Co-operative Society helps members develop a savings culture as it allows members set aside a certain amount of money and also gives members the opportunity of falling back on their savings to run their individual businesses.
One of the features of Co-operative Societies is voluntary membership. In Lagos State, any 20 adults can voluntarily form a Co-operative and get it registered (It was formerly 10 adults). A person who has a common interest can join a Co-operative Society. Membership of a Co-operative Society is open to all. However, the right of membership is not absolute as this can be denied if it is likely to negatively affect the interests or the existence of the Society.
The finances of a Co-operative Society are contributed by members through the purchase of shares. Co-operative Societies also get financial support from the government in the form of loans.
To protect the interest of members, Co-operative Societies are placed under State control through registration.
Co-operative Societies offer a lot of benefits to its members. Some of those benefits include:
- Separate legal entity: After registration, a Co-operative Society acquires separate legal existence, hence death, et ce tera of the members does not affect its perpetual existence. It can enter into contracts in its own name and acquire property in its own name.
- Limited Liability: Like limited liability companies, the liability of members is limited to the extent of their capital in the Co-operative Societies.
- Savings: Co-operative Societies help members develop the habit of saving.
- Access to loans: Members of Co-operative Societies can access loans promptly and the interest rate and repayment terms are easy unlike that of the banks. It serves as a cheaper source of fund for member’s businesses.
- Government Assistance: Government sees Co-operative Societies as effective means of socio-economic change and thus offers grants, loans and financial assistance to them to make them more effective.
- Disposal of Surplus: Some portions of the surplus generated by Co-operative Societies are distributed among members based on their individual transactions; some portions are paid to the employees while some portions are kept in reserve.
- Networking: Co-operatives serve as a platform to network with other members of the Co-operative.
Entrepreneurs are encouraged to form Co-operative Societies and take the benefits of networking, access to loans, Government financial support to grow their individual businesses.