This document discusses good governance and management for cooperatives. It defines governance as a system of relationships and ideals to control power and achieve organizational goals. Good governance involves serving stakeholders adequately and fairly, competent management, accountability, transparency, and creating shareholder value. Common governance issues include lack of member participation, concentrated power, and mismanagement. The document outlines guiding principles, levels of governance, and characteristics of good governance like participation, rule of law, and accountability. It discusses the roles and responsibilities of key cooperative actors like shareholders, boards of directors, and management. The functions of boards and good board practices are also summarized.

1. Good Governance and
Management for
Cooperatives
COOPERATIVE DEVELOPMENT AUTHORITY
CALABARZON

2. DISCUSSION POINTS
2
• Meaning of Governance
• Tests of Good Governance
• Governance Common Issues and Problems
• Good Governance Guiding Principles
• Levels of Governance
• Characteristics of Good Governance
• Key Cooperative Actors
• Functions of the Board of Directors
• Board Good Practices
• Board Relationships
• Duties and Responsibilities of Officers
• Managing Successful Meetings

3. 3
GOVERNANCE
• System
• Ideals
• Relationships

4. What is
GOVERNANCE?
4
• a system designed to control and
distribute power within an organization
• ideals to be done to realize organizational
goals and desires

5. What is
GOVERNANCE?
Set of relationships among the
board of directors,
management, and owners of a
business entity through which
the objectives are decided and
the means for achieving them
and monitoring performance
are determined.
Board of
Directors
Owners
Management

6. 6
Tests for
GOOD GOVERNANCE
• Does the cooperative serve all stakeholders
ADEQUATELY and FAIRLY in providing services and
material information?
• Is management COMPETENT to run the cooperative?
• Does it do so with ACCOUNTABILITY for its actions?
• Does the business entity operate in ACCORDANCE WITH
THE RULE OF LAW?
• Is management TRANSPARENT in all of its transactions?
Books to be kept open: See Art. 52 of RA 9520
• Has management created SHAREHOLDER VALUE?

7. 7
GOVERNANCE:
COMMON ISSUES
AND PROBLEMS
• Reports and other required data not given in advance
of scheduled meetings
• Insufficient discussion of complex issues
• Lack of free exchange of ideas and opinions
• Lack clear definition of the roles and responsibilities of
the board on one hand and management on the other
• Lack of knowledge of the business, statutory
requirements, current and best business practices
• Lack of time devoted to board work
• Insufficient oversight in audit and risk management

8. 8
GOVERNANCE:
COMMON ISSUES
AND PROBLEMS
• Power And Decision Making In Cooperatives Are Often
Concentrated At The Top In Too Few Hands;
• Lack Of Participation And Involvement From The
Members;
• Election Is Not Contested
• Personnel Relationships And Deeply Rooted Networks
Which Weaken Or Prevent Objective Decision-making;
• Mismanagement/Financial scandals;
• Poor cooperative environment;
• Poor internal control system;
• Failure of democracy;
• Unbalanced relationship between management and
elected directors.
• Lack of second line leaders

9. 9
GOVERNANCE:
GUIDING
PRINCIPLES
1st Principle
It is the paramount duty of the board of directors to
select and oversee the chief operating officer.
It is the responsibility of management to operate the
business in an effective, efficient, and ethical
manner in order to produce value for stakeholders.
2nd Principle
3rd Principle
It is the responsibility of management, under the
oversight of the board and audit committee, to
produce timely and factual financial statements.

10. 10
GOVERNANCE:
GUIDING
PRINCIPLES
4th Principle
It is the responsibility of the board and the audit committee to
engage an independent accountant to audit the financial
statements prepared by management.
It is the responsibility of the independent accountant to ensure
that he is in fact independent and has no conflict of interest..
5th Principle
6th Principle
Employees shall be dealt with in a fair and equitable manner

11. 11
LEVELS OF
GOVERNANCE
External
Governance
Internal
Governance
Individual
Governance
individual board members and managers must
maintain ethical conduct and professionalism
and to speak with a single voice once
decisions have been made.
Unlike profit-motivated entities, cooperative
must address its democratic and member-
driven nature.
All financial institutions are expected to
comply with the standards of transparency,
auditing, and financial reporting.

