RFBT - COOPERATIVES Flashcards
What is a cooperative?
A cooperative is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.
What are the Cooperative Principles enumerated under Section 5 of RA 9520?
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1. Voluntary and Open Membership - cooperatives are voluntary organizations open to all persons without discrimination.
- Democrative Member Control - cooperatives are democratic organizations that are controlled by their members who actively participate in setting policies and making decisions.
- Member Economic Participation - Members contribute equitably to the capital of their cooperatives.
- Autonomy and Independence - Cooperatives are autonomous, self-help organizations.
- Education, Training and Information - Cooperatives shall provide education and training for its members, representatives, managers and employees.
- Cooperation among Cooperatives - cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, regional, national and international structures.
- Concern for Community - Cooperatives work for the sustainable development of their communities through policies approved by their members.
What is the primary objective of a cooperative?
The primary objective of every cooperative is to HELP IMPROVE THE QUALITY OF LIFE OF ITS MEMBERS.
What is the type of liability of a cooperative?
Cooperatives shall have a LIMITED LIABILITY.
What is the life/term of a cooperative?
ART. 13. Term. – A cooperative shall exist for a period NOT EXCEEDING FIFTY(50) YEARS FROM THE DATE OF REGISTRATION, unless sooner dissolved or unless said period is extended. The cooperative term, as originally stated in the articles of cooperation, may be extended for periods not exceeding fifty (50) years in any single instance by an amendment of the articles of cooperation, but no extension can be made earlier than 5 years prior to the original or subsequent expiry date unless there are justifiable reasons.
When can extension of the term of a cooperative be made?
No extension can be made earlier than five (5) years prior to the original or subsequent expiry date/dates unless there are justifiable reasons for an earlier extension as may be determined by the Authority.
When does a cooperative acquire juridical personality?
A cooperative ACQUIRES JURIDICAL PERSONALITY FROM THE DATE IT RECEIVES A CERTIFICATE OF COOPERATION FROM THE COOPERATIVE DEVELOPMENT AUTHORITY UNDER ITS OFFICIAL SEAL.
What are the rules on the number and qualifications of organizers of a primary cooperative?
A primary cooperative must be organized by:
- FIFTEEN(15) OR MORE NATURAL PERSONS
- Filipino Citizens
- Legal Age
- Having a COMMON BOND OF INTEREST
- Actually RESIDING/WORKING IN THE INTENDED AREA OF OPERATIONS
- That a PROSPECTIVE MEMBER OF A PRIMARY COOPERATIVE MUST HAVE COMPLETED A PRE-MEMBERSHIP EDUCATION SEMINAR (PMES).
What is a Multipurpose Cooperative?
A multipurpose cooperative is one which COMBINES TWO OR MORE BUSINESS ACTIVITIES OF DIFFERENT TYPES OF COOPERATIVES.
When can newly organized primary cooperatives register as a multipurpose cooperative?
Newly organized primary cooperatives may register as multipurpose cooperatives ONLY AFTER COMPLIANCE WITH THE MINIMUM REQUIREMENTS FOR MULTIPURPOSE COOPERATIVES SET BY CDA.
When can single purpose cooperatives transform into a multipurpose cooperative or create subsidiaries?
Single purpose cooperatives may transform into a multipurpose cooperative or create its subsidiaries ONLY AFTER AT LEAST TWO(2) YEARS OF OPERATIONS.
Group of individuals or cooperatives intending to form a cooperative must submit to CDA how many copies of what documents?
Group of individuals or cooperatives intending to form a cooperative must submit to CDA FOUR (4) copies of the following:
- ) Articles of Cooperation - SIGNED by each of the organizers and ACKNOWLEDGED BY NATURAL PERSONS, and CHAIRPERSONS OR SECRETARIES IF JURIDICAL PERSONS, BEFORE A NOTARY PUBLIC.
- ) Sworn Statement of Treasurer - elected by subscribers showing that AT LEAST 25% OF TOTAL SUBSCRIPTION HAS BEEN PAID, PROVIDED THAT PAID UP CAPITAL NOT BE LESS THAN PHP 15,000.
- ) By Laws
- ) Bonds of Accountable Officers
- ) General Statement - describing the structure of the cooperative which shall INCLUDE A BOOKKEEPER, and the PURPOSES OF THE COOPERATIVE.
- ) Economic Survey - indicating therein the area of operation, size of membership, and other pertinent data.
In general, cooperatives must have a minimum paid up capital of PHP 15,000. What special cooperatives deviate from this rule?
- Electric Cooperatives - PHP 5,000,000
- Multipurpose Cooperative - PHP 100,000 or as required in the feasibility study WHICHEVER IS HIGHER.
- Financial Service Cooperative - PHP 10,000,000 without prejudice to the additional capital requirements of BSP.
- Credit Surety Fund Cooperative - PHP 5,000
When should bylaws be filed?
At the same time as the articles of cooperation.
Explain the process of application for registration in cooperatives.
All applications shall be finally DISPOSED OF THE CDA withing a PERIOD OF SIXTY (60) DAYS FROM THE FILING THEREOF, OTHERWISE THE APPLICATION SHALL BE DEEMED APPROVED UNLESS THE CAUSE OF DELAY IS ATTRIBUTABLE TO THE APPLICANT.
If the application is DENIED, an appeal can be made with the OFFICE OF THE PRESIDENT WITHIN 90 DAYS FROM THE RECEIPT OF NOTICE OF DENIAL.
FAILURE OF THE OFFICE OF THE PRESIDENT TO ACT ON THE APPEAL WITHIN 90 DAYS FROM THE FILING THEREOF SHALL MEAN APPROVAL OF SAID APPLICATION.
What is a credit cooperative?
A credit cooperative is one that promotes and undertakes SAVINGS AND LENDING SERVICES AMONG ITS MEMBERS. Its objectives are to:
a. encourage savings among members
b. create a pool of such savings
c. provide related services to maximize benefits from loans
What is a consumers cooperative?
Consumers cooperative has for its primary purpose the PROCUREMENT AND DISTRIBUTION OF COMMODITIES.
What is a Producers cooperative?
A producers cooperative is one that undertakes JOINT PRODUCTION, WHETHER AGRICULTURAL OR INDUSTRIAL, IN THE PROCESSING OF RAW MATERIALS OR GOODS PRODUCED BY ITS MEMBERS INTO FINISHED/PROCESSED GOODS FOR SALE.
What is a marketing cooperative?
A marketing cooperative is one which engages in SUPPLY OF PRODUCTION INPUTS to members and markets their products.
What is a service cooperative?
A service cooperative is one which engages in medical and dental care, hospitalization, transportation, insurance, housing labor, and other services.
What is a multipurpose cooperative?
A multipurpose cooperative is one which COMBINES TWO OR MORE OF THE BUSINESS ACTIVITIES OF THE DIFFERENT TYPES OF COOPERATIVES.
What is an advocacy cooperative?
An advocacy cooperative is one which promotes and advocates cooperativism among its members and the public through socially oriented projects, training, and other activities.
What is an agrarian reform cooperative?
It is one organized by marginal farmers majority of which are agrarian reform beneficiaries for the purpose of developing an appropriate system of land consolidation/tenure/development.
What is a cooperative bank?
It is one organized for the provision of a wide range of financial services to cooperatives and their members.
What is a dairy cooperative?
A dairy cooperative is one whose members are engaged in the production of fresh milk and the processing thereof.
What is an education cooperative?
It is one organized for the primary purpose of owning and operating licensed educational institutions.
What is an electric cooperative?
It is one organized for the purpose of undertaking power generation and its distribution.
What is a financial service cooperative?
It is one organized for the purpose of engaging in savings and credit services.
What is a fishermen cooperative?
It is one organized by marginalized fishermen in localities whose products are marketed either as fresh or processed products.
What is a Health Services Cooperative?
It is one organized for the purpose of providing medical, dental and other health services.
What is a housing cooperative?
It is one organized to assist or provide access to housing for the benefit of its regular members who actively participate in the savings program for housing.
What is an insurance cooperative?
It is one engaged in the business of insuring life and poverty of cooperatives and their members.
What is a transport cooperative?
It is one which includes land and sea transportation, LIMITED TO SMALL VESSELS.
What is a water service cooperative?
It is one organized to own, operate, and manage water systems for the provision and distribution of potable water.
What is a workers cooperative?
It is one organized by workers, including self-employed, who are at the same time members and owners of the enterprise, whose purpose is to provide employment and business opportunities to its members.
What is a Primary Cooperative?
Primary Cooperative is one whose members are NATURAL PERSONS.
What is a Secondary Cooperative?
It is one whose members are Primary cooperatives.
What is a Tertiary Cooperative?
It is one whose members are secondary cooperatives.
What is the voting requirement for merger/consolidation of cooperatives?
Merger/Consolidation must be APPROVED BY 3/4 VOTE OF ALL MEMBERS WITH VOTING RIGHTS, PRESENT AND CONSTITUTING A QUORUM OF EACH OF THE CONSTITUENT COOPERATIVES AT A SEPARATE GENERAL ASSEMBLY MEETING. Dissenting members shall have the right to exercise their right to withdraw their membership.
