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Questions:

Generic 5

5 x 5 = 25

Distinguish between a joint-stock company and co-operative society.

What are the steps involved in forming a co-operative society?

Enumerate the disadvantages of co-operatives.

What are all the drawbacks of Warehousing?

What are all the documents used in the process of warehousing?

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Answers Key:

Generic 5

5 x 5 = 25

S.No		Joint-Stock Company	Co-operative Society
(i)	Meaning	It is mainly organised with the object of making profit. It is an association of people persons formed for the purpose of doing a business.	It is a voluntary association of the weaker section or the people It may make profit in the process of rendering services.
(ii)	Minimum Number	There must be at least two persons to form a private limited company and seven persons in public limited company.	But in the case of co-operative society, a minimum number of members is 25 as per the the Tamil Nadu Co-operative Societies Act of 1983.
(iii)	Maximum Number	In a private company maximum is 50 and in a public company there is no maximum limit.	There isno limit to the maximum number of members in a cooperative society.
(iv)	Local Membership	The members of a public limited company belong to different parts of the country and even different countries of the world.	But in a co-operative society the members belong to the same locality.
(v)	Registration	A company is formed and registered as per the Companies Act, 1956.	But a co-operative society registered as per the Co operative SocietiesAct of a state government.
(vi)	Management	In a joint company the management is entrusted to the Board of Directors elected by the shareholders	All the members are entitled to participate in the management of co-operative societies with the help of the Board of Directors.
(vii)	Object	Profit is the primary motto of a joint-stock company	Service is the primary motto of a co-operative
(viii)	Purchase of shares by member	In companies there is no limit in the purchase of maximum number of shares	In co-opera ti ve societies minimum number of purchase of shares is limited to the extent of utilisation of benefits
(ix)	Facilities	Government do not provide any concession to joint-stock companies as extended to co-operatives.	But a co-operative society enjoys concession like exemption from paying income tax stamp duty and registration fee etc.
(x)	Right to Vote	In joint-stock company one share one vote principle is followed.	But in a co-operative society one man vote principle is followed
(xi)	Feeling of self interest	In a joint-stock company the feeling of self interest and completion remain present	In co-operative societies 'Each for all and all for each' is the guiding principle.
(xii)	Repayment of shares capital	A shareholder' cannot get back his capital during the lifetime of the company	A member in a co-operative society can surrender his shares withdraw his capital and cancel his membership.
(xiii)	Distribution of profit	In joint-stock company the profit is distributed to the shareholders on the basis of their share value	In a co-operative society a minimum portion of the profit is distributed as dividend. A major portion of the profit is used for the development of the co-operative society.
(xiv)	Transfer of shares	The shares are freely transferable in a public limited company.	A member of a co-operative society cannot transfer his shares. But he can surrender his shares.
`(xv)	New shares	When a company wants to increase its capital the new issue of shares are offered to the existing share-holders if there is a right issue	In the caseof co-operativesociety capital is generally increased when new persons are admitted as members.
(xvi)	Exploitation	A joint-stock company is a capitalistic enterprise ..They try to exploit the public.	But in the case of co-operative society it protects the poor from the exploitation of unscrupulous traders.
(xvii)	Importance	In joint-stock company, money is more important than a man	In a co-operative society, man is more important than money
(xviii)	Registration of membership	A company close the list of shareholders as soon as the capital is fully subscribed. If anyone wants to buy shares he can buy them in stockexchanges	In co-operative society, the list of membership is not closed but open to all the members hailing from the society.
(xix)	Value of shares	The value of shares is generally greater in joint stock companies. It may sell shares either at par or at a premium and or at a discount.	But shares are offered only at par in a co-operative society.

