The Philippine Cooperative The Philippine Cooperative Code of 2008 Code of 2008 (Republic Act No. 9520)(Republic Act No. 9520) Salient Features4th NATIONAL TRIPARTITE CONFERENCE

Background Amended the Coop Code promulgated

in 1990; Discussed in four (4) Congresses

(starting the 11th Congress up to the 14th) spanning over ten (10) years;

Approved by the Bicameral Committee on November 18,2008;

Signed into law last February 17,2009

The Republic Act No. 6938The Republic Act No. 6938

The Cooperative Code of the Philippines

Enacted into law on March 10, 1990

The Republic Act No. 9520The Republic Act No. 9520

The Philippine Cooperative Code of 2008 (Article1)

Signed on February 17, 2009 Published on March 7, 2009 Effective March 22, 2009

State Policy State Policy (Article 2)(Article 2) Foster creation and growth of

cooperatives as a practical vehicle for self-reliance and harnessing people power for the attainment of economic development and social justice

Encourage private sector to undertake actual formation and organization;

Create an atmosphere conducive to the growth and development of cooperatives

State PolicyState Policy Ensure technical guidance, financial

assistance and other services

Recognizes the principle of subsidiarity wherein the sector will initiate the promotion and organization, training and research, audit and support services with government assistance where necessary

Cooperatives defined Cooperatives defined (Article 3)(Article 3)

An 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 Principles Cooperative Principles (Article 4)(Article 4)

• Patterned after the Principles as formulated by the International Co-operative Alliance (ICA)– Voluntary and Open Membership– Democratic Member Control– Member Economic Participation– Autonomy and Independence– Education, Training and Information– Cooperation Among Cooperatives– Concern for Community

Additional Definitions Additional Definitions (Article 5)(Article 5)

Representative assembly – full membership elected by sectors, chapter or district to exercise powers delegated to them by the general assembly

Officers – 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 DefinitionsAdditional Definitions Social Audit – a procedure wherein the

cooperative assesses its social impact and ethical performance vis-à-vis its stated mission, vision, goals and code of social responsibility for coops…

Performance Audit – refer to an audit on the efficiency and effectiveness of the cooperative as a whole, its management and officers, and its various responsibility centers…

Additional DefinitionsAdditional Definitions Subsidiary 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 cooperative

Federation of cooperatives– three or more primary cooperatives, doing the same line of business

Purposes of Cooperatives Purposes of Cooperatives (Article 6)(Article 6)

Encourage 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 CooperativesPurposes of Cooperatives

Insure 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 CooperativesPurposes of Cooperatives Ensure 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; and

Undertake any and all activities for the efficient and effective implementation of the provisions.

Powers and Capacities Powers and Capacities (Article 9)(Article 9)

Exclusive use of registered names, to sue and be sued;

Of succession; To amend its articles; To adopt its bylaws not contrary to law,

morals or public policy Deal with real and personal property Enter into division, merger or

consolidation

Powers and CapacitiesPowers and Capacities Form 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 RegistrationRequirements for Registration(Articles 10,11,14,15,)(Articles 10,11,14,15,)

Pre-membership Education Seminar required Newly 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) years

Economic Survey including staffing pattern which includes at least a bookkeeper

Articles of CooperationAt least 15 membersMinimum Capitalization of PhP 15,000; reviewed

every 5 years By-laws Bonds of accountable officers

Amendments Amendments (Article 18)(Article 18)

Amendments 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

Types Types (Article 23)(Article 23)

Credit – 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 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

Additional Types of Additional Types of CooperativesCooperatives

Advocacy – 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 TypesAdditional Types Education – 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 TypesAdditional Types Fishermen – 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 TypesAdditional Types Transport – 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

Other types as maybe determined by the Authority

Functions of a Coop Federation Functions of a Coop Federation ( Article 24)( Article 24)

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

Membership Membership (Chapter 3, Art.26)(Chapter 3, Art.26)

Kinds of Membership1. Regular member one who has complied

with all the membership requirements and entitled to all rights and privileges of membership.

2. Associate member one who has no right to vote or be voted upon and shall be entitled only to such rights and privileges as the by laws may provide.