When is a merger/consolidation effective?
It is effective upon the issuance of CERTIFICATE OF MERGER/CONSOLIDATION BY CDA.
What is a General Assembly?
It means the full membership of a cooperative duly assembled for the purpose of exercising all the rights and performing all the obligations pertaining to cooperatives.
What are the kinds of membership in a cooperative?
- ) Regular member
2. ) Associate member
What is a regular member? Who is considered a regular member?
A regular member is one who has complied with all the membership requirements, ENTITLED TO VOTE, and entitled to all the rights and privileges of membership. To be a regular member:
a. Associate must meet minimum requirements
b. Continue to PATRONIZE THE COOPERATIVE FOR TWO YEARS.
c. Signify his/her intention to be/remain a member.
What is an associate member?
One who has NO RIGHT TO VOTE NOR BE VOTED UPON and shall be entitled only to such rights and privileges as the bylaws may provide. He can become a regular member when:
To be a regular member:
a. Associate must meet minimum requirements
b. Continue to PATRONIZE THE COOPERATIVE FOR TWO YEARS.
c. Signify his/her intention to be/remain a member.
What is a Laboratory Cooperative? What are its composition, rules and purpose?
It is one ORGANIZED BY MINORS, and must be AFFILIATED WITH A REGISTERED COOPERATIVE which is called the GUARDIAN COOPERATIVE. It is governed by special guidelines promulgated by CDA.
It must be composed of 15 or more minors who must be 7-18 YEARS OLD, who are PH citizens actually residing or enrolled in an educational institution within or near the area of operation of the Guardian cooperative or out of school minors. Its purpose is:
- To serve as a training ground for its members to prepare them for membership in regular cooperatives
- To teach them the value of thrift and savings mobilization
- To instil cooperative values, principles financial discipline and leadership skills
- To promote and advance Filipino social and cultural values, ecological awareness and sustainable development
When is a person deemed a member of a cooperative?
Upon approval of his membership by the BoD.
What are the remedies in case of denial of membership?
If membership is denied by BoD, an APPEAL may be made to the GENERAL ASSEMBLY, WHOSE DECISION SHALL BE FINAL.
If the general assembly has an APPEAL AND GRIEVANCE COMMITTEE, appeal may be made there, and if they fail to decide within 30 DAYS FROM RECEIPT OF APPEAL, MEMBERSHIP SHALL BE DEEMED APPROVED.
Explain the voluntary termination of membership in a cooperative.
Members may for any valid reason withdraw his membership BY GIVING A SIXTY (60) DAY NOTICE TO THE BOD.
The withdrawing shall be ENTITLED TO A REFUND OF HIS SHARE CAPITAL CONTRIBUTION AND ALL OTHER INTERESTS IN THE COOPERATIVE.
However, NO REFUND SHALL BE MADE IF THE VALUE OF THE ASSETS OF THE COOPERATIVE IS LESS THAN ITS LIABILITIES EXCLUSIVE OF HIS CAPITAL CONTRIBUTION.
What happens when a member dies or goes insane in a primary cooperative, and insolvency/dissolution of a member in a secondary/tertiary cooperative?
The death/insanity/insolvency/dissolution is considered a valid ground for the termination of membership.
In case of death/insanity of an agrarian-reform beneficiary-member, his NEXT OF KIN may assume the duties and responsibilities of the original member.
How can a membership be terminated by voting? What number of votes is needed and what are the valid causes?
Membership may be terminated by A VOTE OF THE MAJORITY OF ALL MEMBERS OF THE BOARD OF DIRECTORS for any of the following causes:
a. ) Member has NOT PATRONIZED any of the services of the cooperative FOR AN UNREASONABLE AMOUNT OF TIME as determined by the BoD.
b. ) When a member has FAILED TO COMPLY WITH HIS OBLIGATIONS
c. ) When a member has ACTED IN VIOLATION OF THE BYLAWS/RULES OF THE COOPERATIVE
d. ) For any ACT/OMISSION INJURIOUS/PREJUDICIAL TO THE INTEREST/WELFARE OF THE COOPERATIVE.
What is the process of termination of membership initiated by the BoD? What is the remedy of the member who was terminated?
The member MUST BE INFORMED OF SUCH INTENDED TERMINATION IN WRITING, and shall be GIVEN THE OPPORTUNITY TO BE HEARD before the Board makes its decision.
Decision of the board to terminate must be in writing and communicated to said member and shall be APPEALABLE WITHIN 30 DAYS FROM RECEIPT THEREOF TO THE GENERAL ASSEMBLY OR APPEAL/GRIEVANCE COMMITTEE IF ONE EXISTS. The GA’s and Appeal/grievance committee’s decision shall be FINAL.
The Committee shall be given 30 DAYS to decide on the appeal. Failure to act on it within 30 days will make the appeal deemed approved in favor of the member.
PENDING DECISION OF THE GA/COMMITTEE, MEMBERSHIP REMAINS IN FORCE.
How long shall members of the Appeal/Grievance Committee serve?
1 year.
Who shall compose the General Assembly?
The General Assembly shall be composed of such MEMBERS ENTITLED TO VOTE UNDER THE ARTICLES OF COOPERATION AND BYLAWS.
What is the General Assembly? What are its powers?
The General Assembly is the HIGHEST POLICY-MAKING BODY of the cooperative and shall exercise the POWERS STATED IN THE ARTICLES OF COOPERATION AND BYLAWS. It has the following NON-DELEGABLE POWERS:
a. To determine and approve amendments to the articles of cooperation and bylaws.
b. To elect or appoint the members of the BoD and to remove them for cause. (For electric cooperatives, election of BoD shall be held in accordance with its bylaws or the election guideline of such cooperative)
c. To approve developmental plans of the cooperative.
What number of votes is needed for the General Assembly to delegate some of its power to a smaller body of the cooperative?
A 3/4th vote of all its members with voting rights present and constituting a quorum.
When are general meetings of general assemblies held?
It is held ANNUALLY on a DATE FIXED IN THE BYLAWS, or if there is none, WITHIN 90 DAYS AFTER THE CLOSE OF EACH FISCAL YEAR.
Notice of such meetings shall be sent to all members of record.
When are special meetings of general assemblies held?
Special meetings may be called in at any time BY A MAJORITY VOTE OF THE BOARD OF DIRECTORS or as PROVIDED IN THE BYLAWS.
A NOTICE IN WRITING SHALL BE SENT ONE(1) WEEK PRIOR TO THE MEETING to all members entitled to vote.
A special meeting shall be called by the board of directors after compliance with the required notice within from at least ten per centum (10%) of the total members who are entitled to vote to transact specific business covered by the call.
“If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of ten per centum (10%) of all the members of the cooperative who are entitled to vote, and for good cause shown, shall issue an order to the petitioners directing them to call a meeting of the general assembly by giving proper notice as required in this Code or in the bylaws.
In the case of newly approved cooperative, a special general assembly shall be called as far as applicable, within 90 days from such approval.
The CDA may also call a special meeting of the cooperative.
For a NEWLY APPROVED COOPERATIVE, a special general assembly shall be called within how many days?
A special general assembly shall be called within NINETY (90) DAYS days from the APPROVAL OF A NEWLY APPROVED COOPERATIVE.
May a notice of meeting be waived by any member?
Yes, either expressly or impliedly.
Discuss the Quorum of a General Assembly.
1.) Ordinary Cooperative - at least TWENTY-FIVE (25) PERCENT OF ALL MEMBERS ENTITLED TO VOTE.
2.) Cooperative Bank
a.) General Assembly meetings - ONE HALF PLUS
ONE OF THE NUMBER OF VOTING SHARES OF ALL
MEMBERS IN GOOD STANDING. The voting rights of
the members shall be proportionate to the number of
their paid-up shares.
b.) Board of directors meeting - ONE HALF PLUS ONE
OF ALL MEMBERS OF THE BOARD OF DIRECTORS.
Each director shall only have 1 vote.
c.) For amendments to the articles of cooperation and
bylaws - 3/4 vote of all the members with voting
rights, present and constituting a quorum.
3.) Electric Cooperatives - Quorum shall be at least 5% OF ALL MEMBERS ENTITLED TO VOTE, unless otherwise stated.
What is the quorum for the Board of Directors?
A majority of the members of the Board shall constitute a quorum, unless the bylaws provided otherwise.
How may votes shall a member of a primary cooperative have?
One vote per member.
How many votes shall a member of a secondary/tertiary cooperative have?
They shall have 1 basic vote and as many incentive votes as provided in the bylaws but must not exceed 5 votes.
What is the Board of Directors in cooperatives? What is the composition and term of the BoD?
It is the body entrusted with the management of the affairs of the cooperative under its articles of cooperation and bylaws.
BoD shall be composed of not less than 5 but not more than 15 members elected by the general assembly for a term of 2 years and shall hold office until their successors are duly elected and qualified or until duly removed for cause.
How often do directors in a cooperative have a regular meeting? What notice is given?
At least once a month. Any form of notice is allowed.
How often do directors in a cooperative have a special meeting? What notice is given?
At any time upon the call of the chairperson or a majority of the members of the board.
