FAQs of cooperatives

Frequently Asked Questions

Q. What is 'Cooperation' ?

A. According to economic historian, Charles Guide "Cooperation is self-help and each for all (mutual-aid)". Self-help means the pride of supplying one's own needs by one's own resources, of being one's own merchant banker, money lender and employer. "Each for all" means to seek liberation, not only for oneself but for and through others"

The International Cooperative Alliance (ICA), at its Manchester Congress held in September, 1995 adopted a Statement on Cooperative Identity. The Statement included the definition of Cooperatives, a list of "Cooperative Values and a set of "Cooperative Principles".

According to ICA, "a cooperative is an autonomous association of persons united voluntarily to meet their common, economic, social and cultural/needs and aspirations through a jointly owned and democratically -controlled enterprise" Cooperative - Values

Self-help
Self-responsibility
Democracy
Equality
Equity and solidarity

Q. What are the principles of cooperation?

A. Cooperative Principles are guidelines by which cooperatives put their values into practice.

The Cooperative principles are:

  1. Voluntary and open membership
  2. Democratic member Control
  3. Member economic participation
  4. Autonomy and Independence
  5. Education, Training and Information
  6. Cooperation among Cooperatives
  7. Concern for community

Q. What are the origins of cooperative movement in India?

A. During the British Rule in India, Nicholson a British Officer in India suggested `Find Raiffersen in India', i.e. introduce Raiffersen model of German agricultural credit Cooperatives in India. As a follow-up of that recommendation, the first Cooperative Society Act of 1904 was enacted to enable formation of "agricultural credit cooperatives" in villages in India under Government sponsorship. With the enactment of 1904 Act, Cooperatives were to get a direct legal identity as every agricultural Cooperative was to be registered under that Act only. The 1904 Cooperative Societies Act, was repealed by 1912 Cooperative Societies Act which provided for formation of Cooperative societies other than credit. Under 1919 Administrative Reforms, Cooperatives was made a provincial subject making each province responsible for Cooperative development.

In 1942, the Government of India enacted the Multi-Unit Cooperative Societies Act, 1942 with an object to cover societies whose operations are extended to more than one state. Armed with an experience of 42 years in the working of Multi Unit Cooperative Societies and the Multi-Unit Cooperative Societies Act, 1942, the Central Government enacted a comprehensive Act known as Multi State Cooperative Societies Act, 1984, repealing the Act of 1942.

Based on the recommendation of the Mirdha Committee and the "Model Cooperative Societies Act" this Government of India enacted the Multi State Cooperative Societies Act, 2002 which provided for democratic and autonomous working of the Cooperatives. The Multi State Cooperative Societies Act, 2002 came into force with effect from August 19, 2002.

Q. Which are the institutions working for the development of cooperative movement in India?

A. National Cooperative Union of India (NCUI) and National Cooperative Development Corporation (NCDC) are the important agencies working for promotion of cooperative movement in India.

Q. Who can become members of a cooperative society in India?

A. Persons who may become members of a Cooperative society at State level (as per the State Act)

(a) an individual competent to Contract, attained majority and is of sound mind and belongs to a class of persons if any for whom the society is formed as per its bye-laws;

(b) a society registered or deemed to be registered under the Cooperative Societies Act;

(c) the Government;

No individual shall be eligible for admission as a member of a federal society.

Persons who may become members of a Multi-State Cooperative Society: (As per Multi-State /cooperative Societies Act, 2002).

(a) an individual, competent to contract under section 11 of the Indian contract Act, 1972.

(b) any multi-state Cooperative society or any Cooperative society.

(c) the Central Government

(d) a State Government

(e) National Cooperative Development Corporation (NCDC)

(f) any other Corporation armed or controlled by the Government.

No individual person shall be eligible for admission as a member of a national Cooperative society or a federal Cooperative

For details on the procedures for forming a cooperative society, see the section on "What are the steps / check list for forming a cooperative society?"

Q. HOW TO BECOME MEMBER OF IFFCO

The application form (bilingual) for new admission must be filled completely and correctly preferably in English in capital letters.