12. INTEGRITY
ng
ds.
y
ASPECTS OF INDIVIDUAL
GOVERNANCE
12
COMPETENCE
COMMITMENT

13. ASPECTS OF INTERNAL
GOVERNANCE
13
STRUCTURE
CONTINUTIY
BALANCE
ACCOUNTABILITY

14. ASPECTS OF EXTERNAL
GOVERNANCE
14
TRANSPARENCY
ctivities
public in
ally
lable to
COMPLIANCE
nt
of
PUBLIC
ACCOUNTABILITY

15. 15
Characteristics of Good Governance
1. Participatory
2. Follows the rule of law
3. Transparent
4. Responsive
5. Consensus oriented
6. Equitable and inclusive
7. Effective and efficient
8. Accountable

16. 16
PARTICIPATORY
• Participation of members is a key cornerstone of good governance
• Participation could be either direct (AGA) or representative
(intermediate) through officers or committee members
Follows the rule of law
• Good governance requires fair legal frameworks that are enforced
impartially.
• Good governance also requires full protection of rights.
transparent
• Making and enforcing decisions in a manner that follows rules and
regulations
• Making information freely available and directly accessible
• Providing sufficient and easily understandable information

17. 17
responsive
• Good governance requires that institutions and processes try to serve
all stakeholders within a reasonable timeframe
Consensus oriented
• Mediation of the different interests to reach a broad consensus on
what is the best interest of the whole organization and how this can
be achieved
Equitable and inclusive
• Ensuring that all members of the organization feel that they have a
stake in it and do not feel excluded from the mainstream
• All groups, particularly the most vulnerable, have the opportunities
to improve or maintain their well being

18. 18
Effective and efficient
•Processes and institutions produce result that meets the needs of society
while making the best use of resources at their disposal
•Sustainable use of natural resources and the protection of the environment
accountable
•Officers are responsible to the stakeholders and to the regulator and the
public
•Cannot be enforced without TRANSPARENCY and RULE OF LAW

19. Benefits of Effective
Governance
19
Improved organizational
PERFORMANCE
More effective utilization
of RESOURCES
Promotes economic/
FINANCIAL STABILITY
and facilitates GROWTH

20. Benefits of Effective
Governance
20
Enhanced CREDIBILITY for
the organization –
dependent on
trust relationship
Preferred EMPLOYER
and preferred
DIRECTORSHIP
Greater
respect for
ORGANIZATIONAL
BRAND

21. 21
LET US DETERMINE TOGETHER THE
GOVERNANCE AND MANAGEMENT ISSUES

22. 22
1ST
2ND
3RD

23. 23
4TH
5TH
6TH

24. 24
7TH
8TH
9TH

25. 25
KEY COOPERATIVE ACTORS
Shareholders
Board of Directors
Management
have little voice in the day-to-day management of operations but have the right
to elect directors to look out for their interests and to receive the information
they need to make investment and voting decisions.
Oversees management performance on behalf of shareholders
Runs the day-to-day operations of the cooperative and informs the
board of the status of operations

26. Functions of the
Board
FORMULATING POLICIES
Considering such key policy areas
as:
• Purpose and philosophy
• Organization and staffing
• Operations and infrastructure
• Products and services
• Financial management
OVERSEEING MANAGEMENT
• Planning for management succession
• Understanding, reviewing, & monitoring
strategic plans
• Understanding and reviewing annual plans
and budgets
• Focusing on the integrity and clarity of
financial statements and reporting
• Engaging outside auditors and considering
independence issues
• Advising management on significant issues
• Reviewing and approving significant
cooperative actions
• Overseeing cooperative governance
26

27. Functions of the
Board
MANAGING RISKS AND CRISES
• Identifying possible risks and crisis
• Drawing up plans and policies to
control, mitigate, or eliminate risks
and crisis
• Reviewing periodically risks and
crisis management plan and policies
PROMOTING THE ORGANIZATION
• Attending social events
• Communicating with board members
between meetings
• Complying with government and federation
regulations and requirements
27