Written notices of the special meeting specifying the agenda shall be given to all members of the board 1 WEEK before said meeting.
Is proxy voting allowed in General Assemblies? In Director’s meeting?
General Assemblies - proxy voting is allowed
Director’s Meeting - Not allowed.
What are the qualifications of a director of a cooperative?
- ) Member with the right to vote
- ) Possess qualifications provided in the bylaws
- ) Possess none of the disqualifications provided in the laws or bylaws. Any person ENGAGED IN A BUSINESS SIMILAR TO THAT OF THE COOPERATIVE OR WHO IN ANY WAY HAS A CONFLICT OF INTEREST SHALL BE DISQUALIFIED FROM ELECTION.
Members of the BoD SHALL NOT HOLD ANY POSITION DIRECTLY INVOLVED IN THE DAY TO DAY OPERATIONS OF THE COOPERATIVE.
The cooperative may, by resolution of the BoD, admit as director or committee member one appointed by a financing institution from which the cooperative received financial assistance solely to provide technical knowledge not available within its membership.
What is the exception to the rule that a director be a member entitled to vote?
Only when the cooperative has received financial assistance from a financial institution. The BoD may admit as director/committee member the person appointed by said financial institution. Said person shall only provide technical knowledge and shall have no powers,rights, nor responsibilities except to provide technical assistance as required by the cooperative.
How is filling of vacancy in the BoD done?
If the cause of vacancy is due to EXPIRATION OF TERM - filled by the General Assembly in a regular/special meeting called for the purpose.
If the cause of vacancy is due to OTHER causes aside from expiration of term
a. It may be filled by the BoD IF THEY STILL CONSTITUTE A QUORUM
b. It may be filled by the General Assembly in a regular/special meeting called for the purpose IF THE BOD DOES NOT CONSTITUTE A QUORUM.
Directors elected to fill in a vacancy shall serve only the unexpired term of his predecessor.
What are the threefold duties of directors/officers/committee members?
Duty of Obedience
Duty of Loyalty
Duty of Diligence
What are the liabilities for violation of the threefold duties for cooperatives?
Those involved shall be liable JOINTLY AND SEVERALLY FOR ALL DAMAGES/PROFITS RESULTING THEREFROM TO THE COOPERATIVE,MEMBERS, AND OTHER PERSONS.
How shall DIRECTORS of a cooperative be compensated?
GR: Directors are NOT ENTITLED TO COMPENSATION EXCEPT FOR REASONABLE PER DIEMS.
EXCEPTIONS:
- ) Compensation is provided and fixed in their bylaws.
- ) Compensation is granted by majority vote of the members with voting rights at a general assembly specifically called for the purpose.
In addition, NO ADDITIONAL COMPENSATION OTHER THAN PER DIEMS SHALL BE PAID DURING THE FIRST YEAR OF EXISTENCE OF ANY COOPERATIVE.
Directors and officers shall not be entitled to per diems when in the preceding calendar year the cooperative reported a net loss or had a dividend rate less than the official inflation rate for the same year.
How shall OFFICERS/MEMBERS OF THE COMMITTEE of a cooperative be compensated?
It may be fixed in the bylaws.
How shall ALL OTHER EMPLOYEES of a cooperative be compensated?
- ) As fixed by the bylaws
2. ) If none, as determined by the board of directors.
When are directors and officers not entitled to per diems?
- ) When in the PRECEDING CALENDAR YEAR, cooperative reported a NET LOSS.
- ) When the DIVIDEND RATE IS LESS THAN THE INFLATION RATE FOR THE SAME YEAR.
Explain dealings of directors/officers/members with the cooperative.
A contract entered into by the cooperative with one or more of its directors/officers/members is VOIDABLE AT THE OPTION OF THE COOPERATIVE, unless all the following conditions are present:
a. That the presence of such director in the board meeting wherein the contract was approved WAS NOT NECESSARY TO CONSTITUTE A QUORUM FOR SUCH MEETING.
b. That the VOTE OF SUCH DIRECTOR WAS NOT NECESSARY FOR THE APPROVAL OF THE CONTRACT.
c. That the contract is FAIR AND REASONABLE UNDER THE CIRCUMSTANCES.
d. That in the case of officers or committee members, the contract with the officer/member has been PREVIOUSLY AUTHORIZED BY THE GENERAL ASSEMBLY OR BY THE BOARD OF DIRECTORS.
Where any of the first two are absent, in the case of a contract with a director, such contract may be RATIFIED BY A 3/4 VOTE OF ALL MEMBERS WITH VOTING RIGHTS, PRESENT AND CONSTITUTING A QUORUM IN A MEETING CALLED FOR THE PURPOSE. Provided that ADVERSE INTEREST OF THE DIRECTOR IS DISCLOSED AND THAT THE CONTRACT IS FAIR AND REASONABLE UNDER THE CIRCUMSTANCES.
What is the liability of a disloyal director/officer/member or one who acquires for himself opportunities which should belong to the cooperative?
Such disloyal person shall be liable to the cooperative for DOUBLE THE PROFITS that would otherwise accrue to the cooperative and be LIABLE FOR DAMAGES, unless HIS ACT HAS BEEN RATIFIED BY 3/4 VOTE OF ALL MEMBERS WITH VOTING RIGHTS, PRESENT AND CONSTITUTING A QUORUM.
What is the liability of a director/officer/member who illegally uses confidential information for his advantage?
a. Liable to COMPENSATE COOPERATIVE FOR DIRECT LOSSES SUFFERED BY COOPERATIVE as a result of the illegal use of information
b. Accountable to the cooperative FOR ANY DIRECT BENEFIT/ADVANTAGE RECEIVED as a result of the transaction.
How shall an elected officer of a cooperative be removed?
By 3/4 vote of the regular members present and constituting a quorum called for the purpose. The procedure is as follows:
a. Complaint shall be filed with the BoD
b. Officer in question shall be given the opportunity to be heard
c. Majority of BoD may place the officer in preventive suspension pending resolution of the investigation
d. Upon finding evidence of guilt, the board shall present its recommendation for removal to the general assembly.
An elective officer may be removed by 3/4 vote of regular members present and constituting a quorum in a meeting called for the purpose
Explain the preservation of books and other documents of a cooperative.
Cooperative may dispose of by way of burning/complete destruction documents/records/books pertaining to operations which are ALREADY MORE THAN FIVE (5) YEARS OLD, EXCEPT THOSE PERTAINING TO TRANSACTIONS WHICH ARE THE SUBJECT OF CIVIL, CRIMINAL, ADMINISTRATIVE PROCEEDINGS.
An inventory of audited documents/records/books to be disposed of shall be drawn up and CERTIFIED TO BY THE BOARD SECRETARY AND CHAIRMAN OF THE AUDIT COMMITTEE and PRESENTED THEREUPON TO THE BoD for approval of disposition.
Explain the rules on reports of cooperatives.
Every cooperative shall DRAW UP REGULAR REPORTS OF ITS PROGRAM OF ACTIVITIES AND MAKE SAID REPORTS ACCESSIBLE TO ITS MEMBERS OR RECORD.
These reports shall be FILED WITH THE CDA WITHIN 120 DAYS FROM THE END OF THE CALENDAR YEAR. FAILURE TO FILE REQUIRED REPORTS SHALL SUBJECT THE ACCOUNTABLE OFFICER TO FINES/PENALTIES and shall be A GROUND FOR THE REVOCATION OF AUTHORITY OF THE COOPERATIVE TO OPERATE.
WITHIN 15 DAYS FROM THE EXPIRATION OF THE SAID PERIOD, the CDA shall send cooperative a written notice stating its noncompliance and commensurate fines and penalties until such time the cooperative has complied with requirements.
Every director, officer, and employee handling funds/securities/properties on behalf of any cooperative shall be?
Shall be covered by a SURETY BOND to be issued for a duly registered insurance or bonding company FOR THE FAITHFUL PERFORMANCE OF THEIR RESPECTIVE OBLIGATIONS. The BoD shall determine the adequacy of such bonds.
Read pages 49-51 of the Coop Handouts.
Padayon, CPA!
What are the different cases of dissolution of cooperatives?
- ) Voluntary Dissolution Where NO CREDITORS ARE AFFECTED
- ) Voluntary Dissolution Where CREDITORS ARE AFFECTED
- ) Involuntary Dissolution
- ) Dissolution by Order of CDA
- ) Dissolution by Failure to Organize and Operate.
Explain Voluntary Dissolution of a Cooperative Where no Creditors are Affected.
If the dissolution of a cooperative does not prejudice the rights of any creditor having a claim against it, the dissolution may be affected by a majority vote of the board of directors, and by a resolution duly adopted by the affirmative vote of at least three-fourths (3/4) of all the members with voting rights, present and constituting a quorum at a meeting to be held upon call of the directors: Provided, That the notice of time, place and object of the meeting shall be published for three (3) consecutive weeks in a newspaper published in the place where the principal office of said cooperative is located, or if no newspaper is published in such place, in a newspaper of general circulation in the Philippines: Provided, further, That the notice of such meeting is sent to each member of record either by registered mail or by personal delivery at least thirty (30) days prior to said meeting. A copy of the resolution authorizing the dissolution shall be certified to by a majority of the board of directors and countersigned by the board secretary. The Authority shall thereupon issue the certificate of dissolution.
