A Retail Cooperative Society and a Public Limited Company can be compared to two sisters from the same home (Business organisations).
The business world is made of different types of business structures to suit different individuals, business goals, and the types of business. With virtually all sectors of a country’s economy relying on the existence of business, knowing the right business structure to suit your needs is a must.
Vision this scenario, if Mr Donald wants to go into a business agreement with his friend Mr Nathan, it’s important to recognise that friendship alone is not a sufficient basis for a business structure. All factors must be carefully considered before they decide on a suitable business structure.
Though similar in certain aspects, a Retail Cooperative Society and a Public Limited Company have certain differences that make them unique and easy to identify wherever they are used.
This article sheds more light on the similarities and differences between a Retail Cooperative Society and a Public Limited Company. But first, let’s get a hang of these expressions.
What is a Retail Cooperative Society?
A Retail Cooperative Society is a business organisation where members contribute resources to buy goods at a cheaper rate. Members of a Retail Cooperative Society are the owners of the business, they have a say in the decision-making processes, and are part of the day-to-day running of the business.
Furthermore, these members are already independent owners of their respective businesses but come together for the greater good. Several sizes and scopes of retail cooperative societies exist in the society.
What is a Public Limited Company?
A public limited company (PLC) is a business organisation that gives individuals from all works of life the opportunity to buy shares in the organization. These companies issue shares to the public through an Initial Public Offering (IPO).
Shareholders of a public limited company are not liable for the company’s debt or its day-to-day operations. PLCs publish their audited account statements while adhering to stipulated requirements and guidelines.
Similarities between Retail Cooperative Society and Public Limited Companies
What makes a retail cooperative society and a public limited company similar?
Multiple Ownership
A retail cooperative society and a public limited company can be owned by several people. In the case of a PLC, an individual is required to purchase shares in the company to own a part of it. Meanwhile, in a retail cooperative society, members indicate interest in joining and pooling resources together.
Structured Governance System
In both business organisations, there is a structured governance system that oversees the daily operations of the business. In a PLC, a board of directors is charged with maintaining order in the company’s management. In contrast, in a retail cooperative society, all members are involved in decision-making, thereby maintaining a structured governance system in both cases.
Legal establishment
Both types of business organizations are legal entities separate from the owners of the organisations. They are required by law to register under the right agencies and comply with the regulations governing where the business is located.
Subject to regulatory requirements
A retail cooperative society and a public limited company are both subject to regulatory requirements. This is to ensure that they meet the required standards and laws of operation. However, PLCs are held to stricter laws due to their public standing.
Business operations
Both types of business organizations are free to operate in several sectors of the economy from industries to the provision of goods and services.
Differences between Retail Cooperative Society and Public Limited Company
What makes a retail cooperative society different from a public limited company?
Requirements for Regulations
Though both types of business organisations are subject to regulatory compliance, differences exist in the manner and type of regulation required.
In a retail cooperative society, ensuring the rights of members and adherence to cooperative laws are a big deal. Meanwhile, In a public limited company, organizations are required to follow the stock exchange laws and carry out periodic reports of their financial status.
Distribution of Profit
A retail cooperative society distributes its profit to members in the form of rebates, which are based on their level of patronage. In contrast, PLCs pay dividends to their shareholders based on the amount of shares purchased and dividend policies.
Generation of Capital
Capital is the lifeblood of any business organisation. In a retail cooperative society, capital is raised through loans from banks, membership fees from members, and the sale of goods. Conversely, a public limited company raises funds by selling shares to the public.
Purpose
The main reason why a retail cooperative society is set up is to meet the needs of its members, often by providing goods and services at competitive prices. On the other hand, the aim of setting up a public limited company is to make profit and maximize returns for her shareholders.
Continuity
The ability of a business to operate despite changes in ownership is of great importance. In a retail cooperative society, fewer issues of ownership tussles occur due to its goal of meeting the needs of its members. Its laws make provision for the registration of new members and the leaving of old ones.
Conversely, a public limited company is prone to frequent power struggles, especially when shareholders sell their shares and management changes.
Conclusion
Retail cooperative society and public limited company are business organisational structures that will continue to exist and serve humans in several capacities. Making the right choice between both entails looking at what makes each unique and the goal you intend to achieve when starting a business.
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