coop lecture 6

8/10/2019 Coop Lecture 6

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Purposes for which Cooperative maybe Organized

A cooperative may be organized with atleast one purposeThe purpose which defines the type ofcooperative, is stated in the articles ofcooperation, the registration of which andthe subsequent issuance of a certificate

of registration to evidence the act ofregistration bestows juridical personality on that particular.



Under Art.No.6 of the Code,

Cooperative may be formed toany or all of the followingpurposes

1. Thrift and saving mobilization2. Fund generation and credit

extension3. Production and marketing4. Provisions of goods and savings



5. Skills development6. Land acquisition, housing benefits7. Protection against losses8. Economic, social and educational

advancement9. Ownership and operation of

enterprises

10. Coordination and facilitation of co-op activities

11. Other collateral purposes



Cooperative Objective

According to Art.No.7 of the code, the primary objective of every cooperativeis to provide goods and services .

Cooperative empowers their member A cooperative is not a charitableinstitution



Mind Alert

A faculty coop set up a restaurant anda mini-grocery. Faculty members eatin the coop but students, who are not

allowed to be members, are alsoserved when they enter the store. Thecoop naturally serves more students

than faculty.◦ From the activities of the coop, what do

you think is the purpose of the coop?



Cooperative power andcapacity

A CDA-registered cooperativeacquires juridical personality and

hence is able to exercise powersand capacities expressly grantedby law and such other powersnecessary to carry out thepurposes stated in the articles of

cooperation.



The code lists down express powers ofcooperatives:

a. To sue and be sued in its cooperativename;b. To exercise the right of succession

c. To exercise powers provided for in theCooperative CodeTo amend its articles of cooperation inaccordance with the provisions of the codeTo adopt by laws not contrary to law, moralsor public policy, and to amend and repeal thesame



To enter into division, merger or consolidation;To join federations or unions;

d. To purchase, receive, take or grant, hold,convey, sell, lease, pledge, mortgage andotherwise deal with such real and personal

property, subject to the limitationsprescribed law and the Constitution;



e. To accept and receive grants, donationsand assistance from foreign and domesticsources

f. To exercise such other powers granted bythe code



Economic Survey

Coop’s feasibility study Contains the general statementdescribing the structure, purposes,and economic feasibility of theproposed cooperative



Liability of Cooperative

Cooperatives have limitedliability, meaning the financial

liability of a cooperative doesnot exceed its subscribedshare capital.

Creditors cannot require thecooperative to liquidate or putcash value on its unissued



Terms of existence

Cooperatives can exist for amaximum of 50 years at any

one grant of juridicalexistence.There is no limit on thenumber of times that the termsof existence may be amended



Articles of cooperation

It is a requirement for registration andmust be filed with the CDA.In a primary cooperative, each of the

organizers sign and acknowledges thearticles.In secondary or tertiary cooperatives, the

presidents or secretaries sign andacknowledge the article of cooperation.In both primary and secondary co-op thearticles of cooperation are alwaysnotarized .



The articles of cooperation contain thefollowing:

a. The name of the cooperative which shallinclude the word “cooperative”

b. The purpose or purposes and scope of

business for which the cooperative is tobe registered

c. The term of existence of cooperative

d. The area of operation and the postaladdress of its principal office



e. The names, nationality, and the postaladdresses of the registrants

f. The common bond of membershipg. The list of names of the directors who

shall manage the cooperative

h. The amount of its share capital, thenames and residences of its contributorsand a statement of whether the

cooperative is primary, secondary ortertiary in accordance with Art.23 hereof.



Mind Alert

A cooperative sells on consignmentbasis from the farmers, unfortunatelythe farm products from farmers where

destroyed by flood in the coopwarehouse amounting to P100,000.◦ Can the co-op be made to pay for the

corn when money on hand amounts onlyP5,000?◦ Where should the money come from?



The articles of cooperation maycontain provisions that are notinconsistent with the Code or any

other law



By- laws

It is a set of rules governingthe affairs of the cooperatives,such as meetings, power ofofficers, election of officers,

rights and responsibilities ofmembers, and etc.



registration

Is the operative act thatgives the cooperative its

juridical personalityThe evidence of registrationis the certificate ofregistration



Inclusions to articles ofCooperation

1. Surety bonds of the accountable

officers, such as the treasurerand the cashier2. Sworn statement of the treasurer



Registration Process

Within 30 days after the application forregistration is filed, the CDA has to act

on it. After 30 days from filing, theapplication is deemed approved ifdelay on the action on the application

is attributable to the CDA; otherwise,the presumption of “approvedregistration” is attributable to the

applicant.



In case the CDA within the allottedtime disapproves the application, theapplicant can appeal to the Office of

the President within 90 days fromreceipt of the notice of denial.

The person seeking the formation ofthe cooperative is called a promoter .



Divisions of cooperatives

Juridical personality for each of the newcooperatives comes about upon registrationin the CDA and the surrender of the original

certificate of registration which will then becancelled.The division of new cooperatives will not be

allowed if the purpose is for defrauding thecreditors.



Merger or consolidation ofcooperatives

Merger means the fusion into one of two ormore cooperatives.◦ One of the two cooperative will be dominant

and survive the merger.Consolidation happens when two or morecooperatives become one and an

altogether new cooperative.◦ An entirely new cooperative is born.



And other interests in thecooperative unless such

refund will reduce theassets below the level of

liabilities.



Effects of mergers andConsolidationa. The constituent cooperatives, shallbecome a single co-op which, in case of

merger, shall be the surviving co-op, andin case of consolidation, shall be theconsolidated co-op.

b. The separate existence of the constituentco-op shall cease, except that of thesurviving or consolidated co-op



c. The surviving or consolidated co-op shallposses all the assets, rights, privileges,

immunities and franchises of each of theconstituent co-opd. The surviving or consolidated co-op shall

be responsible for all the liabilities andobligations of each of the constituent co-op in the same manner.



Federation

An association composed of primarycooperatives or secondarycooperatives with either single or

multipurpose business activities. A federation may be organized witheither a primary purpose or secondary

purpose.



Cooperative Union

An organization of registeredcooperatives and federations formedto represent the interest and welfare of

all types of cooperatives at theprovincial, city, regional, and nationallevels



Distinction Between CooperativeFederation and Union

Cooperative Federation Cooperative Union

Designed to engage inbusiness in favor ofcooperative members topromote growth and survival

Organized if there is need forit; e.g. credit cooperatives mayform a federation to print,based on economies of scale,passbooks, deposit slips,vouchers, withdrawal slips,reading materials, etc.

Generally organized alongcooperative types

Designed to engage ineducation and advocacy

Organized so long asmembers are willing

Transcends cooperative genre

coop lecture 6

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