Explain Voluntary Dissolution of a Cooperative Where Creditors are Affected.
Where the dissolution of a cooperative may prejudice the rights of any creditor, the petition for dissolution shall be filed with the Authority. The petition shall be signed by a majority of its board or directors or other officers managing its affairs, verified by its chairperson or board secretary or one of its directors and shall set forth all claims and demands against it and that its dissolution was resolved upon by the affirmative vote of at least three-fourths (3/4) of all the members with voting rights, present and constituting a quorum at a meeting called for that purpose.
“If the petition is sufficient in form and substance, the Authority shall issue an order reciting the purpose of the petition and shall fix a date which shall not be less than thirty (30) nor more than sixty (60) days after the entry of the order. Before such date, a copy of the order shall be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation published in the municipality or city where the principal office of the cooperative is situated or in the absence of such local newspaper, in a newspaper of general circulation in the Philippines, and a copy shall likewise be posted for three (3) consecutive weeks in three (3) public places in the municipality or city where the cooperative’s office is located.
“Upon expiry of the five (5) day notice to file objections, the Authority shall proceed to hear the petition and try any issue raised in the objection filed; and if the objection is sufficient and the material allegations of the petition are proven, it shall issue an order to dissolve the cooperative and direct the disposition of its assets in accordance with existing rules and regulations. The order of dissolution shall set forth therein:
“(1) The assets and liabilities of the cooperative;
“(2) The claim of any creditor;
“(3) The number of members; and
“(4) The nature and extend of the interests of the members of the cooperative.
Explain Involuntary Dissolution of a Cooperative by order of competent court after due hearing.
Involuntary Dissolution. – A cooperative may be dissolved by order of a competent court after due hearing on the grounds of:
“(1) Violation of any law, regulation or provisions of its bylaws; or
“(2) Insolvency.
Explain Dissolution by Order of the CDA.
Dissolution by Order of the Authority. – The Authority may suspend or revoke, after due notice and hearing, the certificate of registration of a cooperative on any of the following grounds:
“(1) Having obtained its registration by fraud;
“(2) Existing for an illegal purpose;
“(3) Willful violation, despite notice by the Authority, of the provisions of this Code or its bylaws;
“(4) Willful failure to operate on a cooperative basis; and
“(5) Failure to meet the required minimum number of members in the cooperative.
Explain Dissolution by Failure to Organize and Operate.
If a cooperative has not commenced business and its operation within two (2) years after the issuance of its certificate of registration or has not carried on its business for two (2) consecutive years, the Authority shall send a formal notice to the said cooperative to show cause as to its failure to operate. Failure of the cooperative to promptly provide justifiable cause for its failure to operate shall warrant the Authority to delete its name from the roster of registered cooperatives and shall be deemed dissolved.
Explain the Liquidation of a cooperative.
Every cooperative whose charter expires by its own limitation or whose existence is terminated by voluntary dissolution or through an appropriate judicial proceeding shall nevertheless continue to exist for three (3) years after the time it is dissolved; not to continue the business for which it was established but for the purpose of prosecuting and defending suits by or against it; settlement and closure of its affairs; disposition, conveyance and distribution of its properties and assets.
“At any time during the said three (3) years, the cooperative is authorized and empowered to convey all of its properties to trustees for the benefit of its members, creditors and other persons in interest. From and after any such conveyance, all interests which the cooperative had in the properties are terminated.
“Upon the winding up of the cooperative affairs, any asset distributable to any creditor, shareholder or member who is unknown or cannot be found shall be given to the federation or union to which the cooperative is affiliated with.
“A cooperative shall only distribute its assets or properties upon lawful dissolution and after payment of all its debts and liabilities, except in the case of decrease of share capital of the cooperative and as otherwise allowed by this Code.
Upon dissolution and liquidation, subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether public or private given to a cooperative which form part of the donated capital or fund of the cooperative shall be escheated in favor of the Republic of the Philippines
Who can be parties to a merger/consolidation?
Only cooperatives belonging to the same category can be parties to Merger or Consolidation. A primary cooperative can only merge or consolidate with a primary cooperative, a secondary with a secondary cooperative, and a tertiary with a tertiary cooperative.
Who may propose merger/consolidation?
The Proposal to Merge or Consolidate may be made by the Board of Directors or by at least ten percent (10%) of the members with voting rights.
The PROPOSAL shall be approved by at least majority of the members of each of the constituent cooperatives with voting rights, present and constituting a quorum in separate general/representative assembly meetings called for the purpose.
What are the capital sources of a cooperative?
Cooperatives registered under this Code may derive their capital from any or all of the following sources:
“(1) Member’s share capital:
a. Common share capital - regular members only
b. Preference share capital - regular and associate members
“(2) Loans and borrowings including deposits;
“(3) Revolving capital which consists of the deferred payment of patronage refunds, or interest on share capital; and
“(4) Subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether public or private: Provided, That capital coming from such subsides, donations, legacies, grants, aids and other assistance shall not be divided into individual share capital holdings at any time but shall instead form part of the donated capital or fund of the cooperative.
“Upon dissolution, such donated capital shall be subject to escheat.
What is the limitation on share capital holdings?
Limitation on Share Capital Holdings.- No member of primary cooperative other than cooperative itself shall own or hold more than ten per centum (10%) of the share capital of the cooperative.
“Where a member of cooperative dies, his heir shall be entitled to the shares of the decedent: Provided, That the total share holding of the heir does not exceed ten per centum (10%) of the share capital of the cooperative; Provided, further, That the heir qualify and is admitted as members of the cooperative: Provided finally , That where the heir fails to qualify as a member or where his total share holding exceeds ten per centum (10%) of the share capital , the share or shares excess will revert to the cooperative upon payment to the heir of the value of such shares.
What is the rule on Assignment of Share Capital Contribution or Interest?
No member shall transfer his shares or interest in the cooperative or any part thereof unless.
“(1) He has held such share capital contribution or interest for not less than one (1) year.
“(2) The assignment is made to the cooperative or to a member of the cooperative or to a person who falls within the field of the membership of the cooperative; and
“(3) The board of directors has approved such assignment.
What is the rule on Shares of Cooperative?
The term “share” refers to a unit of capital in a primary cooperative the par value of which may be fixed to any figure NOT MORE THAN One thousand pesos (PHP 1,000.00). The share of capital of a cooperative is the money paid or required to be paid for the operations of the cooperative. The method for the issuance of share certificates shall prescribed in its bylaws.
What is revolving capital as mentioned in RA 9520?
The general assembly of any cooperative may authorize the board of directors to raise a REVOLVING CAPITAL to strengthen its capital structure by deferring the payment of patronage refunds and interest on share capital or by the authorized deduction of a percentage from the proceeds of products sold or services rendered, or per unit of product or services handled. The board of directors shall issue revolving capital certificates with serial number, name, amount, and rate of interest to be paid and shall distinctly set forth the time of retirement of such certificates and the amounts to be returned.”
Discuss the Annual Audit and Audit Report as mentioned in RA 9520.
Cooperatives registered under this Code shall be subject to an annual financial, performance and social audit. The financial audit shall be conducted by an external auditor who satisfies all the following qualifications:
“(1) He is independent of the cooperative or any of its subsidiary that he is auditing; and
“(2) He is a member in good standing of the Philippine Institute of Certified Public Accountants (PICPA) and is accredited by both the Board and Accountancy and the Authority.
“The social audit shall be conducted by an independent social auditor accredited by the Authority.
“Performance and social audit reports which contain the findings and recommendations of the auditor shall be submitted to the board of directors.
“The Authority, in consultation with the cooperative sector, shall promulgate the rules and standards for the social audit of cooperatives.
Discuss the Audit Report as mentioned in RA 9520.
The auditor shall submit to the board of directors and to the audit committee the financial audit report which shall be in accordance with the generally accepted auditing standards for cooperatives as jointly promulgated by the Philippine Institute of Certified Public Accountants (PICPA) and the Authority.
“Thereafter, the board of directors shall present the complete audit report to the general assembly in its next meeting.
Discuss the members’ rights to examine records and remedies for refusal to examine said records.
A member shall have the right to examine the records required to be kept by the cooperative under Article 52 of this Code during reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records without charge except the cost of production.
“Any officer of the cooperative who shall refuse to allow any member of the cooperative to examine and copy excerpts from its records shall be liable to such member for damages and shall be guilty of an offense which shall be punishable under Article 140 of this Code: Provided, That if such refusal is pursuant to a resolution or order of the board of directors, the liability under this article shall be imposed upon the directors who voted for such refusal: Provided, further, That it shall be a defense to any action under this article that the member demanding to examine and copy excerpts from the cooperative records has improperly used any information secured through any prior examination of the records of such cooperative or was not acting in good faith or for a legitimate purpose in making his demand.
Discuss Net Surplus as mentioned in RA 9520.
Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall be determined in accordance with its bylaws. Every cooperative shall determine its net surplus at the close of every fiscal year and at such other times as may be prescribed by the bylaws.
