BUSINESS LAW

6. Cooperate with the government,

What is Cooperative? other cooperatives and people-
- Autonomous and duly registered oriented organizations to further
association of persons, with a common
the attainment of any of the
bond of interest, who have voluntarily
joined together to achieve their social, foregoing objectives.
economic, and cultural needs and
aspirations by making equitable TYPES OF COOPERATIVE:
contributions to the capital required, 1. Credit Cooperative- Promotes and
patronizing their products and services undertakes savings and lending
and accepting a fair share of the risks services among its members.
and benefits of the undertaking in
- To provide financial assistance for
accordance with universally accepted
productive and provident purposes
cooperative principles.
2. Consumers Cooperative- To
Objectives and Goals:
procure and distribute commodities
➔ To help improve the quality of life
to members and non-members
of its members. Towards this end,
(fulfilling needs)
the cooperative shall aim to: 3. Marketing Cooperative- Engages
1. Provide goods and services to its in the supply of production inputs to
members to enable them to members and markets their products
attain increased income, savings, 4. Producers Cooperative-
investments, productivity and Undertakes joint production whether
promote among themselves agricultural or industrial (production
equitable distribution of net and processing of raw materials for
surplus through maximum sale by the cooperative to its
members and non-members).
utilization of economies of scale,
5. Service Cooperative- Medical,
cost-sharing and risk-sharing;
transportation, insurance, housing,
2. Provide optimum social and
labor, electric power, communication,
economic benefits to its professional and other services.
members; 6. Multi-purpose Cooperative-
3. Teach them efficient ways of Combing the 2 or more activities of
doing things in a cooperative these different types of coop.
manner; 7. Advocacy Cooperative- Which
4. Propagate cooperative practices promotes and advocates
and new ideas in business and cooperativism among its members
management; and the public through socially
oriented projects, training and other
5. Allow the lower income and less
similar activities to reach out to its
privileged groups to increase
intended beneficiaries;
their ownership in the wealth of
8. Cooperative Bank- Providing a
the nation; wide range of financial services to
cooperatives and their members
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9. Dairy Cooperative and other gov’t offices free of
10. Education Cooperative- Owning charge
and operating licensed educational - Cooperatives organized among gov’t
institutions employees shall enjoy the free use
11.Electric Cooperative- Undertaking of any available space in their
power generations, utilizing agency (whether owned or rented).
renewable energy sources - Coop such as electricity or other
(subtransmission or distribution to special types; shall secure franchise
its household members). and open their membership to all
12.Financial Service Cooperative- persons qualified in their areas of
Engaging in savings and credit operation
services and other financial services Who can be members?
13.Fishermen Cooperative- - Natural person + Filipino Citizen +
Organized by marginalized fishermen Legal Age
in localities. - Juridical Person (cooperative or
14.Health Services Cooperative NGO’s) + should meet the
15. Housing Cooperative- Provide qualifications prescribed in the
access to housing for the benefit of bylaws of the cooperative
its regular members who actively NOTE FOR MINORS: laboratory cooperatives
participate in the savings program (training grounds nila ‘yon) lang sila pwede
for housing. It is co-owned and + dapat assisted ng registered coop.
controlled by its members;
16.Transport Cooperative- Land and Kinds of Membership
sea (under PH maritime laws) 1. Regular Member- Complied with
17.Water Service Cooperative- all the membership requirements
Distribution of potable water for its and entitled to all the rights and
members and their households. privileges cooperative code +
18.Workers Cooperative- Organized bylaws.
by workers, including the 2. Associate Member- No right to vote
self-employed, who are at same time and be voted; only entitled to such
the members and owners of the rights and privileges provided by the
enterprise. Its principal purpose is to cooperative’s bylaws.
provide employment and business
opportunities to its members and Termination of membership
manage it in accordance with 1. Vote of the majority of all members
cooperative principles. of the board of directors
2. Not patronized any of the services
Benefits and Privileges for an unreasonable period of time
- Depositing their sealed cash boxes, 3. Continuously failed to comply with
documents or any valuable papers in his obligations
the safes of the municipal treasurers 4. Violations of bylaws and the rules of
cooperative
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5. Act or omission injurious or secretaries, if juridical persons, before a
prejudicial to the welfare of the coop notary public.
NOTE: “the member” shall be informed of - “Name + Cooperative”
the intended termination in writing and shall - Purpose and Scope
be given an opportunity to be heard before
- Term of existence
the board makes its decision.
- Area of operation (main office)
- Names, nationality and address
May a member withdraw?
- YES, 60-day notice to the BOD is a
of registrants
must ! - Common bond of membership
- Names of directors (BOD)
How to Organize? - Amount of share capital
1. Get organized 6. Secure bond of accountable
- At least 15 members officer(s)
- Problem you want to resolve; - Surety bond should be secured
basic needs you want to provide from a duly registered insurance
2. Reserve your proposed or bonding company.
cooperative name 7. Execute Treasurer’s Affidavit
- Fill up the Cooperative Name - Sworn statement of the treasurer
Reservation Request Form. this elected by the subscribers
must be submitted to Cooperative showing that at least 25% of the
Development Authority (SEC authorized share capital has been
yung ka-level niya) + Reservation subscribed
fee - At least 25% of the total
3. Prepare a general statement subscription has been paid should
called an Economic Survey be executed and to be attached
- General statement describing, to AOC (Paid up SC not less than
among others, the structure and 15,000 pesos)
purposes of the proposed 8. Complete the
cooperative. Pre-Membership Education
4. Cooperative’s Bylaws Seminar
- Rules and regulations governing 9. Register your cooperative
the operation of the cooperative with CDA
5. Articles of Cooperation Submit the following required
NOTE: The articles of cooperation shall documents;
be signed by each of the organizers and - Economic Survey
acknowledged by them if natural - AOC and Bylaws
persons, and by the chairpersons or - Surety bond
- Treasurer’s Affidavit
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- Approved Cooperative Name and Life Term
Reservation slip - Has a basic term of 50 years from
- Cert. of PMES the date of registration unless
How many members are needed? sooner dissolve or unless said
- Not less than 15 natural persons period is extended
+ Filipino Citizen + Legal age +
must have a common bond of The term may be extended?
interest + residing or working in - YES !
the intended area of operation - May extend another 50 years
provided that no extension may
Where do we register? be made earlier than 5 years
Cooperative Development prior to the original or
Authority (CDA)- sole gov’t agency subsequent expiry date of the
mandated to register all types of term
cooperatives. - Or unless there are justifiable
reasons for an earlier extension
What is meant by registration of Coop? as may be determined by the
- As an operative act that grants CDA.
juridical personality to a proposed
cooperative and is evidenced by a IX: Merger and Consolidation (crdts
cert. of registration
kay ralph)

