Chapter II – Organization and Registration

ART. 7. Objectives and Goals of a Cooperative. The primary objective of every cooperative is to help improve the quality of life
of its members. Towards this end, the cooperative shall aim to:

(a) Provide goods and services to its members to enable them to attain increased income, savings, investments, productivity,
and purchasing power, and promote among themselves equitable distribution of net surplus through maximum utilization of
economies of scale, cost-sharing and risk-sharing;

(b) Provide optimum social and economic benefits to its members;

(c) Teach them efficient ways of doing things in a cooperative manner;

(d) Propagate cooperative practices and new ideas in business and management;

(e) Allow the lower income and less privileged groups to increase their ownership in the wealth of the nation; and

(f) Cooperate with the government, other cooperatives and people-oriented organizations to further the attainment of any of
the foregoing objectives.

Articles of Cooperation – it is the document registered before the CDA, including any amendment, if any.

By – laws

Merger – union of two or more existing cooperatives belonging to the same category whereby the surviving cooperative,
relating to identity, absorbs one or more constituent cooperatives. Unlike in Corporation, it requires that cooperatives shall be
in the same category.

Constituent Cooperatives

Consolidation

Subsidiary Cooperative

Preferential Right over Reserved Cooperative Name – The applicant shall have the right over the reserved name during the
approved reservation period including its extension. Otherwise, the reserved name shall be made available to other applicants.
( Section 6, Guidelines on Cooperative Name Reservation)

Cooperative Names – No cooperative name shall be allowed by the CDA if the proposed name is identical or deceptively or
confusingly similar to that of any existing cooperative, contrary to public policy, moral and existing laws.

The proposed cooperative name shall incorporate the word “cooperative” and specifying the type in accordance with economic
activity. The use of “development”, “integrated”, “incorporated”, or other similar connotation shall not be allowed. ( Section 9,
Guidelines on Cooperative Name Reservation)

As can be observed, the above-mentioned rule essentially adopts the requirements set in the use of Corporate names.

ART. 10. Organizing a Primary Cooperative. Fifteen (15) or more natural persons who are Filipino citizens, of legal age, having a
common bond of interest and are actually residing or working in the intended area of operation, may organize a primary
cooperative under this Code: Provided, That a prospective member of a primary cooperative must have completed a Pre-
Membership Education Seminar (PMES).
Any newly organized primary cooperative may be registered as multipurpose cooperative only after compliance with the
minimum requirements for multipurpose cooperatives to be set by the Authority. A single-purpose cooperative may transform
into a multipurpose or may create subsidiaries only after at least two (2) years of operations.

Primary Cooperative – a cooperative, the members of which are natural persons.

Area of Cooperative – it refers to the are where the cooperative members come from as provided foe in their Articles of
Cooperation and By – laws.

Area of Business Operation – refers to the principal place of business of a cooperative where the cooperative conducts its
business as provided for in their Article of Cooperative and By – laws.

Multi – purpose Cooperative – a cooperative which combines 2 or more business/economic activities.

No cooperative shall be registered as a multi – purpose cooperative unless it has been in operation for at least 2 years. Wit the
exception of the agriculture cooperatives and agrarian reform cooperative, only those cooperatives with a minimum paid – up
capital of P100,000.00 or as required in the feasibility study, whichever is higher may be allowed to transform into a multi –
purpose cooperative.

Bond of Membership - refers to the condition where a member associate himself to attain the common goals and objective
which may either be residential, occupational, associated, and institutional.

The 25% Rule shall mean that at least 25% of the Authorized Share Capital shall be subscribed, and at least 25% of the
Subscribed Share Capital shall be paid up by the members. This requirement shall apply to common share capital only.

No member in a primary cooperative shall own more than 10% of the total subscribed share capital of the aforesaid
cooperative. In the case of Secondary and Tertiary Cooperatives, no member shall own more than 10% of the Total Subscribe
Share Capital of the Cooperative Federation/ Union.

Dual membership – a cooperative may include in its by-laws a provision not allowing members of existing cooperatives of the
same type within the same area of operation to be member of the proposed cooperative unless they resign from the former.

Categories

Residential – members working/ and or residing (actually and physically) in the same place.

Institutional – members consist of employees, workers in a institution.

Associational – members come from a registered and/ or recognized association, group, club, fraternity, religious groups,
cultural and other similar aggrupation.

Occupational - members come from same or allied profession or actual occupation.