“Any provision of law to the contrary notwithstanding, the net surplus shall not be construed as profit but as an excess of payments made by the members for the loans borrowed, or the goods and services availed by them from the cooperative or the difference of the rightful amount due to the members for their products sold or services rendered to the cooperative including other inflows of assets resulting from its other operating activities and which shall be deemed to have been returned to them if the same is distributed as prescribed herein.
Discuss the Order of Distribution as mentioned in RA 9520.
The net surplus of every cooperative shall be distributed as follows:
“(1) An amount for the reserve fund which shall be at least ten per centum (10%) of net surplus: Provided, That, in the first five (5) years of operation after registration, this amount shall not be less than fifty per centum (50%) of the net surplus:
“(a) The reserve fund shall be used for the stability of the cooperative and to meet net losses in its operations. The general assembly may decrease the amount allocated to the reserve fund when the reserve fund already exceeds the share capital.
“Any sum recovered on items previously charged to the reserve fund shall be credited to such fund.
“(b) The reserve fund shall not be utilized for investment, other than those allowed in this Code. Such sum of the reserve fund in excess of the share capital may be used at anytime for any project that would expand the operations of the cooperative upon the resolution of the general assembly.
“(c) Upon the dissolution of the cooperative, the reserve fund shall not be distributed among the members. The general assembly may resolves:
“(i) To establish a usufructuary trust fund for the benefit of any federation or union to which the cooperative is affiliated; and
“(ii) To donate, contribute, or otherwise dispose of the amount for the benefit of the community where the cooperative operates. If the members cannot decide upon the disposal of the reserve fund, the same shall go to the federation or union to which the cooperative is affiliated.
“(2) An amount for the education and training fund, shall not be more than ten per centum (10%) of the net surplus. The bylaws may provide that certain fees or a portion thereof be credited to such fund. The fund shall provide for the training, development and similar other cooperative activities geared towards the growth of the cooperative movement:
“(a) Half of the amounts transferred to the education and training fund annually under this subsection shall be spent by the cooperative for education and training purposes; while the other half may be remitted to a union or federation chosen by the cooperative or of which it is a member. The said union or federation shall submit to the Authority and to its contributing cooperatives the following schedules:
“(i) List of cooperatives which have remitted their respective Cooperative Education and Training Funds (CETF);
“(ii) Business consultancy assistance to include the nature and cost; and
“(iii) Other training activities undertaken specifying therein the nature, participants and cost of each activity.
“(b) Upon the dissolution of the cooperative, the unexpended balance of the education and training fund appertaining to the cooperative shall be credited to the cooperative education and training fund of the chosen union or federation.
“(3) An amount for the community development fund, which shall not be less than three per centum (3%) of the net surplus. The community development fund shall be used for projects or activities that will benefit the community where the cooperative operates.
“(4) An optional fund, a land and building, and any other necessary fund the total of which shall not exceed seven per centum (7%).
“(5) The remaining net surplus shall be made available to the members in the form of interest on share capital not to exceed the normal rate of return our investments and patronage refunds: Provided, That any amount remaining after the allowable interest and the patronage refund have been deducted shall be credited to the reserve fund.
“The sum allocated for patronage refunds shall be made available at the same rate to all patrons of the cooperative in proportion to their individual patronage: Provided, That:
“(a) In the case of a member patron with paid-up share capital contribution, his proportionate amount of patronage refund shall be paid to him unless he agrees to credit the amount to his account as additional share capital contribution;
“(b) In the case of a member patron with unpaid share capital contribution, his proportionate amount of patronage refund shall be credited to his account until his account until his share capital contribution has been fully paid;
“(c) In the case of a non-member patron, his proportionate amount of patronage refund shall be set aside in a general fund for such patrons and shall be allocated to individual non-member patrons only upon request and presentation of evidence of the amount of his patronage. The amount so allocated shall be credited to such patron toward payment of the minimum capital contribution for membership. When a sum equal to this amount has accumulated at any time within a period specified in the bylaws, such patron shall be deemed and become a member of the cooperative if he so agrees or requests and complies with the provisions of the bylaws for admission to membership; and
“(d) If within any period of time specified in the bylaws, any subscriber who has not fully paid his subscribed share capital or any non-member patron who has accumulated the sum necessary for membership but who does not request nor agree to become a member or fails to comply with the provisions of the bylaws for admission to membership, the amount so accumulated or credited to their account together with any part of the general fund for nonmember patrons shall be credited to the reserve fund or to the education and training fund of the cooperative, at the option of the cooperative.”
Discuss the Rights, Responsibilities, and Privileges of a Cooperative.
RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF COOPERATIVE
“ART. 51. Address. – Every cooperative shall have an official postal address to which all notices and communications shall be sent. Such address and every change thereof shall be registered with the Authority.
“ART. 52. Books to be Kept Open. – (1) Every cooperative shall have the following documents ready and accessible to its members and representatives of the Authority for inspection during reasonable office hours at its official address:
“(a) A copy of this Code and all other laws pertaining to cooperatives;
“(b) A copy of the regulations of the Authority;
“(c) A copy of the articles of cooperation and bylaws of the cooperative;
“(d) A register of members;
“(e) The books of the minutes of the meetings of the general assembly, board of directors and committee;
“(f) Share books, where applicable;
“(g) Financial statement; and
“(h) Such other documents as may be prescribed by laws or the bylaws.
“(2) The accountant or the bookkeeper of the cooperative shall be responsible for the maintenance of the cooperative in accordance with generally accepted accounting practices. He shall also be responsible for the production of the same at the time of audit or inspection.
“The audit committee shall be responsible for the continuous and periodic review of the books and records of account to ensure that these are in accordance with generally accepted accounting practices. He shall also be responsible for the production of the same at the time of audit or inspection.
“(3) Each cooperative shall maintain records of accounts such that the true and correct condition and the results of the operation of the cooperative may be ascertained therefrom at any time. The financial statements, audited according to generally accepted auditing standards, principles and practices, shall be published annually and shall be kept posted in a conspicuous place in the principal office of the cooperative.
“(4) Subject to the pertinent provisions of the National Internal Revenue Code and other laws, a cooperative may dispose by way of burning or other method of complete destruction any document, record or book pertaining to its financial and nonfinancial operations which are already more than five (5) years old except those relating to transactions which are the subject of civil, criminal and administrative proceedings. An inventory of the audited documents, records and books to be disposed of shall be drawn up and certified to by the board secretary and the chairman of the audit committee and presented to the board of directors which may thereupon approve the disposition of said records.
“ART. 53. Reports. – (1) Every cooperative shall draw up regular reports of its program of activities, including those in pursuance of their socio-civic undertakings, showing their progress and achievements at the end of every fiscal year. The reports shall be made accessible to its members, and copies thereof shall be furnished to all its members or record. These reports shall be filed with the Authority within one hundred twenty (120) days from the end of the calendar year. The form and contents of the reports shall be as prescribed by the rules of the Authority. Failure to file the required reports shall subject the accountable officer/s to fines and penalties as may be prescribed by the Authority, and shall be a ground for the revocation of authority of the cooperative to operate as such. The fiscal year of every cooperative shall be the calendar year except as may be otherwise provided in the bylaws.
“(2) If a cooperative fails to make, publish and file the reports required herein, or fails to include therein any matter required by the Code, the Authority shall, within fifteen (15) days from the expiration of the prescribed period, send such cooperative a written notice, stating its non-compliance and the commensurate fines and penalties that will be imposed until such time that the cooperative has complied with the requirements.
“ART. 54. Register of Members as Prima Facie Evidence. – Any register or list of members shares kept by any registered cooperative shall be prima facie evidence of the following particulars entered therein:
“(1) The date on which the name of any person was entered in such register or list of member; and
“(2) The date on which any such person ceased to be a member.
“ART. 55. Probative Value of Certified Copies of Entries. – (1) A copy of any entry in any book, register or list regularly kept in the course of business in the possession of a cooperative shall, if duly certified in accordance with the rules of evidence, be admissible as evidence of the existence of entry and prima facie evidence of the matters and transactions therein recorded.
“(2) No person or a cooperative is possession of the books of such cooperative shall, in any legal proceedings to which the cooperative is not a party, be compelled to produce any of the books of the cooperative, the contents of which can be proved and the matters, transactions and accounts therein recorded, unless by order of a competent court.
“ART. 56. Bonding of Accountable Officers. – Every director, officer, and employee handling funds, securities or property on behalf of any cooperative shall be covered by a surety bond to be issued for a duly registered insurance or bonding company for the faithful performance of their respective duties and obligations. The board of directors shall determine the adequacy of such bonds.
“Upon the filing of the application for registration of a cooperative, the bonds of the accountable officers shall be required by the Authority. Such bonds shall be renewed manually and the Authority shall accordingly be informed of such renewal.
“ART. 57. Preference of Claims. – (1) Notwithstanding the provisions of existing laws, rules and regulations to the contrary, but subject to the prior claim of the Authority, any debt due to the cooperative from the member shall constitute a first lien upon any raw materials, production, inputs, and products produced; or any land, building, facilities, equipment, goods or services acquired and held, by such member through the proceeds of the loan or credit granted by the cooperative to him for as long as the same is not fully paid.
