Mridul Trikha
Cooperative societies are formed for the benefit of society. The people who come together and form groups to promote a common objective are the members of the cooperatives. These combine their ideas, purposes, and opinions and work together to formulate the main purpose of cooperatives. Besides this, cooperatives provide benefits to society as they not only support economically but also legally. Cooperative societies consist of the three-tier system which includes primary agricultural society’s state cooperative banks and district central cooperative banks. Overall these help in supporting rural economic activities, giving loans, receiving repayments for loans given, etc.
The role of cooperatives has a major impact on boosting the overall economy. So to maintain cooperatives and their working structure it is very important to follow the rules and ethics. A major concern in the management of the cooperatives is the role of the board of directors. The board is the primary body for controlling the management of cooperatives. It also monitors the doings of the organization as it provides guidance to the managers which further helps in the execution and implementation of the tasks assigned to the managers. It also acts as the advisory body to the management. Corporate governance plays a major role in setting the roles of the board as ethics are kept in mind for the formulation of various policies and procedures. Cooperatives can be found in various sectors such as agriculture, retail, housing, and finance. Cooperatives are the organizations that are owned and managed by the people who use their services or work for them, rather than by shareholders or external investors. The members of a cooperative typically share in the profits or benefits based on their participation. In the cooperative, every member has an equal chance to participate in decision-making. Profit sharing depends upon the use of money and their participation in decision-making matters. Thus, these provide goods or services at lower costs compared to the other profit-seeking business entities. They aim to assist their members and the formation of local communities with the people joining them. Following is the main protagonist which very well explains the objectives of corporate governance in cooperatives.
ROLE OF CORPORATE GOVERNANCE
- Ensuring Accountability and Transparency
Corporate governance structures ensure that the organization operates transparently and that executives are accountable for their actions. Regular disclosures should be done to provide stakeholders with clear insights into the company’s activities. Therefore, transparency helps in building trust with investors, regulators, and the public.
- Managing Risk: Corporate governance helps identify, manage, and mitigate risks. A strong governance structure includes mechanisms for monitoring risks which, may be financial, legal, operational, and reputational risks.
- Improving Decision-Making: Well-designed governance processes lead to better decision-making by ensuring that a diverse group of individuals with varied expertise is involved in corporate decision-making. It will help in providing sustainability in decision making also.
- Enhancing Company Performance
Effective corporate governance promotes the alignment of the company’s operations with its long-term objectives. By focusing on sustainability, ethics, and stakeholder interests, good governance leads to better financial and operational performance.
To conclude, corporate governance in cooperatives refers to the system of rules, practices, and processes that are implemented by the cooperatives and further directed and controlled for efficient management of the organizations. Corporate governance also improves overall efficiency by establishing clear policies and procedures for managing resources and operations. Therefore, it is the best concept that helps in scaling up and upliftment of the cooperatives.