ART. 16. Registration. A cooperative formed and organized under this Code acquires juridical personality from the date the
Authority issues a certificate of registration under its official seal. All applications for registration shall be finally disposed of by
the Authority within a period of sixty (60) days from the filing thereof, otherwise the application is deemed approved, unless
the cause of the delay is attributable to the applicant: Provided, That in case of a denial of the application for registration, an
appeal shall lie with the Office of the President within ninety (90) days from receipt of notice of such denial: Provided, further,
That failure of the Office of the President to act on the appeal within ninety (90) days from the filing thereof shall mean
approval of said application.

The above-mentioned provision omitted the procedure in application for registration, thus:

a) A written request or petition for the issuance of Certificate of Registration shall be filed by the applicant cooperative
to CDA;
b) Upon receipt of said request or petition, the Registration Division of CDA shall evaluate and determine:
I. The period of time the application for registration of the applicant cooperative has been pending with the CDA; and
II. The completeness of documents from the submission of application for registration.
a) The 60 day period shall not commence unless and until the documents submitted to the CDA are complete in form
and substance.
b) If upon evaluation, the documents are complete in form and substance and the 60 day period has already lapsed
without the fault of the applicant cooperative, the CDA shall issue Certificate of Registration.

If the 60 day period already lapsed without the fault of the applicant cooperative but the documents on file with the CDA are
not complete in form and in substance, the CDA shall direct the cooperative in writing to complete/ rectify the documents
within 15 days from receipt thereof. Failure to comply with the said directive shall result to the denial of the application for
registration.

In case of denial of approval of registration, an appeal can be filed before the Office of the President within 90 days from
receipt of denial by CDA. The failure to act by the Office of the President to act on the appeal within 90 days from filing shall
mean the approval of the application.

This procedure shall apply to amendments to the Article of Cooperation and By – laws, except for the period to be observed
which required 30 days.

Jurisdiction – all applications for registration of cooperative and amendment thereto shall be filed before the CDA Extension
Office (EO) having jurisdiction over the principal office of the proposed cooperative. Secondary or Tertiary cooperative that
shall operative with municipal/city, provincial, regional or inter-regional coverage shall be registered in the CDA EO where its
principal office is located. CDA Central Office shall register tertiary cooperative with national coverage and selected types of
cooperatives including amendments thereto prescribed by law, rules and circular issued by the CDA which are forwarded by the
concerned EO.

Primary Cooperative – refers to a cooperative the members of which are natural persons except electric and water
cooperatives.

Secondary Cooperative – refers to a cooperative the members of which are primary cooperatives.

Registration of Secondary and Tertiary Cooperatives

a) Membership –minimum number of members in a federation:

Category Federation Union

Secondary 3 Primary Coops 15 primary coops

Tertiary 3 secondary coops 15 secondary coops

b) Paid up Capital – minimum paid-up share capital for any proposed federation/ union shall be, as follows:

Category Federation Union

Secondary Php 500,00.00 Not applicable

Tertiary Php 5,000,000.00 or feasibility Not applicable

study whichever is higher.

Tertiary Cooperative – refers to a cooperative the members of which are secondaries.

Inter – regional – refers to the cooperative’s are of operation covering two or more adjacent regions.

Area of Business Operation – refers to the principal place of business of cooperative where the cooperative conducts its
business as provided for in their articles of cooperation and by-laws.

Area of Operation – refers to the area where the cooperative members come from as provided for in their articles of
cooperation and by-laws.

Business Transaction – is a business activity or livelihood engaged in by the cooperative where such cooperative generates
savings.

Number of members required for Registration – Fifteen (15) or more natural persons who are Filipino citizens, having common
bond of interest and are residing or working in the intended area of operations are required for registration.

Capital Requirements – the paid up capitalization requirement for primary cooperative shall not be less than P15,000 except
for multipurpose cooperative which should have at least P100,000.00 or as required by the feasibility study whichever is higher.

Share

Share Capital - the money paid or required to be paid by the members for the conduct of the operation of the cooperative.

Preferred Share and Common Share - Should preferred share capital be provided in their by-laws, it shall not exceed 25% of the
total authorized share capital of the cooperative.

Finally, for both the common and preferred share capital, no fractional share shall be issued.

It is recommended that only the common share be offered.

Limitations in the amendment of the Article of Cooperation (AOC) and By – laws

a. The amendment requires 2/3 vote of all members with voting rights;
b. Both the original and amended AOC and By –laws shall contain all provisions required by law to be set out in the AOC
and By – laws;
c. Amendment shall be indicated by underscoring or otherwise appropriately indicating the change or changes made
and a copy of the amended articles or amended by- laws certified under oath by the cooperative secretary and
majority of the directors stating the fact that said amendment or amendments to the articles of cooperation and/ or
by-laws have been approved by the required vote of the members;
d. The amendment must be approved by the CDA; and
e. Dissenting members may exercise their right to withdraw their membership.

