7.4.2.

ADMINISTRATION

1. General Assembly: Composed of members who are entitled to vote under the articles of
cooperation and by-laws of the cooperative, the General Assembly is the highest policy-making
body. It has exclusive powers which cannot be delegated, as follows:
(a) to determine and approve amendments to the articles of cooperation and bylaws;
(b) to elect or appoint the members of the board of directors, and to remove them for
cause, and
(c) to approve developmental plans;

11/ 16/2 024 SAMPL E FO OTE R TEX T 1

• Delegation of powers of the GA: only for purposes of prompt and intelligent
decision-making, the general assembly may by a three-fourths (3/4) 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; these powers shall be enumerated under
the by-laws of the cooperative.

11/ 16/2 024 SAMPL E FO OTE R TEX T 2

Meetings

• shall be held annually on a date fixed in the by-laws, or if so not fixed, any
date within 90 days after the close of each fiscal year.
• whenever necessary, a special meeting of the general assembly may be called
at any time by a majority vote of the board of directors or as provided for in the by-laws. A
notice in writing shall be sent one (1) week prior to the meeting to all members who are
entitled to vote.

11/ 16/2 024 SAMPL E FO OTE R TEX T 3

 Other ways of calling a special meeting
• 1. A special meeting shall be called by the board of directors after compliance with the required notice within 1 month after receipt of a request
in writing from at least ten (10%) of the total members who are entitled to vote to transact specific business covered by the call.
• 2. If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of ten (10%) of all the
members of the cooperative who are entitled to vote, and for good cause shown, shall issue an order to the petitioners directing them to call a
meeting of the general assembly by giving proper notice as required by the Code or in the by-laws.
• 3. In the case of a newly approved cooperative, a special general assembly shall be called, as far as practicable, within ninety (90) days from such
approval;
• 4. The Authority may call a special meeting of the cooperative for the purpose of reporting to the members the result of any examination or other
investigation of the cooperative affairs;

11/ 16/2 024 SAMPL E FO OTE R TEX T 4

• may be done in writing, by posting or publication or through electronic means. Note, however, that notice of any meeting may be waived,
expressly or impliedly, by any member.

• Quorum: consist of at least 25% of all the members entitled to vote.

•
• Cooperative banks: ½ plus 1 (EXCEPT: to amend the Articles and the By-Laws, which will require ¾ [Art. 99])

• Electric cooperatives: 5% of all members entitled to vote, unless the by-laws provides otherwise

• Voting system: Each member of a primary cooperative shall have only one vote.

• In case of members of secondary or tertiary cooperatives, they shall have one basic vote and as many incentive votes as provided for in the bylaws but not
to exceed 5 votes.

• the votes cast by the delegates shall be deemed as votes cast by the members thereof.
• may be allowed by the by-laws of a cooperative other than a primary cooperative.

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BOARD OF DIRECTORS, COOPERATIVE OFFICERS AND COMMITTEES

• Board of Directors: Unless otherwise provided in the bylaws, the direction and
management of a cooperative's affairs are vested in a board of directors. It is
composed of not less than five or more than 15 members who will be elected by the
general assembly for two years and shall hold office until their successors are duly
elected and qualified, or until duly removed for cause. The board is responsible for
strategic planning, direction-setting, and policy-formulation activities.

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 BOARD OF DIRECTORS, COOPERATIVE OFFICERS AND COMMITTEES
• Directors: Any member of a cooperative who under the bylaws of the cooperative, has the right to vote and who possesses
all the qualifications and none of the disqualifications provided in the laws or bylaws shall be eligible for election as
director.

The cooperative may, by resolution of its board of directors, admit as directors, or

committee member one appointed by any financing institution from which the cooperative received financial assistance solely to
provide technical knowledge not available within its membership. Such director or committee member need not be a member of
the cooperative and shall have no powers, rights, nor responsibilities except to provide technical assistance as required by the
cooperative.

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 BOARD OF DIRECTORS, COOPERATIVE OFFICERS AND COMMITTEES

•
• 1. The members of the board of directors shall not hold any other position directly involved in the day
to day operation and management of the cooperative.
• 2. Any person engaged in a business similar to that of the cooperative or who in any way has a conflict
of interest with it, is disqualified from election as a director of said cooperative.

