Legal Requirements for Setting Up a Cooperative in the Philippines

Setting up a cooperative in the Philippines involves a series of legal and regulatory steps designed to ensure that the cooperative operates within the framework of the law and adheres to cooperative principles. Cooperatives in the Philippines are primarily governed by the Cooperative Development Authority (CDA) under the Republic Act No. 9520, also known as the Philippine Cooperative Code of 2008. Here’s a comprehensive guide on the legal requirements for establishing a cooperative in the Philippines.

1. Understanding Cooperatives

Definition: A cooperative is an autonomous and duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common social or economic end, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.

2. Pre-Registration Requirements

2.1 Conduct a Pre-Registration Seminar (PRS)

• Purpose: To educate the founding members about the principles, laws, and management of cooperatives.
• Conducted By: The Cooperative Development Authority (CDA) or any CDA-accredited training provider.
• Certification: Participants receive a Certificate of Attendance, which is a prerequisite for registration.

2.2 Gather the Minimum Number of Members

• Primary Cooperatives: At least 15 members, each of legal age and residing or working in the intended area of operation.
• Secondary and Tertiary Cooperatives: Composed of cooperatives as members.

2.3 Draft the Cooperative’s Organizational Documents

• Articles of Cooperation: Includes the cooperative’s name, purpose, principal office address, term, common bond of membership, names of directors, capital structure, and other relevant details.
• By-Laws: Rules and regulations governing the internal affairs of the cooperative.

3. Registration Process

3.1 Name Reservation

• Step: Reserve the cooperative’s name with the CDA.
• Process: Submit a name reservation request to ensure that the proposed name is unique and not similar to existing cooperatives.

3.2 Submit the Registration Documents

• Required Documents:
  • Articles of Cooperation: Duly notarized.
  • By-Laws: Duly notarized.
  • Treasurer’s Affidavit: Certifying that at least 25% of the authorized share capital has been subscribed and at least 25% of the total subscription has been paid.
  • Economic Survey: A study showing the viability and feasibility of the cooperative’s intended operations.
  • Sworn Statement of the Secretary: Confirming the names of the cooperative members and their subscription.
  • Bond of Accountable Officers: For officers handling funds, a bond to cover potential losses.
  • Certificate of Pre-Registration Seminar: Proof of attendance by the cooperative’s members.
  • Additional Documents: As required by the CDA for specific types of cooperatives.

3.3 Filing with the CDA

• Step: Submit all required documents to the CDA Regional Office where the cooperative’s principal office is located.
• Fees: Pay the necessary registration fees as stipulated by the CDA.

3.4 Review and Approval

• Process: The CDA reviews the submitted documents for completeness and compliance with legal requirements.
• Issuance of Certificate of Registration: Upon approval, the CDA issues a Certificate of Registration, officially recognizing the cooperative.

4. Post-Registration Requirements

4.1 Obtain Necessary Permits and Licenses

• Barangay Clearance: Obtain a clearance from the barangay where the cooperative’s principal office is located.
• Mayor’s Permit: Secure a business permit from the local government unit (LGU).
• BIR Registration: Register with the Bureau of Internal Revenue (BIR) to obtain a Tax Identification Number (TIN), register books of accounts, and secure authority to print receipts and invoices.

4.2 Open a Bank Account

• Step: Open a bank account in the name of the cooperative for operational transactions.

4.3 Membership Education

• Purpose: Conduct regular training and education programs for members on cooperative principles, management, and operations.

4.4 Regular Reporting

• Requirement: Submit regular reports to the CDA, including annual financial statements, general information sheets, and other required reports.

5. Legal Compliance and Good Governance

5.1 Adhere to Cooperative Principles and Values

• Democratic Member Control: Ensure that members participate actively in setting policies and making decisions.
• Member Economic Participation: Members contribute equitably to and democratically control the capital of the cooperative.

5.2 Conduct Regular General Assembly Meetings

• Purpose: Discuss and approve important matters, including the election of directors and officers, approval of budgets, and distribution of surplus.

5.3 Maintain Transparency and Accountability

• Financial Management: Keep accurate financial records and make them available to members.
• Audit: Conduct regular audits by an independent auditor to ensure financial integrity and transparency.

Best Practices for Setting Up and Running a Cooperative

1. Engage with Members: Foster a sense of ownership and active participation among members.
2. Invest in Training: Provide continuous education and training for members and officers to enhance their skills and knowledge.
3. Build Strong Governance Structures: Establish clear governance structures and processes to ensure accountability and effective management.
4. Focus on Sustainability: Develop sustainable business practices that contribute to the long-term success of the cooperative.
5. Leverage Technology: Use technology to streamline operations, enhance communication, and improve service delivery to members.

Conclusion

Setting up a cooperative in the Philippines involves a series of legal and procedural steps designed to ensure compliance with the Cooperative Code and promote good governance. By following these steps and adhering to best practices, cooperatives can achieve their social and economic objectives while fostering a sense of community and mutual support among their members.