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REVISED RULES AND REGULATIONS IMPLEMENTING CERTAIN
AND SPECIAL PROVISIONS OF THE PHILIPPINE COOPERATIVE CODE OF 2008
Pursuant to the provisions of Article 139 of Republic Act No. 9520, otherwise known as the Philippine Cooperative Code of 2008, the Cooperative Development Authority hereby issues the following rules and regulations implementing the provisions of the said Code.
“Article 139.Implementing Rules and Regulations. The Authority shall issue rules and regulations to implement those provisions of this Code which expressly call for the issuance thereof. This paragraph shall not apply to those cases wherein a specific provision of this Code expressly designates particular government agencies which shall issue the regulations called for by any provision of this Code.”
TITLE AND DEFINITIONS
Section 1. Title. These Rules shall be known as the “Revised Rules and Regulations Implementing Certain and Special Provisions of the Philippine Cooperative Code of 2008.
Section 2. Definition of Terms. For the purpose of these Rules and Regulations, the following terms are defined, as follows:
- Agrarian Reform Cooperative (ARCo) - refers to one organized by marginal farmers majority of which are Agrarian Reform Beneficiaries, duly registered with the Authority, for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform. It shall also refer to Agrarian Reform Beneficiaries Cooperative (ARB Coop) as defined in DAR Administrative Order No. 05, Series of 2009.
For purposes of this definition, the following terms shall mean:
a. Agrarian Reform Area - refers to the area subject for coverage under the Comprehensive Agrarian Reform Program (CARP)/Comprehensive Agrarian Reform Program Extension with Reforms (CARPER). b. Agrarian Reform Beneficiaries (ARBs) - refers to qualified beneficiaries under the Comprehensive Agrarian Reform Program (CARP), as defined under Section 22, Chapter VII of R.A. 6657. c. Agrarian Reform Community (ARC) - refers to a community composed and managed by ARBs who are willing to be organized and to undertake the integrated development of an area and/or their organizations or cooperatives as defined under RA 9700, otherwise known as the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) Act.
d. CLOA - refers to the Certificate of Land Ownership Award. e. DAR - refers to the Department of Agrarian Reform. f. Marginal Farmers - refers to farmers who are tilling an area of not more than three (3) hectares. g. Next of Kin – for purposes of ARB cooperative succession, refers to a natural person who is an heir of an agrarian reform beneficiary and who is qualified to be a member of the cooperative under its By-laws and as determined by DAR.
- Alternative Dispute Resolution (ADR) - refers to a process or procedure used to resolve a dispute or controversy, other than by adjudication of a presiding Judge of Court or an officer of a government agency, in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini trial, or a combination thereof.
For purposes of this definition, the following terms shall mean:
a. Arbitrator - refers to the person appointed to render an Award, in a dispute that is the subject of an arbitration agreement. b. Award - refers to any partial or final decision by an Arbitrator in resolving the issues in a controversy. c. Conciliation - refers to the process whereby a neutral third party takes an active role in assisting disputants to formulate between and among themselves an acceptable solution to reach an amicable settlement. d. Dispute - refers to intra/inter cooperative controversy or grievance arising from any violation or disagreement over any provision of law, including violations of the rights and conditions of membership provided in the By-laws of the cooperative and/or in the Cooperative Code, which may be the subject of a formal or informal request for conciliation/mediation or arbitration assistance sought by either parties. e. Mediation – refers to the process wherein a mediator, selected by the disputing parties, facilitates communication and negotiation, and assists the parties in reaching a voluntary agreement relative to the dispute. f. Settlement - refers to any compromise or agreements reached between the disputants to settle the matters in dispute and thus dispose of controversy. g. Submission Agreement - refers to the written agreement signed by the disputing parties to submit the dispute to voluntary arbitration. h. Voluntary Arbitration - refers to a dispute resolution process wherein any intra/inter cooperative dispute is settled by a voluntary arbitrator/s chosen by the disputing parties or appointed by the Authority from a list of accredited arbitrators, who shall render an Award. i. Voluntary Arbitrator/Arbitrators - refers to any accredited and authorized employee of the Authority or an accredited private
includes other inflow of assets resulting from its other operating activities, which shall be returned to the members as prescribed in the Code. g. Net Worth - refers to equity inclusive of members’ equity, donations, grants and reserve funds less unbooked allowances for probable losses on loans, accounts receivable, investment and non-performing assets and other capital adjustments as may be allowed by the Authority. h. Paid-up Share Capital - refers to the portion of a member’s share capital that has been paid. i. Patronage Refund - refers to the amount returned to the individual members in proportion to their individual patronage of the cooperative’s products and services. j. Revolving Capital - refers to the amount constituting the patronage refund and interest on share capital of the members, the payment of which has been deferred by the cooperative. A corresponding revolving capital certificate shall be issued to the members. k. Revolving Capital Certificate – refers to the certificate issued by the Board of Directors of the cooperative indicating the serial number, name, amount, and rate of interest to be paid and shall distinctly set forth the time of retirement of such certificate and the amount to be returned. l. Risk Asset - refers to the cooperative’s total assets less cash on hand, evidence of indebtedness, loans to the extent covered by hold-outs or assignments of deposits, lands owned used for operations, buildings and land improvements net of depreciation, furniture and fixtures and equipment net of depreciation, real estate mortgage, loans and other non-risk items as the Authority may, from time to time, authorize to be deducted from total assets. m. Share Capital - refers to the money paid or required to be paid by the members for the conduct of the operations of the cooperative. n. Total Average Share Month – refers to the sum total of the average share month which is determined by adding the monthly ending balances of a member’s share capital and dividing the sum by twelve (12) months. o. Unpaid Subscription - refers to a member’ sunpaid subscribed share capital.
- COC - refers to the Certificate of Compliance issued by the Authority to all types of cooperatives after compliance with the rules of the Authority.
- Code - refers to Republic Act No. 9520, otherwise known as the Philippine Cooperative Code of 2008.
- Cooperative Bank - refers to a cooperative organized primarily to provide a wide range of financial services to cooperatives and their members.
- Credit Cooperative - refers to a cooperative that promotes thrift and wise use of money and undertakes savings and lending services among its members. It generates a common pool of funds in order to provide financial assistance and
other related financial services to its members for productive and provident purposes.
- Dairy Cooperative - refers to a cooperative engaged in the production of fresh milk which may be processed and/or marketed as dairy products. All matters relating to the technical operations of the dairy business shall be supervised by the following government agencies: a. NDA - refers to the National Dairy Authority. b. FDA - refers to the Food and Drugs Administration. c. DOH - refers to the Department of Health.
- Dissenting Member - refers to a member who votes against a proposed activity/project of a cooperative.
- Division - refers to the act of splitting a single cooperative into two or more cooperatives, wherein the original cooperative shall be dissolved and the resulting cooperatives shall acquire separate and distinct juridical personalities.
- Electric Cooperative - refers to a cooperative organized primarily for the purpose of undertaking power generation, utilizing renewable energy sources, including hybrid system, acquisition and operation of sub- transmission or distribution to its household members.
For purposes of this definition, the following terms shall mean:
a. Distribution of Electricity - refers to the conveyance of electric power by a distribution utility through its distribution system pursuant to the provisions of the EPIRA Law. b. Distribution Utility - refers to any Electric Cooperative, private corporation, government-owned utility, or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with the EPIRA Law. c. EPIRA - refers to the Electric Power Industry Reform Act of 2001. d. Referendum - refers to a mechanism to secure the approval of the general membership of an Electric Cooperative on issues relative to its registration, operation and management. e. Renewable Energy Resources - refer to energy resources such as, but not limited to, biomass, solar, wind, hydro, geothermal and ocean energy. These resources do not have an upper limit on the total quantity of energy to be used and are renewable on a regular basis, the renewable rate of which is rapid enough to consider availability over an indefinite time. f. Sub-transmission Assets - refer to the facilities related to the power delivery service below the transmission voltages and based on the functional assignment of assets, including, but not limited to, step-down transformers used solely by load customers, associated switchyard/substation, control and protective equipment, reactive compensation equipment to improve customer power factor, overhead lines, and the land where such facilities / equipment are located. These include NPC assets linking transmission system and the distribution system which are neither classified as generation nor transmission.
construction, home improvement, or renovation and other similar purposes. b. Cooperative Housing Program - refers to an alternative housing approach, in partnership with government/non-government agencies involved in a housing program, undertaken by a financially and organizationally stable cooperative to address the housing problems of its members, primarily the low-income earners, through its own cooperative efforts in planning and direct production of affordable, decent and adequate housing units. c. DBP – refers to the Development Bank of the Philippines. d. DENR – refers to the Department of Environment and Natural Resources. e. HDMF - refers to the Home Development Mutual Fund or Pag-IBIG Fund. f. HGC – refers to the Home Guarantee Corporation. g. HLURB - refers to the Housing and Land Use Regulatory Board. h. HUDCC – refers to the Housing and Urban Development Coordinating Council. i. Housing Beneficiaries - refer to regular members in good standing of the Housing Cooperative who actively participate in the savings programs for housing and qualify to own a unit as provided in the By- laws and duly approved internal policies of the cooperative. j. LBP – refers to the Land Bank of the Philippines. k. NHA - refers to the National Housing Authority. l. SSS - refers to the Social Security System. m. Socialized Housing - refers to the housing program and project undertaken by the government and private sector for the underprivileged and homeless which may also be undertaken by a Housing Cooperative. This includes sites and services development, long-term financing and liberalized terms on interest payments. n. SHFC – refers to the Social Housing Finance Corporation. o. Technical Plan - refers to all technical documents required in planning a housing project namely, the bar chart and construction schedule, systematic development plan, the architectural and detailed engineering and housing design, contract documents, technical and material specification.
- Insurance Cooperative - refers to a cooperative engaged in the business of insuring life and property of the constituting cooperatives and their members. It shall also refer to Cooperative Insurance Societies (CIS).
For purposes of this definition the following terms shall mean:
a. Commission - refers to the Insurance Commission. b. Insurance-like Activity - refers to any activity involving regular collection of premiums, fees, contributions, or charges prior to the occurrence of contingent event and the payment of guaranteed benefits upon the
occurrence of such event. The term excludes risk pooling practices such as “damayan” or “abuloy” system wherein an individual or group of individuals voluntarily pledge and contribute a certain amount of money to a fund and the benefits are not pre-determined but are contingent to the amounts collected. c. Micro-Insurance - refers to an activity providing specific insurance and other similar products and services that meet the needs of the low- income sector for risk protection and relief against distress, misfortune and other contingent events. This shall include all forms of insurance and other similar activities, as may be defined by concerned regulatory bodies with features such as: premiums, contributions, fees or charges collected/deducted prior to the occurrence of a contingent event and guaranteed benefits provided upon the occurrence of a contingent event. d. Micro-Insurance Product - refers to a financial product or service that meets the risk protection needs of the poor where the amount of premiums, contributions, fees or charges computed on a daily basis does not exceed seven and a half percent (7.5%) of the current daily minimum wage rate for non-agricultural workers in Metro Manila, as approved by the National Wages Productivity Board (NWPB)/Regional Tripartite Wages Productivity Board (RTWPB), and the maximum sum of guaranteed benefits is not more than 1,000 times the daily minimum wage rate for non-agricultural workers in Metro Manila. e. Regular Insurance Product - refers to all other insurance policies not covered by Micro-Insurance Product.
- Laboratory Cooperative - refers to a cooperative duly recognized by the Authority, formed and managed principally by minors and is affiliated with another registered cooperative which is called the guardian cooperative.
For purposes of this definition, the following terms shall mean:
a. Guardian Cooperative - refers to a duly registered cooperative with which a laboratory cooperative is affiliated. b. Minor - refers to an individual below eighteen (18) years of age.
- Labor Service Cooperative - refers to a cooperative organized primarily to engage in providing a specific work, job, or service to a principal under a contracting or subcontracting arrangement as may be defined under existing laws and in accordance with the cooperative principles set forth under the Philippine Cooperative Code of 2008 (RA 9520).
- Liquidation - refers to the process of settlement and closure of the cooperative affairs, disposition, conveyance and distribution of its assets.