Formation of a co-operative society:
It must be registered under the co-operative societies Act 1912 or any other state co-operative law.
A co-operative society can be started with a minimum of 25 persons, having a common interest. An application has to be submitted to the Registrar of co-operative societies expressing their intention.
The application form is known as 'Memorandum of Association'. It should contain the name and address of the society its objectives, the capital and liability of the members. A copy of the bye-laws slating the rules and regulations of the society should be attached along with the application form.
The system of management procedure with regard to meetings resolutions are stated in the bye-laws. The Registrar will carefully scrutinise the documents in order to ensure that they are in accordance with the provisions of the Act. When he is fully satisfied he will enter the name of the society in his register and issue the 'Certificate of Registration'. By issue of this certificate the society comes into existence as a body corporate having a separate legal entity.

(i) Limited funds:
Co-operative societies have limited membership and are promoted by the weaker sections. The membership fees collected is low. Therefore the funds available with the co-operatives are limited. The principle of one-man one-vote and limited dividends also reduce the enthusiasm of members. They cannot expand their activities beyond a particular level because of the limited financial resources.
(ii) Over reliance on Government funds:
Co-operative societies are not able to raise their own resources. Their sources of financing are limited and they depend on government funds. The funding and the amount of funds that would be released by the government are uncertain. Therefore co-operatives are not able to plan their activities in the fight manner.
(iii) Imposed by Government:
In the Western countries, co-operative societies were voluntarily started by the weaker sections. The objective is to improve their economic status and protect themselves from exploitation by businessmen. But in India, the co-operative movement was initiated and established by the government Wide participation of people is lacking. Therefore the benefit of the co-operatives has still not reached many poorer sections.
(iv) Benefit to rural rich:
Co-operatives have benefited the rural rich and not the rural poor. The rich people elect themselves to the managing committee and manage the affairs of the co-operatives for their own benefit. The agricultural produce of the small farmers is just sufficient to fulfill the needs of their family. They do not have any surplus to market. The rich farmers with vast tracts of land produce in surplus quantities and the services of co-operatives such as processing, grading, correct weightment and fair prices actually benefit them.
(v) Inadequate rural credit:
Co-operative societies give loans only for productive purposes and not for personal or family expenses. Therefore the rural poor continue to depend on the money lenders for meeting expenses of marriage, medical care, social commitments etc. Co-operatives have not been successful in freeing the rural poor from the clutches of the money lenders.

Warehousing is not effective because of the following reasons:
1. There are no adequate transport facilities between the place of production and warehouses.
2. Lack of sufficient storage facilities for different commodities such as perishable and non-perishable commodities.
3. Complicated formalities are to be fulfilled at the warehouses. The illiterate and innocent farmers are not able to cope with these procedures.
4. Complicated process of Barcode technology can reduce the storing of goods by some producers.
5. Unavoidable delay for obtaining financial assistance may cause loss to the owner of goods.

The following are used in connection with the warehousing:
Warehouse Warrants:
It is a document issued in favour of the owner or depositor of goods by the warehouse keeper. This is a document of title of goods and can be transferred by simple endorsement and delivery To transfer all the goods the warehouse warrant is sufficient. If only a part of the goods are to be transferred then delivery order is needed. The delivery order is to be accompanied by the warehouse warrant.
Warehouse Keeper's Receipt:
It is a document issued by the warehouse keeper, which acknowledges the receipt of goods from the depositor of goods. It also shows the existence of an agreement to keep the goods in the warehouse subject to certain conditions. This is not a document of title of goods and is not transferable.
Dock Warrant:
Dock is a place in the harbor where the goods are kept for loading into the ship. Dock warrant is a document of title of goods issued by dock authorities. This document certifies that the dock authorities hold the goods. To take delivery of the goods this certificate should be given back to dock authorities. The right of getting delivery of goods can be assigned to third parties too.
Dock Receipt:
Dock receipt is an acknowledgement of receipt of goods issued by dock authorities to the owner of the goods. It is not a document of title of goods. Therefore, the right of taking of delivery of goods cannot be transferred.
Delivery Order:
This is a document through which the depositor directs the warehouse keeper to deliver the specified goods either to the party mentioned in the document or to the bearer. The warehouse keeper delivers the goods as per the instruction. Transfer of ownership takes place through this document.