Membership Legal age, Filipino citizens Capable and willing to perform the

responsibilities of a member Allows associate members but needs to

qualify for regular membership within (2) years

All elective officials are ineligible to be officers or directors of cooperatives except party-list representatives

General Assembly General Assembly (Chapter 4,)(Chapter 4,)

Shall be the highest policy making body of the cooperative

3/4 vote of members required to delegate some powers to a representative assembly

Quorum is at least 25% of all members entitled to vote

Voting in primary cooperatives is strictly one-member, one vote and no proxies allowed except for representative assembly

Board of Directors Board of Directors (Articles 37,38, 39)(Articles 37,38, 39)

Responsible for strategic planning, direction, setting and policy formulation

Term shall be fixed in the coop bylaws. A term is 2 years

Prohibition against holding any other position involved in the day-to-day operations and management

Disqualification of persons engaged in business similar to the cooperative

Committees and Officers Committees and Officers (Art.43)(Art.43)

Additional committeesMediation and ConciliationEthics

All officers and committee members required to undergo trainings conducted by accredited institutions by the CDA

No compensation except for per diems. If cooperative reports a net loss for the preceding year, officers are not entitled to per diems

Removal of officers may be done by a majority vote of the members

Functions, Responsibilities and Training Requirements (Article 44)

The functions and responsibilities of the directors, officers and committee members, AS WELL AS THEIR TRAINING REQUIREMENTS, shall be IN ACCRODANCE WITH THE RULES AND REGULATIONS ISSUED BY THE AUTHORITY.

Responsibilities of CooperativesResponsibilities of Cooperatives Accountant or bookkeeper is responsible for

maintenance and safekeeping of books of accounts

Audit committee responsible for continuous and periodic review of books of accounts; monitor adequacy and effectiveness of management’s control system and audit the performance of the cooperative

Audited financial statements required to be posted in principal office

Annual Reports Annual Reports (Article 53)(Article 53)

Filed within 120 days from close of calendar year

Regular activities including socio-civic undertakings

Must show their progress and achievements The form and contents of the report shall be

prescribed by the rules of the Authority Liability for non-submission is fines and other

penalties imposable until the cooperative has complied with the requirements

Tax Treatment of Cooperatives Tax Treatment of Cooperatives (Article 60, 61)(Article 60, 61)

Not subject to taxes and fees imposed under NIRC and other tax laws for cooperatives transacting business with members only

Transactions with members are not subject to taxes and fees, including final tax on members’ deposits and documentary tax

Tax ExemptionsTax Exemptions Non-members will pay VAT; coop will

collect and remit to BIR Provided, finally that at least 25% of

net surplus of coop is returned to members as interest and patronage refund

Cooperative is responsible for collection and remittance of individual withholding taxes (proper recording)

Additional PrivilegesAdditional Privileges

Faculty cooperatives have right of first refusal in management of canteen and other services related to the operations of educational institutions

Housing agencies and financial institutions shall create a window for financing housing projects

Capital Capital Subsidies, donations, legacies, grants, and

aids shall not be divided into individual share capital holdings anytime but subject to escheat proceedings upon dissolution

Limitation on share capital held by one member reduced from 20% to 10%

Reasonable and realistic member capital build-up program to allow the continuing growth f the members’ investment in the coop

AuditAudit

Financial audit conducted by external auditor in good standing with PICPA and accredited by Board of Accountancy and CDA

Social and performance audits may be conducted by an independent social auditor accredited by CDA

Social AuditingSocial Auditing Based on the 7th Cooperative Principle –

Concern for Community Defined 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 SurplusDistribution of Net Surplus At least10% of net surplus; however, in first

5 years after registration, this is not less than 50% of the net surplus

Not for than 10% for CETF; half to be used by the cooperative; other half is 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 SurplusDistribution of Net Surplus

Not less than 3% for community development fund for projects/activities for the benefit of the community where the cooperative operates

Not more than 7% for optional fund, land and building, and other funds

Other ProvisionsOther Provisions Additional Special Provisions

Transportation CooperativesElectric CooperativesCooperative BanksCredit CooperativesFinancial Service CooperativesHousing Cooperatives

Conciliation and Mediation Committee (ADR) Additional Penal Provisions CDA allowed to formulate rules on the

Cooperative Code on certain provisions

Other ProvisionsOther Provisions

Congressional 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 statement

Must secure tax exemption certificate from BIR

Changes in the New Coop Code are not threats, they are

opportunities that can be pursued.

THANK YOU & MAY GOD BLESS

YOU…

LECIRA V. JUAREZChairpersonCooperative Development Authority