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• Meeting of the board and quorum requirement:
• In the case of primary cooperatives, regular meetings of the board of directors shall be held at least
once a month.
• of the board of directors may be held at any time upon the call of the chairperson or a majority of the
members of the board: Provided, That written notices of the meeting specifying the agenda of the special meeting shall
be given to all members of the board at least one (1) week before the said meeting.
• A majority of the members of the Board shall constitute a quorum for the conduct of business, unless the
bylaws provide otherwise.
• Directors cannot attend or vote by proxy at board meetings.

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 BOARD OF DIRECTORS, COOPERATIVE OFFICERS AND COMMITTEES
In case of vacancy and who will fill-up the vacancy:
Expiration of the term -

Other causes -

Note that for corporations, removals are filled-up only by the stockholders in the same meeting where the director
was removed.

11/ 16/2 024 SAMPL E FO OTE R TEX T 10

BOARD OF DIRECTORS, COOPERATIVE OFFICERS AND COMMITTEES
In case of vacancy and who will fill-up the vacancy:
Expiration of the term -

Other causes -

Note that for corporations, removals are filled-up only by the stockholders in the same meeting where the director
was removed.

11/ 16/2 024 SAMPL E FO OTE R TEX T 11

 OFFICERS OF THE COOPERATIVES: Rules Applicable:

• The board of directors shall elect from among themselves the chairperson and vice-chairperson, and elect or appoint other
officers of the cooperative from outside of the board in accordance with their by-laws.
• All officers shall serve during good behavior and shall not be removed except for cause after due hearing.
• Loss of confidence shall not be a valid ground for removal unless evidenced by acts or omission causing loss of confidence in the
honesty and integrity of such officer.
• No two (2) or more persons with relationships up to the third civil degree of consanguinity or affinity nor shall any person
engaged in a business similar to that of the cooperative nor who in any other manner has interests in conflict with the
cooperative shall serve as an appointive officer.

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COMPENSATION OF DIRECTORS:
• directors are not to receive any compensation
•
• 1. If there is a provision in the by-laws fixing their compensation;
• 2. Reasonable per diems,
• a. if in the preceding calendar year, the cooperative reported a net loss or
• b. had a dividend rate less than the official inflation rate for the same year.

11/ 16/2 024 SAMPL E FO OTE R TEX T 13

• No additional compensation other than per diems shall be paid during the first year of existence of any
cooperative.
• Under Section 5 of CDA MC 2013-17, the grant of compensation other than per diem to the
directors shall be made only after the adoption of a General Assembly Resolution approving such
compensation.
• Under Section 6, resumption of grant of per diem after a period of suspension shall not be compounded.
No recovery of per diem during the period of suspension shall be allowed.
• 3. By a majority vote of the members with voting rights at a regular or special general assembly
meeting specifically called for the purpose

11/ 16/2 024 SAMPL E FO OTE R TEX T 14

• Compensation of Officers, Committee Members and employees: The compensation of officers of
the cooperative as well as the members of the committee as well as the members of the
committees may be fixed in the by-laws.
• Unless already fixed in the by-laws, the compensation of all other employees shall be
determined by the board of directors.

11/ 16/2 024 SAMPL E FO OTE R TEX T 15

DEALINGS OF DIRECTORS, OFFICERS, OR COMMITTEE MEMBERS WITH COOPERATIVES
• SELF-DEALING DIRECTORS: A contract entered into by the cooperative with one (1) or more of its
directors is , at the option of the cooperative, unless all the following conditions are present:
• 1. That the presence of such director in the board meeting wherein contract was approved was not necessary to
constitute a quorum for such meeting;
• 2. That the vote of such director was not necessary for the approval of the contract;
• 3. That the contract is fair and reasonable under the circumstances; and

11/ 16/2 024 SAMPL E FO OTE R TEX T 16

DEALINGS OF DIRECTORS, OFFICERS, OR COMMITTEE MEMBERS WITH COOPERATIVES
• 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 three-fourths (3/4) vote of all the members with voting
rights, present and constituting a 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 same rule above shall apply, except in the case of an
officer or committee member, the contract shall be valid if it has been previously authorized by the general
assembly or by the board of directors.

11/ 16/2 024 SAMPL E FO OTE R TEX T 17

DEALINGS OF DIRECTORS, OFFICERS, OR COMMITTEE MEMBERS WITH COOPERATIVES

• DISLOYALTY OF A DIRECTOR: A director who, by virtue of his office, acquires for

himself an opportunity which should belong to the cooperative shall be liable for damages and
must account for double the profits that otherwise would have accrued to the cooperative by
refunding the same, unless his act has been ratified by a three-fourths (3/4) vote of all the
members with voting rights, present and constituting a quorum. This provision shall be
applicable, notwithstanding the fact that the directorused his own funds in the venture.

11/ 16/2 024 SAMPL E FO OTE R TEX T 18

DEALINGS OF DIRECTORS, OFFICERS, OR COMMITTEE MEMBERS WITH COOPERATIVES

• USE OF CONFIDENTIAL INFORMATION: A director or officer, or an associate of a director or officer, who, for his
benefit or advantage or that of an associate, makes use of confidential information that, if generally known, might
reasonably be expected to adversely affect the operation and viability of the cooperative, shall be held:
• 1. Liable to compensate the cooperative for the direct losses suffered by the cooperative as a result of the illegal use of
information; and
• 2. 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.

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• REMOVAL OF OFFICERS:
• All complaints for the removal of any elected officer shall be filed with the board of directors.
• Such officer shall be given the opportunity to be heard.
• Majority of the board of directors may place the officer concerned under preventive suspension pending the resolution of the
investigation.
• 4. Upon finding of a prima facie evidence of guilt, the board shall present its recommendation for removal to the general
• assembly.
• 5. An elected officer may be removed by three fourths (3/4) votes of the regular members present and constituting a quorum, in a
regular or special general assembly meeting called for the purpose.
• 6. The officer concerned shall be given an opportunity to be heard at said assembly.

11/ 16/2 024 SAMPL E FO OTE R TEX T 20

• OTHER OFFICERS
• The accountant or the bookkeeper of the cooperative shall be responsible for the
maintenance of the
• cooperative in accordance with generally accepted accounting practices. He shall also be
responsible for the production of the same at the time of audit or inspection.
• The audit committee shall be responsible for the continuous and periodic
review of the books and records of account to ensure that these are in accordance with
generally accepted accounting practices. He shall also be responsible for the production of the
same at the time of audit or inspection.

11/ 16/2 024 SAMPL E FO OTE R TEX T 21

RECORDS AND REPORTS
“ART. 52. Books to be Kept Open. (1) Every cooperative shall have the following documents ready and accessible to its members
and representatives of the Authority for inspection during reasonable office hours at its official address:
• “(a) A copy of this Code and all other laws pertaining to cooperatives;
• “(b) A copy of the regulations of the Authority;
• “(c) A copy of the articles of cooperation and bylaws of the cooperative;
• “(d) A register of members;
• “(e) The books of the minutes of the meetings of the general assembly, board of directors and committee;
• “(f) Share books, where applicable;
• “(g) Financial statement; and
• “(h) Such other documents as may be prescribed by laws or the bylaws.

11/ 16/2 024 SAMPL E FO OTE R TEX T 22

• Subject to the pertinent provisions of the National Internal Revenue Code and other laws, a cooperative may dispose by
way of burning or other method of complete destruction any document, record or book pertaining to its financial and
nonfinancial operations which are already more than five (5) years old except those relating to transactions which are
the subject of civil, criminal and administrative proceedings. An inventory of the audited documents, records and
books to be disposed of shall be drawn up and certified to by the board secretary and the chairman of the audit
committee and presented to the board of directors which may thereupon approve the disposition of said records.

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AUDIT, INQUIRY AND MEMBER’ S RIGHT TO EXAMINE
• “ART. 83. Right to Examine. A member shall have the right to examine the records required to be kept by the cooperative under Article 52 of this
Code during reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records without charge except the
cost of production.

• “Any officer of the cooperative who shall refuse to allow any member of the cooperative to examine and copy excerpts from its records shall be
liable to such member for damages and shall be guilty of an offense which shall be punishable under Article 140 of this Code: Provided, That if
such refusal is pursuant to a resolution or order of the board of directors, the liability under this article shall be imposed upon the directors who
voted for such refusal: Provided, further, That it shall be a defense to any action under this article that the member demanding to examine and copy
excerpts from the cooperative records has improperly used any information secured through any prior examination of the records of such
cooperative or was not acting in good faith or for a legitimate purpose in making his demand.

11/ 16/2 024 SAMPL E FO OTE R TEX T 24

TAX TREATMENT OF COOPERATIVE
“ART. 60. Tax Treatment of Cooperative. – Duly registered cooperatives under this Code which do not transact any business
with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and
other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section.
• Article 60 states that a cooperative that does not transact with non-members or the general public shall not be subject to any taxes
and fees imposed. And Article 61 provides tax exemption only to transactions with members and no tax exemption to transactions
with non-members.
• “ART.61. Tax and Other Exemptions. Cooperatives transacting business with both members and non-members shall not be
subjected to tax on their transactions with members.

11/ 16/2 024 SAMPL E FO OTE R TEX T 25

TAX TREATMENT OF COOPERATIVE
Notwithstanding the provisions of any law or regulation to the contrary, such cooperatives dealing with non-members shall
enjoy the following tax exemptions:
• a. Cooperatives with accumulated reserves and undivided net savings of not more than Ten million pesos
(P10,000,000.00) shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and
nature.
Such cooperatives shall be exempt from customs duties, advance sales or compensating taxes on their importation of
machineries, equipment and spare parts used by them and which are not available locally a certified by the department of
trade and industry (DTI). All tax free importations shall not be sold nor the beneficial ownership thereof be transferred to
any person until after five (5) years, otherwise, the cooperative and the transferee or assignee shall be solidarily liable to
pay twice the amount of the imposed tax and / or duties.

11/ 16/2 024 SAMPL E FO OTE R TEX T 26

 TAX TREATMENT OF COOPERATIVE
• Cooperatives with accumulated reserves and divided net savings of more than Ten million pesos (P10,000,000.00) shall
pay the following taxes at the full rate:
• i. Income Tax - On the amount allocated for interest on capitals: Provided, That the same tax is not consequently imposed
on interest individually received by members: Provided, further, That cooperatives regardless of classification, are
exempt from income tax from the date of registration with the CDA;
• ii. Value-Added Tax – On transactions with non-members: Provided, however, That cooperatives duly registered with
• the Authority are exempt from the payment of value-added tax subject to exemptions under Section 109 of the Tax Code.
• iii. All other taxes; and
• iv. Donations to charitable, research and educational institutions and reinvestment to socioeconomic projects within the
area of operation of the cooperative may be tax deductible.

11/ 16/2 024 SAMPL E FO OTE R TEX T 27

TAX TREATMENT OF COOPERATIVE

• All cooperatives, regardless of the amount of accumulated reserves and undivided net savings shall be
exempt from payment of local taxes and taxes on transactions with banks and insurance companies:
Provided, That all sales or services rendered for non-members shall be subject to the applicable
percentage taxes sales made by producers, marketing or service cooperatives.

11/ 16/2 024 SAMPL E FO OTE R TEX T 28

CAPITAL, PROPERTY AND FUNDS
• Sources of Capital
• 1. Member’s share capital;
• 2. Loans and borrowings including deposits;
• 3. Revolving capital which consists of the deferred payment of patronage refunds, or interest on share capital; and
• 4. Subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether
public or private: Provided, That capital coming from such subsides, donations, legacies, grants, aids and other
assistance shall not be divided into individual share capital holdings at any time but shall instead form part of the
donated capital or fund of the cooperative.
• Upon dissolution, such donated capital shall be subject to escheat.

11/ 16/2 024 SAMPL E FO OTE R TEX T 29

 CAPITAL, PROPERTY AND FUNDS
• Limitation on Share Capital Holdings:
• 1. No member of primary cooperative other than cooperative itself shall own or hold more than ten per centum (10%) of the share capital (total
subscribed share capital as per CDA MC 2011-05) of the cooperative.
• 2. Where a member of cooperative dies, his heir shall be entitled to the shares of the decedent: Provided,
• a. the total shareholding of the heir does not exceed ten per centum (10%) of the share capital of the cooperative;
• b. the heir qualifies and is admitted as members of the cooperative; and
• c. where the heir fails to qualify as a member or where his total shareholding exceeds ten per centum (10%) of the sharE capital, the
share or shares in excess will revert to the cooperative upon payment to the heir of the value of such shares.

11/ 16/2 024 SAMPL E FO OTE R TEX T 30

 CAPITAL, PROPERTY AND FUNDS
• Assignment of Share Capital Contribution or Interest: No member shall transfer his shares or interest in the cooperative
or any part thereof unless:
• He has held such share capital contribution or interest for not less than one (1) year.
• The assignment is made to the cooperative or to a member of the cooperative or to a person who falls within the field
of the membership of the cooperative; and
• he board of directors has approved such assignment.

11/ 16/2 024 SAMPL E FO OTE R TEX T 31

 CAPITAL, PROPERTY AND FUNDS
• Capital Build-Up: The by-laws of every cooperative shall provide for a reasonable and realistic member capital build-up program to allow the
continuing growth of the members’ investment in their cooperative as their economic conditions continue to improve.

• cooperatives are required

• 1. To adopt a policy of continuing subscription on share capital upon full payment of the initial subscription.
• 2. To execute subscription agreement upon admission of members and whenever additional subscription shall be made by members upon full
payment of their initial subscription.
• 3. Unless otherwise provided for in their bylaws, cooperatives shall issue Share Certificates at least every end of the calendar year based on the
number of shares fully paid for the said period.
• a. Cooperatives are prohibited from issuing multiple types of common shares and different par value per share.
• b. It is likewise prohibited for any cooperative increase/decrease the par value of the share capital by way of amending their Articles of
Cooperation and Bylaws.

11/ 16/2 024 SAMPL E FO OTE R TEX T 32

 CAPITAL, PROPERTY AND FUNDS

• Share: refers to a unit of capital in a primary cooperative the par value of which may be fixed to any figure not more than One
thousand pesos (P1,000.00). The share of capital of a cooperative is the money paid or required to be paid for the operations of
the cooperative. The method for the issuance of share certificates shall prescribed in its by-laws.
• Fines: The by-laws of a cooperative may prescribe a fine on unpaid subscribed share capital. Provided, that such fine is fair
and reasonable under the circumstances.

11/ 16/2 024 SAMPL E FO OTE R TEX T 33

CAPITAL, PROPERTY AND FUNDS
• Investment of Capital: A cooperative may invest its capital in any of the following:
• In shares or debentures or securities of any other cooperative;
• In any reputable bank in the locality, or any cooperative;
• In securities issued or guaranteed by the Government;
• In real state primarily for the use of the cooperative or its members; or
• In any other manner authorized in the bylaws.
• Revolving Capital: The General Assembly may authorize the board of directors to raise a revolving capital to strengthen its capital
structure by deferring the payment of patronage refunds and interest on share capital or by the authorized deduction of a percentage
from the proceeds of products sold or services rendered, or per unit of product or services handled. The board of directors shall issue
revolving capital certificates with serial number, name, amount, and rate of interest to be paid and shall distinctly set forth the time
of retirement of such certificates and the amounts to be returned.

11/ 16/2 024 SAMPL E FO OTE R TEX T 34

• NET SURPLUS:
• 1. Every cooperative shall determine its net surplus at the close of every fiscal year and at such
other times as may be prescribed by the bylaws.
• 2. It shall not be construed as profit but as an excess of payments made by the members for the
loans borrowed, or the goods and services availed by them from the cooperative or the difference
of the rightful amount due to the members for their products sold or services rendered to the
cooperative including other inflows of assets resulting from its other operating activities and
which shall be deemed to have been returned to them if the same is distributed as prescribed herein.

