Organization, Registration

and Management

of Cooperatives

Organizing a Cooperative

Organizing CooperativesOrganizing a cooperative can be

complex and simple. It requires an understanding of the basic needs

of the prospective cooperative members. It demands patience

from the organizer who must take the cooperative’s long term goals and objectives, and its visions a real part of the member’s lives.

How to organize a

Cooperative?

FIRST

Get organized. You must have at least 15 members to do that.

For what purpose(s) may a cooperative be organized with?

• Thrift and savings mobilization among members

• Fund generation and providing loans to members for productive and provident purposes

• Systematic production and marketing• Providing goods and services• Developing the expertise and skills of

members

• Acquiring lands and providing housing services

• Promoting and advancing the economic, social and educational status of the members

• Establishing, owning, leasing and operating cooperative banks, wholesale and retail complexes, insurance and agricultural/industrial processing enterprises and public markets

• Coordinating and facilitating the activities of the cooperatives

• Advocating the cause of the cooperative movement

• Ensuring the viability of cooperatives through the utilization of new technologies

• Encouraging and promoting self-help or self-employment as engines for economic growth and poverty alleviation

Goals to be attained to improve the quality of life of the members

•Increased income, savings, investments, productivity, and purchasing power•Maximum utilization of economies of scale, cost sharing and risk-sharing•Equitable distribution of net surplus and optimum social and economic benefits•Learning efficient and cooperative ways of doing things

• Propagation of cooperative practices and new ideas in business and management• Increased ownership in the wealth of the nation by

the lower income and the underprivileged groups• Cooperation with government, other cooperatives

and people-oriented organizations to further the attainment of the foregoing goals and objectives

• Common problems to be solved and basic needs to be provided

• Classify your cooperative

Who may become members of a primary cooperative?

What are the kinds of memberships in the cooperative?

Can government officers and employees join a cooperative?

Who may become members of a primary cooperative?

• Filipino of legal age – qualifications• Board of Directors• Exercise his rights only after having paid

the fees and acquired shares

What are the kinds of membership in the Cooperative?

REGULAR MEMBERS

Has complied with all the requirements

Entitled to all right and privileges stated in Cooperative Code and the coops by-laws

ASSOCIATE MEMBERS

Has no right to vote nor be voted

Entitled to rights and privileges stated in the coops by-laws only

*Meets up the minimum requirements of regular

membership, continues to patronize the cooperative for

(2) years

Can government officers and employees join a cooperative?• CDA officer or employee shall be

disqualified to be elected or appointed to any position

• Elected government officials of the government shall be ineligible to become officers and directors

• 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.

If Membership’s Denied

• May appeal to the General Assembly• The General Assembly may opt to create

an appeal and grievance committee, which members served for (1) year and shall decide appeals on membership application within 30 days upon receipt.– If it fails to decide within 30 days, the appeal

is deemed approved in favor of the applicant

Termination of Membership• Withdrawal of member• Death or insanity of a member in primary,

and the insolvency of dissolution in secondary and tertiary

• Vote of the majority of all the members of the board of directorshas not patronized the services of the

cooperative for an unreasonable period of time as may be fixed by the board of directors

continuously failed to comply with his obligations

has acted in violation of the bylaws and the rules of the cooperative

For any act or omission injurious or prejudicial to the interest or the welfare of the cooperative

SECOND

Reserve your proposed cooperative name.

• Cooperative Name Reservation Request Form (CNRRF)

• Submitted to CDA Central Office or its Extension Office

• Reservation fee shall apply

THIRD

Prepare a general statement called an

economic survey.

Economic Survey• A general statement describing the

structure and purposes of the proposed cooperative

• A project feasibility study (economic feasibility)

Structure• Describes the kind of cooperative being set

up whether it is primary, secondary or tertiary and whether it is a credit, consumer transport or any other type of coop.

Purpose• Defines the primary, secondary and other

objectives of the cooperative• Cooperative’s area of operation• Size of membership

FOURTH

Prepare the cooperative’s by-

laws.

By-laws• contain the rules and regulations

governing the operation of the cooperative• set of rules that determines how a

cooperatives is to be run without confusion

• Qualifications for membership; how they are acquired, maintained and lost

• Rights and liabilities of members• The procedure to be followed in cases of

termination of membership• 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

borrowing, 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

• Other matter pertaining to the purpose and activities of the cooperative

FIFTH

Prepare the articles of cooperation.

Articles of Cooperation

• shall be signed by each of the organizers and acknowledged by them if natural persons, and by the chairpersons or secretaries, if juridical persons, before a notary public

• the name of the cooperative, which must include the word “cooperative”

• the purpose or purposes and scope of business for which the cooperative is to be registered

• the term of existence of cooperative (not more than 50 years)

• area of operation and the postal address of its principal office

• the names, nationality and the postal addresses of the registrants

• the common bond of membership• The list of names of the directors who shall

manage the cooperative• 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

SIXTH

Secure bond of accountable officer(s).

