss in a company is spread over a large number of• _____________

• (i) face value of shares held by them (ii) Board of directors (iii) high (iv) Indian multinational companies (v) members

Government Company

A Government Company has been defined by the Indian Companies Act 1956

as one of which not less than 51 per cent of share capital is held by the Government (Union or State)

Examples • Hindustan Machine Tools (HMT), • Coal India, • SAIL,• NTPC, • MTNL, • ONGC etc

Characteristic of a Government company

1. Separate Legal Entity : It has a separate legal existence.

2. Share percentage : Either the whole or at least 51 per cent of the total share capital is held by the Government.

3. Directors :The Directors are appointed by the company.

4. Employees :Its employees are not civil servants.

MULTINATIONAL COMPANIES

Multinational company (MNC’s)

It is a company which has its head office in one country and also has offices and business in other countries.

They may produce goods and services in one country and sell them in other countries also.• i. Philips• ii. LG• iii. Coca Cola• iv Mcdonalds• v Cadbury

Advantages of a Multinational Companya. Investment of foreign capital – Investment of multinationals

helps under developed countries.

b. Generation of Employment – Gives jobs and raises the standard of living.

c. Use of Advanced Technology – These companies do research and development.

- Results in better methods of production and better quality goods.

d. Growth of Ancillary Units – Suppliers of materials and services grow in host countries.

e. Increase in Exports and - Goods produced in host Foreign Exchange countries may be exported. - This increases foreign exchange

of host country.f. Healthy Competition - Makes the producers of host

country improve their products & services

.

Disadvantages (limitations) of a Multinational Company

a. Least concerned with priorities of host countries - - They invest in profit making industries only. - Do not develop backward areas in host country.b. Adverse effect on domestic enterprises - - Their large scale operation and technological skills – gives rise to monopoly.c. Change in tradition - - Goods of multination companies clash with culture of host country. - This results in change from tradition.

I. Given below are some statements about Multinational Company. Statewhich of them are true and which are false :(i) Multinational Companies slow down the economic developmentof the under developed countries.

(ii) Multinational Companies help to earn foreign exchange for thehost countries.

(iii) Domestic producers improve their performance because ofMultinational Companies.

(iv) Generally Multinational Companies invest money in profitableindustries.

(v) Multinational Companies never dominate the markets of the hostcountries.I. (i) False, (ii) True, (iii) True, (iv) True, (v) False

II. Multiple Choice Questionsi. Cooperative societies do not have the following characteristicsa) Open Membership (b) Separate legal entity (c) Profit Motive (d) Voting Power

ii. Which of the following is not an example of consumer cooperative society?(a) Apna Bazar (b) Kendriya Bhandar,(c) Super Bazar (d) Narain Group Housing Society.

iii. Liability of the members of a cooperative society is(a) Limited (b) Unlimited (c) Joint (d) Joint & Several.

iv. The success of a cooperative society depends on(a) Loyalty of its members (b) Central Government(c) State Government (d) Local Self Government

v. In a Private Limited Company, capital is contributed by:(a) Central Government (b) Public and Government only(c) Its own members only (d) Issue of shares to Public only.

II. (i) c, (ii) d, (iii) a, (iv) a, (v) c