Question

State one difference between Cooperative sector industries and Multinational

Corporations.​

Answer 1

Answer:

1. Objectives:

There is a difference in basic objectives of cooperatives from companies. The basic objective of a cooperative organisation is to provide essential service for the benefit of mem­bers.

On the other hand, a company is a business organisation with the objective of earning profit.

2. Membership:

ADVERTISEMENTS:

The membership of a coop­erative society is generally drawn from a particu­lar locality while the shareholders of a company are drawn from all over the country. The minimum number of members required for the registration of a cooperative is 10 while the Companies Act requires at least 7 persons for the formation of a pub­lic limited company and at least 2 persons for the formation of private limited company.

3. Members’ Liability:

The liability of mem­bers of a company is limited but the liability of the members of cooperative society is generally unlim­ited.

4. Capital:

A cooperative society may or may not have share capital. A member cannot transfer the shares of the society. On the other hand, a com­pany must have capital divided into shares by its shareholders. The shares of a company are freely transferable.

5. Surplus:

ADVERTISEMENTS:

In a company, the profits are dis­tributed among members by way of dividend which varies according to the amount of capital by individual members. But a cooperative society does not distribute its profit according to the capital held by the shareholders. The surplus or profit earned by a cooperative is given away to the members on tine basis of the purchase made by them.

Explanation: