COOPERATIVE AND THE ECONOMIC SYSTEM Coop 002 – Cooperative Management MARILYN P. GAOAT Instructor

Cooperative, defined R.A 9520, Article 3 “An autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risk and benefits of the undertaking in accordance with universally accepted principles.”

Social Development Each person has the right, capacity, and responsibility to make the fundamental choices that affect his or her life Better education Higher standards of health and nutrition Clean, healthy, safety, and friendly environment Equality in opportunity for employment or livelihood Greater individual freedom Richer cultural life

Impact of Cooperative in Development Cooperative promote and support entrepreneurial development Create productive employment Raised income and helped reduce poverty Community-building

Impact of Cooperative in Development Cooperatives are important economic players Credit cooperative serve millions of members (financing needs) Agricultural cooperative accounts for a significant part of agricultural production Electric cooperative are important providers in rural areas

Impact of Cooperative in Development Cooperative provide opportunities for social inclusion Assistance for self-employment Banking services (savings and credit cooperative) Financing in the formation of small and micro business Inclusive finance – reaching the poor in a sustainable way

Impact of Cooperative in Development Cooperatives are substantial provided of social protection Health coverage Health insurance

Impact of Cooperative in Development Cooperatives are instrumental in peace- building and creating bridges of communication

Cooperative Limitations The success of cooperatives is a function of: capable management and governance Ability to adapt to prevailing business conditions Ability to raise capital Threat of demutualization (conversion to investor-owned)

Number of Persons Required for Formation At least 15 ( natural persons can be members only of primaries, while juridical can be members of federations and/or unions)

Grant of Juridical Personality Must be registered with Cooperative Development Authority

Registration Requirements for Documentation Articles of Cooperation By-Laws Economic Survey Bonds Treasurer’s Affidavit

Capitalization Contributions Member contributes (limited to 10 percent of the authorized share capital of the cooperative: Chapter 8, Art. 73)

Management Structure General Assembly has final decision

Voting Rights One member, one vote No proxy voting for primary cooperative

Liability Limited until subscribed share capital

Taxability Net Surplus non taxable, shareholders pay tax on the interest on share capital received by them

Effect of Death of Owner, Partner, Stockholder or Member Cooperative continues, heirs become members, if qualified