• secured from a duly registered insurance or bonding company

• Every director, officer and employee handling funds, securities or property on behalf of the cooperative shall be covered by this

• The amount of the bond is to be decided upon by the Board of Directors

SEVENTH

Execute Treasurers Affidavit.

• Sworn statement of treasurer elected by the subscribers attached to the articles of cooperation

• At least 25% of the authorized share capital has been subscribed

• At least 25% of the total subscription has been paid (shall not be less than P15,000)

Upon RegisteringASC = P400,000

= 4,000 sharesArticles of Cooperation– member subscribes at least 10 shares (P1,000)– subscribe not more than 400 shares (P40,000)

To be registeredSSC = at least 1,000 shares (P100,000)

* 25% of ASCPSC = at least 250 shares (P25,000)

* 25% of SSC* not less than P15,000

Illustration

* not more than P1,000/sharepar value = P100

EIGTH

Complete the Pre-Membership Education

Seminar (PMES).

• All prospective member must have completed PMES

• Certificate of PMES

NINTH

Register your cooperative with the Cooperative

Development Authority (CDA).

• Submit the required documents in (4) copies and duly notarized

Economic SurveyArticles of CooperationBy-Laws

Surety bond of accountable officersTreasurer’s AffidavitApproved Cooperative Name Reservation SlipCertificate of PMES

Registering a Cooperative

Registering a Cooperative

Registration of a new co-operative under the Co-operatives Act 1992 is a 3 step process:• The Act requires a set of rules and a disclosure

statement be submitted to the Registrar for approval.

• Once this has occurred the proponents of the co-operative hold a formation meeting to formally adopt the rules and present the disclosure statement to prospective members.

• Registration occurs after the formation meeting when the Application for registration is submitted to the Registry.

Where do you register a Cooperative?

• Cooperative Development Authority• Main office = 827 Aurora Blvd.,

Immaculate Conception, Quezon City• CDA Extension Offices were set-up

What are the general requirements in registering a Cooperative?

Economic Survey (duly notarized)Articles of Cooperation (duly notarized)By-Laws (duly notarized)Surety bond of accountable officersTreasurer’s AffidavitApproved Cooperative Name Reservation SlipCertificate of PMES

How much is the registration fee?

• Memorandum Circular 2004-07, Series of 2004• Initial registration fee 1/10 of 1% of

authorized share or basic fee below whichever is higher:

Primary Cooperatives (Php 500.00)Secondary Cooperatives (Php 2,000.00)Tertiary Cooperatives (Php 3,000.00)Laboratory Cooperatives (Php 50.00)

For what purpose(s) may a federation of cooperatives be registered?

• To carry on any cooperative enterprise authorized under Article 6

• To carry on, any encourage and assist educational and advisory work relating to its member cooperatives

• To coordinate and facilitate the activities of its member cooperatives

• To print, publish, and circulate any newspaper of other publication in the interest of its member cooperatives and enterprises

• To enter into joint ventures with national or international cooperative of other countries in the manufacture and sale of products and/ or services in the Philippines and abroad

• 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

For what purpose(s) may a cooperative union be registered?

• To represent its member organization• To acquire, analyze, and disseminate economic,

statistical, and other phases of cooperatives within its area of operation

• To sponsor studies in the economic, legal, financial, social, and other phases of cooperation, and publish their results

• To promote the knowledge of cooperative principles and practices

• To develop the cooperative movement in their respective areas of operation

• To advice the appropriate authorities on all question relating to cooperatives

• To raise funds through membership fees and contribution , donations, and subsidies from local and foreign sources whether private or government

• To do and perform such other activities as may be necessary to attain these objectives

How soon should the CDA act on application for registration?

• 30 days• considered approved if no action

was made, unless application himself causes the delay

What should one do if application is denied?

• Appeal to the Office of the President• If fails to act within (90) days,

application is considered approved

What are the powers and capacities of a registered cooperative?

• To sue and be sued in its cooperative name• Of succession• To amend its Articles of Cooperative in accordance with the

provisions of R.A. 6938• To adopt by laws not contrary to law ,morals or public policy,

and to amend and repeal the same in accordance with R.A. 6938

• To purchase, receive, take of grant, 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 consolidated, as provided in R. A. 6938;

• To join federations federation or unions, as provided in R.A. 6938;

• To accept and receive grants, donations and assistance from foreign and domestic sources; and

• To exercise such other powers granted by R.A. 6938 necessary to carry out its purpose as stated in its Article of Cooperation.

What evidence confirms the approval of a registration?

Certificate of Registration from CDA