Law Summary
Purpose of the Guidelines
- To ensure orderly and systematic establishment and operation of cooperative branches.
- To prescribe minimum requirements to facilitate continuous growth in membership and business expansion.
Scope of Application
- Applies to all cooperatives intending to set up or have existing branches.
- Cooperative banks are explicitly excluded from this guideline.
Definitions of Key Terms
- Area of Operation: Geographic area where cooperative members originate as specified in governing documents.
- Area of Business Operation: Principal business location as indicated in cooperative documents.
- Branch: A business office outside the principal office with full cooperative activities.
- Branch Office: The physical place where branch operations occur.
- Certificate of Authority: Official document issued by CDA authorizing branch operation.
- Cooperative: An entity registered with the CDA.
- Principal Office: Registered main office listed in cooperative articles.
- Satellite Office: Office within the area of operation offering limited services to members.
Essential Elements of a Branch Operation
- Must have an office with proper signage.
- Operational structure and manual of operation.
- Designated management staff.
- Operational plan and budget.
- Complete and updated books of accounts.
- Full business operations including membership applications and meetings.
- Display certificates of registration, authority, and business permits visibly.
Pre-Qualification Requirements for Establishing a Branch
- Minimum paid-up capital required depending on cooperative type:
- Primary: Php 2 Million
- Secondary: Php 5 Million
- Tertiary: Php 10 Million
- Startup operating capital for each branch:
- Primary: Php 1 Million
- Secondary: Php 3 Million
- Tertiary: Php 5 Million
- Must demonstrate actual operational growth without net loss for last three consecutive years.
- Net worth must be progressive over the last three years.
- Net worth computed as total equity including member’s equity, grants, reserves less unbooked losses and receivables.
Documentary Requirements for Branch Establishment
- Letter request signed by Chairman or General Manager.
- Business plan detailing activities, products, services, and three-year financial projections.
- General assembly resolution authorizing branch establishment and resource allocation.
- Organizational structure of proposed branch, showing key staffing.
- Certification confirming presence of manual of operations and exact branch location.
Processing Fee for Certificate of Authority
- Primary cooperatives: Php 500.00
- Secondary cooperatives: Php 2,000.00
- Tertiary cooperatives: Php 3,000.00
Issuance and Requirement of Certificate of Authority
- Cooperative branches cannot operate without a valid Certificate of Authority issued by the CDA after compliance with requirements.
Jurisdiction and Approval Authorities
- Extension Office Director approves certificate applications for primary and secondary cooperatives within their jurisdiction.
- For branches outside the jurisdiction, official notice is sent to concerned extension office.
- Executive Director approves certificate applications for tertiary cooperatives and notifies concerned extension offices.
Relocation or Transfer of Branch
- Authorization required from CDA.
- New location must be within the registered area of operation; otherwise, amendment of area of operation is needed.
- Notice of relocation must be posted and sent to CDA at least three months prior.
Branch Monitoring and Reporting
- Extension Office where the branch is located conducts validation and monitoring.
- Branch reports directly to its principal office.
- Principal office is responsible for consolidated reporting to the Extension Office where it is registered.
Voluntary Closure of Cooperative Branch
- Notice of closure must be posted prominently at branch at least three months prior.
- Notice sent via registered mail to the CDA Extension Office at least three months before closure.
- Certification of compliance with closure procedures signed by branch manager and noted by Chairman must be submitted within 10 working days after closure.
- Certification must be accompanied by board resolution authorizing closure.
Sanctions for Violations
- Violation of guidelines may lead to cancellation of Certificate of Authority and closure of branch.
- False certification submission results in:
- Non-issuance of Certificate of Good Standing to cooperative for one year.
- Fine of Php 10,000 imposed on the certifying officer.
Effectivity of the Circular
- Circular effective 15 days after Board approval and filing with the Office of Administrative Register (ONAR).
- Approved by Board of Administrators Resolution No. 131, S-2011 dated May 6, 2011.