11/ 16/2 024 SAMPL E FO OTE R TEX T 35

 The net surplus of every cooperative shall be distributed as follows:
Reserve Fund The reserve fund shall be used for the stability of the cooperative and Minimum 10% of the net surplus;
to meet net losses in its operations. The General Assembly may decrease
Provided, that in the first 5 years
the amount allocated to the reserve fund when the reserve fund already
exceeds the share capital. of
operation after registration, it shall
Any sum recovered on items previously charged to the reserve fund not be less than 50% of the net
shall be credited to such fund.
surplus.
The reserve fund shall not be utilized for investment, other than those
allowed in RA 9520. Such sum of the reserve fund in excess of the
share capital may be used at any time for any project that would
expand the operations of the cooperative upon the resolution of the
general
assembly.

11/ 16/2 024 SAMPL E FO OTE R TEX T 36

Education andThe bylaws may provide that certain fees or a portion thereof beMaximum 10 % of the net surplus
credited to such fund. The fund shall provide for the training,
Training Fund development and similar other cooperative activities geared towards the
growth of the cooperative movement:

Half of the amounts transferred to the education and training fund

annually shall be spent by the cooperative for education and training
purposes; while the other half may be remitted to a union or federation
chosen by the cooperative or of which it is a member. The said union or
federation shall submit to the CDA and to its contributing
cooperatives the following schedules:

i. List of cooperatives which have remitted their respective Cooperative

Education and Training Funds (CETF);
ii. Business consultancy assistance to include the nature and cost; and
iii. Other training activities undertaken
specifying therein the nature, participants
and cost of each activity.
.

11/ 16/2 024 SAMPL E FO OTE R TEX T 37

Community Development Fund The community development fund shall beMinimum 3% of the net surplus
used for
projects or activities that will benefit the
community
where the cooperative operates.

Optional Fund A land and building and other necessary Maximum 7% of the net surplus
fund

Remaining surplus Interest on share capital Not to exceed the normal rate of return
on investments and patronage funds.
Any amounts remaining after the
allowable interest and patronage refund
shall be credited to the reserve fund.

11/ 16/2 024 SAMPL E FO OTE R TEX T 38

• PATRONAGE REFUNDS: the sum allocated to “patrons” or those who availed of the goods/services of the
cooperative.
•
• 1. With paid-up share capital contribution, his proportionate amount of patronage refund shall be paid to him unless
he agrees to credit the amount to his account as additional share capital contribution;
• 2. With unpaid share capital contribution, his proportionate amount of patronage refund shall be credited to his
account until his account until his share capital contribution has been fully paid;
•
• 1. In the case of a non-member patron, his proportionate amount of patronage refund shall be set aside in a general fund
for such patrons.
• 2. It shall be allocated to individual non-member patrons only (a) upon request and (b) presentation of evidence of the
amount of his patronage.

11/ 16/2 024 SAMPL E FO OTE R TEX T 39

DISSOLUTION
• “

Dissolution is the termination of the juridical personality of the cooperative through appropriate judicial
proceedings, or by an order of the CDA, or through its own initiative.

Modes:
1. Voluntary: if initiated through the voluntary decision of the members of cooperatives
2. Involuntary: if ordered by the CDA or a competent court having jurisdiction over the cooperatives on
grounds as specified by law, and after due process

Effect: terminates the right of the cooperative to continue the business or purposes for which it was
established and is bound
to wind up its affairs within the period as specified by law

11/ 16/2 024 SAMPL E FO OTE R TEX T 40

Voluntary
• “ Dissolution Where no Creditors are Affected:

1. By a majority vote of the board of directors, and by a resolution duly adopted by the affirmative vote of at least
three- fourths (3/4) of all the members with voting rights, present and constituting a quorum at a meeting to be
held upon call of the directors.
2. That the notice of time, place and object of the meeting shall be published for three (3) consecutive weeks in a
newspaper published in the place where the principal office of said cooperative is located, or if no newspaper is
published in such place, in a newspaper of general circulation in the Philippines
3. That the notice of such meeting is sent to each member of record either by registered mail or by personal delivery at
least thirty (30) days prior to said meeting.
4. A copy of the resolution authorizing the dissolution shall be certified to by a majority of the board of directors
and countersigned by the board secretary.
5. The CDA shall thereupon issue the certificate of dissolution.

