Solution:

Features of Co-operative Organization:

(1) State Control :

• The activities of the co-operative societies are subject to certain rules and regulations framed by the Government.

• There are many formalities which are required to be completed for getting the society registered under the Co-operative Societies Act, 1912 or the State Co-operative Societies Act of the particular State.

• The audited accounts and affairs of the society are inspected by the Government periodically. Besides this, a co-operative society has to submit annual reports and accounts to the Registrar of Co-operative Societies.

(2) Limited Return of Capital :

• The capital invested in a co-operative is not given an undue preference.

• A limited rate of interest is allowed; because capital appreciation is not the main motto of co-operation.

• Under the existing law in India, a maximum of 10 per annum can be given as return on capital contribution to the co-operative.

• This is a first charge on surpluses of the society.

(3) Separate Legal Entity :

• A co-operative society must get itself registered under the Co-operative Societies Act, 1912 or under the Co,-operative Societies Act of a State Government.

• Like a joint stock company, it is a separate legal person, it can own property, enter into contracts, sue and be sued in its own name.

(4) Equitable Distribution of Surplus :

• Unlike other forms, of business organization, surplus earned by a co-operative society is distributed among its members equitably on basis other than capital contribution of the members.

• As per the law governing Co-operative organization, 25 per cent of its profits after meeting its trading expenses and paying a fixed rate of dividend on capital not exceeding 10 per cent is to be transferred to general reserves.

• In addition, a portion of the profit not exceeding 10 per cent may be utilized for the general welfare of the locality in which the co-operative society is functioning.

• The residual, if any, may be distributed among members on the basis to be decided by the members collectively.

• Normally, in case of consumers’ co-operatives, this residual is distributed according to purchases made by the members from the Co-operative Society; and in case of producers co-operatives, this profit is distributed in proportion to the goods delivered to the Co-operative society for sale.

(5) Voluntary Association :

• A co-operative organization is a voluntary association of persons. Its voluntary character is one of the most guiding principles of co-operative organization.

• It implies principles of co-operative organization.

• It implies that every individual, irrespective of his caste, creed, religion, sex, etc. is free to become member of the co-operative and leave it any time, after giving proper notice. It also implies that none should be forced or coerced to join it.

(6) Equal Voting Rights :

• In co-operative form of organization, each member has equal voting right. This means that every member irrespective of his holdings of shares or status is given one vote.

• A rich person cannot hold control of the cooperative organization on the basis of his wealth. All members have equal voice in the management of the organization.

(7) Democratic Management :

• Democracy is the rule of co-operatives. In a co-operative society since each member has equal voting right, its management is essentially democratic.

• All the members of a society elect a body of persons to conduct and control the working of the society. The members frequently meet and give guidelines to its executive.

• Thus, a co-operative organization is an emblem of true democracy.

(8) Service Motive :

• Unlike, earlier forms of business organization, the primary objective of establishing co-operative form of organization is to render maximum service to its members. Here, the aim is not to earn profits.

• The cooperative societies do earn a nominal amount of profit to cover-up administrative expenses. Thus, co-operatives promote social justice.