Question & AnswerQ&A (Republic Act No. 2023)
The Act is known as the Philippine Non-Agricultural Co-operative Act.
Congress aims to assist people in developing their enterprises on a co-operative basis to strengthen economic independence by promoting organized industrial production, marketing, distribution, credit, and improving processes to raise the standard of living and expand the national economy.
A cooperative is a non-profit organization of natural or juridical persons registered under this Act to achieve common economic and social benefits on a cooperative basis, including open and voluntary membership, democratic control, limited interest on capital, and distribution of savings proportionate to participation.
The Administrator of the Co-operatives Administration Office under the Department of Commerce and Industry is charged with the administration of the Act.
Any natural person, cooperative, or nonprofit group meeting the qualifications in the regulations and by-laws can qualify. Membership is voluntary and open to all persons residing in the area of operation who meet by-law qualifications. Also, government officers or employees may be members but elective government officers cannot hold cooperative offices.
Interest on share capital shall not exceed eight percent (8%) per annum on fully paid-up shares and such interest shall be non-cumulative.
Yes, cooperatives may be registered with or without limited liability, but liability is limited if the cooperative has a cooperative as a member.
Each member of a cooperative is entitled to only one vote regardless of the number of shares held. Voting by proxy is prohibited except for voting by mail or delegates if provided in the by-laws.
The Administrator may order the removal and disqualification of any officer, director, or committee member for fraud, gross negligence, violation of by-laws, or detrimental acts, after due hearing and recording reasons.
Any person or group using the word 'cooperative' in a business name without sanction may be fined up to two hundred pesos, with an additional fine of twenty pesos daily for continuing offenses.
Articles must include the cooperative's name, purpose, term, area of operation, subscribers' names and addresses, membership field, initial directors, capital details, and may include additional provisions consistent with the Act. They must be submitted to the Administrator with proposed by-laws and a survey report.
All cooperatives registered under earlier cooperative laws will be deemed registered under this Act, with by-laws and transactions continued unless inconsistent with the provisions of this Act.
The Administrator must record reasons for refusal. The cooperative may appeal to the Secretary of Commerce and Industry within two months, and the Secretary's decision is final.
Net savings are considered excess payments by patrons and not profit, to be distributed as prescribed, including allocation to reserve funds, educational funds, interest on capital, and patronage refunds.
The Administrator may order liquidation for reasons including cessation of business, insufficient capital, failure to report, or other causes. A liquidator is appointed with powers to control assets, conduct business winding up, and pay creditors, under Administrator supervision.