28. Functions of the
Board
ADMINISTRATIVE RESPONSIBILITIES
• Attending meetings
• Accepting members
• Hiring chief executive officer
• Performing housekeeping functions
28

29. 29
BOARD OF
DIRECTORS
GOOD PRACTICES
• Directors must participate in board meetings, review
relevant materials, serve on board committees, and
prepare for meetings and for discussion with
management
• Directors must be given incentives to focus of long-
term stakeholder value
• Acceptance of a new directorship should be
thoroughly considered in order not to compromise
the ability to perform present responsibilities
• Board responsibilities may be delegated to
committees to permit directors to address key areas
more deeply
• The board’s agenda must be carefully planned, yet
flexible enough to accommodate emergencies and
unexpected developments

30. 30
BOARD OF
DIRECTORS
GOOD PRACTICES
• Management presentations should be scheduled for
discussion
• The board must have accurate, complete information to do its
job
• New directors must be provided with materials and briefings to
permit them to become familiar with the business, industry,
and corporate governance practices
• From time to time, it may be appropriate for the board and
committees to seek advice from outside advisors
• The performance of the full board and the committees should
be evaluated annually
• The board should have a process for evaluating whether the
individuals sitting on the board bring the skills and expertise
appropriate for the business and how they work as a group
• Planning for the departure of directors and the welcoming of
new board members are essential

31. 31
BOARD
RELATIONSHIPS
BOARD
OF
DIRECTORS
SHAREHOLDERS
EMPLOYEES
COMMUNITIES
GOVERNMENT

32. 32
BOARD
RELATIONSHIPS
WITH SHAREHOLDERS
Communicating candid, timely, clear, and
consistent information to make them
understand the business, risk profile,
financial condition, operating performance,
and trends

33. 33
BOARD
RELATIONSHIPS
WITH EMPLOYEES
• Treating employees fairly and equitably
• Providing employees with competitive compensation and
benefits
• Establishing mechanisms for employees to alert the
board and management to allegations of misconduct
without fear of retribution
• Communicating honestly with employees about
operations and financial performance
• Providing employees with enough resources and
technology, and conducive work environment

34. 34
BOARD
RELATIONSHIPS
WITH COMMUNITIES
• Making donations or contributions
• Encouraging directors, managers, and
employees to form relationships with these
communities
• Promoting awareness of health, safety,
environmental, and other concerns

35. 35
BOARD
RELATIONSHIPS
WITH GOVERNMENT
• Developing, implementing, and maintaining
effective legal compliance programs
• Contributing to the public policy dialogue
• Involving in discussions about the
development, enactment, and revision of
relevant laws and regulations

36. 36
Duties and Responsibilities of Officers

37. THE BOARD OF
DIRECTORS (Chairperson )
37
▪ Set and prepare the agenda for board meetings in coordination with the other
members of the Board of Directors;
▪ Preside all meetings of the Board of Directors and General/Representative Assembly;
▪ Sign contracts, agreements, certificates and other documents on behalf of the
cooperative as authorized by the Board of Directors or by the General/Representative
Assembly as prescribed in their By-laws; and
▪ Perform such other functions as may be authorized by the Board of Directors.

38. THE BOARD OF
DIRECTORS
(Vice Chairperson )
38
▪ Perform all duties and functions of the Chairperson in the absence of the
latter; and
▪ Perform such other duties as may be delegated to him/her by the Board of
Directors.

39. Other Officers: Treasurer
39
▪ Ensure that all cash collections are deposited in accordance with the policies set by
the Board of Directors;
▪ Have custody of funds, securities, and documentations relating to assets, liabilities,
income and expenditures;
▪ Monitor and review the financial management operations of the cooperative, subject to
such limitations and control as may be prescribed by the Board of Directors;
▪ Ensure the maintenance of full and complete records of cash transactions;
▪ Ensure maintenance of a Petty Cash Fund;
▪ Maintain a Daily Cash Position Report; and
▪ Perform such other functions as may be prescribed in the By-laws or authorized by the
Board of Directors.

