Question & AnswerQ&A (Republic Act No. 6938)
The official title is the "Cooperative Code of the Philippines."
The policy is to foster the creation and growth of cooperatives to promote self-reliance, economic development, and social justice, encouraging the private sector to form cooperatives and ensuring government assistance without infringing on cooperative autonomy.
A cooperative is a duly registered association of persons with a common bond of interest, voluntarily joined to achieve lawful common social or economic goals, making equitable capital contributions and sharing risks and benefits according to universally accepted cooperative principles.
The principles include open and voluntary membership, democratic control (one-member-one-vote for primary cooperatives), limited interest on capital, equitable distribution of net surplus, cooperative education, and cooperation among cooperatives.
At least fifteen (15) natural persons who are citizens of the Philippines with a common bond of interest residing or working in the intended area of operation may organize a cooperative.
Membership includes natural persons, cooperatives, or nonprofit organizations with juridical personality that meet qualifications set by the bylaws; however, only natural persons may be members of primary cooperatives.
Each member of a primary cooperative has one vote (one-member-one-vote). Secondary and tertiary cooperatives have five votes as delegates representing member cooperatives.
A cooperative exists for up to fifty (50) years from registration, renewable by amendment of the articles of cooperation for additional periods not exceeding fifty years, with extensions not allowed earlier than five years before expiration unless justified.
Termination may occur due to withdrawal with 60 days' notice, death, insanity, insolvency, dissolution, or board vote for reasons such as failure to patronize services, continuous noncompliance, violation of bylaws, or acts prejudicial to the cooperative.
Unauthorized use results in imprisonment of one year and/or fine up to P1,000. Direct or indirect intervention by public officials incurs imprisonment of 1 to 5 years and/or a fine of not less than P5,000.
Members have limited liability and are liable up to the extent of their contribution to the cooperative's share capital.
A quorum consists of twenty-five percent (25%) of all members entitled to vote.
Exclusive powers include approval of amendments to articles and bylaws, election or removal of board members, approval of developmental plans, and matters requiring two-thirds vote of all members.
Net surplus shall be allocated to reserve fund (minimum 10%), education and training fund (up to 10%), optional funds (up to 10%), and the remainder distributed to members as interest and patronage refunds.