2019 WAEC Commerce Theory The staff of Kander Manufacturing Company Limited formed a cooperative society to enable them to…

Explanation

(a) The cooperative society to be formed is a Thrift and Credit Society.

(b) Features of a thrift and credit society:

i. There is continuity, which means that the death of a member will not bring society to an end.

ii. Members are entitled to one vote each irrespective of the number of shares owned.

iii. The liability is limited to the shares held by the members.

iv. Profit is shared among members based on patronage.

v. The objective of the society is to generate funds which Would be given as loans to members.

vi. The management of the society is by a committee of elected members.

vii. Capital is raised from members' contributions.

(c) Advantages of thrift and credit society:

i. Society encourages saving habits among members.

ii. Members of the society have equal powers as all are entitled to one vote each during decision making.

iii. It enables members to have access to funds that could be difficult to obtain from Omer financial institutions.

iv. The death of any member cannot bring society to an end. It has continuity.

v. It improves members' standard of living as commodities such as cars, furniture, and housing are made available to members on credit.

vi. Members benefit from training and seminars which are organized by the society

vii. It grants loans to members.

Disadvantages of thrift and credit society:

i. There is usually difficulty in recovering loans which may hinder the operations of the society.

ii. Mismanagement/embezzlement of funds by elected members may lead to the collapse of society.

iii. There is great reliance on the contributions of members as well as repayment of loans.

iv. Some committee members lack management and technical skills to run the society, thereby leading to the collapse of the society.