“(2) No property or interest on property which is subject to a lien under paragraph (1) shall be sold nor conveyed to third parties without the prior permission of the cooperative. The lien upon the property or interest shall continue to exit even after the sale or conveyance thereof until such lien has been duly extinguished.
“(3) Notwithstanding the provisions of any law to the contrary, any sale or conveyance made in contravention of paragraph (2) hereof shall be void.
“ART. 58. Instrument for Salary or Wage Deduction. – (1) A member of a cooperative may, notwithstanding the provisions of existing laws to the contrary, execute an instrument in favor of the cooperative authorizing his employer to deduct from his/her salary or wages, commutation of leave credits and any other monetary benefits payable to him by the employer and remit such amount as maybe specified in satisfaction of a debt or other demand due from the member to the cooperative.
“(2) Upon the execution of such instrument and as may be required by the cooperative contained in a written request, the employer shall make the deduction in accordance with the agreement and deduction in accordance with the agreement and remit forthwith the amount so deducted within ten (10) days after the end of the payroll month to the cooperative. The employer shall make the deduction for as long as such debt or other demand remains unpaid by the employee.
“(3) The term “employer” as used in this article shall include all private firms and the national and local governments and government-owned or controlled corporations who have under their employer a member of a cooperative and have agreed to carry out the terms of the instrument mentioned in paragraphs (1) and (2) of this article.
“(4) The provisions of this article shall apply to all similar agreements referred to in paragraph (1) and were enforced prior to the approval of this Code.
“(5) Notwithstanding the provisions of existing laws to the contrary, the responsibilities of the employer as stated in paragraphs (1) and (2) of this articles shall be mandatory: Provided, That in the case of private employer, the actual and reasonable cost deducting and remitting maybe collected.
“ART. 59. Primary Lien. - Notwithstanding the provision of any law with the contrary, a cooperative shall have primary lien upon the capital, deposits or interest of a member for any debt due to the cooperative from such a member.
“ART. 60. Tax Treatment of Cooperative. - Duly registered cooperatives under this Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section.
“ART.61. Tax and Other Exemptions. Cooperatives transacting business with both members and non-members shall not be subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not be subject to any taxes and fees, including not limited to final taxes on members’ deposits and documentary tax. Notwithstanding the provisions of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax exemptions:
“(1) Cooperatives with accumulated reserves and undivided net savings of not more than Ten million pesos (P10,000,000.00) shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature. Such cooperatives shall be exempt from customs duties, advance sales or compensating taxes on their importation of machineries, equipment and spare parts used by them and which are not available locally a certified by the department of trade and industry (DTI). All tax free importations shall not be sold nor the beneficial ownership thereof be transferred to any person until after five (5) years, otherwise, the cooperative and the transferee or assignee shall be solidarily liable to pay twice the amount of the imposed tax and / or duties.
“(2) Cooperatives with accumulated reserves and divided net savings of more than Ten million pesos (P10,000,000.00) shall fee the following taxes at the full rate:
“(a) Income Tax - On the amount allocated for interest on capitals: Provided, That the same tax is not consequently imposed on interest individually received by members: Provided, further, That cooperatives regardless of classification, are exempt income tax from the date of registration with the Authority;
“(b) Value-Added Tax – On transactions with non-members: Provided, however, That cooperatives duly registered with the Authority; are exempt from the payment of value-added tax; subject to Section 109, sub-sections L, M and N of Republic Act No. 9337, the National Internal Revenue Code, as amended: Provided, That the exempt transaction under Section 109 (L) shall include sales made by cooperatives duly registered with the Authority organized and operated by its member to undertake the production and processing of raw materials or of goods produced by its members into finished or process products for sale by the cooperative to its members and non-members: Provided, further, That any processed product or its derivative arising from the raw materials produced by its members, sold in then name and for the account of the cooperative: Provided , finally, That at least twenty-five per centum (25%) of the net income of the cooperatives is returned to the members in the form of interest and/or patronage refunds;
“(c) All other taxes unless otherwise provided herein; and
“(d) Donations to charitable, research and educational institutions and reinvestment to socioeconomic projects within the area of operation of the cooperative may be tax deductible.
“(3) All cooperatives, regardless of the amount of accumulated reserves and undivided net savings shall be exempt from payment of local taxes and taxes on transactions with banks and insurance companies: Provided, That all sales or services rendered for non-members shall be subject to the applicable percentage taxes sales made by producers, marketing or service cooperatives: Provided further, That nothing in this article shall preclude the examination of the books of accounts or other accounting records of the cooperative by duly authorized internal revenue officers for internal revenue tax purposes only, after previous authorization by the Authority.
“(4) In areas where there are no available notaries public, the judge, exercising his ex officio capacity as notary public, shall render service, free of charge, to any person or group of persons requiring the administration of oath or the acknowledgment of articles of cooperation and instruments of loan from cooperatives not exceeding Five Hundred Thousand Pesos (P500,000.00).
“(5) Any register of deeds shall accept for registration, free of charge, any instrument relative to a loan made under this Code which does not exceed Two Hundred Fifty Thousand Pesos (P250,000.00) or the deeds of title of any property acquired by the cooperative or any paper or document drawn in connection with any action brought by the cooperative or with any court judgment rendered in its favor or any instrument relative to a bond of any accountable officer of a cooperative for the faithful performance of his duties and obligations.
“(6) Cooperatives shall be exempt from the payment of all court and sheriff’s fees payable to the Philippine Government for and in connection with all actions brought under this Code, or where such actions is brought by the Authority before the court, to enforce the payment of obligations contracted in favor of the cooperative.
“(7) All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond.
“(8) Any security issued by cooperatives shall be exempt from the provisions of the Securities Act provided such security shall not be speculative.
“ART. 62. Privileges of Cooperatives. – Cooperatives registered under this Code, notwithstanding the provisions of any law to the contrary, be also accorded the following privileges:
“(1) Cooperatives shall enjoy the privilege of depositing their sealed cash boxes or containers, documents or any valuable papers in the safes of the municipal or city treasurers and other government offices free of charge, and the custodian of such articles shall issue a receipt acknowledging the articles received duly witnessed by another person;
“(2) Cooperatives organized among government employees, notwithstanding any law or regulation to the contrary, shall enjoy the free use of any available space in their agency, whether owned or rented by the Government;
“(3) Cooperatives rendering special types of services and facilities such as cold storage, ice plant, electricity, transportation, and similar services and facilities shall secure a franchise therefore, and such cooperatives shall open their membership to all persons qualified in their areas of operation;
“(4) In areas where appropriate cooperatives exist, the preferential right to supply government institutions and agencies rice, corn and other grains, fish and other marine products, meat, eggs, milk, vegetables, tobacco and other agricultural commodities produced by their members shall be granted to the cooperatives concerned;
“(5) Preferential treatment in the allocation of fertilizers, including seeds and other agricultural inputs and implements, and in rice distribution shall be granted to cooperatives by the appropriate government agencies;
“(6) Preferential and equitable treatment in the allocation or control of bottomries of commercial shipping vessels in connection with the shipment of goods and products of cooperatives;
“(7) Cooperatives and their federations, such as farm and fishery producers and suppliers, market vendors and such other cooperatives, which have for their primary purpose the production and/or the marketing of products from agriculture, fisheries and small entrepreneurial industries and federations thereof, shall have preferential rights in the management of public markets and/or lease of public market facilities, stalls or spaces: Provided, That these rights shall only be utilized exclusively by cooperatives: Provided, further, That no cooperative forming a joint venture, partnership or any other similar arrangement with a non-cooperative entity can utilize these rights;
“(8) Cooperatives engaged in credit services and/or federations shall be entitled to loans credit lines, rediscounting of their loan notes, and other eligible papers with the Development Bank of the Philippines, the Land Bank of the Philippines and other financial institutions except the Bangko Sentral ng Pilipinas (BSP);
“The Philippine Deposit Insurance Corporation (PDIC) and other government agencies, government-owned and controlled corporations and government financial institutions shall provide technical assistance to registered national federations and unions of cooperatives which have significant engagement in savings and credit operations in order for these federations and unions to establish and/or strengthen their own autonomous cooperative deposit insurance systems;
“(9) A public transport service cooperative may be entitled to financing support for the acquisition and/or maintenance of land and sea transport equipment, facilities and parts through the program of the government financial institutions. It shall have the preferential right to the management and operation of public terminals and ports whether land or sea transport where the cooperative operates and on securing a franchise for active or potential routes for the public transport;
“(10) Cooperatives transacting business with the Government of the Philippines or any of its political subdivisions or any of its agencies or instrumentalities, including government-owned and controlled corporations shall be exempt from prequalification bidding requirements notwithstanding the provisions of Republic Act No.9184, otherwise known as, the Government Procurement Act;
“(11) Cooperative shall enjoy the privilege of being represented by the provincial or city fiscal or the Office of the Solicitor General, free of charge, except when the adverse party is the Republic of the Philippines;
“(12) Cooperatives organized by faculty members and employees of educational institutions shall have the preferential right in the management of the canteen and other services related to the operation of the educational institution where they are employed: Provided, That such services are operated within the premises of the said educational institution; and
“(13) The appropriate housing agencies and government financial institutions shall create a special window for financing housing projects undertaken by cooperatives, with interest rates and terms equal to, or better than those given for socialized housing projects. This financing shall be in the form of blanket loans or long-term wholesale loans to qualified cooperatives, without need for individual processing.