Contracts executed prior to Registration

- All contracts entered between the private persons and cooperative prior to the registration of the cooperative shall
be valid.

Proposal for Division and Approval of Plan of Division

a. The majority of the BOD or at least 10% of members voting with voting rights may propose for division. The same
must be approved by at least majority of the members with voting rights present and constituting quorum in a
general/ representative assembly.
b. The BOD shall call a General/ Representative Assembly meeting to action such Plan of Division with notice to all
members of record and creditors at least 30 days prior to the scheduled meeting. The Plan of Division shall be
approved by a vote of ¾ of all members with voting rights present and constituting quorum in such general/
representative assembly meeting.
Objection – withi 15 days from day of position of from the last day of publication, a party may file objection or opposition
before CDA. Within 60 days from receipt, the CDA shall resolve the same.

Consolidation-

Merger –

Constituent Cooperatives – refers to cooperatives, which are parties to the merger/ consolidation.

Surviving Cooperatives – refers to the cooperatives which survives and continue the business of the combined cooperative in
case of merger.

Consolidated Cooperatives – refers to the new cooperative created after the termination of the old cooperative in case of
consolidation.

Third Party – refers to any person natural or juridical, who are which shall be adversely affected in case of merger or
consolidation.

Procedure for Merger of Consolidation

a. Proposal to merger or consolidate, either by the BOD or at least 10% of the members;
b. Approval of the proposal to merge or consolidate – The merger or consolidation approved by the majority of the
member of each of the constituent cooperative with voting rights present and constituting a quorum in a separate
general/ representative assembly meeting called for the purpose.
c. Appointment/ election of joint committee to draft Plan of Merger/ Consolidation.
d. Presentation and Approval of the Plan of Merger/ Consolidation –
I. The plan shall be presented to the constituent cooperatives, separately.
II. Required vote to approve the plan of merger or consolidation or any amendment thereto. The affirmative vote of
members representing at least ¾ of all members with voting rights , present and constituting quorum for each
constituent cooperative.

Publication Requirement

a. Posting in at least 3 conspicuous places in their respective area of operation or publication in a newspaper of general
circulation once a week for 3 consecutive weeks.
b. Publication may also be supplemented by a radio and television announcement or any other means of
communication.

Objection to the Plan of Merger of Consolidation

a. A third party may file an objection or opposition to the plan of merger or consolidation within 15 days after the
posting or from the last day of publication.
b. The objection or opposition shall be filed before CDA, the latter shall resolve the same within 60 days from receipt.
c. If the objection is meritorious, the CDA may defer or disapprove the merger or consolidation.

Labor service - refers to a service cooperative engaged in providing service to principal employer.

Workers cooperative – refers to a cooperative organized by workers, including self – employed who are owners and members
of the enterprise. The term ownership shall mean actual contribution to the share capital of the cooperative up to the
maximum allowed by law and the by – laws. As mandated by law, each regular member shall mean only have one vote
regardless of the number of shares actually held. The principal purpose of this cooperative is to provide jobs and business
opportunities to its members and manage it in accordance with cooperative principles.
Member-owner – a member of worker’s cooperative, who works in the cooperative or is deployed as worker in a company
availing the services of the cooperative.

Worker ownership – work and management are carried out jointly, without the limitations of individual work, nor exclusively
under the rules of conventional wage based labor.

Self – employed worker – a person who has his own occupational capacity put to a productive use by applying his own capital
raised by himself or together with other self – employed persons pursuing related occupational interest. As a member of a
worker’s cooperative, he is a worker – owner.

Purpose of Workers cooperative

a. Job Creation
b. Income Enhancement
c. Economic Sustainability
d. Integral Human Development
e. Social and Cultural Development

Business operation – a workers cooperative may engage in any legitimate business, such as but not limited to manufacturing,
production, retail and distribution, tourism services, agri – business, telecommunications and transportation services,
construction, financial services, hospital, educational institutions, hotels, restaurants, business processing, and outsourcing.

Labor service Cooperative – engaged exclusively in job contracting and sub-contracting services to third parties.

Workers Cooperative – provides employment and business opportunities to its members and manages in accordance with
cooperative principles. It cannot engage in contracting and sub-contracting.

Job Contracting/ Sub Contracting workers service cooperative and Multi-purpose cooperative with Job Contracting/ Sub –
Contracting operation.

Job Contracting/ Sub- Contracting Workers Service Cooperative – refers to a duly registered cooperative the members of
which are natural persons and the business activity is providing job contracting/ sub-contracting services to clients.

Multi – Purpose Cooperative with Job Contracting/ Sub – Contracting Operation – refers to the cooperative duly registered
with the CDA as multi-purpose where one of the line of business in its operation is providing job contracting/ sub-contracting
services to clients.

