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Co-operative Society Features and Merits, ISC Class 11

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Business StudiesISC Class 11 · Co-operative Organisations

Co-operative Societies: Features, Types, Merits and Demerits (ISC Class 11)

Updated 17 October 2026 · Fact-checked

A co-operative society is a voluntary association of persons who join together to promote their economic interests on the basis of equality, self-help and mutual help. Its key features are voluntary membership, democratic control (one member, one vote), service motive, limited return on capital and distribution of surplus on the basis of patronage. It is formed by registration under the relevant co-operative law.

Notice that one society idea, 'each for all and all for each', branches into six types, each serving a different member need.

Illustration drawn for QuestionBuddy.

Understand Co-operative Societies: Meaning, Features, Types, Merits and Demerits

Meaning. An association of persons, often of limited means, who voluntarily unite to serve their common economic needs, with the motto "each for all and all for each".

Features.
1. *Voluntary membership:* open to all with a common interest; free to join and leave (subject to rules).
2. *Registration:* a minimum number of members (as per the Act) and registration give a separate legal identity.
3. *Democratic management:* one member, one vote, irrespective of shares held; managing committee elected by members.
4. *Service motive:* aim is service, not profit.
5. *Limited liability:* members' liability is generally limited to their capital contribution.
6. *Limited return on capital:* dividend on shares is kept low.
7. *Surplus shared on patronage:* the surplus is not distributed only by shares.
8. *Self-help and mutual help.*

Types. *Consumer* (supply goods at fair prices), *producer* (supply raw materials and tools to members), *marketing* (sell members' produce), *credit* (loans to members), *housing* (houses for members) and *farming* (joint farming).

Merits. Easy to form; open membership; democratic control; limited liability; economies of bulk buying; elimination of middlemen; state support; stable existence.
Demerits. Limited capital; inefficient management due to lack of professional skills; delays in decision-making; limited secrecy; possible misuse of funds; rivalry and politics among members; dependence on government help.

Compared with company. In a company voting is by shares; in a co-operative society by person. A company works for profit; a co-operative for service.

Co-operative Societies: Meaning, Features, Types, Merits and Demerits: key facts

Voting
  • One member
  • One vote
  • Irrespective of shares held
Democratic control.
Motto
Each for all | All for each
Co-operation.
Return on capital
Dividend on share capital = Fixed low rate | Surplus shared by patronage
Limited return.

How to answer Co-operative Societies: Meaning, Features, Types, Merits and Demerits questions

Features and merits answers need a one-line explanation each.

  1. 1State the meaning in your own words.
  2. 2List features with a short reason.
  3. 3Name the type for each case by looking at what the members do.
  4. 4Balance with the demerits when asked.

Co-operative Societies: Meaning, Features, Types, Merits and Demerits in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Types of society

Suppose a group of 50 milk producers in a village pools its milk, processes it and sells it together in the city.

Which type of co-operative society is this?

Try it first, then show the solutionSolution
  1. The members are producers who sell their produce together.
  2. It is a marketing (and producers') co-operative.

Answer: A marketing co-operative society.

Memory hook: Name the society by what members share.

Tricks to remember Co-operative Societies: Meaning, Features, Types, Merits and Demerits

Short memory aids. Say each one aloud once, then use it on a question the same day.

  • V-D-S-L

    Voluntary, Democratic, Service, Limited return.

    Use it when: Features.

  • Man not money

    Voting follows the member, not shares.

    Use it when: One member, one vote.

  • Types by need

    Consumer buys, producer supplies, marketing sells, credit lends, housing builds.

    Use it when: Types.

Co-operative Societies: Meaning, Features, Types, Merits and Demerits: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Voting · 1 mark · MCQBoard level

In a co-operative society, a member holding 100 shares has:
(a) 100 votes (b) one vote (c) no vote (d) votes in proportion to capital

Try it first, then show the solutionSolution
  1. The rule is one member, one vote.

Answer: (b) one vote

Example 2: Features · 4 marks · Short answerBoard level

State any four features of a co-operative society. (4 marks)

Try it first, then show the solutionSolution
  1. Voluntary membership.
  2. Democratic management.
  3. Service motive.
  4. Limited return on capital.

Answer: Voluntary membership, democratic management (one member one vote), service motive and limited return on capital.

Example 3: Types · 4 marks · Short answerHarder board level

Name the type of co-operative society in each case and give a reason: (i) workers of a factory run a shop that sells goods at cost plus small margin to members; (ii) small farmers pool crops to sell in the city; (iii) artisans buy raw material together; (iv) members lend savings to one another. (4 marks)

Try it first, then show the solutionSolution
  1. (i) Consumer: supplies goods to member-consumers.
  2. (ii) Marketing: sells members' produce.
  3. (iii) Producer: supplies raw material and equipment.
  4. (iv) Credit: lends to members.

