The main difference between cooperative organisation and company organisation are given below:

1. Basic objects:

The primary objective of a cooperative society is to provide service, whereas a company seeks to earn profits. This does not mean that a cooperative society does not earn profits or a company does not render service to society.

It simply means that all the activities of a cooperative society are guided by service motive and profits are incidental to this objective. On the other hand, the activities of a company are inspired by profit taking and services rendered to society are incidental to profit motive.


2. Number of members:

The minimum number of persons is 7 in a public company and 2 in a private company. A cooperative requires at least 10 members. The maximum number of members is 50 in a private company and 100 in cooperative credit society. There is no maximum limit in case of public companies and non-credit cooperative societies.

3. Member’s liability:

The liability of members of a company is generally limited to the face value of shares held or the amount of guarantee given by them though the Companies Act permits unlimited liability to companies. The members of a cooperative society can opt for unlimited liability. But in practice their liability is generally limited.


4. Membership:

The membership of a cooperative society is open at all times and new members have to pay the same amount per share as old ones have paid. A company, on the other hand, closes the list of members as soon as its capital is fully subscribed. People who want to become members later on have to buy shares at the stock exchange.

5. Management and control:

The management of a cooperative society is democratic as each member has one vote and there is no system of proxy. In a company, the number of votes depends upon the number of shares and proxies held by a member.


There is little separation between ownership and management in a cooperative society due to limited and local member­ship.

6. Distribution of surplus:

The profits of a company are distributed as dividends in propor­tion to the capital contributed by the members.

In a cooperative society a minimum part of surplus must be set aside as a reserve and for the general welfare of the public. The rest is distributed in accordance with the patronage provided by different members after paying divi­dend up to 10 per cent on capital.


7. Share capital:

In a company, one member can buy any number of shares but an individual cannot buy more than 10 per cent of the total number of shares or shares worth Rs. 1,000 of a cooperative society.

A public company must offer new shares to the existing members while a cooperative society issues new shares generally to increases its membership.

The subscription list of a cooperative society is kept open for new members whereas, the subscription list of a company is closed after subscriptions. A company is thus capitalistic in nature while a coopera­tive society is socialistic.


8. Transferability of interest:

The shares of a public limited company are freely transfer­able while the shares of cooperative society cannot be transferred but can be returned to the society in case a member wants to withdraw his membership.

A member of a cooperative society can withdraw his capital by giving a notice to the society. A shareholder, on the other hand, cannot demand back his capital from the company until it’s winding up.

9. Coverage:


A cooperative society generally draws its membership from a limited local area. The members have common bond in the form of a common occupation or employer or locality. In a company members have no such relationship and are usually drawn from different parts of the country and even from abroad.

10. Exemptions and privileges:

A cooperative society enjoys several exemptions and privi­leges regarding income tax, stamp duty, etc. This is because the Government seeks to encourage the growth of the cooperative movement.

No such exemptions, privileges and assistance is avail­able to a public limited company. A private limited company, however, enjoys a number of exemptions and privileges under the Companies Act.

11. Governing statute:

A company is governed by the Companies Act, 1956 while a co­operative organisation is subject to the provisions of the Cooperative Societies Act, 1912 or State Cooperative Societies Acts.

Formation of a Cooperative Society

In order to get a Cooperative society registered, an application in the prescribed form must be submitted to the Registrar of Cooperative Societies of the State in which the society’s regis­tered office is to be situated.

Any ten persons above the age of 18 years and having common interest may submit a joint application for being formed into a Cooperative society. The applica­tion should contain the following information:

(i) The name and address of the society.

(ii) The aims and objects for which the society is being registered.

(iii) The names, address and occupations of the members.

(iv) Share capital and its division.

(v) Method of admission of new members, and

(vi) Two copies of the bylaws (rules and regulations) of the society.

A Cooperative may adopt model bylaws given in the Cooperative Societies Act instead of framing its own bylaws.

Once the application for registration along with the copies of bylaws is submitted, the Registrar of Cooperative Societies will carefully scrutinise them in order to ensure that they are in accordance with the provisions and spirit of the Cooperative Societies Act.

When he is fully satisfied in this connection he will enter the name of the society in his register and will issue a certificate of registration.

After getting the certificate of registration, the society becomes a body corporate having a separate legal entity of its own, with perpetual succession and limited liability of its members.

A cooperative society can be registered only when it satisfies the prescribed conditions. Some of these are as follows:

(1) There must be at least ten adult members.

(2) The members should be bound together by some common interest e.g., they may belong to the same occupation, locality or employer.

(3) They must put up a joint application to the Registrar of Cooperative Societies.

(4) Each member must give an undertaking to buy at least one share.

(5) A copy of bylaws must be submitted to the Resistrar.

The management of a cooperative society lies in the hands of a managing committee. Members of this committee are elected directly by the members at the annual general meeting of the society.

The managing committee consists of a number of members who elect from among themselves the following office bearers:

1. President,

2. Vice-president(s),

3. Secretary

4. Joint Secretary, if any, and

5. Treasurer.

The general body of shareholders lays down the broad objectives and policies of the co­operative society. The managing committee determines detailed programmes and procedures of the society.

The committee also gets progress reports from the office-bearers and it is accountable to the annual general meeting of members. The office-bearers of the society work mainly in an honorary capacity.

The annual accounts of the society are audited and its annual report is submit­ted to the Registrar of Cooperative Societies.