COOPERATIVE AND THE ECONOMIC SYSTEM Coop 002 Cooperative

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 ü Better education ü Higher standards of health and nutrition ü Clean, healthy, safety, and friendly environment ü Equality in opportunity for employment or livelihood ü Greater individual freedom ü Richer cultural life

Impact of Cooperative in Development • Cooperative promote and support entrepreneurial development üCreate productive employment üRaised income and helped reduce poverty üCommunity-building

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

Impact of Cooperative in Development • Cooperative provide opportunities for social inclusion üAssistance for self-employment üBanking services (savings and credit cooperative) üFinancing in the formation of small and micro business üInclusive finance – reaching the poor in a sustainable way

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

Impact of Cooperative in Development • Cooperatives are instrumental in peacebuilding 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