40. Other Officers: Secretary
40
▪ Keep an updated and complete registry of all members;
▪ Record, prepare and maintain records of all minutes of meetings of the Board of Directors and the
General/Representative Assembly;
▪ Ensure that the necessary actions and decisions of the Board of Directors are transmitted to the
management for compliance and implementation;
▪ Issue and certify the list of members who are entitled to vote as determined by the Board of Directors;
▪ Prepare and issue Share Certificates and maintain the share and transfer book;
▪ Serve notice of all meetings called and certify the presence of quorum in the conduct of all meetings of the
Board of Directors and the General/Representative Assembly;
▪ Keep copies of the Treasurer's reports and other reports;
▪ Serve as custodian of the cooperative seal; and
▪ Perform such other functions as may be prescribed in the By-laws or authorized by the Board of Directors.

41. Committees of the
Cooperative :
Election Committee
41
▪ Formulate election rules and guidelines and recommend to the General/Representative Assembly for approval;
▪ Recommend necessary amendments to the election rules and guidelines, in coordination with the Board of
Directors, for the General/Representatives Assembly's approval;
▪ Implement election rules and guidelines duly approved by the General/Representative Assembly;
▪ Supervise the conduct, manner and proceedings of election and other election- related activities and act on the
changes thereto;
▪ Canvass and certify the results of the election;
▪ Proclaim the winning candidates;
▪ Decide election and other election-related cases except those involving the Election Committee or its members;
and
▪ Perform such other functions as prescribed in the By-laws or authorized by the General/Representative Assembly.

42. Committees of the
Cooperative :
Audit Committee
42
▪ Audit the performance of the cooperative and its various responsibility centers;
▪ Monitor the adequacy and effectiveness of the cooperative's management and internal control system;
▪ Review continuously and periodically the books of account, financial records, and policies governing internal control,
accounting and risk management to ensure that these are in accordance with the cooperative principles and generally
accepted accounting procedures;
▪ Review the internal audit report of the cooperative;
▪ Follow up actions on the internal and external audit recommendations;
▪ Discuss the result of the internal audit with the Board of Directors; Submit reports on the result of the internal audit and
recommend necessary changes on policies and other related matters on operation to the General/Representative Assembly;
▪ Review, approve or amend the report and recommendation of the Ethics Committee involving violations of the Code of
Governance and Ethical Standards if the remaining members of the Board of Directors fail to act on said report and
recommendation within a period of thirty (30) days, or the violation is committed by the majority of the Board of Directors; and
▪ Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly.

43. Committees of the
Cooperative :
Mediation and Conciliation
Committee
43
▪ Conduct mediation-conciliation proceedings and services;
▪ Formulate, develop and improve the Conciliation-Mediation policies, guidelines and program and ensure its proper
implementation;
▪ Monitor Conciliation-Mediation program and processes;
▪ Submit semi-annual reports of cooperative cases to the Authority within fifteen (15) days after the end of every
semester;
▪ Accept and file Evaluation Reports;
▪ Submit recommendations for improvement to the Board of Directors;
▪ Recommend to the Board of Directors any member of the cooperative for Conciliation-Mediation Trainings as
Cooperative Conciliator-Mediator;
▪ Issue the Certificate of Non-Settlement ( CNS);
▪ Act as conciliator-mediator during their term, provided the persons who will mediate are mutually selected by both
parties; and
▪ Perform such other functions as may be prescribed in the By-laws or authorized by the Board of Directors.

44. Committees of the
Cooperative :
Ethics Committee
44
▪ Formulate, develop, implement and monitor the Code of Governance and Ethical Standards (CGES)
to be observed by the members, officers and employees of the cooperative subject to the approval of
the Board of Directors and ratification by the General/Representative Assembly;
▪ Conduct initial investigation or inquiry, upon receipt of a complaint involving violations of the Code of
Governance and Ethical Standards.
▪ Submit report on its recommendation together with the appropriate sanctions, to the Board of
Directors for its proper action, or to the remaining members of the Board of Directors, if the violation is
committed by any members of the Board of Directors. Provided, that if the remaining members of the
Board of Directors fail to act on the report within a period of thirty (30) days, or the violation is
committed by the majority of the Board of Directors, the Audit committee shall act on the same; and
▪ Perform such other functions as may be prescribed in the By-laws or authorized by the Board of
Directors.