“The Authority, in consultation with the appropriate government agencies and concerned cooperative sector, shall issue rules and regulations on all matters concerning housing cooperatives.”
What is the vote required for the AMENDMENT OF ARTICLES OF COOPERATION/BY LAWS?
APPROVED by 2/3 vote of all the members with voting rights, without prejudice to the right of dissenting members to exercise their right of withdrawal of their membership under Art 30.
What is the vote required for the DIVISION OF A COOPERATIVE into two or more cooperatives?
APPROVED by 3/4 vote of all members with voting rights, PRESENT AND CONSTITUTING A QUORUM.
What is the vote required for MERGER AND CONSOLIDATION OF COOPERATIVES?
APPROVED by 3/4 vote of all members with voting rights, PRESENT AND CONSTITUTING A QUORUM.
What is the vote required for the DELEGATION BY GENERAL ASSEMBLY SOME OF ITS POWERS TO A SMALLER BODY OF A COOPERATIVE?
APPROVED by 3/4 vote of all members with voting rights, PRESENT AND CONSTITUTING A QUORUM.
What is the vote required for RATIFICATION OF ACTS BY SELF-DEALING DIRECTOR/OFFICER/COMMITTEE MEMBER?
RATIFIED by 3/4 vote of all members with voting rights, PRESENT AND CONSTITUTING A QUORUM.
What is the vote required for RATIFICATION OF ACTS OF DISLOYAL DIRECTOR?
RATIFIED by 3/4 vote of all members with voting rights, PRESENT AND CONSTITUTING A QUORUM.
What is the vote required for REMOVAL OF ELECTIVE OFFICER?
3/4 VOTE OF THE REGULAR MEMBERS PRESENT AND CONSTITUTING A QUORUM.
What is the vote required for VOLUNTARY DISSOLUTION OF COOPERATIVE WHERE NO CREDITORS ARE AFFECTED?
Majority vote of the Board of Directors AND by a resolution duly adopted by the affirmative vote of at least 3/4 of all members with voting rights, present and constituting a quorum.
What is the vote required for VOLUNTARY DISSOLUTION OF COOPERATIVE WHERE CREDITORS ARE AFFECTED?
Majority of the Board of Directors or other officers managing its affairs, VERIFIED by the chairperson or its secretary or one of its directors and that its dissolution was resolved upon the affirmative vote of at least 3/4 of all members with voting rights, present and constituting a quorum.
What is the vote required for TERMINATION OF MEMBERSHIP?
Majority of all the members of the Board of Directors.
What is the vote required for CALLING OF SPECIAL MEETING OF THE GENERAL ASSEMBLY?
Majority vote of the Board of Directors OR as provided in the bylaws.
What is the vote required for CALLING OF SPECIAL MEETINGS OF THE BOARD OF DIRECTORS?
Chairperson or a majority of the members of the Board of Directors.
What is the vote required for FILING OF VACANCY IN THE BOARD OF DIRECTORS ON GROUNDS OTHER THAN EXPIRATION OF TERM?
Majority of the remaining directors, if still constituting a quorum.
If not, the vacancy must be filled by the general assembly in a regular or special meeting called for the purpose.
What is the vote required for DELEGATION OF POWERS TO EXECUTIVE COMMITTEE?
Majority vote of all the members of the Board of Directors.
What is the vote required for GRANTING COMPENSATION TO DIRECTORS?
Majority vote of the members with voting rights.
What is the vote required for PLACING ELECTED OFFICER UNDER PREVENTIVE SUSPENSION?
Majority of Board of Directors.
T or F
The bylaws of a cooperative shall be filed at the same time as the articles of cooperation
TRUE
What are the purposes of a cooperative?
- To encourage thrift and savings mobilization among the members
- To generate funds and extend credit to the members for productive and provident purposes
- To encourage among members systematic production and marketing
- To provide goods and services and other requirements to the members
- To develop expertise and skills among its members
- To acquire lands and provide housing benefits for the members
- To insure against losses of the members
- To promote and advance the economic, social and educational status of the members
- To establish, own, lease or operate cooperative banks, cooperative wholesale and retail complexes, insurance and agricultural/industrial processing enterprises, and public markets
- To coordinate and facilitate the activities of cooperatives
- To advocate for the cause of the cooperative movements
- To ensure the viability of cooperatives through the utilization of new technologies
- To encourage and promote self-help or self-employment as an engine for economic growth and poverty alleviation
- To undertake any and all other activities for the effective and efficient implementation of the provisions of the Cooperative Code
What are the objectives and goals of a cooperative?
- Provide goods and services to its members to enable them to attain increased income, savings, investments, productivity and purchasing power, promote among themselves equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk sharing
- Provide optimum social and economic benefits to its members
- Teach them efficient ways of doing things in a cooperative manner
- Propagate cooperative practices and new ideas in business and management
- Allow the lower income and less privileged groups to increase their ownership in the wealth of the nation
- Cooperate with the government, other cooperatives and people-oriented organizations to further the attainment of any of the foregoing objectives
What are the powers and capacities of a cooperative?
- To the exclusive use of its registered name, to sue and be sued
- Succession
- To amend its articles of cooperation in accordance with the provisions of the code
- To adopt bylaws not contrary to law, morals or public policy, and to amend and repeal the same in accordance with the Cooperative Code
- To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise deal with such real and personal property as the transaction of the lawful affairs of the cooperative may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution
- To enter into division, merger or consolidation, as provided in Cooperative Code
- To form subsidiary cooperatives and join federations or unions as provided in the code
- To avail of loans, be entitled to credit and to accept and receive grants, donations, and assistance from foreign and domestic sources, subject to the conditions of said loans, credits, grants, donations or assistance that will not undermine the autonomy of the cooperative. The Authority, upon written request shall provide necessary assistance in the documentary requirements for the loans, credit, grants, donations, and other financial support
- To avail of preferential rights granted to cooperatives under RA 7160 (Local Government Code) and other laws, particularly those in the grant of franchises to establish, construct, operate and maintain ferries, wharves, markets, or slaughterhouses and to lease public utilities, including access to extension and on-site research services and facilities related to agriculture and fishery activities
- To organize and operate schools in accordance with RA 9155 (Governance of Basic Education Act of 2001) and other pertinent laws
- To exercise such other powers granted by the Cooperative Code or necessary to carry out its purpose as stated in the Articles of Cooperation.
What shall be set forth/included in the Articles of Cooperation?
a. The name of the cooperative which shall include the word cooperative
b. The purpose/s and scope of business for which the cooperative is to be registered
c. The term of existence of the cooperative
d. The area of operation and the postal addresses of its principal office
e. The names, nationality, and the postal addresses of the registrants
f. The common bond of membership
g. The list of names of the directors who shall manage the cooperative
h. The amount of its share capital, the names and residences of its contributors and a statement of whether the cooperative is primary, secondary or tertiary
What shall be set forth in the bylaws?
- The qualifications for admission to membership and the payment to be made or interest to be acquired as a condition for the exercise of the right of membership
- The rights and liabilities of membership
- The circumstances under which membership is acquired,maintained and lost
- The procedure to be followed in cases of termination of membership
- The conditions under which the transfer of a share or interest of the members shall be permitted
- The rules and procedures on the agenda, time, place and manner of calling, convening, conducting meetings, quorum requirements, voting systems, and other matters relative to the business affairs of the general assembly, board of directors, and committees
- The general conduct of the affairs of the cooperative, including the powers and duties of the general assembly, the board of directors, committees and the officers, and their qualifications and disqualifications
- The manner in which the capital may be raised and the purposes for which it can be utilized
- The mode of custody and of investment of net surplus
- The accounting and auditing systems
- The manner of loaning and borrowing including the limitations thereof
- The method of distributions of net surplus
- The manner of adopting, amending, repealing and abrogating bylaws
- A conciliation or mediation mechanism for the amicable settlement of disputes among members, directors, officers and committee members of the cooperative
- Other matters incident to the purposes and activities of the cooperative
What are committees?
Committees refer to any body entrusted with specific functions and responsibilities under the bylaws or resolution of the general assembly or the BoD.
What is social audit?
It is a procedure wherein the cooperative assesses its social impact and ethical performance vis-a-vis its stated mission, vision and goals and code of social responsibility for cooperatives. It enables the cooperative to develop a process whereby it can account for its social performance and evaluate its impact in the community and be accountable for its decisions and actions to its regular members.
What is performance audit?
It refers to an audit on the efficiency and effectiveness of the cooperative as a whole, and its management and officers, and its various responsibility centers as a basis for improving individual team or overall performance and for objectively informing the general membership on such performance.
What is a single-line/purpose cooperative?
One that undertakes activities which are related to its main line of business or purpose.
