COOPERATIVE SOCIETY Lesson Note
Instructional Objectives
This SS2 COMMERCE lesson note covers COOPERATIVE SOCIETY for First Term, Week 5.
Lesson Note
Instructional Objectives
At the end of the lesson, students should be able to:
1. Define cooperative society.
2. State and explain the characteristics of cooperative societies.
3. Identify and explain the major types of cooperative societies.
4. State similarities between cooperative societies and public companies.
5. Distinguish between cooperative societies and public companies.
6. Explain the advantages of cooperative societies.
7. Identify the problems of cooperative societies.
MEANING/DEFINITION OF COOPERATIVE SOCIETY
A cooperative society is a voluntary organization in which individual businessmen and traders with common interests pool their resources together to promote the economic and welfare interest of their members it is owned and controlled by the members
CHARACTERISTICS OF COOPERATIVE SOCIETY
1. Perpetual existence : the death of a member cannot bring the organization to an end
2. Managed by a committee: control and management of the organization is by an elected committee
3. Democratic control: members normally have equal voting rights, regardless of the amount of capital contributed.
4. Separate legal identity: a registered cooperative can have a legal identity distinct from its members.
5. Limited liability: members' liability is limited to the amount prescribed by the society's rules.
TYPES OF COOPERATIVE SOCIETY
1. Consumer Cooperative Society: Formed by consumers to buy goods in bulk and make them available to members at reasonable prices.
2. Producer Cooperative Society: Formed by producers, of similar products who organize cooperative production and undertake joint marketing of the product on wholesale or retail basis
3. Wholesale cooperative: is forced by small scale wholesaler who purchase goods in bulk from the manufacturer at a reasonable price and sell in small quantities to the retail cooperatives
4. Credit and Thrift Cooperative Society: Encourages members to save regularly and provides loans to members under agreed conditions.
5. Multipurpose Cooperative Society: Combines two or more cooperative activities, such as savings, credit, purchasing and marketing.
SIMILARITIES BETWEEN COOPERATIVE SOCIETY AND PUBLIC Company
1. Both can be registered organisations recognised by law.
2. Members buy shares
3. They hold annual general meetings ( AGM).
4. Both are legal entities
5. Both shareholders received dividends
DIFFERENCES BETWEEN COOPERATIVE SOCIETY AND PUBLIC COMPANY
| Basis | Cooperative Society | Public Company |
|---|---|---|
| Main objective | Primarily to meet members' common needs and provide services. | Generally established to conduct business and earn profit for shareholders. |
| Voting | Usually one member, one vote. | Voting power is generally linked to shareholding, subject to the company's rules and law. |
| Ownership | Owned by members of the cooperative. | Owned by shareholders. |
| Return/benefit | Benefits may be distributed according to patronage or cooperative rules. | Profit may be distributed as dividends according to shareholding and applicable law. |
| Membership | Usually based on common interest or needs and cooperative rules. | Investors can acquire shares subject to company law and the company's constitution. |
| Capital | Mainly from members' contributions, savings and other permitted sources. | Raised through shares and other permitted sources of company finance. |
| Management | Democratically controlled by members. | Managed by directors on behalf of shareholders. |
| Transfer of interest | Membership interests are normally subject to cooperative rules and may not be freely traded like public-company shares. | Shares of a public company may generally be transferable, subject to law and company rules. |
ADVANTAGES OF COOPERATIVE SOCIETY
1. Encourages saving and thrift among members.
2. Democratic in nature, that is each members has equal say in the organization
3. Renders financial assistance to members
4. Perpetual existence, death of a member cannot bring the society to an end
5. Improve member standard of living
PROBLEMS OF COOPERATIVE SOCIETY
1. Inadequate capital due to low contributions or irregular savings.
2. Poor management and lack of competent personnel.
3. Fraud, embezzlement and misuse of cooperative funds.
4. Low commitment or participation by some members.
5. Poor record keeping and weak internal controls. Due to illetracy
Evaluation
OBJECTIVE QUESTIONS
1. A cooperative society is mainly formed to
A. maximise government revenue
B. satisfy the common needs of members
C. eliminate all private businesses
D. control the banking industry
2. The principle commonly associated with voting in a cooperative society is
A. one share, one vote
B. one member, one vote
C. one naira, one vote
D. one director, one vote
3. A cooperative society formed mainly to provide savings and loans to members is called a ______ cooperative.
A. housing
B. consumer
C. credit and thrift
D. marketing
4. A cooperative society that helps producers market their produce collectively is a ______ cooperative.
A. Producers
B. housing
C. consumer
D. transport
5. Which of the following is a major advantage of cooperative societies?
A. Encouraging exploitation
B. Encouraging thrift and saving
C. Preventing members from participating
D. Discouraging mutual assistance
6. One major problem of cooperative societies is ______.
A. adequate record keeping
B. effective management
C. mismanagement of funds
D. strong member participation
7. A public company is primarily owned by ______.
A. its customers
B. shareholders
C. government employees
D. cooperative officers
8. Which of the following is a similarity between a cooperative society and a public company?
A. Both may have legal identity
B. Both must use one-member-one-vote
C. Both distribute surplus only by patronage
D. Both have exactly the same ownership structure
9. A cooperative society formed to help members obtain houses or land is a ______ cooperative.
A. producer
B. housing
C. consumer
D. marketing
10. In a cooperative society, the main emphasis is generally on ______.
A. members' common needs and mutual benefit
B. monopoly of the market
C. government ownership
D. maximising dividends for outside investors
Theory Questions
1a. Define a cooperative society.
1b. State five characteristics of a cooperative society.
2a. Explain four types of cooperative society.
2b. State three similarities between a cooperative society and a public company