Capital Requirement – minimum of P1,000,000.

Common Bond of Membership – residential, associational, or occupational.

Prohibition against Labor – only contracting

Labor – only contracting – refers to an arrangement where the cooperative recruits, supplies or places workers to perform a
job, work or service for a client. In labor only contracting, the cooperative has no substantial capital and the right to control of
its member-workers.

Cooperative among Professional – refers to a primary cooperative organized by a persons duly registered and licensed by
appropriate government agency and as such belonging to the same group for the sole purpose of practicing their profession.

- Members required for registration in this type of cooperative, shall be 15 or more natural person who are Filipino
citizens, having a common bind of membership residing or working in the intended area of operation.
- Lawyers and accountants are prohibited from organizing cooperative in the exercise of their profession.
- The cooperative may provide in its by – laws prohibition on its members to join other cooperatives of the same type.

Transport Cooperative – one which includes land and sea transportation, limited to small vessels.

- The members should at least be 15 or more natural persons, having a common bond of membership and are residing or
working in the intended area of operation.
Agriculture Cooperative – primary cooperative which or whose members are involve/ engage in raising/ culture of plants,
animals, fungi and other living organisms for productive and economic purpose and in related activities that lead to the
reduction of cos and/ or value addition of outputs.

- The members should at least be 15 or more natural persons, having a common bond of membership and are residing
or working in the intended area of operation.
- Paid – up capitalization for primary cooperative shall not be less than P15,000.00.

Agriculture Cooperative Activities

a. Raising, culture of plants, animals;

b. Facilitating the procurement of farm inputs/ implements for the members;
c. Processing and marketing of the member’s products/ produce; and
d. Any other activities that lead to the reduction of cost and/or value of addition of outputs.

Small – scale Mining Cooperative – refers to a cooperative composed of Filipino citizens, duly registered with the CDA, to
engage in small-scale mining activities.

- The members should at least be 15 or more natural persons, having a common bond of membership and are residing
or working in the intended area of operation.
- Paid – up capitalization for primary cooperative shall not be less than P15,000.00, except for multi-purpose
cooperative which should have at least P100,000.00 or as required by the appropriate government agency.
- The cooperative may provide in its by – laws prohibition on its members to join other cooperatives of the same type.

Small-scale Miners – refers to Filipino citizens who, individually or in the company of other Filipino citizens, voluntary form or
cooperative duly licensed by the DENR to engage, under the terms and conditions of a contract, in the extraction or removal of
minerals or ore-bearing materials from the ground.

Categories of Cooperatives – Cooperatives shall be categorized according to membership and territorial considerations as
follows:

a. In terms of membership, cooperative shall be categorized into:

i. Primary – the member of which are natural persons;

ii. Secondary – the members of which are primaries; and

iii. Tertiary – the members of which are secondary cooperative;

b. In terms of territory, cooperatives shall be categorized according to areas of operations which may or may not
coincide with the political subdivisions of the country.

Federation of cooperatives – refers to a cooperative the members of which are primary cooperatives doing the same line of
business.

Cooperative Union – refers to a cooperative the members of which are registered cooperatives and/or federations organized
purposely to represent the interest and welfare of all types of cooperatives at the provincial, city, regional, and national levels.

Area of coverage – federation/ union may be organized at the municipal/ city, district, provincial, regional, or national levels,
whose members must be doing the same line of business activity.

Business activity – can engage in any cooperative enterprise authorized under Article 6 of RA 9520 that complements,
augments, supplements, or supplements but does not conflict, compete with, nor supplant the business or economic activities
of its members.

Bonding requirement – accountable officer/s of the proposed federation shall be covered by sufficient Surety bond.
Chapter III
Membership

Regular Member – one who has complied with all the membership requirements and entitled to all the rights and privileges of
membership.

Associate member – a member of cooperative 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.

Laboratory Cooperative – a cooperative duly recognized by the CDA formed and managed primarily by minors, and is affiliated
with another registered cooperative which is called the Guardian Cooperative.

- A cooperative may assist in the organization of a laboratory cooperative of fifteen (15) or more individuals who are
minors, who may be students or out school minor, Filipino citizens, and are actually studying or residing within the
nearest are of operation of the intended guardian cooperative.
- A laboratory cooperative may choose a guardian cooperative of its choice.

Purpose of Laboratory Cooperatives

a. To serve as a training ground for its members to prepare them for membership in regular cooperatives.
b. To teach the values of thrift and saving mobilization among its members.
c. To install cooperative values, principles, financial discipline, business skills, and leadership skills among its members.
d. To promote and advocate Filipino social and cultural values, financial education, ecological awareness, and
sustainable development.

