Cooperative Societies Act 1912, in a nutshell.


The word cooperative is made of two words Co and Operate which simply means to work together. Cooperation in India emerged in 1904 started by British Government in order to provide relief to poor farmers from the harassment caused by lenders.

A Cooperative Society is a form of business organization wherein people voluntarily come together to work towards common goal for the welfare of the society. The main motive of Cooperative Societies is self-help through mutual help thereby meeting the financial needs of weaker sections of the society.

The first Cooperative Societies Act was passed in 1904.This act was further amended in 1912 with an intent to ease the formation of cooperative societies to boost the thrift and self-help agriculturist, artisans and persons of limited means. The act provides registration of societies, rights & liabilities of its members, supervision & audit, dissolution of society etc.

Cooperatives operate on 7 core principles & values that reflect their concerns. The roots of these principles belong to Rochdale pioneers who founded first modern cooperative in England in 1844.These principles are generally followed worldwide.

  1. Voluntary & Open Membership.
  2. Democratic Member Control.
  3. Member’s economic Participation.
  4. Autonomy & Independence.
  5. Education, training & and Information.
  6. Cooperation among Cooperatives.
  7. Concern for community.

Registration of Society.

The registration of cooperative society is compulsory. The Registrar of cooperative societies may be appointed by each state government. A Society can be registered with or without limited liability. The society registered with limited liability needs to add the word “Limited” at the end of its name. For the purposes of registration:

  • an application is required to be made to the registrar of the state in which such a society is to be established.
  • The application shall be signed by- a) at least 10 persons above the age of 18yrs incase where no member is a registered society. And b) by a duly authorized person of each society where each member is registered society, and where all the members of the society are not registered societies, by ten other members or, when there are less than ten other members, by all of them.
  • A copy of proposed bye-laws of the society shall be attached to the application.

Further, if the registrar is satisfied and thinks fit, register the society & its bye laws and provide a duly signed certificate of registration which shall act as evidence of registration.

Features of Cooperative Society.

  1. Body Corporate– The registration of society makes it a body corporate because of which it enjoys all the features as that of a company such as perpetual succession & common seal.
  2. One member one vote– Where a society is not limited by shares, each member shall have one vote, notwithstanding the amount of his interest in capital whereas if a society is limited by shares, then each member shall have as many votes as prescribed by the bye-laws.
  3. Exemption from Income Tax, stamp duty & registration fees– Since cooperative societies are established with the intention of public welfare, government provides support to them in the form tax exemptions, subsidies, lower interest rates on loans.
  4. Restraint on loan– Cooperative societies is usually formed by weaker sections of the society with the aim of helping their fellow members. Hence, loans are distributed only to its members. However, loans can be given to other registered societies with the prior sanction of the registrar.
  5. Restriction on transfer of shares or interest- If a member wants to transfer his share or interest in the capital of the society, he can do so only to the extent of his maximum holding. In case of registered society with unlimited liability, holdings of the member shall be atleast for a year and transfer can be made only to a society or a member of society.
  6. No funds to be distributed by way of profits- Any fund of the registered society shall not be distributed as bonus or dividend among its members.
  7. Charitable Funds Contribution- Registered Societies can up to 1% of the net profit after transferring 1/4th of the net profit to reserve fund, contribute the remaining to Charitable Trust, provided sanction by the registrar.
  8. Dissolution- A Registered Society ceases to be body corporate, once its registration is cancelled. The registrar on inquiry & inspection is satisfied, then he may cancel the registration of the society. A liquidator may also be appointed by the registrar.
  9. Rules- This act bestows upon the state government the right to make rules to serve the purpose of the act.

The Cooperative Societies play an important role in agro-industrial development & rural credit. “Each for all and all for each” is the basis of Cooperative society. The various types of cooperative societies are consumer cooperative society, producer cooperative society, housing cooperative society, credit cooperative society. A few well-known cooperatives in India are Amul, Lijjat Papad, Indian Farmers Fertiliser Cooperative Limited (IFFCL). A New Push to cooperatives has been Ministry of Cooperation which was formed in July 2021 with the vision Sahakar se Samridhi -Prosperity though Cooperation. This ministry aims at reinforcing the cooperatives at grass root level for ease of doing business. In thriving democracy, Cooperatives are looked upon as equitable and all- inclusive source of development in the country.





Leave a Reply

Your email address will not be published. Required fields are marked *