For purposes of this definition, the following terms shall mean:
- Representative Assembly – refers to the full membership of the body of representatives elected from each of the sectors, chapters or districts of the cooperative, duly assembled for the purpose of exercising such powers lawfully delegated by the general assembly in accordance with the By-laws of the cooperative.
For purposes of this definition, the following terms shall mean:
a. Election Deputies – refer to those members of the cooperative from the sector, chapter or district appointed by the election committee as approved by the board of directors, tasked to facilitate the conduct of the election of the Representative/Delegate in their respective sector, chapter or district, in accordance with the By-laws of the cooperative, which shall not be more than five (5) for each sector, chapter, or district. b. Representative/Delegate - refers to a member duly elected during the sector, chapter or district meetings who shall represent his/her sector, chapter or district to the representative assembly meeting. c. Numerous and Dispersed Membership - refers to a cooperative with a large number of membership who are scattered/dispersed by reason of geographical location, work shift or other similar conditions making it impossible and difficult to conduct its general assembly meeting. d. Sector, Chapter or District - refers to an aggrupation of a cooperative membership, by reason of geographical location, work shift or other similar conditions. e. Sequential Election of Representative - refers to the election of the representatives during meetings held in sequence, in different days and/or at various venues, by several sectors, chapters or districts of a cooperative for the purpose of electing their respective Representatives to the representative assembly meeting. f. Simultaneous Election of Representative - refers to the election of the representatives during the meetings held, on the same day and at various venues, by several sectors, chapters, or districts of a cooperative for the purpose of electing their respective Representatives to the representative assembly meeting.
- Service Cooperative – refers to a cooperative organized primarily to provide any type of service to its members including, but not limited to, labor, transport, information and communication, insurance, housing, electric, health services, education, banking and savings, and credit.
- Secondary Cooperative - refers to a cooperative the members of which are primary cooperatives.
- Subsidiary Cooperative - refers to a cooperative all or majority of whose membership or shareholders come from a cooperative called a parent cooperative. It is organized for a purpose other than that of the parent cooperative, and receives technical, managerial, and financial assistance from the said parent cooperative.
For purposes of this definition, the following term shall mean:
a. Parent Cooperative - refers to a cooperative which organizes a subsidiary and provides technical, managerial and financial assistance thereto.
- Tertiary Cooperative - refers to a cooperative, the members of which are secondary cooperatives.
- Transportation Service Cooperative - refers to a cooperative organized primarily to provide land and sea/water transportation, provided that sea/water transportation shall be limited to small vessels as defined under Philippine Maritime laws.
For purposes of this definition, the following terms shall mean:
a. Accreditation - refers to the recognition extended by the OTC to a registered Transportation Service Cooperative, as evidenced by a Certificate of Accreditation. b. CPCN / Franchise / Permit - refers to the Certificate of Public Convenience and Necessity issued by the appropriate government agency. c. Cooperative Education and Transport Operation Seminar (CETOS) - refers to seminars conducted by OTC for the purpose of providing continuing education on cooperative and transport service operations to enhance the knowledge and capability of the officers and members of the Transportation Service Cooperative. d. DILG – refers to the Department of the Interior and Local Government. e. DOTC - refers to the Department of Transportation and Communications. f. LGU - refers to the Local Government Unit. g. LTFRB - refers to the Land Transportation Franchising and Regulatory Board. h. LTO - refers to the Land Transportation Office. i. MARINA - refers to the Maritime Industry Authority. j. OTC - refers to the Office of Transportation Cooperatives. k. PCG - refers to the Philippine Coast Guard.
- Water Service Cooperative - refers to a cooperative organized primarily to own, operate and/or manage water supply distribution system to serve its members and their households.
For purposes of this definition, the following terms shall mean:
a. LWUA - refers to the Local Water Utilities Administration, created under PD 198, as amended. b. NWRB - refers to the National Water Resources Board, created under PD 424.
location, scope of operation, cluster, work shift, or other similar conditions shall be the basis in dividing the cooperative into sector, chapter, or district.
3.2 Composition of Sector, Chapter, or District. The By-laws shall provide for the number of the regular members comprising each sector, chapter, or district.