Name of Laboratory Cooperative

- It shall include in its name the word “ Laboratory Cooperative of ( Name of Guardian Cooperative).

Issuance of Certificate of Recognition

- This serves as a conclusive evidence that the Laboratory Cooperative is duly recognized by the CDA as affiliate of the
Guardian Cooperative and which shall remain valid unless such recognition has been earlier revoked or cancelled.
- However, the issuance of Certificate of Recognition does not result to acquisition of juridical personality by the
laboratory cooperative.

Duties and Responsibilities of the Guardian Cooperative

a. Formulate the programs, plans and activities appropriate for the education and training of the members of the
Laboratory Cooperative;
b. Supervise the conduct of Officers and General Assembly meetings of the Laboratory Cooperative;
c. Represent the laboratory cooperative in its dealings and transactions with third partner;
d. Formulate, adopt, and implement internal control policies and procedures of laboratory cooperative which shall be
embodied in manual of operation for the Laboratory Cooperative;
e. Prepare, keep, and maintain the list of members;
f. Submit an annual report on the activities and economic operations of the Laboratory Cooperative;
g. Maintain separate subsidiary ledgers, passbooks of members, and other accountable forms; and
h. Adopt and implement a systematic procedure in the collection of savings deposits.

Termination of Membership

a. Upon reaching the age of majority; and

b. Such other causes as may be provided for in the by – laws of the Guardian Cooperative and in the Manual of
Operations for the Laboratory Cooperatives.
Option of Member who reaches the Age of Majority

- Any member who reaches the age of Majority has the option to join the Guardian Cooperative by signifying his/her
intention to become a member upon compliance with all the requirements for membership.

N.B.: A guardian cooperative may supervise more than 1 laboratory cooperative. In addition, the dissolution of the Guardian
Cooperative shall result in the revocation of the Certificate of Recognition of Laboratory Cooperative.

Government Officers and Employees

a. It is prohibited to appoint elective officials as officers of the cooperatives which include:

b. Members of the Board of Directors;
c. Members of the different committee created by the general assembly;
d. General Manager or the Chief Executive Officer;
e. Secretary;
f. Treasurer; and
g. Members holding other positions as may be provided for the by-laws of the cooperative.

N.B.: The ineligibility shall commence upon the assumption of office.

Application

Liability of Members

Termination of Membership

Right to Withdraw – a member of a cooperative may, for valid reason, withdraw his membership from the cooperative by
giving a 60 day notice to the board of directors.

Death or Insanity of a Member in a Primary Cooperative – these are valid grounds for termination of membership.

Exception – in case of death or insanity of an agrarian reform beneficiary member of a cooperative, the next of kin may assume
the duties and responsibilities of the original member

Grounds for Termination of Membership by a Vote of the Majority of All the Members of the Board of Directors.

a. When a member has not patronized any of the services of the cooperative for an unreasonable period of time as may
be previously determined by the board of directors;
b. When a member has continuously failed to comply with his obligations;
c. When a member has acted in violation of the by-laws and the rules of the cooperative; and
d. For any act or omission injurious or prejudicial to the interest or the welfare of the cooperative.

Chapter IV
Administration

General Assembly – refers to the full membership of the cooperative duly assembled for the purpose of exercising all the rights
and performing all the obligations pertaining to cooperatives, as provided by Cooperative Code, AOC and by-laws.

Powers of General Assembly –

a. To determine and approve amendments to the articles of cooperation and by-laws;

b. To elect or appoint the members of the board of directors, and to remove them for cause; and

c. To approve developmental plans of the cooperative.

N.B. The general assembly may by a ¾ vote of all its members with voting rights, present and constituting a quorum, delegate
some of its powers to a smaller body of the cooperative.
Regular Meeting – held annually on a date fixed in the by-laws, or if not so fixed, on any date within 90 days after the close of
each fiscal year.

Special Meeting – it may be called at any time by a majority vote of the board of director or as provided in the by-laws. A notice
shall be sent one (1) week prior to the meeting to all members entitled to vote. Members constituting 10% of all the members
may request the board to call a meeting, provided a one (1) month notice was sent.

Quorum – the quorum shall at least 25% of all the members entitled to vote.

Exception:

Cooperative Banks – ½ plus 1 of the number of voting shares of all the members in good standing.

Electric Cooperatives – 5% of all the members entitled to vote.

Voting system in Cooperative

Primary Cooperative – 1 member shall be equivalent to 1 vote.

Secondary and Tertiary – Members shall have 1 basic vote and may be granted with an incentive vote not exceeding 5 votes.

Composition of the BOD – not less than 5 nor more than 15 members elected by the General Assembly.

