Before we deal the subject of “Formation of the Cooperative Society” for which you are require to follow certain set rules or guidelines step-by-step, it is important for all to understand the nature and importance / advantage of forming a society.
The defining characteristic of a cooperative is that it is a business owned and controlled by the people who use its services. Four additional features that characterize co-ops are: service at cost, benefits proportional to use, democratic control, and limited return on equity.
Promotion of its object, self-help and mutual aid are the fundamental principles of co-operation. The objectives of commercial organization and co-operative organizations are fundamentally different. In a commercial organization, earning and maximizing the profits can be the sole motive but whereas in a co-operative organization profit cannot or should not be the sole motive.
“The Co-operative Societies Act 1912”, is a central Act which governs the societies at large. The law provides the liberty to the concerned states to form their own State Act governing the societies to suit their local conditions in line with the central act. Many states have enacted their own co-operative society Act and rules there under but more or less the requirements for forming society remains the same.
Follow below steps to form the Cooperative Society:
1. Minimum Ten Individuals who are desirous of forming a Society are required.
As per the provision of The Cooperative Societies Act 1912, minimum 10 members must show intention to be part of the society having same aim and objective to be achieved through the society for their mutual benefit and thereby be desirous to be part of it.
2. Provisional Committee to select Chief Promoter
The next step for the registration is to have the core objectives defined by the group of individuals have a desire to form a society should form a provisional committee. After the formation of the provision committee all of them should by mutual consent or by majority whichever they prefer must choose a person who will be a chief promoter of the society which is going to be formed by them.
3. Select the name of the Society
Once the chief promoter is decided by the individuals among them, they are required to select a name for the co-operative society which they wish to form.
4. Rules & Regulation of the Society / Model Bye-Laws
This is a very important section of the formation of the society and need to be carefully drafted. Under this section the society should cover the constitution of the Governing Body, Strength and function of governing body, Definitions, Type of Memberships, Fee & Subscription, Termination or cessation of Membership, General Body, Right & Privileges of the members, Duties of members, function of general body, term, resignation, management of the fund, operation & utilization of the fund etc. in the form of Memorandum of Society. One can also adopt the model Bye-laws rather then re-inventing the wheel.
5. Application to the Registration Authority
Once the name of the society is selected by the members then they have to make a application to the registration authority stating that they have a intention to form a society and the name of the society has to be given to the authority for its approval and registering authority has to confirm that name is in conformity with laws and issue a confirmation certificate to the members. Then when the members get their name approval from the authority it is valid for 3 months from the date of approval.