A cooperative is a duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common social or economic end, making equitable to contribution to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principle.
According to membership and territory, the following are the categories of cooperatives: In terns of membership: I .Primary -The members of which are natural persons of legal age; II .Secondary- The members of which are primaries; III. Tertiary - The member of which are secondaries upward to one or more apex organizations. Cooperatives whose members are cooperatives are called federations or unions. In terms of territory, cooperatives are categorized according to areas of operation which may not be coincide with the political subdivisions of the country.
What are the General Steps in Forming a Cooperative?
First , get organized
Second , prepare a general statement called an economic survey
Third , draft the cooperatives by-laws
Fourth , draft the articles of cooperation
Sixth , register your cooperative with the Cooperative Development Authority (CDA)
In every step, you may consult the CDA. The CDA emphasizes education as a key to the success of cooperatives.
Who May Become Members of a Primary Cooperative?
If you are a Filipino of legal age, you can be a coop member if you meet the qualifications prescribed by the coop's by laws.
The board of directors act on application for membership.
A member may exercise his rights only after having paid the fees for membership and acquired shares in the cooperative,
What are the Kinds of Membership in the Cooperative?
A cooperative has two kinds of members; regular members and associate members.
A regular member is entitled to all the rights and privileged of membership as stated in the Cooperative Code and the coops by- laws.
An associate member has no right to vote and to be voted upon and is entitled to such rights and privileged provided by the cooperatives by laws.
What is the Minimum Number of Members in a Cooperative?
Fifteen (15) natural persons of legal age who are citizens of the Philippines
Can Government Officers and Employees Join a Cooperative?
Yes, provided that:
Any officer of the government of the CDA shall be disqualified to be elected or appointed to any position in a cooperative;
Elected officials of the government, except barangay officials, shall be ineligible to become officers and directors of cooperatives; and
Any government employee may, in the discharge of his duties as member in the cooperative, use official time provided that the operations of the office where he works are not adversely affected.
The qualifications for membership; how they are acquired, maintained and lost;
The rights and obligations of members;
The condition for transfer of a share of interest;
The rules and procedures covering agenda, time, place, and manner of calling, covering , conduct meeting, quorum requirements, voting system, and other, matters related 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, board of directors, committees and the officers, and their qualifications and disqualifications;
The manner in which capital may be raise and purpose for which it can be utilized;
The mode of custody and investment of net surplus;
The accounting and auditing systems.
The manner and limitations of loaning and barrowing, including limitations;
The methods of distribution of net surplus;
The manner of adopting, amending, repealing, and abrogating by-laws;
A conciliation or mediation mechanism for the amicable settlement of disputes among members, directors, officers and committees; and
Other matter pertaining to the purpose and activities of the cooperative.
All regular members who meet the qualification and none of the disqualification set by the laws of the cooperative can be elected to the board of directors.
How Are The Officers Of The Cooperative Chosen?
The board of directors elect among themselves only the chairman and vice- chairman.
Then they either elect or appoint the other officers needed by the cooperative, such as the treasurer who takes custody of all the moneys, securities and papers and maintains complete records of its cash transactions and secretary who keeps the records of the cooperative.
What Are The Committees Needed By A Cooperative?
Through the bylaws, a cooperative may be form any committee it thinks necessary for its operation.
An executive committee may also be formed. The board of directors appoints its members and may, through a majority vote, delegate powers to it.
As a reminder an audit committee must be provided for in the bylaws of the cooperative.
Unless the by laws define it otherwise, a quorum consist of 25% of all the regular members entitled to vote. For the board of directors a simple majority of its member makes a quorum.
What Books Should Be Maintained And Kept Open?
Books to be maintained and kept open to the members of the cooperative and the CDA are :
A copy of the Cooperative Code of the Philippines and all other laws about cooperatives;
A copy of the regulations of the CDA;
A register of member;
Minutes of the meetings of the general assembly, board of directors and committees; Share books;
Financial statements; and
Other documents as may be prescribed by laws or the by-laws.
Are Cooperatives Required To Be Audited Annually?
Yes, Cooperatives are subject to an annual audit by an auditor who is independent of the cooperative being audited and of any subsidiary of the cooperative and is a member of any recognized professional accounting or cooperative auditor's association with similar qualifications.
Yes. An annual report about the affairs of the cooperative must be given to each member and to the federation/union to which it is affiliated and the CDA every fiscal year. Failure to file the annual report may result in cancellation of the certificate of registration
What Are The General Privileges Enjoyed By Cooperatives?
These privileges are:
Three right to deposit their valuable in government offices free of charge with the government official acting as custodian of such valuables.
Free use of space, when the cooperative members are government employees, in the same government office.
Special types of coops like cold storage, electricity, transport and similar services can open their membership to all persons qualified in their areas of operation.
The preferential right to supply government offices with their produce, in the allocation of fertilizer and rice distribution, use of butteries for shipment of their goods, and in the management of public markets.
Entitlement to loans, credit line, and rediscounting of notes with government financial institution like PNB, Land Bank and DBP.
Exemption from prequalification requirements when bidding for a government project.
The right to be represented by the provincial or city fiscal or the Office of the Solicitor general, free of charge in legal suits.
What are the benefits derived from membership in cooperatives?
Members develop the habit of thrift and the wise use of money.
Members avail of loans at reasonable rate of interest for productive and provident purposes; thus, increasing the members' income.
Members develop awareness in solving common problems or needs among themselves.
Members develop the feeling of belongingness, love and concern for fellowmen.
Membership in cooperative inculcates unified participation in community affairs
How Is The Net Surplus Of A Cooperative Allocated And Distributed?
As far as the coop is concerned, this excess payment or surplus is considered as having been returned to the members if the surplus is distributed in the following manner:
First priority goes to the reserve fund at least 10 percent of the net surplus.
Second priority goes to the Education and Training fund which is not more than 10 percent of net surplus
Third priority is an optional fund, a land and building fund, community development fund and any other necessary funds
What Are The General Requirements in Registering a Cooperative?
You will need four copies each of the Economic Survey, By -Laws and Articles of Cooperation. The Articles of Cooperation should be duly notarized and accompanied by there following.
Bonds of the accountable officers (any director, officer and employee handling funds, securities offices and employee handling funds, securities or properties on behalf of the cooperative. The board of directors determine the amount of bonds required based on the initial network which shall include the paid-up capital, membership fees and other assets of the cooperative at the time of registration); and
Sworn statement of the treasurer showing that at least 25% of the authorized share has been subscribed and at least 25% of the total subscription has been paid. The paid-up capital must not be less than P2,000. It must be noted that no member may own more than 20% of the subscribed capital; and that each share must not be less than P1.00