Term of office – 2 years

Powers of the BOD:

a. Strategic Planning

b. Direction - setting

c. Policy – formulation

Requirements for election as Director

a. Member of a cooperative who under the by-laws of the cooperative has the right to vote.
b. Any member who possess all the qualifications and none of the disqualifications provided in the laws or the by-laws.

Regular Meetings of the BOD

- In case of the primary cooperative, the regular meetings of the BOD shall be held at least once a month.

Special Meetings of the BOD

- It may be called at any time upon the call of the chairperson or a majority of the members of the board.

Quorum of the BOD

- Majority of the members of the board shall constitute a quorum.

Exception:

Unless otherwise provided by the by-laws.

N.B. Unlike in RCC, where Directors are allowed to vote and attend meeting via proxy. This is prohibited on meetings of BOD in
cooperative.
Vacancy in the BOD

General Rule: Unless the vacancy occurs by reason of expiration of term, the BOD may fill the vacancy by a majority of the
remaining directors. The director elected to fill the vacancy shall only serve the unexpired term of his predecessor in office.

Exception: if there is no quorum, the vacancy must be filled by the general assembly in a regular or special meeting.

Officers of the Cooperative

It shall include the BOD, members of the different committees by the General Assembly, General Manager or Chief Executive
Officer, Secretary, Treasurer, and members holding other positions as may be provided for in the by-laws.

The prohibition with relationship up to third civil degree of consanguinity or affinity shall not apply to elected officers. It shall
only apply to officer appointed by the BOD.

Committees of Cooperatives

a. Executive Committee – created in the by laws to be appointed by the BOD with powers and duties as may be delegated to it
in the by-laws or by a majority vote of all the members of the BOD.

b. Audit Committee – elected by the general assembly, thus it shall be directly responsible and accountable to the general
assembly.

c. Election Committee – elected by the general assembly.

d. Mediation and Conciliation Committee – appointed by the BOD.

e. Ethics Committee – appointed by the BOD.

N.B. Other committees may be necessary for the conduct of the affairs of the cooperative.

Certificate if Compliance – a certificate issued to all cooperative after complying with the rules of CDA.

Joint and several liability for damages of Directors, Officers and Committee members

a. Those who willfully and knowingly vote for or assent to patently unlawful acts;
b. Those who are guilty of gross negligence or bad faith in directing the affairs of the cooperative;
c. Those who are guilty of bad faith in directing the affairs of the cooperative; and
d. Those who acquire any personal or pecuniary interest in conflict with their duty.

N.B. When a director, officer or committee member attempts to acquire or acquires, in violation of his duty any interest or
equity adverse to the cooperative in respect to any matter which has been reposed in him in confidence, as trustee for the
cooperative, be liable for damages and shall be accountable for double the profits which otherwise would have accrued to the
cooperative.

Compensation - includes all forms of remuneration. It refers to any remuneration given for services rendered, like salary which
is a compensation paid regularly, as by, month. It does not imply an immediate payment, or direct return, nor the payment of
cash or its equivalent. It refers to any remuneration, by whatever name or it is designated.

Per diem – refers to allowance given as a reimbursement for extra expenses incurred by one in the performance of his duties.

Honorarium – a gesture of appreciation for the service of one with expertise of professional standing in recognition of his broad
and superior knowledge in specific fields. It is given to official/ employee not as a matter of obligation but in appreciation for
services which admits of no compensation in money.
Grant of compensation to directors

As a rule, the compensation for directors shall be fixed in the by-laws. If the by-laws do not provide for compensation of the
directors, the directors are not entitled to any compensation except for reasonable per diem.

If the members voted by majority vote at a regular or special general assembly meeting, granting compensation the directors
may receive the same.

Suspension of the grant of per diem

a. When the cooperative incurred net loss in the preceding year, or

b. When the dividend rate of the cooperative fell below the official national inflation rate during the preceding year.

Resumption of the grant of per diem to directors and officers shall not be compounded. No recovery of per diem during the
period of suspension shall be allowed.

Dealings of Directors, Officers, or Committee members

General Rule

Contract entered into by a cooperative with 1 or more of its directors, officers, and committee members is voidable at the
option of the cooperative.

Dealings of Directors, Officers, or Committee members are valid if the following are present:

a. The presence of such director in the board meeting wherein the contract was approved was not necessary to
constitute a quorum for such meeting;
b. That the vote of such director was not necessary for the approval of the contract;
c. That the contract is fair and reasonable under the circumstances; and
d. That in case of an officer or committee member, the contract with the officer or committee members has been
previously authorized by the general assembly or by the BOD.