11/ 16/2 024 SAMPL E FO OTE R TEX T 41

Voluntary
• “ Dissolution Where Creditors Are Affected:

1. The petition for dissolution shall be filed with the CDA.

2. The petition shall be:
a. signed by a majority of its board of directors or other officers managing its affairs;
b. verified by its chairperson or board secretary or one of its directors; and
c. shall set forth all claims and demands against it and that its dissolution was resolved upon by the affirmative
vote of
at least three-fourths (3/4) of all the members with voting rights, present and constituting a quorum at a meeting
called for that purpose.
3. If the petition is sufficient in form and substance, the CDA shall issue an order reciting the purpose of the
petition and shall
fix a date which shall not be less than thirty (30) nor more than sixty (60) days after the entry of the order.

11/ 16/2 024 SAMPL E FO OTE R TEX T 42

Voluntary
• “ Dissolution Where Creditors Are Affected:

4. Before such date, a copy of the order shall be published at least once a week for three (3) consecutive weeks in a
newspaper of general circulation published in the municipality or city where the principal office of the cooperative is
situated or in the absence of such local newspaper, in a newspaper of general circulation in the Philippines, and a copy
shall likewise be posted for three (3) consecutive weeks in three (3) public places in the municipality or city where the
cooperative’s office is located.
5. Upon expiry of the five (5) day notice to file objections, the CDA shall proceed to hear the petition and try any issue
raised in the objection filed; and if the objection is sufficient and the material allegations of the petition are proven, it
shall issue an order to dissolve the cooperative and direct the disposition of its assets in accordance with existing rules
and regulations.
6. The order of dissolution shall set forth therein:
a. The assets and liabilities of the cooperative;
b. The claim of any creditor;
c. The number of members; and
d. The nature and extend of the interests of the members of the cooperative.

11/ 16/2 024 SAMPL E FO OTE R TEX T 43

 • “

Involuntary Dissolution by Order of the CDA: The CDA may suspend or revoke, after due notice and hearing, the
certificate of registration of a cooperative on any of the following grounds:

1.Having obtained its registration by fraud;

2. Existing for an illegal purpose;
3. Willful violation, despite notice by the CDA, of the provisions of RA 9520 or its bylaws;
4. Willful failure to operate on a cooperative basis; and
5. Failure to meet the required minimum number of members in the cooperative.

11/ 16/2 024 SAMPL E FO OTE R TEX T 44

Involuntary
• “ Dissolution by the Court: A cooperative may be dissolved by order of a competent court after due hearing
on
the grounds of:

1. Insolvency.
2. Violation of any law, regulation or provisions of its bylaws; or

Upon receipt of final and executory decision of the court, the CDA shall issue an order to proceed with the winding
up of the
affairs of the cooperative.

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Dissolution by Failure to Organize and Operate: If a cooperative:

1. has not commenced business and its operation within two (2) years after the issuance of its certificate of
registration; or
2. has not carried on its business for two (2) consecutive years,

The CDA shall send a formal notice to the said cooperative to show cause as to its failure to operate. Failure of
the cooperative to promptly provide justifiable cause for its failure to operate shall warrant the CDA to delete
its name from the roster of registered cooperatives and shall be deemed dissolved.

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LIQUIDATION
1. Every cooperative whose charter expires by its own limitation or whose existence is terminated by voluntary dissolution or
through an appropriate judicial proceeding shall nevertheless continue to exist for three (3) years after the time it is dissolved; not
to continue the business for which it was established but for the purpose of prosecuting and defending suits by or against it;
settlement and closure of its affairs; disposition, conveyance and distribution of its properties and assets.
2. At any time during the said three (3) years, the cooperative is authorized and empowered to convey all of its properties to
trustees for the benefit of its members, creditors and other persons in interest.
3. From and after any such conveyance, all interests which the cooperative had in the properties are terminated.
4. Upon the winding up of the cooperative affairs, any asset distributable to any creditor, shareholder or member who is unknown or
cannot be found shall be given to the federation or union to which the cooperative is affiliated with.
5. A cooperative shall only distribute its assets or properties upon lawful dissolution and after payment of all its debts and liabilities,
except in the case of decrease of share capital of the cooperative and as otherwise allowed by this Code.

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