Law Summary
Definition and Principles of Cooperatives
- A cooperative is an autonomous, registered association of persons united by common interests.
- Members contribute equitably to capital, patronize services, and share risks and benefits.
- Cooperatives operate under principles including voluntary and open membership, democratic control, member economic participation, autonomy, education, cooperation among cooperatives, and concern for community.
Organizational Requirements and Registration
- Primary cooperatives require at least 15 Filipino natural persons with common bond and completion of pre-membership education seminar.
- Articles of Cooperation and bylaws must be filed including details like name, purpose, capital, directors, and membership scope.
- Share capital paid-up requirements apply, including minimums and possible adjustments.
- The Cooperative Development Authority (CDA) grants registration and supervises compliance.
- Procedures for amendment, merger, consolidation, and division are defined with member approval thresholds.
Membership Categories and Termination
- Members may be regular (with voting rights) or associate (limited rights, no vote).
- Procedures cover approval, appeal, liability limited to share capital contribution, and termination for valid reasons including non-patronage or violation of bylaws.
- Special provisions for minors and laboratory cooperatives apply.
Governance and Administration
- The general assembly is the highest policy-making body with exclusive powers including election and removal of directors and approval of bylaws.
- Board of directors manages cooperatives, must have between 5 and 15 members, and serve terms as per bylaws.
- Regular meetings, quorum, voting rules, and committee creation are prescribed.
- Directors and officers are held liable for unlawful acts, disloyalty, and misuse of confidential information.
- Removal and compensation rules are stipulated.
Rights, Books, and Financial Records
- Cooperatives must maintain accessible records: Code, regulations, articles, member register, minutes, financial statements.
- Annual reports must be submitted and posted; failures attract penalties.
- Surety bonds are required for officers handling funds.
- Members’ debts create liens on their property produced with cooperative funds.
- Salary or wage deduction instruments can be executed for debt repayment.
- Cooperatives enjoy tax exemptions and other fiscal privileges under certain conditions.
Cooperative Types and Categories
- Includes credit, consumers, producers, marketing, service, multipurpose, advocacy, agrarian reform, cooperative banks, electric, financial service, and others.
- Categorized by membership (primary, secondary, tertiary) and territorial area.
Special Provisions for Agrarian Reform Cooperatives
- Organized by agrarian reform beneficiaries to develop land tenure, marketing, and social benefits.
- May lease public lands and enjoy preferential rights for franchises and services.
- Government provides financial and technical assistance.
Cooperative Banks
- Subject to BSP supervision with special regulatory guidelines.
- May be formed by cooperatives with limitations on number per province.
- Distinction between regular and associate members.
- Capital, operations, and reporting governed by BSP regulations and cooperative code.
Public Service Cooperatives
- Engage in franchised public services like power, transport, communication, markets.
- Registration requires proof of user/producer membership.
- Subject to government agency regulations for franchise operations.
- Transport cooperatives may engage in related allied business.
Credit and Financial Service Cooperatives
- Credit cooperatives promote savings and loans among members.
- Financial service cooperatives provide broader financial services regulated jointly by CDA and BSP.
- Conversion and registration procedures specified.
- Federations may act as supervisors and provide liquidity and guarantee systems.
- Regulatory powers include investigation, suspension, removal, and supervision.
Electric Cooperatives
- Registered with CDA, may undertake power generation and distribution.
- Require referendum approval by 20% voting members.
- Rates and tariffs subject to Energy Regulatory Commission.
- Retain rights and loans under existing laws if not registered with CDA.
Dispute Resolution and Oversight
- Disputes among members and officials settled by conciliation, mediation, or voluntary arbitration.
- Appeal to Office of the President allowed.
- Establishes a Joint Congressional Oversight Committee to monitor law implementation.
Penal Provisions
- Unauthorized use of the term "cooperative" punished by imprisonment and fines.
- Tax evasion and interference by government officials in cooperative affairs penalized.
- Directors/officers liable for unlawful acts with stiff penalties.
- False reporting, refusal to produce records, and other violations punished.
Final Provisions
- The law takes precedence over previous inconsistent laws.
- Registered cooperatives under previous law are deemed registered under this Code.
- Liberal construction in favor of cooperatives if doubt arises.
- The Code takes effect 15 days after publication.