45. Other Committees.
45
▪ Other committees that may be created shall assist in the formulation of
policies and rules and in the implementation of the service of the cooperative.
Their powers, functions, and responsibilities shall be defined in the By-laws.

46. 46
The Management
• The Board of Directors appoints this group of
professional and functional staff
• They are not answerable to the General Meeting
• The Board, however, appoints one ‘nodal’ or ‘chief
executive’ whose task is to implement the decisions
of the Board and for that purpose has the authority
seek financial and personnel support.

47. 47
The Management
Rule 7,Section 4, IRR, 4.9 The General Manager shall:
a.) Oversee the overall day to day business operations of the cooperative by providing
general direction, supervision, management and administrative control over all the operating
departments subject to such limitations as may be set forth by the Board of Directors or the
General Assembly;
b.) Formulate and recommend in coordination with the operating departments under his/her
supervision, the Cooperative’s Annual and Medium Term Development Plan, programs and
projects, for approval of the Board of Directors and ratification of the General Assembly;

48. THE MANAGER
48
Rule 7,Section 4, IRR, 4.9 The General Manager shall:
c.) Provide systems and procedures in the implementation of policies;
d.) Implement the duly approved plans and programs of the Cooperative and
any other directive or instruction of the Board of Directors;
e.) Provide and submit to the Board of Directors monthly reports on the status
of the Cooperatives operation vis-à-vis its targets and recommend
appropriate policy or operational changes, if necessary;

49. THE MANAGER
49
Rule 7,Section 4, IRR, 4.9 The General Manager shall:
f.) Represent the Cooperative in any agreement, contract, business dealing
and in any other official business transaction as may be authorized by the
Board of Directors;
g.) Ensure compliance with all administrative and other requirements of
regulatory bodies; and
h.) Perform such other functions as may be prescribed in the By-laws or
authorized by the General Assembly.

50. THE MANAGER
• The chief executive is
expected to report to
the Board. In many
cases, one of the
Board members is
authorized to look
after the management
and business of the
cooperative.
• The manager is the
source of information
that enables the Board
to take decision.
There is, therefore,
the need for the
relationship between
the Manager and the
Board to be congenial,
cordial and smooth.
• THERE IS NO
ROOM FOR
CONFLICT.
Harmonious
relationship between
the two makes the
cooperative an
enlightened
institution.
50

51. 51
Policy vs. Procedures
POLICIES
• Can be board
approved
• Can be board
monitored
PROCEDURES
• management developed
• management monitored

52. 52
WHY COOPERATIVES FAIL OR THRIVE?

53. Reasons for Failure of
Cooperatives
53
• Poor selection of directors, especially those who fail to support
their cooperative;
• Members who join but never use their cooperative and bypass it
for a small gain elsewhere;
• Members who use cooperatives but fail to take responsibility;
• Each member must be ready to accept responsibility when
asked, or as the need arises;
• Every member should have an equal opportunity to be president
of the cooperative;

54. Reasons for Failure of
Cooperatives
54
• Members who do not attend annual meetings;
• Directors who fail to attend Board meeting and take unanimous
decisions;
• Lack of consistent membership education about the problems
cooperative faces;
• Not supporting the cooperative with enough money [risk capital]
to get the job done;
• Low-cost management – it is the most expensive item for a
cooperative;
• High priced management is usually the least expensive item;
• Not closely watching the formation of cliques and special interest
groups;

55. Reasons for Failure of
Cooperatives
55
• Concealing facts about a cooperative; Errors in financial policy, such
as over-extension of credit, too little capital;
• Poor accounting records, delayed Audit Reports, non-compliance of
reports;
• Lack of financially sound, systematic programme for reimbursement
of equity;
• Errors in educational and social work – failure to develop member
loyalty;
• Management errors, such as dishonesty, ineffective management,
incompetent directors, nepotism, poorly conducted meetings,
admittance of disloyal and dissatisfied members.

56. “Good governance depends on ability to
take responsibility by both administration
as well as people.”
Narendra Modi
56

57. 57
Thank you very much for your time and unwavering attention throughout this
presentation.
It was lively, engaging, educative, and fulfilling because of your presence.
THANK YOU!
CDA-RIZAL FIELD OFFICE