Theory question 102
Co-operative SocietiesCommerce 2 (theory)
The staff of Kander Manufacturing Company Limited formed a cooperative society to enable them have access to funds.
(a) Name the type of cooperative society they formed.
(b) State four features of the cooperative society.
(c) State three advantages and two disadvantages of the cooperative society.
Show the model answer
(a) Thrift and credit (credit and savings) co-operative society.
(b) Any four: formed by people with a common bond (e.g. same workplace); voluntary membership; capital from members' regular savings/shares; aim is to give members loans at low interest; one member, one vote; managed by an elected committee; registered, so it has continuity and limited liability; surplus shared according to patronage/savings.
(c) Advantages (any three): encourages saving; gives members cheap loans with little collateral; easy deductions from salary; loans for emergencies and projects; members learn management; dividends on savings.
Disadvantages (any two): limited capital; poor management by part-time officers; possible misuse or embezzlement of funds; loan defaults by members; small loans relative to needs; delays in giving loans.
The common workplace and the aim of access to funds point to a thrift and credit society.