The Philippine Cooperative Code of 2008 (Republic Act No. 9520)

Republic Act No. 6938

The Cooperative Code of the Philippines

Enacted into law on March 10, 1990

Republic Act No. 9520

The Philippine Cooperative Code of 2008

Signed on February 17, 2009

Published on March 7, 2009

State PolicyFoster creation and growth of cooperatives as a practical vehicle for self-reliance and harnessing people power for the attainment of economic development and social justiceEncourage private sector to undertake actual formation and organization;Create an atmosphere conducive to the growth and development of cooperatives

State Policy

Ensure technical guidance, financial assistance and other services

Recognizes the principle of subsidiarity

CooperativeAn autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services, and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.

Cooperative PrinciplesPatterned after the Principles as formulated by the International Co-operative Alliance (ICA)Voluntary and Open MembershipDemocratic Member ControlMember Economic ParticipationAutonomy and IndependenceEducation, Training and InformationCooperation Among CooperativesConcern for Community

Additional DefinitionsRepresentative assembly full membership of a body of representatives elected by each of the sectors, chapter or district of the cooperative duly assembled for the purpose of exercising such powers delegated to them by the general assembly

Additional DefinitionsOfficers members of board of directors, different committees created by the GA, general manager or CEO, secretary, treasurer and members holding other positions as provided for in their bylaws.

Additional DefinitionsSocial Audit cooperative assesses its social impact and ethical performance vis--vis its stated mission, vision, goals and code of social responsibility Performance Audit audit on the efficiency and effectiveness of the cooperative as a whole, its management and officers, and its various responsibility centers

Additional DefinitionsSubsidiary Cooperative any organization all or majority of whose membership comes from a cooperative, organized for any other purpose different from that of, and receives technical, managerial and financial assistance from, a cooperativeFederation three or more primary cooperatives, doing the same line of business

Purposes of CooperativesEncourage thrift and savings mobilization;Generate funds and extend credit;Encourage systematic production and marketing;Provide goods and services and other requirements;Develop expertise and skills among members;Acquire land and provide housing benefits

Purposes of CooperativesInsure against losses of members;Establish, own, lease or operate cooperative banks, wholesale and retail complexes, insurance and agricultural/ industrial processing enterprises and public markets;Coordinate and facilitate activities of cooperatives;Advocate for the cause of the cooperative movement

Purposes of CooperativesEnsure viability of cooperatives through utilization of new technologies;Encourage and promote self-help or self-employment as an engine for economic growth and poverty alleviation; andUndertake any and all activities for the efficient and effective implementation of the provisions.

Powers and CapacitiesExclusive use of registered names, to sue and be sued;Of succession;To amend its articles of cooperation;To adopt its bylaws not contrary to law, morals or public policyDeal with real and personal propertyEnter into division, merger or consolidation

Powers and CapacitiesForm subsidiary cooperatives and join federations and unions;Avail of loans, credits, grants, donations from domestic and foreign sources;Avail of preferential rights under RA7160;Organize and operate schools in accordance with RA 9155

Requirements for RegistrationPre-membership Education Seminar requiredNewly organized primary may be registered as MPC after compliance with requirements set by CDA; SPC may transform into an MPC or create subsidiaries after two (2) yearsEconomic Survey including staffing pattern which includes at least a bookkeeperArticles of CooperationAt least 15 membersMinimum Capitalization of PhP 15,000; reviewed every 5 yearsBy-lawsBonds of accountable officers

AmendmentsAmendments need 2/3 vote of members with voting rights

Merger, consolidation and division of cooperatives require 3/4 of all members with voting rights present and constituting a quorum

TypesCredit promotes and undertakes savings and lending services to its members;Consumers to procure and distribute commodities to members and non-members;Producers undertakes joint production whether agricultural or industrial

Types Marketing supply of production inputs and markets their products;Service engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;Multi-purpose combines 2 or more business activities of these diff. types of cooperatives.