The Society should submit the following documents alongwith its application form:

  • Resolution of the Managing Committee of the society for IFFCO membership
  • Copy of registration certificate of society.
  • The Demand Draft for atleast 25% of subscribed share capital and admission fee* in favour of IFFCO payable at New Delhi.
  • Certification of credentials and existence of the society from the concerned Assistant / Deputy Registrar of Cooperative Societies.
  • Licence for sale of Fertiliser, Pesticide and Seed from the concerned Government District/ State Authority.
  • Copy of resolution stating that neither it is a member of competitive society of IFFCO nor it will become member of competitive society in future.
  • Society must have their Bank Account in a Bank equipped with electronic transfer facility having MICR No./ IFSC Code

The application form should be recommended by the concerned Assistant / Deputy Registrar of Cooperative Societies.

After receiving the recommendation from Assistant / Deputy Registrar, State Marketing Manager should verify all the above documents and recommend the application for membership of IFFCO. State Marketing Manager should also verify the credential and existence of the society before sending the application form for membership.

The relevant application forms can be obtained from nearest Area Office / State Office of IFFCO 

*Admission fee for village level societies is Rs 25/- and for others Rs 100/-.

Q. Which are the laws that regulate cooperative societies in India?

A. Laws regulating Cooperative Societies in India are:

(a) State Cooperative Societies Acts of individual states

(b) Multi-State Cooperative Societies Act, 2002 for the multi-state Cooperative societies with Area of operation in more than one State.

Q. What is 'Multi-state Cooperative Act'?

A. A multi-state Cooperative Society means a society registered or deemed to be registered under the Multi-State Cooperative Societies Act, 2002 and includes a national Cooperative society or a Federal Cooperative.

Q. How does a multi-state cooperative society differ from a company?

A. Broad differences between a cooperative and a company

S. No Item Cooperative Society Company
1 Object Interest of members and community Self interest either of management or the share holders
2 Number of members Minimum number of members should be 50 for a multi state cooperative society from each state in case of individual membership
In case societies are members of a Multi State Cooperative Society, two societies from different states should sign the application of registration of the society
If a Multi State Cooperative Society is a member then the multi state cooperative and a society should sign the application of registration
In a public limited company, minimum number of members should be 7 and in a private limited company minimum number of members should be 2
3 Management Chairperson is elected by the Board of Directors from among themselves. The Managing Director / Chief executive is appointed by the Board of Directors Usually, Chairperson / Managing Director are persons with maximum number of shares in the company
4 Share Capital The shares of cooperative society are not issued to general public by advertisement and can be issued any time. Shares can be withdrawn member / society as prescribed by rules in their byelaws. Shares are issued to general public or by invitation. In a company shares cannot be withdrawn by a share holder.
5 Types of shares Only equity shares are available Equity and preferential shares may be issued
6 Voting Power Member of a cooperative society have right of only one vote, irrespective of the number of shares held of any denomination Voting rights depend directly on the holding of shares
7 Distribution of Profits Minimum 25% of net profits should be transferred to the General reserve and the maximum dividend cannot exceed 20% No restrictions on a company
8 Taxes Cooperatives are exempt from few taxes in some states like stamp duty. Tax rates also vary No exemptions provided
9 Workers participation Provision for workers participation in the management through a representative exists No such provision for workers
10 MRTP Act Not applicable to Multi State Societies Applicable
11 Control The Central registrar of Cooperatives advises in the affairs of a multi state society Companies are governed by the Company Registrar of the states where its registered office is located

Q. Who can become a member cooperative society of IFFCO?

A. As per the bye laws of IFFCO, no individual shall be eligible for membership of IFFCO. The membership of IFFCO will be open to the following :

  1. National Cooperative Federations of agricultural credit/marketing/processing/supply and other agricultural Cooperative Societies;
  2. State level Cooperative Federations of agricultural credit/marketing/processing/supply and other agricultural Cooperative Societies;
  3. District, Regional and Primary Cooperative credit/marketing/processing/supply and other agricultural Cooperative Societies including Cane Unions;
  4. Primary Agricultural Cooperative credit, service, multi-purpose, cane, irrigation, farming societies and other village agricultural societies;
  5. National Cooperative Development Corporation;
  6. Govt. of India, to the extent that the Board/General Body of IFFCO require and request; Public Financing Institutions to the extent required /requested by the Board /General Body of IFFCO;
  7. Any cooperative society activities of which are augmentative to the activities and conducive to overall growth of IFFCO

Q. What are the steps / check list for becoming a member of IFFCO?

A. 1. The application form for new admission must be filled in English in capital letters

2. Resolution of the Managing Committee for IFFCO membership should be attached with the application form

3. The application form should be recommended by the concerned Assistant / Deputy Registrar of Cooperative Societies

4. The credential and existence of the society should be certified by the State Marketing Manager and the application form should be routed through concerned IFFCO's state office.

