Lectures for Basic Seminar on

Cooperative Development
(Pre-Membership Education Seminar)

Adiong Memorial Polytechnic State College

March 25-27, 2007

GAPHOR M. PANIMBANG

What Is A Cooperative?
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.

What are the Principles of

Cooperativism?
The first principle is anchored on voluntarism
The second principle is democracy
The third principle is the limitation of share capital interest
The fourth principle is sharing all location of cooperatives
surplus or savings.
The fifth principle, makes provision for the education and
training of cooperatives members, officers and employees,
and of the general public in the principles and techniques of
cooperation.
The sixth principle harps on the promotion of cooperation
between cooperatives at local, national and international
levels
The seventh principle is the concern for community by
working for its sustainable development through policies
approved by the cooperative members.

What are the basic laws that govern

organization and administration of
cooperatives in the Philippines ?
Republic Act 6938 known as
Cooperative Code of the Philippines .
Republic Act 6939 creating the
Cooperative Development Authority

What Are The Kinds Of

Cooperative?
Credit Cooperative- promotes thrift and savings among its
members and creates funds in order to grant loans for
productivity
Consumer Cooperative- the primary purpose is to procure
and distribute commodities to member and non-members;
Producers Cooperative - undertakes joint production
whether agricultural or industrial;
Service Cooperative- engages in medical, and dental care,
hospitalization, transportation, insurance, housing , labor,
electric light and power, communication and other services;
and
Multi- Purpose Cooperative - combines two (2) or more of
the business activities of these different types of
cooperatives;

Multi-Purpose Cooperative contn

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 bylaws.
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.

What is an Economic Survey?

An economic survey is a general statement
describing the structure, purpose, economic
feasibility of the proposed cooperative, area
of operation, size of membership and other
pertinent data.
It is, in fact a project feasibility study
The 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.

What Are Cooperative By-Laws?

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.

What does The Article of

Cooperation contain?
The Article of Cooperation is a duly notarized document that
legally binds all the signatories in the formation of a
cooperative.
It should contain:
The name of the cooperative which shall include the word "
cooperative, " e.g. Sta. Maria Multi-Purpose Cooperative;
The purpose of the cooperative and scope of business;
The term of existence of the cooperative (not more than 50
years);
The area of operation and the postal address of the registrants;
The common bond of membership;
The list of names of the directors who shall manage the
cooperative; and
The amount of its share capital, the names, and residences of
its contributors and a statement of whether the cooperative is
primary, secondary of tertiary in accordance with Article 23 of
R.A 6938.

Does A Cooperative Follow A

Basic Organizational Structure
Yes.
Your cooperative will need at least the
following for its day to day operation.
General Assembly
Board of Directors
Set of Officers
Committee System
Hired management/ paid employees

What Is The General Assembly?

The General Assembly is the highest policy-making body of
the cooperative and is the final authority in the management
and administration of the affairs of the cooperative.
It is composed of members who are entitled to vote, duly
assembled and constituting quorum.
The general assembly holds at least one meeting a year; the
date of the meeting is fixed in the by laws, or within 90 days
after the close of each fiscal year.
For newly registered cooperatives a special general
assembly meeting must be called within 90 days from the
date of approval.

What Are The Powers Of The

General Assembly?
The General has the following exclusive
powers which cannot be delegated:
To determine and approve amendments to the
articles of cooperation and by laws;
To elect or appoint the members of the board of
directors, and to remove them for cause;
To approve developmental plans of the
cooperative; and
Other matters requiring a 2/3 vote of all the
members of the general assembly

What Is The Board Of Directors?

The Board of Directors is the body that formulates policies,
directs, supervises and manage the business of the
cooperative.
It is composed of five (5) to fifteen (15) members elected by
the general assembly.
Their term of office is determined by the laws of the
cooperative. A term of office must not exceed two years. Also
no director can serve for more than three (3) consecutive
terms.
The board of directors must hold monthly meetings, unless
the by laws say otherwise. Special meetings may be called
any time by the chairman.
Directors cannot attend or vote by proxy at board meetings.

Who Can Be Members Of The

Board Of Directors?
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.

What Constitutes A Quorum?

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.

Is There A Needed For An Annual

Report?
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?
Economic Benefits
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.

Social Benefits
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

How Much Is The Registration

Fee?
CDA Memorandum Circular No. 92-004,
effective 01 May 1992 provides that
provides that registration fee shall be one
tenth (1/10) of one percent of the paid- up
share capital with the minimum of:
P250 for new primary cooperative;
P500 for secondary cooperative,
P2,000.00 for tertiary cooperative while
laboratory cooperative is free of charge.

Cooperative Process
WELFARE

GENERAL
ASSYMBLY

Elect/appoints

BODs
Committee
Officers/
members

Plan/formulates

Articles of
Cooperation
By Laws,
Rules & Regulations
Other policies

What are the Success Factors of

Cooperative
Members recognition of common needs
Members determination to help themselves
Members conviction that group action offer
advantageous
Presence of good members and capable
dedicated leaders
Good record keeping system
Frequent Audit
Continuous cooperative education
Training of officers and members
Proper Guidance
Other factors: Financial Assistance

Savings Mobilization &

Capital Build Up Program
(SMCBUP)

Capital Build Up
A cooperative shall have a capital
formation process for the operation of its
business
The capitalization of cooperatives and the
accounting therefore shall be governed by
the provisions of the Cooperative Code and
the regulations issued hereunder
The shares of cooperatives are registered
with the CDA those of corporations are
registered with SEC

Capital Sources
Art 73. Capital Sources Cooperative
registered under this Code may derived
their capital from any of all of the following:
Members share capital;
Loans and borrowings including deposits;
Revolving capital which consists of the differed
payment of patronage refunds, or interests on
share capital; and
Subsidies, donations, legacies, grants, aids and
such other assistance from any local or foreign
institution whether public or private

Savings Mobilization
Savings is encouraged to cooperatives to augment
the group business that members engaged into
It could be used for expansion of the enterprise.
Some of the savings schemes used by most
cooperatives are the following:
Piso-piso deposito or One Peso a day savings
Birthday Regalo (for Christians) & Ramadhan Regalo (for
Muslims)
Raffle tickets or raffle draws
Twenty Five centavos retention to every item being sold
by cooperative store (or any amount agreed)
Other savings schemes

Wassalam!