Remedy if it is denied by the CDA Merger - is a union whereby one or more

existing corporations are absorbed by
- Appeal to the office the president another corporation that survives and
within 90 days from the receipt of continues the combined business.
the notice of denial
Surviving corporation automatically
acquires all their rights, privileges, and
How to run a Cooperative? powers, as well as their liabilities.
- Direction and management of the
Consolidation - is the union of two or
affairs of a cooperative shall be
more existing entities to form a new entity.
vested in a BOARD OF
DIRECTORS Constituent corporation - the corporation
proposing to merge or consolidate.
Composition of BOD
- Composed of not less than 5 nor Plan of Merger or Consolidation
more than 15 members elected
The board of directors or trustees of each
by the general assembly
corporation, party to the merger or
consolidation, shall approve the plan of
merger or consolidation setting forth the
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following
b. As to stock corporations, the
a. The names of the corporations number of shares outstanding, or
proposing to merge or consolidate, in the case of nonstock
hereinafter referred to as the corporations, the number of
constituent corporations members

b. The terms of the merger or c. As to each corporation, the

consolidation and the mode of number of shares or members
carrying the same into effect voting for or against such plan,
respectively
c. A statement of the changes, if any,
in the articles of incorporation of d. The carrying amounts and fair
the surviving corporation in case values of the assets and liabilities
of merger; and, in case of of the respective companies as of
consolidation, all the statements the agreed cut-off date
required to be set forth in the
articles of incorporation for e. The method to be used in the
corporations organized under this merger or consolidation of
Code accounts of the companies

d. Such other provisions with respect f. The provisional or pro forma

to the proposed merger or values, as merged or
consolidation are deemed consolidated, using the accounting
necessary or desirable. method

g. Such other information as may be

Approval Requirements prescribed by the Commission.
➢ Majority of Board of Directors/Trustees
➢ 2/3 of the Outstanding Capital
Stock/Member Effectivity of Merger or Consolidation
➢Issuance of Certificate of Merger by
Amendment: SEC
➢ Majority of Board of Directors/Trustees ➢Issuance of Certificate of Consolidation
➢ 2/3 of the Outstanding Capital by SEC
Stock/Member

Effects of Merger or Consolidation

Articles of Merger or Consolidation
a. The constituent corporations shall
Articles of merger or articles of become a single corporation
consolidation shall be executed by each which, in case of merger, shall be
of the constituent corporations, to be the surviving corporation
signed by the president or vice president designated in the plan of merger;
and certified by the secretary or assistant and, in case of consolidation, shall
secretary of each corporation setting be the consolidated corporation
forth: designated in the plan of
a. The plan of the merger or the plan consolidation
of consolidation
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b. The separate existence of the Procedure
constituent corporations shall
cease, except that of the surviving 1. The board of directors/trustees of
or the consolidated corporation each corporations draws up a plan
of merger or consolidation.
c. The surviving or the consolidated
corporation shall possess all the 2. Submission of plan to
rights, privileges, immunities, and stockholders/members of each
powers and shall be subject to all corporation for approval.
the duties and liabilities of a
corporation organized under this 3. Execution of the Articles of
Code Merger/Consolidation

d. The surviving or the consolidated 4. Submission of AOM/AOC to SEC

corporation shall possess all the for approval
rights, privileges, immunities and
franchises of each constituent 5. The SEC shall if it deems
corporation; and all real or necessary set a hearing giving
personal property, all receivables notice to all corporations
due on whatever account, concerned.
including subscriptions to shares
and other choses in action, and 6. Issuance of certificate of
every other interest of, belonging merger/consolidation
to, or due to each constituent
corporation, shall be deemed
transferred to and vested in such
surviving or consolidated
corporation without further act or
deed
e. The surviving or consolidated
corporation shall be responsible
for all the liabilities and obligations
of each constituent corporation as
though such surviving or
consolidated corporation had itself
incurred such liabilities or
obligations; and any pending
claim, action or proceeding
brought by or against any
constituent corporation may be
prosecuted by or against surviving
or consolidated corporation. The
rights of creditors or liens upon the
property of such constituent
corporations shall not be impaired
by the merger or consolidation.