Skip to content

CS Professional · CSR and Social Governance · Contribution of Non-Corporate Entities in Social Governance

A cooperative society earns a surplus at year end. Members have traded with it in different volumes through the year. Following cooperative principles, which is the most appropriate way to distribute the distributable surplus after statutory reserves?

The surplus should be returned to members in proportion to their transactions with the society, after statutory reserves, with only limited return on share capital. This reflects the member economic participation principle, which rewards use of the cooperative rather than size of capital invested.

  1. AReturn to members in proportion to their transactions with the society, with limited return on capitalCorrect
  2. BDistribute equally to all members by number of shares only
  3. CPay entirely to the largest investor as a priority dividend
  4. DTransfer the whole surplus to the promoter as management fee

Explanation

Economic participation by members means surplus is shared mainly in proportion to patronage, with only limited compensation on share capital. Share-based or investor-priority payouts resemble company profit distribution and defeat the cooperative purpose.

Did you get it right without looking?

One question tells you little. A timed set on Contribution of Non-Corporate Entities in Social Governance shows your real accuracy, how long you take and where you lose marks.

Practise Contribution of Non-Corporate Entities in Social GovernanceFree diagnostic mock

More Contribution of Non-Corporate Entities in Social Governance questions