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Question No.21: A) What is the difference between Joint Stock Company and Co-operative society?

B) Write the procedure of formation of a COOPERATIVE SOCIETY. Answer: A) Difference Between Joint Stock Company and Co-operative Society: 1. Definitions JOINT STOCK COMPANY: Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership

POINTS

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Other Differences between JOINT STOCK COMPANY & CO-OPERATIVE: JOINT STOCK COMPANY CO-OPERATIVE

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CO-OPERATIVE SOCIETY: A cooperative is a form of organization, where in persons voluntary associate together as human beings, on the basis of equality, for the promotion of the economic interest themselves

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2.Legislation or Act

Company is controlled and governed under the Companies Ordinance 1984.

3.Formation

4. Profit

5.Registration Fee

6.Objectives

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7.No of Members Minimum 2 and max 50 members in Pvt. Ltd Co. but in Pub

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The registration fee is paid to the government i.e. income tax, super tax, stamp duty etc... The basic purpose or object of the company is to earn profit.

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Its formation is complicated and depends upon long process. The profits are divided into shareholders in their proportion of shares.

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While Cooperative society is controlled and governed under the Society Act 1925. The formation of society is very easy and short process. The 90% profit is utilized for promotion of society and 10% to members. If required. The registration fee is not paid. Government can exempt income tax, super tax, stamp duty etc... It is formed for the promotion of selfhelp, social & economic welfare of its members. Min no of members are 10 which should be

8.Liabilities

9.Debentures

10.Management

11.Role of middleman 12.Public confidence

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Ltd Co. min 7 and max No limit. The liabilities of the members are limited upto the value of shares which they keep with them. Joint stock company may issues debentures to borrow required amount of money. It is managed and controlled by the board of directors.

Cooperative society cannot issue debentures for the purpose of borrowing money. In the cooperative society every member has an equal right in the management (Executive Committee, Secretary). In joint stock In the cooperative company middleman society middleman plays very effective has no any and important role. effective role. The people show People show less much confidence on confidence on JSC. Because it is cooperative society because it legally required for companies to is not legally publish their annual required for

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above 18 years of age. The liabilities of the members may be limited or may be unlimited.

accounts. 13.Audit

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The audit of accounts is made by the registrar or by a person authorized in writing by the registrar. The owners and The members may 14.Consumers consumers are be producers and different people. consumers. A member can 15.No of shares A share holder can purchase the shares purchase 1/5 of holding upto any value. share capital or There is no ban on Rs.10,000. But in case of housing max purchase of shares. cooperative society the limit is Rs.20,000. The shares of 16.Transferability In JSC the shares are easily cooperative transferred to any society cannot be other person without transfer to the any legal restriction. non-members but can be transferred to members after 1 year.

The audit of accounts is made by an auditor appointed in the annual general meeting.

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societies its accounts.

22.New Capital

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20.Value of share The face value of share may e different from its market value due to limited numbers shares. Shareholders can 21. purchase of buy shares at shares market value from stock exchange.

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17.Working areas It operates in a vast area so it is not & Attending possible for its share Meetings holder to attend the meeting. The directors control 18.Division of the company affairs Control in their respective areas. The company 19.Price of charge more profit in commodities this way the selling prices of goods are very high.

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If new capital is required then new

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It operates within a limited area so its member can easily attend the meeting. The managing committee controls the business affairs. The society basically acts as nonprofit activities. So there is nominal profit is charged on the daily necessities of life The face value of the shares remains the same due to unlimited supply of shares. Shareholders can buy shares at par value from society.

If new capital is increased only by

23.Tax Exemption

shares will be issued. No income tax is exemption is available.

14.Withdrawal rights

B) FORMATION OF A COOPERAIVE SOCIETY:

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CONCUSION: It is concluded that both types of organizations are performing their duties and functions according to their rules and regulations. Co-operative societies benefits to their members which is the result of savings, growth and economic development. Whereas, joint stock companies earn maximum profits and provide to people new innovations & also different choices.

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25.Dissolution

admission of new members. Agriculture income is tax exempted and other concessions are also available. It is convenient for A member of the its shareholders to co-operative withdraw their society can capital from the withdrawal his capital on giving company by stock his short notice exchange. but after 1 year. There is complicated The process of and long procedure dissolution of from the winding up cooperative of JSC society is very simple

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Definition: The process by which a cooperative society come into existence by filling prescribed form to get registration form Registrar of cooperative society under COOPERATIVE SOCIETY ACT 1925. Formation of a cooperative society: Cooperative society are formed and registered under the cooperative societies Act 1925. Provision of the Act as to formation of cooperative societies is explained below: 1. Conditions of registration: The registrar of cooperative societies may grant registration to a cooperative society, if the society fulfills the following conditions: (i) Objects: A society which has its objects the promotion of economic interest of its members in accordance with cooperative principles may apply registration. (ii) Liability: The liability of members of a society may be limited or unlimited. How, ever liability of a society of which a member is a society shall be limited; and the liability of the society of which the primary object is the creation of funds to be lent to its members shall be unlimited. The word limited shall be the last word in the name of every society with limited society. (iii) Members:

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No society shall be registered unless it has its members at least ten persons above the age of 18years. No such limit is prescribed for a society of which a member is a society. It is further provided that where the object of the society is creation of funds to be lent to its members. It is necessary that all of the members should be residents of the same locality.

a.

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(v) Application for registration: For the purpose of registration an application shall be made to the registrar n the prescribed form in the application following information are provided to the registrar. Name of proposed society. b. Address to be registered. c. Liability limited or unlimited. d. Area of operations. e. Objects of the society. f. If the capital is to be raised by shares, what is the number and value of shares which is to be proposed to issue?

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(iv) Restrictions on Share of Members: Where the liability of members if the society is limited by shares no member, other than a member which is a society, shall hold more than 1/5th (one-fifth) of the share capital or the shares exceeding Ten thousand rupees (10,000 Rs.) and in case of a housing society share exceeding Twenty thousand rupees (20,000 Rs.)

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g. If capital is to be raised by loans and deposits, what is the amount of capital? h. Language in which books and accounts will be kept. The application shall be signed by at least ten prospective members in case where a prospective member is a society; the application must be signed by a duly authorized representative of that society and by at least ten other members or by all other members if the numbers of such other members is less than ten. The application for registration shall be accompanied by three copies of proposed bye-laws of the society signed by the applicants 2. Registration: The registrar may be registering a society if he is satisfied that the society has complied with the legal provisions as to the registrations and its bye-laws are not contrary to the law. Registration of a cooperative society is discretion of the Registrar and not obligatory for him, even if the society has complied with all the legal requirements. In this respect the Cooperative Societies Act 1925. is different from Companies Ordinance 1984. The registrar of companies has no such discretion. 3. Evidence of Registration: On registration, a certificate of registration signed by the registrar shall be issued to the society. The certificate shall be the conclusive evidence that the society mentioned there in is duly registered.

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4. Effective of registration: As soon as a society becomes registered it becomes a distinct legal person it becomes entitled to commence its business and to admit new members.

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