What is a service cooperative?
Those which provide any type of service to its members
What is a subsidiary cooperative?
It refers to THREE OR MORE PRIMARY COOPERATIVE DOINT THE SAME LINE OF BUSINESS, organized to undertake business activities in support if its member-cooperatives.
What is a guardian cooperative?
It is a duly registered cooperative which a laboratory cooperative is associated with
What are the functions of a federation of cooperatives?
- To carry on any cooperative enterprise authorized under Art 6 that complements/augments/supplements but does not conflict, compete nor supplant business/economic activities of its members
- To carry on and encourage educational and advisory work relating to its member cooperatives
- To render services designed to encourage simplicity/efficiency and economy in the conduct of the business of its member cooperatives and to facilitate the implementation of their bookkeeping/accounting and other systems and procedures
- To print/publish/circulate newspaper and other publications in the interest of its member cooperatives
- To coordinate and facilitate the activities of its member cooperatives
- To enter into JV with national/international cooperatives of other countries in the manufacture and sale of products and services in the PH and abroad
- To perform such other functions necessary
What are the purposes of cooperative unions?
- To represent its member organizations
- To acquire/analyze/disseminate economic/statistical and other info relating to its members and to all types of cooperatives within its area of operation
- To sponsor studies in the economic/legal/financial/social and other phases of cooperation and publish the results thereof
- To promote the knowledge of cooperative principles and practices
- To develop the cooperative movement in their respective jurisdictions
- To advise the appropriate authorities on all questions relating to cooperatives
- To raise funds through membership fees, dues and contributions, donations and subsidies from local and foreign sources whether private or government
- To do and perform such other non-business activities as may be necessary to attain the foregoing objectives
T or F
No cooperative or method or act thereof which complies with the Cooperative Code shall be deemed a conspiracy or combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily in violation of any laws of the PH
True.
T or F
The required number of votes for registration with the CDA by an electric cooperative is 30% of all its members.
False, 20% of all members in good standing.
What is an economic survey in relation to cooperative?
An economic survey must be submitted to the CDA by those who intend to form a cooperative. It is a GENERAL STATEMENT describing the structure and purposes of the proposed cooperative, the structure and actual staffing pattern which must include a BOOKKEEPER, and that they shall not be allowed to operate without the necessary personnel.
The economic survey must indicate the area of operation, size of membership, and other pertinent data.
T or F
The CDA shall periodically assess the required paid-up share capital and may increase it every 10 years when necessary upon consultation with the cooperative sector and SEC.
False.
The CDA shall periodically assess the required paid-up share capital and may increase it every 5 YEARS when necessary upon consultation with the cooperative sector and NEDA.
T or F
Amendment of articles of cooperation shall take effect upon its approval by the CDA or within 60 days from the date of filing thereof if not acted upon by the CDA for a cause not attributable to the cooperative.
False
Amendment of articles of cooperation shall take effect upon its approval by the CDA or within 30 DAYS from the date of filing thereof if not acted upon by the CDA for a cause not attributable to the cooperative.
What are the grounds for membership termination in a cooperative?
a. ) Member has NOT PATRONIZED any of the services of the cooperative FOR AN UNREASONABLE AMOUNT OF TIME as determined by the BoD.
b. ) When a member has FAILED TO COMPLY WITH HIS OBLIGATIONS
c. ) When a member has ACTED IN VIOLATION OF THE BYLAWS/RULES OF THE COOPERATIVE
d. ) For any ACT/OMISSION INJURIOUS/PREJUDICIAL TO THE INTEREST/WELFARE OF THE COOPERATIVE.
T or F
In the case of newly approved cooperative, a special general assembly shall be called as far as applicable, within 60 days from such approval.
False, 90 days
T or F
Notice of meeting may be waived expressly or impliedly by any member.
True.
T or F
The members of the BoD may hold the position of chairman and vice chairman of the board but are not allowed to hold other official positions which shall be given to persons outside the board.
True.
Discuss the quorum in Board of Directors.
Ordinary Cooperative - At least majority of the Board unless the bylaws provide otherwise
Cooperative Bank - One half plus one of the BoD.
Discuss the rules on the officers of the cooperative.
The BoD shall elect from among themselves the chairperson and vice-chairperson, and elect other officers of the cooperative from OUTSIDE THE BoD in accordance with their bylaws. All officers shall serve during good behavior and SHALL NOT BE REMOVED EXCEPT FOR CAUSE AFTER DUE HEARING
LOSS OF CONFIDENCE SHALL NOT BE A VALID GROUND FOR REMOVAL UNLESS EVIDENCED BY ACTS OR OMISSIONS CAUSING LOSS OF CONFIDENCE IN THE HONESTY AND INTEGRITY of such officer.
No 2 or more persons with relationships up to the THIRD CIVIL DEGREE OF CONSANGUINITY OR AFFINITY NOR SHALL ANY PERSON ENGAGED IN A BUSINESS SIMILAR TO THAT OF THE COOPERATIVE NOR WHO IN ANY OTHER MANNER HAS INTEREST/CONFLICT WITH THE COOPERATIVE SHALL SERVE AS AN APPOINTIVE OFFICER.
Discuss the rules on committees of cooperatives.
- Bylaws may create an executive committee to be appointed by the BoD with such powers and duties as may be delegated to it in the bylaws or by a majority vote of all members of BoD.
- Bylaws shall provide for the creation of an AUDIT, ELECTION, MEDIATION/CONCILIATION, ETHICS and such other committees necessary. The MEMBERS OF THE AUDIT AND ELECTION COMMITTEE SHALL BE ELECTED BY THE GENERAL ASSEMBLY, WHILE THE REST SHALL BE APPOINTED BY THE BOARD.
T or F
The audit and election committee members are elected by the BoD
False, by the general assembly.
T or F
The audit committee shall be directly accountable to the BoD. It shall have the power and duty to continuously monitor the adequacy and effectiveness of the cooperative’s management control system and audit the performance of the cooperative.
False, audit committee is under the General Assembly.
T or F
Unless otherwise provided in the bylaws, the BoD, in case of vacancy in the committees, may call an election to fill the vacancy or appoint a person to fill the same subject to the provision that the person elected shall server for only the unexpired portion of the term.
True.
T or F
Directors, officers and committee members who willfully and knowingly vote for or assent to patently unlawful acts or who are guilty of gross negligence or bad faith in directing the affairs of the cooperative or acquire any personal or pecuniary interest in conflict with their duty as such officer shall be JOINTLY AND SEVERALLY LIABLE FOR ALL DAMAGES OR PROFITS RESULTING THEREFROM to the cooperative, members and other persons.
True.
T or F
Unless already fixed in the bylaws, the compensation of the cooperative employees shall be determined by the BoD
True.
What are the effects of merger of a cooperative?
- The constituent cooperatives shall become single cooperative which in case of merger, shall be the surviving cooperative, and in case of consolidation, shall be the consolidated cooperative
- The separate existence of the constituent cooperatives shall cease, except that of the surviving or the consolidated cooperative.
- The surviving or the consolidated cooperative shall possess all the assets/rights/privileges/immunities/ and franchises of each of the constituent cooperatives
- The surviving or the consolidated cooperative shall be responsible for all the liabilities and obligation of each of the constituent cooperative in the same manner as if such surviving or consolidated cooperative had itself incurred liabilities or obligations.
Any claim/action/proceeding pending by or against the surviving/consolidated cooperative may be prosecuted by or against the surviving/consolidated cooperative as the case may be. Neither the rights of creditors nor lien upon the property of any such constituent cooperative shall be impaired by such merger or consolidation
T or F
The interest on share capital shall not exceed the rate of return on investment. Unless otherwise provided for in the bylaws, share capital shall earn interest.
True.
How is rate of interest computed?
Rate of interest = X (Net surplus less statutory reserves)/Total avg share month
Where X shall be a percentage to be determined by the BoD allocated for interest on share capital.
T or F
No allocation of interest on share capital shall be made without the approval of the BoD.
True.
What vote is required for increase/decrease of allocation of interest on share capital?
Majority of BoD present and constituting a quorum
T or F
Bylaws may prescribe a fine on unpaid subscribed capital provided that such fine is fair and reasonable
True.
Under the Cooperative Code, where can a cooperative invest its capital?
- Shares/debentures/securities of other cooperatives
- Any reputable bank
- Securities issued guaranteed by the government
- Real estate primarily for the use of the cooperative
- Any other manner authorized in the bylaws
Explain the proceedings upon insolvency of a cooperative.
In case a cooperative is unable to fulfill its obligations to creditors due to insolvency, such cooperative may apply for such remedies it may deem fit under the Act No. 1956 aka Insolvency Law or under FRIA 2010.
What is the title of RA 9520?
Philippine Cooperative Code of 2008
What is the vote required for the AMENDMENT OF BY-LAWS OF A COOPERATIVE?
APPROVED by 2/3 vote of all the members with voting rights, without prejudice to the right of dissenting members to exercise their right of withdrawal of their membership under Art 30.
What is the voting rights of the members of a cooperative bank?
The voting rights of members shall be proportionate to the number of paid-up shares.