5. The Clause of IFFCO's Byelaws under which the applicant society is entitled for membership should be clearly indicated by the concerned IFFCO's SMM's office

6. The Demand Draft for the exact amount for share capital and admission fee in favour of IFFCO payable at New Delhi should be enclosed with the application form. Admission fee for village level societies is Rs 25 and for others Rs 100.

a. National/state/regional federations and large processing cooperatives such as cooperative sugar mills, cooperative cane unions are eligible for Rs one lakh share category

b. District and primary marketing/processing/supply and other cooperative societies including cane unions are eligible for Rs ten thousand share category

c. Primary cooperatives at village level are eligible for Rs one thousand category

The relevant application forms can be obtained from nearest Area Office / State Office of IFFCO

Q. Does IFFCO supply fertiliser products only to member societies?

A. IFFCO's fertiliser supply is not restricted to only member cooperatives. Fertiliser supply is also made to non-member societies. Any agricultural co-operative society permitted by Registrar of Co-operative Societies and/or Director of Agriculture of the State (depending on concerned state governments requirements) with a license to sell fertilisers can sell IFFCO's fertiliser. Other cooperatives, such as commodity cooperatives, require approval from competent authority in IFFCO. While fertiliser supply is made to both member and non-cooperative members, as a cooperative society working for rural India, societies are encouraged to become members of IFFCO.

Q. What are the general terms and conditions of fertiliser supply by IFFCO?

A. IFFCO supplies Urea and DAP/NPK to the Federation/Societies at the issue prices notified by Government of India. In addition, credit period not exceeding 30 days is given on Urea, NPK and DAP or cash discount in lieu of credit period. In some States, Credit period or Cash discount is not given on DAP/NPK. Sometimes supplies are also made to a Federation against tender terms.

Q. What are the benefits of becoming a member society of IFFCO?

A.The member society can send their nominee as Direct Delegate on Representative General Body by contributing Rs. 10 Lakh and above in the Share Capital of IFFCO subject to the provisions of bye laws of IFFCO. In case contribution to the share capital is less than Rs 10 lakh, they can be a delegate of the General Body through the election process as per IFFCO Bye-laws. These direct delegates and elected delegates are entitled to participate in the Annual General Meetings / General Body Meetings and in election of 8 Directors who will represent on the Board of Directors of IFFCO. In addition, the Members are eligible to get dividend on the equity held by them in IFFCO. In 2001-02, dividend @ 20% was given to the Members. In addition, the RGB members also eligible to participate in plant visit programmes, state / zonal advisory committee meetings, local extension programmes, etc.

Q. How do member cooperatives participate in the management of IFFCO?

A. Member cooperatives of IFFCO, elect a Representative General Body (RGB) as per the provisions of IFFCO's bye laws. The RGB is the supreme policy making body of IFFCO which is responsible for guiding IFFCO in achieving its objectives. The RGB elects eight Directors on the Board of IFFCO who participate in managing its affairs.

Q. What is Representative General Body (RGB) of IFFCO?

A.The Representative General Body (RGB) consists of members representing entire spectrum of members of IFFCO. The RGB guides IFFCO in charting out a path to realise the objectives as enshrined in bye laws of IFFCO. The following are some of the duties performed by the RGB. The list is not exhaustive.

  1. Election and removal of the members of the Board of Directors;
  2. Amendment or repeal of any existing Bye-laws or the enactment of any new Bye-laws in accordance with the procedure prescribed in the Act and the Rules;
  3. Consideration and adoption of Annual Report and Statement of Accounts, review of activities of current year and approval of Programme of Activities of ensuing year presented by the Board of Directors; Approval of Annual Budget;
  4. Distribution of net profits including dividend;
  5. Creation of specific reserves and other funds; Review of actual utilization of reserve and other funds.
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