Co-operative societies are an important part of our nation's economy. Read this article to learn about the investment of funds in cooperative society.
Overview
Co-operative Societies in India are the most popular and successful form of society that has been formed by people to help them achieve their goals and objectives. Co-operative Societies in India have a great potential to be the best example for all other countries as well. The idea of forming a Co-operative society is very simple but it requires immense efforts to make it work effectively. The main objective behind this is to provide various benefits for its members, which can be used for different purposes like education, healthcare, etc. In this article, you will read about the investment of funds in cooperative societies.
What is a Co-operative Society?
A Co-operative society is a non-profit organization that is owned and controlled by its members. The members are the people who buy shares in the company, and they decide how it should be run. The people involved in a Co-operative society voluntarily come together and work on issues related to social, economic, and cultural growth.
Co-operative Societies are the largest and most successful form of business in India. They account for more than 50% of all retail sales, 50% of farm produce, and 30% of total agricultural production. Some common examples of Co-operative societies in India are:
- Dairies are made by farmers and their combined efforts and resources
- Sugar Mills are created by farmers who want to process their produce
- Co-operative banks and marketing societies insurance and urban areas.
Co-operative Societies Act of 1912
The Co-operative Societies Act, of 1912 was passed by the British Parliament to regulate the activities of Co-operative societies. It is a part of the Indian Companies Act, of 1913 which governs all types and sizes of companies in India. The Act contains provisions for registration and regulation of co-operatives as well as their constitution and management. This Act also laid down rules for dealing with disputes between members and other issues related to running a cooperative society.
Some Advantages of Co-operative Societies are as follows:
- The process of formation of Co-operative societies is an easy process
- The people involved in a cooperative society have common interests and walk towards a common goal
- The members of a cooperative society choose the person who would handle the day-to-day activities of the society
- This represents a democratic system
- Co-operative societies are given many benefits such as tax exemptions and assistance from the state government
- Co-operative societies last for a long time and they are not affected by the condition of any single member.
Registration for cooperative society can be done online through Vakilsearch. Once you enter the details on the website, a legal consultant or lawyer will contact you and help you with the entire process. They will help you collect all the documents that are required for the registration process and guide you through them step by step. This will make the process smooth and hassle-free for you.
Investment of Funds in a Registered Co-operative Society
The Co-operative societies act of 1912 mentions certain important points regarding the investment of funds-cooperative society. The investment of funds back Co-operative societies is regulated by the department of Registrar Co-operative Society.
It mentions that,
- If a cooperative society is registered under the Co-operative societies Act, it can invest its funds in a government savings bank or the shares of any other registered Co-operative society
- The funds can be invested or deposited with any person approved by a Registrar for this purpose
- The Bank Fixed Deposit that a cooperative society can make should be only in a scheduled cooperative bank or a nationalised bank
- In other cases, approval from the state government would be required
- The funds can be invested in stocks as well
- A Co-operative society can give an amount as a charity as it is defined in Section 20 of the Charitable Endowments Act of 1890.
Some other rules regarding the funds of Co-operative societies are:
- Only a member of a cooperative society can get a loan from the funds of the society
- If a registrar approves a cooperative society can give a loan to another Co-operative Society
- The fund deposits that a cooperative society can accept must be mentioned and approved according to the bye-laws.
If you want to learn more about the investment of a funds-cooperative society, you can contact the experts at Vakilsearch. They will help you solve all your queries and help you with multiple legal procedures.
Importance of Co-operative Societies
Co-operative societies are the largest and most powerful social institutions in India. They have an enormous potential to change the face of Indian society. The cooperative movement has been a driving force behind many progressive and innovative initiatives in various fields such as education, health care, housing, agriculture, etc. Co-operative societies provide employment opportunities for millions of people across the country. It is estimated that about 10 million people are employed by co-operatives in India today.
If you want to register a Co-operative society you can do so by online method. Vakilsearch can help you in the registration process. Go to Vakilsearch and enter details such as your name and contact number and a little consultant will contact you. They will solve all your queries and guide you through the entire registration process.
Conclusion
Co-operative societies in India are the best examples of self-help groups. They are basically a group of people who have come together to help each other and provide services to their members. The services provided by these societies include banking, insurance, housing, education, etc.
These societies were formed by farmers or workers in order to get better prices for their produce and also to be able to pay higher wages for their labour. Today most Co-operative Societies in India have become very big businesses with huge assets and even employees working at these organisations!
If you’re planning to move forward with the registration process of a Co-operative society, Vakilsearch can help you. Our team of experts will make the process easy for you and guide you through it so that there are no problems in the future. You can enter your details and our expert legal representatives will contact you.
Frequently Asked Questions
What is the investment of funds of a registered cooperative society?
The investment of funds of a registered Co-operative society typically involves prudent allocation of resources into various avenues such as government securities, fixed deposits, bonds, and other financial instruments, aiming to generate returns while minimising risk and ensuring compliance with regulatory guidelines.
What is Co-operative investment?
Co-operative investment refers to the collective pooling of funds by members of a Co-operative society for investment purposes. These investments are managed and utilised to benefit the members collectively, contributing to the socioeconomic development of the community and fostering financial inclusion and empowerment.
Can a co-operative credit society invest in mutual funds?
Yes, co-operative credit societies can invest in mutual funds as part of their investment portfolio, subject to regulatory guidelines and restrictions. Mutual funds offer diversification, professional management, and potential for higher returns, but members should assess risks and ensure alignment with the society's investment objectives.
Is it safe to invest in a credit Co-operative society?
Investing in a credit Co-operative society can be safe if it operates within regulatory frameworks, maintains financial transparency, and adheres to prudent risk management practices. Members should conduct due diligence, review financial statements, and assess the society's governance structure to mitigate investment risks effectively.
What types of funds are created in co-operative society?
Co-operative societies typically create various funds to meet specific purposes, including share capital fund, reserve fund, dividend equalisation fund, and welfare fund. Each fund serves distinct functions, such as capital formation, risk mitigation, and social welfare initiatives, contributing to the society's overall financial stability and sustainability.
What is the source of funds for Co-operatives?
The primary sources of funds for Co-operatives include member contributions, share capital, loans and advances from financial institutions, government grants, retained earnings, and revenue generated from business operations or services rendered by the society.
What are society funds?
Society funds encompass the collective financial resources accumulated and managed by a Co-operative society to support its operations, investments, and social objectives. These funds comprise various components such as share capital, reserves, profits, and other contributions from members and external sources.
How is the profit of Co-operative society distributed?
The profit of a Co-operative society is typically distributed among its members in proportion to their participation or patronage, as specified in the society's bylaws or policies. Distribution methods may include dividends on share capital, interest on savings or deposits, rebates, or allocations to reserve or welfare funds.
