LAW ON COOPERATIVES

Property of @ARdalmatian (NOT FOR SALE)

duly registered autonomous association of persons

Voluntary and Open Membership - Open to all without discrimination
Democratic Member Control - Controlled by members democratically
with common bond of interest Member Economic Participation - Members equitably control cooperative capital
Definition joined to achieve social, economic, and cultural needs must be established in accordance
Autonomy and Independence - Self-help, autonomous organization
through capital contribution, patronizing product/service with Cooperative Principles
Education, Training, and Information - Provides education and training
accepting share of risks and benefits Cooperation among Cooperatives - Cooperatives work together
Concern for Community - Focus on sustainable community development

Organization and Registration

D
Types of Cooperatives
Article of Cooperation (AOC) Content of AOC As to Purpose
a. Cooperative Name - must include word Cooperative
Bylaws
b. Purpose Single-Purpose focus on exclusive type of service/activity to meet members’ needs
Economic Survey minimum paid-up capital 25%
c. Term of existence whichever is higher
General Statement 50yrs (renewable within 5 yrs before expiration 15k Note: An SPC may
structure + staffing plan d. Area of Operation and Principal Office address Multi-Purpose engage on multiple service/activities across various transform into MPC
(should include e. Name, Nationality, and Address of Registrant sectors to meet diverse needs of members only after at least
bookkeeper) f. Common bond of membership minimum paid-up capital 25% 2 yrs of operation
g. List of names of directors 100k whichever is higher
Bond Accountable Officers
f. Capital structure Req. by FS
Sworn Statement of Treasurer
As to Members
composed of 15 or more natural persons
Cooperative Development Authority (CDA) Primary residing/working in the area of operation
Union Federation
within 60d
Secondary composed of primary coop min. paid-up cap 1M/FS req
may file appeal in Office of Pres N/A
Approved Denied within 90days. If no action within whichever higher
if no action by 90days, deemed approved min. members 10 3
CDA within 60d, primary primary
(based on CDA MC 2020-23)
deemed approved
Note: Registration fee = 1/10 of 1% of Tertiary composed of secondary coop min. paid-up cap 5M/FS req
N/A
Certificate of = Acquisition of authorized cap or amount prescribed by whichever higher
Registration(COR) Juridical Personality CDA, whichever is higher min. members 3
(secondary) 10
federations secondary
(based on CDA MC 2020-24)
Members Regular entitled to all the rights and privileges
those who comply all the requirements General Assembly Meetings
composes the General Assembly composition: All members entitled to vote Members Directors
Associate limited entitlement to rights and privileges purpose: exercise right and perform obligations Type Regular/Special Regular/Special
delegation of power Freq. R-Annually R-Monthly
no right to vote or be voted
GR: may delegate to smaller body by fixed in by-laws or within S- Anytime
Termination
a. withdrawal - for a valid reason and giving a 60-day notice to BOD vote of 3/4 of all members 90d from end of fiscal yr
b. death/insanity (for pimary) or dissolution/insolvency (for non-primary) XPN: Powers cannot be delegated S- Anytime
c. vote by majority of BOD for certain causes a. amendments to bylaws and AOC Quorum GR: 25%
• non-patronization of products/service b. elect members of the board XPN: Coop Banks - 1/2 + 1 Majority
• continuous failure to comply obligations c. approve development plans Elec. Coop - 5%
• violation of rules and bylaws GenAss is the highest-policy making body of cooperative Proxy Allowed Not allowed
• acts/omissions prejudicial to the interest of the coop

Board of Directors Key Issues Records

Compostion 5 to 15 by general assembly Compensation Coop shall maintain records of accounts
Term 2yrs GR - Not entitled Records more than 5yrs old are disposed by complete destruction
strategic planning XPN By laws
Power direction-setting Reasonable per diem Reports
policy formulation except when Financial reports audit by CPA
holding other position/function a. incurred loss Socio-economic perf. reports
submitted to CDA
Prohibitions engagement in same business b. dividend rate < inflation rate
present to GenAss in a meeting
conflict of interest Tax Exemptions
Contracts by Self-dealing Directors
Filling of vacancy GR - Voidable a. Transaction between members - Exempt
by General Assembly XPN Presence not necessary for quorum b. Transaction between non-members
if cause is term expiration Vote not necessary for approval GR: Taxable
other causes and BOD can’t constitute quorum Fair and Reasonable XPN: Reserve&Undivided Savings < 10m Exempt
by BOD Reserve&Undivided Savings > 10m
other causes provided BOD can still quorom Income Tax interest on capital
Disloyalty of Directors Taxable on
Officers Committee GR: Liable damages VAT if coop is not VAT-exempt
chairperson a. Audit double the profit c. All coop are exempt in local taxes and taxes on
BOD GenAss
vice-chair b. Election XPN: Ratification by 3/4 of members transactions with banks and insurance companies
others c. Others

Capital Net Surplus Distribution Voting Requirement Summary

Members capital
Sources
Loans and borrowings Statutory Funds Cooperative Acts Directors Members
Revolving capital a. Reserve Fund Y1-Y5 = 50% min Amendment of AOC
Assistance 2/3 (all)
subs. yrs = 10% min Amendment of By-laws
Limitation on Share b. Educ.&Training Fund 10% maximum Delegation of the GA powers
No member of primary corp
Capital Holding c. Comm. Dev. Fund 3% minimum Division
shall hold more than 10% N/A
d. Optional Fund 7% maximum Merger and Consolidation
Ratification of act of disloyal director 3/4 (P+Q)
Share Ordinary
Par Vale < 1k Ratification of contracts by self-dealing directors
Preference Remaining Surplus
Removal of directors
Limit of Pref. Share: less than a. Interest on Capital not to exceed normal
voluntary dissolution Maj (All)
25% of total share capital b. Patronage Refund rate of return
compensation of directors Maj (All)
filling up of vacancy (expiration of term) N/A
Dissolution Liquidation other than expiration of term (no quorom) Maj (P+Q)
Voluntary No cr affected Cr affected settlement and realization deferment of pmt of interest of capital
Resolution Petition continue to exist for 3 yrs after

I
File calling of a special meeting of GA
dissolution for purpose of winding up removal of member in certain cases Maj (All)
maj of BOD +
Voting Req
maj of voting members delegation of powers to committee
by Failure of Operate non-commencement for 2 yrs filling up vacancy in the committee N/A
Involuntary non-operation for 2 yrs allocation of interest of share capital
by order of court Maj (P+Q)
by order of CDA recommendation to GA the removal of an officer
filling vacancy (other than exp) with quorum
Laboratory Cooperative cooperative organized by minors affiliated with a guardian coop all - all members P+Q - present and quorum

Name shall include the words laboratory cooperative of (name of guardian)

registration = juridical personality
dissolution of guardian = revocation of COR of laboratory
Division
Rules applicable All cooperatives may resolve to divide itself to 2 or
guardian is responsible for any violation of the laboratory
more cooperatives subject to CDA prescription
any member who reach age of majority has option to join the guardian coop
guardian coop may supervise more than one laboratory group
Merger and Consolidation
Causes of termination upon reaching age of majority (18yrs old) merger - Coop1 + Coop2 = Coop1 (Surviving Coop)
of membership such other causes provided in by-laws conso - Coop1 + Coop2 = Coop3 (Consolidated Coop)