Additional Types of CooperativesAdvocacy promotes and advocates cooperativism among its members and the public;Agrarian Reform organized by marginal farmers majority of whom are agrarian reform beneficiaries;Cooperative Bank providing a wide range of financial services to cooperatives and their members;Dairy production of fresh milk which may be processed and/or marketed as dairy products;

Additional TypesEducation owning and operating licensed educational institutions;Electric undertaking power generation, acquisition and operation of subtransmission or distribution to its household members;Financial service engaging in savings and credit services and other financial services;

Additional TypesFishermen marginalized fishermen where their products are marketed either as fresh or processed products;Health Services providing medical, dental and other health services;Housing assist or provide access to housing for members who participate in the savings program for housing;Insurance business of insuring life and property of cooperatives and members

Additional TypesTransport services including land and sea transportation;Water Service own, operate and manage water systems for the provision and distribution of potable water to its members;Workers organized by workers, including self-employed, to provide employment and business opportunities

FederationFunctions should complement, augment or supplement but does not conflict , compete with, nor supplant the business or economic activities of its members.

MembershipLegal age, Filipino citizensCapable and willing to perform the responsibilities of a memberAllows associate members but needs to qualify for regular membership within two (2) yearsAll elective officials are ineligible to be officers or directors of cooperatives except party-list representatives

General Assembly3/4 vote of members required to delegate some powers to a representative assemblyQuorum is at least 25% of all members entitled to voteVoting in primary cooperatives is strictly one-member, one vote and no proxies allowed except for representative assembly

Board of DirectorsResponsible for strategic planning, direction, setting and policy formulation Prohibition against holding any other position involved in day-to-day operations and managementDisqualification of persons engaged in business similar to the cooperative

Committees and OfficersAdditional committeesMediation and ConciliationEthics All officers and committee members required to undergo trainings conducted by accredited institutions by the CDANo compensation except for per diems, but if cooperative reports a net loss for the preceding year, officers are not entitled to per diemsRemoval of officers may be done by a majority vote of the members

Responsibilities of CooperativesAccountant or bookkeeper is responsible for maintenance and safekeeping of books of accountsAudit committee responsible for continuous and periodic review of books of accounts; monitor adequacy and effectiveness of managements control system and audit the performance of the cooperativeAudited financial statements required to be posted in principal office

Annual ReportsFiled within 120 days from close of calendar year; non-submissionRegular activities including socio-civic undertakingsMust show their progress and achievements Liability for non-submission is fines and other penalties imposable until the cooperative has complied

Tax PrivilegesNot subject to taxes and fees imposed under NIRC and other tax laws for cooperatives transacting business with members onlyTransactions with members are not subject to taxes and fees, including final tax on members deposits and documentary tax

Tax ExemptionsNon-members will pay VAT; coop will collect and remit to BIR25% of net surplus is returned to members as interest and patronage refund

Additional PrivilegesFaculty cooperatives have right of first refusal in management of canteen and other services related to the operations of educational institutionsHousing agencies and financial institutions shall create a window for financing housing projects

Capital Subsidies, donations, legacies, grants, and aids shall not be divided into individual share capital holdings anytime but subject to escheat proceedings upon dissolutionLimitation on share capital held by one member reduced from 20% to 10%Reasonable and realistic member capital build-up program

AuditFinancial audit conducted by external auditor in good standing with PICPA and accredited by Board of Accountancy and CDASocial and performance audits may be conducted by an independent social auditor accredited by CDA

Social AuditingBased on the 7th Cooperative Principle Concern for CommunityDefined as the systematic review and appraisal of the cooperative in relation to the development of its most essential building blocks-its members, its people, and its distinctive contribution to the development of its community and society as a whole.

Distribution of Net SurplusAt least10% of net surplus; however, in first 5 years after registration, this is not less than 50% of the net surplusNot for than 10% for CETF; half to be used by the cooperative; other half is may be remitted to the federation/union chosen by the cooperative; federation/ union should submit: (a) list of contributing cooperatives; business consultancy assistance with nature and cost; and (c) training activities specifying the nature, participants, and cost

Distribution of Net SurplusNot less than 3% for community development fund for projects/activities for the benefit of the community where the cooperative operatesNot more than 7% for optional fund, land and building, and other funds

Other ProvisionsAdditional Special ProvisionsTransportation CooperativesElectric CooperativesCooperative BanksCredit CooperativesFinancial Service CooperativesHousing CooperativesConciliation and Mediation Committee (ADR)Additional Penal ProvisionsCDA allowed to formulate rules on the Cooperative Code on certain provisions

Other ProvisionsCongressional Oversight Committee to review and approve the implementing rules and regulations Re-registration of all cooperatives to confirm their status by submitting: (a) Certificate of Registration/Confirmation; (b) articles of cooperation; (c) bylaws; and (d) latest audited financial statementMust secure tax exemption certificate from BIR

THANK YOU

**articl*