Answer: (i) consumer; (ii) marketing; (iii) producer; (iv) credit.

Example 4: Co-operative vs sole proprietorship · 5 marks · Long answerHarder board level

A group of 30 low-income vendors wants cheap credit and bulk purchase of goods. Compare how a co-operative society and a sole proprietorship would serve them on five points. (5 marks)

Try it first, then show the solutionSolution
  1. Capital: pooled from many members vs one person's limited funds.
  2. Risk: shared and limited in the co-operative vs borne by one person.
  3. Control: democratic, one member one vote vs one owner decides.
  4. Purpose: service to members vs the owner's profit.
  5. Bulk buying: possible through collective purchases vs small scale.

Answer: The co-operative pools capital, shares risk with limited liability, is run democratically, aims at service and buys in bulk; the sole proprietor has limited funds, bears all risk, decides alone and works for personal profit.

Example 5: Case: a housing society · 4 marks · Short answerHOTS / competency

A group of teachers forms a housing co-operative society. Five members hold 50 shares each and 20 members hold 5 shares each. At a vote on spending Rs 2 lakh on a garden, the five big holders vote against and the 20 others vote for. Decide the outcome and discuss the principle applied. (4 marks)

Try it first, then show the solutionSolution
  1. Each member has one vote: 20 votes for and 5 against.
  2. The motion is carried, 20 to 5.
  3. The principle is one member, one vote, not weight of capital.

Answer: The proposal passes 20 to 5; democratic control by persons, not shares, decides.

Where students lose marks in Co-operative Societies: Meaning, Features, Types, Merits and Demerits

The slips examiners see most often, and what to write instead.

  • Mistake: Voting by shares in a co-operative

    Copying the company rule.

    Wrong working

    250 votes versus 100 votes

    Right working

    5 votes versus 20 votes

    Do this: One member, one vote.

    Usually costs: 2 marks.

  • Mistake: Profit motive as main aim

    Business habit.

    Wrong working

    The aim is maximum profit

    Right working

    The aim is service to members

    Do this: Service motive.

    Usually costs: 1 mark.

  • Mistake: Unlimited liability

    Confusing with sole trader.

    Wrong working

    Members have unlimited liability

    Right working

    Liability is generally limited

    Do this: Limited liability is the usual feature.

    Usually costs: 1 mark.

Exam tips

  • Give a one-line explanation of each feature.
  • Use a table for comparisons.
  • Name the type of society by the members' common need.

Practice questions on Co-operative Societies: Meaning, Features, Types, Merits and Demerits

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

  1. Q1 · 1 mark · MCQBoard level

    The motto of the co-operative movement is:
    (a) each for himself (b) each for all and all for each (c) profit for owners (d) survival of the fittest

    Hint

    Mutual help.

    Answer

    (b) each for all and all for each

  2. Q2 · 5 marks · Short answerBoard level

    State any three merits and two demerits of a co-operative society. (5 marks)

    Hint

    Democratic, easy; limited capital.

    Answer

    Merits: democratic control, limited liability, elimination of middlemen. Demerits: limited capital, lack of professional management.

  3. Q3 · 6 marks · Long answerHarder board level

    Explain consumer, producer and credit co-operative societies with one benefit each to members. (6 marks)

    Hint

    Three types.

    Answer

    Consumer: supplies goods at fair prices, so members save. Producer: supplies raw materials and tools, so small producers cut cost. Credit: gives loans at low interest, freeing members from moneylenders.

  4. Q4 · 5 marks · Long answerHarder board level

    Compare a co-operative society and a partnership on five points, covering formation, liability, voting, motive and continuity. (5 marks)

    Hint

    Table.

    Answer

    Formation: registration with minimum members vs agreement; liability: limited vs unlimited for partners; voting: one member one vote vs by partnership deed; motive: service vs profit; continuity: continues despite member changes vs ends on change unless deed provides.

  5. Q5 · 4 marks · Short answerHOTS / competency

    A co-operative society earns a surplus but the members complain that it works slowly and many decisions are delayed. Suggest two reasons from the demerits and two remedies. (4 marks)

    Hint

    Management and capital.

    Answer

    Reasons: management by elected members who may lack professional skills, and the need for committee approval. Remedies: training of members and hiring trained staff; clear delegation of powers.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

  1. 1.One member has?Show answer

    One vote.

  2. 2.Motive of a co-operative?Show answer

    Service.

  3. 3.A consumer society sells to?Show answer

    Its members at fair prices.

  4. 4.Liability of members?Show answer

    Generally limited.

  5. 5.Registration gives?Show answer

    Separate legal identity.

Co-operative Societies: Meaning, Features, Types, Merits and Demerits: frequently asked questions

Can anyone join?

Anyone with a common interest and eligible under rules.

Does it pay dividends?

At a limited rate.

Is it a company?

No.

Who manages?

An elected managing committee.