This article will help you to learn about the difference between a cooperative society and a joint stock company.
Difference between Co-Operative Society and Company
Co-Operative Society
Difference – 1. Formation:
It is formed under Cooperative Societies Act, 1912 or other State Co-operative Acts.
Difference – 2. Membership:
A co-operative society can be formed with ten members. There is no maximum limit of its members.
Difference – 3. Basic Object:
The major objectives are to economically uplift the poor and weaker sections of society.
Difference – 4. Liability:
Some co-operatives have limited while others have Unlimited liabilities.
Difference – 5. Registration:
The registration of cooperative societies is not compulsory, though they can get themselves registered under Indian Co-operative Societies Act. 1912.
Difference – 6. Transferability of Shares:
In the case of co-operative societies, a member cannot transfer his shares to anybody else. If a member wants to quite the society, he has to return the shares and get his money back.
Difference – 7. Voting Rights:
In co-operative societies, the system is ‘one person one vote’, irrespective of number of shares held.
Difference – 8. Management:
It is democratically controlled and managed.
Difference – 9. Privileges:
Co-operative societies enjoy special privileges in regard to taxation, finance, etc. These societies are exempted from stamp duty and registration fees.
Difference – 10. Distribution of Surplus:
The surplus is not distributed according to the capital contributions. It is distributed according to the purchases made by the members in case of consumer societies; and according to the goods delivered to the society for sale in case of producers’ cooperatives.
Law, however, requires that at least one-fourth of the surplus should be kept as reserve in the society and upto 10 per cent of the surplus should be spent for the welfare of members.
Joint Stock Company
Difference – 1. Formation:
It is incorporated under Indian Companies Act. 1956.
Difference – 2. Membership:
There must be at least two members to form a private company and maximum number of members cannot exceed fifty. At least seven persons are required to form a public company and there is no maximum limit of its members.
Difference – 3. Basic Object:
The objective to form a company is to earn more and more profit and to exploit the people.
Difference – 4. Liability:
The liability of the member is limited to the value of shares held by them.
Difference – 5. Registration:
The registration of a company is compulsory.
Difference – 6. Transferability of Shares:
In the case of public limited companies, shares are freely transferable and the shareholder can sell his shares whenever he feels so. In the case of private companies, shares can be transferred but subject to certain restrictions.
Difference – 7. Voting Rights:
In companies, the voting rights are on the basis of ‘one share one vote’.
Difference – 8. Management:
The shareholders have no hand in the running of the management. The directors control the whole management.
Difference – 9. Privileges:
No such privileges are enjoyed by a company organisation.
Difference – 10. Distribution of Surplus
In the case of companies, profits are distributed as dividend among shareholders. It depends upon the capital contributed by individual members.