3.3 Quorum requirement for Sector, Chapter or District meeting. At least twenty- five per centum (25%) of the members entitled to vote in each sector, chapter, or district shall constitute a quorum.
3.4 Number of Sector, Chapter or District Representative. The number of elected representatives of a sector, chapter, or district as provided in the By-laws, shall be within the range of 1% to 10% of the total number of the regular members entitled to vote in the sector, chapter, or district.
3.5 Term of Office of the Sector, Chapter, or District Representatives. The term of office of the Representative or Delegate shall be provided in the By-laws which shall not exceed two (2) years, commencing on the first regular representative assembly meeting.
3.6 Qualifications and Disqualifications of the Representative or Delegate. The sector, chapter, or district representative or delegate shall possess all the qualifications and none of the disqualifications as provided in the cooperative By- laws.
Section 4.Powers, Functions, and Responsibilities of the Representative or Delegate. The Representative or Delegate shall have the following powers, functions, and responsibilities:
- To represent the sector, chapter, or district in the Representative Assembly Meeting;
- To present, after due consultation with the sector, chapter or district, the respective decision of the sector, chapter or district on issues and matters to be decided upon by the representative assembly. Discretion, however, is given to the respective representative/delegate to decide on new matters raised during the said representative assembly; and
- To present to his/her sector, chapter, or district the report and the minutes of the proceedings of the Representative Assembly Meeting.
Section 5. Election of Sector, Chapter, or District Representative or Delegate. The election of sector, chapter, or district Representative/Delegate shall be held not later than sixty (60) days before the scheduled date of the regular representative assembly meeting as provided for in the By-laws.
The Board of Directors shall mandate the Election Deputies, through the Election Committee, to conduct the election of the sector, chapter, or district Representatives/Delegates, either simultaneously or sequentially.
In case the sector, chapter, or district fails to elect its Representative/s or Delegate/s, the right to send its Representatives/Delegates on the preceding representative assembly meetings shall be deemed waived.
Section 6. Vacancy in the Sector, Chapter, or District Representative or Delegate. Any vacancy shall be filled up in accordance with the provisions of the cooperative By-laws. The Delegate or Representative elected/appointed to fill a vacancy shall serve only the unexpired term of his/her predecessor.
Section 7. Resignation, Removal, Incapacity or Death of Sector, Chapter, or District Representative or Delegate. The sector, chapter, or district Representative or Delegate may, for any valid reason, resign as Representative or Delegate of his/her sector, chapter, or district. The Board of Directors shall act on the resignation within sixty (60) days from receipt thereof, otherwise, the resignation shall be deemed approved. Any sector, chapter, or district Representative/Delegate may be removed by a vote of three-fourths (3/4) of all the members with voting rights present and constituting a quorum at a sector, chapter, or district meeting called for the purpose on the following grounds:
- Failure to attend the immediately preceding representative assembly meeting for unjustifiable reason;
- Non-performance of any functions and responsibilities stated in the By-laws;
- Any violation of the provisions of the Code, the By-laws of the cooperative and other issuances of the Authority; and
- Any acts or omissions inimical or prejudicial to the interest of the cooperative.
During the same meeting, the sector, chapter, or district shall fill the vacancy caused by the removal, resignation, incapacity or death of the Representative or Delegate. In case said Representative or Delegate is an incumbent Officer of the Cooperative, his/her position shall be declared vacant and shall be filled up in accordance with the Rule of Succession as provided for in the By-laws of the Cooperative. Unless otherwise provided for in the By- laws, such successor shall not necessarily assume the position of his/her predecessor. However, in the case of membership in the committee, the vacated post shall be filled up by the Board of Directors of the Cooperative from among the Representatives / Delegates.
Section 8. Sector, Chapter, or District Assembly Meeting. The sector, chapter, or district meetings of the cooperative adopting this scheme shall be as follows:
a. Regular meeting b. Special meeting
A regular meeting shall be conducted to elect the sector, chapter, or district Representatives or Delegates, to discuss and decide the matters which shall be taken during the representative assembly meeting and for such other purposes as maybe provided in the By- laws.