N.B. Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a
director, such contract may be ratified by a ¾ vote of all the members with voting rights present and constituting quorum in a
meeting called for the purpose. Provided, that full disclosure of the adverse interest of the directors involved is made at such
meeting, and that the contract is fair and reasonable under the circumstances.

The above-mentioned rule is akin to Section 31 of the RCC.

Disloyalty of Director

A director who, acquires for himself an opportunity, by virtue of his office, which should belong to the cooperative shall be
liable for damages and must account for the double the profits that otherwise would have accrued to the cooperative by
refunding the same. The said action may be ratified by all ¾ vote of all members with voting rights.

Illegal Use of Confidential Information by a Director, or Officer, or an Associate of a Director or Officer

a. He shall be liable to compensate the cooperative for the direct losses suffered by the cooperative as a result of the
illegal use of information; and
b. He shall be accountable to the cooperative for any direct benefit or advantage received or yet to be received by him
or his associate, as a result of the transaction.
Removal of Elected officer

All complaints for the removal of any elected officer shall be filed with the BOD. Majority of the BOD may place the officer
concerned under preventive suspension pending the resolution of the investigation. If prima facie evidence exists, the Board
shall refer its recommendation for removal before the General Assembly. The regular members may remove the elected officer
via ¾ votes of those present and constituting quorum in a general assembly.

Chapter V
Administration

Address and Signage

Cooperatives shall put up and maintain a signage at the entrance of the principal offices and all branch or satellite offices. The
signage shall be visible, legible and shall contain at least the following:

a. Name of the Cooperative;

b. Address, whether it is:
I. Principal office;
II. Branch office;
III. Satellite office;
c. Registration Number of the Cooperative
d. Tax Identification Number;
e. The words “ Principal, Satellite and/ or Branch Office”, if applicable; and
f. The phrase “Registered with Cooperative Development Authority- ___ Extension Office”.

Addition Information for Branches and Satellites:

a. Certificate of Authority No. for branch; and

b. Letter of Authority No. for satellite.

Inspection

CDA can conduct inspection to ensure that cooperatives comply with the regulatory requirements imposed by the cooperative
laws, rules and regulations, related laws, and other administrative issuances.

Notice of Inspection

It shall be sent to the cooperative concerned through its BOD or the General Managers at least 2 weeks prior to the conduct of
the inspection. The notice shall contain the following:

a. The name/s of the duly authorized inspector/s;

b. The date of the inspections; and
c. Documents and records needed during the inspection.

Authority of the Inspector/s

During the conduct of the inspections, the Inspector/s shall have the following powers and authorities:

a. Require the presentation and/ or submission of reports or documents or records necessary to ascertain the facts
relative to the condition of the cooperative and other matters which are the subject of the inspection;
 b. Inquire into financial information of the cooperative and other cooperative activities to determine whether they are
in accordance with cooperative laws, rules and regulations, and with the general policies set by the general assembly
and the Board of Directors.
c. Conduct interview and other inquiries on matters that need clarifications;
d. Conduct an Exit/ Clarificatory Conference; and
e. To do other acts that may be deemed necessary in the conduct of inspection.

During the inspection, the inspection team shall observe the principle of independence and confidentiality on the conduct of
inspection. Further, the inspection shall be conducted by only the authorized personnel of CDA or a team thereof. The
inspection shall be undertaken at least once a year.

After the inspection, the inspector/s shall conduct Exit Conference to discuss all the findings and observations with the Board of
Directors and other officers of the cooperative. It shall include the good practices of the cooperative.

In case the Chairman, other members of the Board or the key officers did not attend during the conference, their absence shall
constitute waiver of participation.

After the exit conference, the Inspector/s shall furnish the cooperative a copy of the Inspection Report. It shall be signed by the
inspector and confirmed by the Chairman and/ or General Manager or representative of the cooperative, with written authority
to sign and in their behalf.

Prohibited Acts or Omissions of Officer or Employee

a. Omission or refusal to furnish any information, report or other document required under RA 9520;
b. Providing information, reports, or other documents to the CDA which the persons responsible know to be false or
misleading;
c. Omission or refusal to keep a book or registry required under RA 9520 or to make the required entry therein;
d. Making an entry required under RA 9520 in a book or registry which the persons responsible know to be misleading;
e. Hindering an authorized inspector from making an inspection or refusal of the cooperative to be inspected;
f. Failure to comply with an order or written instruction issued or given by the CDA;
g. Violation of the provisions regarding the transactions with a restricted party; and
h. Abetting, counselling, allowing, authorizing, or commanding another person to commit an offense punishable by this
Code. Provided, that in case the violator is a cooperative or juridical person, the penalty shall be imposed on its
directors and officers.