A special meeting shall be conducted to report on the proceedings during the representative assembly meeting and for such other purposes as maybe provided in the By-laws. After the
Section 1. Legal Basis. The legal basis for this Rule is Article 5 (16) of the Code, quoted as follows:
"Art. 5 (16) Subsidiary Cooperative refers to any organization all or majority of whose membership or shareholders come from a cooperative, organized for any other purpose different from that of, and receives technical, managerial and financial assistance from, a cooperative, in accordance with the rules and regulations of the Authority."
Section 2. General Requirements. A parent cooperative may organize a subsidiary cooperative provided that:
- The creation of a subsidiary cooperative and the technical, managerial and financial assistance to be provided shall be approved by at least two-thirds (2/3) vote of the members of the parent cooperative with voting rights, present and constituting a quorum in a regular or special general assembly/representative assembly meeting called for the purpose.
- The Parent cooperative has been in operation for at least two (2) years and has not incurred a net loss for the last two (2) preceding years of operation
- It has a total net worth of at least Fifty Million Pesos (Php50,000,000.00) as shown in its latest Audited Financial Statement.
- The purpose of the subsidiary cooperative shall be different from that of the parent cooperative.
- All or majority of the members of the subsidiary cooperative must come from the parent cooperative.
- The Parent Cooperative shall be required to submit a feasibility study.
Section 3. Conditions. The following conditions shall be considered in the registration and operation of Subsidiary Cooperatives:
- Assistance in the form of technical, managerial and financial assistance shall be provided by the Parent Cooperative to its Subsidiary Cooperative;
- Directors or Officers of the Parent Cooperative cannot be elected or appointed as Officers of the Subsidiary Cooperative. However, the Parent Cooperative through its General / Representative Assembly may appoint its Representative to act as Ex-Officio member of the Board of Directors of the Subsidiary Cooperative;
- The Management Staff of the Parent Cooperative cannot at the same time be the Management Staff of the Subsidiary Cooperative;
- Transfer of shares of members and other related interests from the Parent Cooperative to the Subsidiary Cooperative and vice versa is prohibited; and
- In case of dissolution of the Parent Cooperative, the Subsidiary Cooperative cannot be a recipient of any grant, donations or other interests from the Parent Cooperative.
Section 4. Name of Subsidiary Cooperative. The name of the Parent Cooperative shall appear in the name of the Subsidiary Cooperative.
Section 5. Assistance from Parent Cooperative. The financial assistance to be provided shall not exceed ten per centum (10%) of the net worth of the Parent Cooperative which shall be in the form of loans or donations. In case of grants/donations it shall not be distributed as member share capital. The technical and managerial assistance shall depend upon the needs of the Subsidiary Cooperative and capacity of the Parent Cooperative, which shall be taken up in the book at actual cost.
A Memorandum of Agreement containing the terms and conditions of the financial and other assistance provided by the parent cooperative to the subsidiary cooperative shall be entered into by both cooperatives.
Section 6.Effect of Dissolution of Parent or Subsidiary Cooperative. The dissolution of either cooperative shall not affect the existence of the other.
However, in case of the dissolution of the parent cooperative, the Subsidiary Cooperative shall subsequently amend its cooperative name to remove the words “Subsidiary Cooperative of (Name of Parent Cooperative)”.
RULE 3
MULTIPURPOSE COOPERATIVE
Section 1.Legal Basis. The legal basis for this Rule is Article 10 of the Code quoted as follows:
"Art. 10. Organizing a Primary Cooperative.
Any newly organized primary cooperative may be registered as multipurpose cooperative only after compliance with the minimum requirements for multi- purpose 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 operation."
Section 2. Coverage. No cooperative shall be registered as a multipurpose cooperative unless it has been in operation for at least two (2) years.
Section 3. Minimum Capitalization Requirements. With the exception of the agriculture cooperatives and agrarian reform cooperatives, only those cooperatives with a minimum paid-up capital of One Hundred Thousand Pesos (Php100,000.00) or as required in the feasibility study, whichever is higher, may be allowed to transform into a multipurpose cooperative.
Section 4. Requirements for Registration. The following requirements shall be submitted to the Authority:
- Written Notification to Creditors;
- Filing with the Authority of the Required Documents for the Registration of Division; and
- Issuance of the Certificate of Registration.
Section 3. Proposal for Division. The majority members of the Board of Directors or at least ten per centum (10%) of members with voting rights may propose for division, which must be approved by at least majority of the members of the cooperative with voting rights, present and constituting a quorum, in a general/representative assembly meeting called for the purpose. Upon approval of the proposal to divide, a committee to formulate the Plan of Division shall be constituted by the General/Representative Assembly.
Section 4. Preference of Members. Upon approval of the proposed division of the cooperative by the General/Representative Assembly in a meeting called for the purpose, members of the original cooperative shall be allowed within two (2) weeks to choose the new cooperative they prefer to join. The management of the original cooperative shall then transfer the member's share and all other interests to his/her chosen cooperative.
Section 5. Presentation and Approval of the Plan of Division. The Board of Directors shall call a General/Representative Assembly meeting to act on such Plan of Division with notice to all members of record and Creditors at least thirty (30) days prior to the scheduled meeting. The Plan of Division shall be approved by a vote of three-fourths (3/4) of all members with voting rights, present and constituting a quorum in such general/representative assembly meeting.
Section 6. Right of a Dissenting Member. A dissenting member shall be entitled to a refund of his/her share capital and all other interests under Article 30 of the Code.
Section 7. Contents of the Plan of Division. The Plan of Division shall include the following:
- The rationale or justification for the division of the cooperative;
- A Financial Statement duly certified by an independent Certified Public Accountant including a schedule of assets, liabilities and share capital of the cooperative intending to divide;
- A proposed revaluation of assets, determination of liabilities, statutory reserves, undivided net surplus and members' share capital;
- List of all the receivables of the cooperative;
- List of all the Creditors and their respective claims against the cooperative;
- Procedure for the division of assets, allocation and settlement of the obligations and the collection of receivables of the cooperative;
- Feasibility study ensuring the viability and sustainability of both cooperatives;
- List of members showing their share capital contributions certified by the Secretary and attested by the Board Chairperson of the cooperative;
- The proposed name, address and area of operation of the new cooperatives; and
- Benefit package for Management Staff to be affected by the plan.
Section 8. Publication. Within seven (7) days after the date of approval of the division of the cooperative, the Secretary of the cooperative, duly noted by the Chairperson, shall publish such plan of division once a week for three (3) consecutive weeks in a newspaper of general circulation within its area of operation. Said publication may also be supplemented by radio and television announcements.
Alternatively, the announcement of the division may also be done by posting in at least three (3) conspicuous public places for three (3) consecutive weeks within its area of operation.
Likewise, letters/notices duly signed by the Chairperson announcing such division shall be sent by the Secretary of the cooperative through registered mails to their creditors.
Section 9. Objection by a Third Party. Within fifteen (15) days from the day of posting or from the last day of publication, a party may file an objection or opposition to the Plan of Division before the Authority, copy furnished the cooperative concerned, which shall be decided upon, within sixty (60) days from receipt of the objection or opposition. If the objection or opposition is meritorious and in order not to prejudice the interest of the third party, the Authority shall cause the deferment or disapproval of the registration of the new cooperatives.
After the lapse of the period to file an objection/opposition and no objection/opposition has been filed or after all objections/oppositions have been resolved, the cooperative can file its application for registration.
Section 10. Additional Requirements for Registration. In addition to the regular requirements for registration of cooperatives, the following documents shall be filed with the Authority:
- The resolution of division as approved by the General/Representative Assembly duly certified by the Secretary and duly noted by the Chairperson;
- The Plan of Division including all its attachments;
- The Minutes of the General/Representative Assembly Meeting approving the Plan of Division;
- The Financial Statements of each of the new cooperatives duly certified by the respective Treasurers and Chairpersons;
- Proof of Notice of Publication and/or posting of the announcement of such division;
- Proof of Notice to the Creditors;
- Written Agreement to Settle Obligation;
- Original Certificate of Registration; and
- Written approval or recommendation from the concerned government agency, if applicable.
Section 11. Issuance of Certificate. Once the registration requirements are found to be complete and in order, the Authority shall issue the Certificates of Registration to the new cooperatives.