The cooperative may request for reconsideration within 10 days, if the inspection yields for negative findings. The request shall
be filed before the appropriate CDA – Extension Office (EO).

Required Reports

a. For primary cooperatives

Cooperative Annual Progress Report (CAPR) with the following attachments:

1. Social Audit Report, including its programs of activities, pursuant to the socio – civic goals of the cooperative;
2. Performance Audit Report, including copies of the semi-annual Report on mediation and conciliation as received by
the CDA pursuant to EO 97;
3. Audited Financial Statements; and
4. List of Officers and Trainings Undertaken/ Completed.
b. For secondary and tertiary cooperatives (Federations and Unions)

Cooperative Annual Progress Report ( CAPR) with the following attachments:

 1. Social Audit Report including its programs of activities pursuant to the socio-civic goals of the cooperative;
2. Performance Audit Report, including copies of the semi-annual Report on mediation and conciliation as received by
CDA pursuant to EO 97;
3. Audited Financial Statements;
4. List of Officers and Trainings undertaken/ completed;
5. List of affiliates and cooperatives which have remitted their respective Cooperative Education and Training Funds
(CETF);
6. Business consultancy assistance to include the nature and cost, including the use of CETF; and
7. Other training activities undertaken specifying therein the nature, participants, and cost of each activity.

Effect of Partial Compliance of required reports

It shall be considered as non-compliance, the cooperative shall be in delay until such time that the filing of the required reports
have been fully complied with. Delay shall commence on the day following the last day prescribed for the filing reports.

Notice of Delay

The CDA shall notify the cooperatives of their non-compliance within 15 days from the lapse of the period to file the required
reports, stating:

a. That the cooperative has incurred delay;

b. The commensurate fines and penalties that will be imposed as a result of its failure to file the required reports; and
c. The demand to pay the fines and penalties.

Fines and Penalties

Failure to file the required regular reports on time shall be subject the Accountable Officers to a fine of P100 per day of delay.
Accountable Officers refer to the officer/ individuals duly authorized by the cooperative to prepare, certify/approve the reports
and in whose had the delay/failure has occurred.

The following officers are accountable for the following reports:

(Accountable Officer) (Accountable Officer)

Report Preparation Approval

Cooperative Annual Performance Report(CAPR) Compliance Officer General Manager/ Chairman of the BOD

Audited Financial Statements Finance Manager / Accountant Chairman of BOD

List of Officers and Trainings Completed Internal Audit / Audit Committee Chairman of BOD

Performance Audit Report Internal Auditor/ Audit Committee Chairman of BOD

Social Audit Report Internal Auditor / Audit Committee Chairman of BOD

Bonding requirements of Accountable Officers/ Employees of the Cooperative

In order to meet any contingency that may arise in the operation of the cooperative, accountable officers/ employee of
cooperatives shall submit a surety bond for the faithful performance of their functions. The following persons shall be bonded:

a. Chairperson;
b. Treasurer and Cashier;
c. Manager;
d. Warehouseman;
e. Loan/ deposit Collectors;
f. Signatories of checks and other financial instruments; and
 g. Such other persons as may be authorized by the cooperative to act as a custodian of funds, merchandise, inventories,
securities, and other assets of the cooperative.

The Board of Directors shall determine the adequacy of such bonds.

Certificate of Compliance – refers to the certificate in lieu of Certificate of Good Standing, issued to all types of cooperatives
after compliance with the rules of CDA.

This may only be issued to operative cooperative. In MC 2011-16, Certificate of Good Standing was changed into Certificate of
Compliance.

Operating Cooperative - refers to cooperative that has been performing cooperative activities with business operation
whether realizing gains or losses in the conduct of business. Newly registered cooperatives can be waived operation for not
more than 1 year from date of its registration.

Cooperative Activities – refers to the membership, governance, and institutional undertaking of the cooperative.

Business Operation – refers to the economic undertaking of providing product and services to members in accord with the
cooperative registered objectives.

Grounds for non issuance of Certificate of Good Standing

Notwithstanding with the provisions of this guidelines, any of the following conditions shall warrant the non-issuance of the
CGS:

a. Non- submission of statutory reports for 2 or more consecutive years;

b. Delayed in the submission of the statutory reports for more than 6 months for at least 2 consecutive years;
c. Non – compliance with CDA guidelines (violation of laws, guidelines, circulars and their by-laws); and
d. The existence of the question on legitimacy of leadership.

Period of Filing

Cooperatives shall secure a Certificate of Good Standing (CGS) to CDA on or before April 30 of the current year.

Validity of Certificate of Good Standing

It shall be valid and effective until April 30 of the succeeding year. However, Certificate of Good Standing issued for Special
Purpose shall be valid for six (6) months only from the date of issuance.