MC 2015-01 | Revised Guidelines Governing the Registration of Cooperatives

MEMORANDUM CIRCULAR 2015-01

Series of 2015

SUBJECT : REVISED GUIDELINES GOVERNING THE REGISTRATION OF COOPERATIVES

Pursuant to Republic Act No. 6939, the Cooperative Development Authority hereby
adopts and promulgates the following revised guidelines governing the registration of
cooperatives.

Article I
Title

This guideline shall be known as the “Revised Guidelines Governing the Registration of
Cooperatives”.

Article II
Policy

It is the declared policy of the State to foster the creation and growth of cooperatives
as practical vehicles for promoting self-reliance and harnessing people power towards
the attainment of economic development and social justice.

Article III
Purpose

This guideline is issued for the orderly registration of cooperatives in compliance with
the requirements as provided under RA 9520, Implementing Rules and Regulations, and
relevant administrative issuances by CDA.

Article IV
Coverage

This shall govern the registration of all types and categories of cooperatives intending
to register as such except those cooperatives defined under Chapters XII, XIII, XVI and
XVII of R.A. 9520.

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Article V
Definition of Terms

As used in this guideline, the following terms shall be defined as:

(a) Area of Business Operation – shall refer to the principal place of business of
cooperative where the cooperative conducts its business as provided for in their articles
of cooperation and by-laws.

(b) Area of Operation – shall refer to the area where the cooperative members come
from as provided for in their articles of cooperation and by-laws.

(c) Authority – shall refer to the Cooperative Development Authority.

(d) Bond of Membership – shall refer to the condition where members associate
themselves to attain their common goals and objectives which may either be
residential, occupational, associational, and institutional.

(e) Business Transaction – shall refer to any business activity or livelihood engaged in
by the cooperative where such cooperative generates savings.

(f) Cooperative – shall refer to the autonomous and duly registered association of
persons, with a common 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 risks and benefits of the undertaking in accordance with
universally accepted cooperative principles.

(g) Federation – shall refer to a cooperative the members of which are primary
cooperatives doing the same line of business.

(h) Inter-regional – shall refer to the cooperative’s area of operation covering two or
more adjacent regions.

(i) Primary Cooperative –shall refer to a cooperative the members of which are natural
persons except electric cooperative, water service cooperative and other cooperatives
which the implementing rules and regulations of RA9520 or the Authority may allow.

(j) Registration – shall refer to the operative act of the Authority granting judicial
personality to a proposed cooperative and is evidenced by the Certificate of
Registration.

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(k) Secondary Cooperative – shall refer to a cooperative the members of which are
primary cooperatives.

(l) Share – shall refer to a unit of capital in primary cooperative the par value of which
is fixed at any figure not more than One Thousand Pesos (P1,000.00) and should be
divisible by one peso may be divided into common share capital and preferred share
capital.

(m) Share Capital – shall refer to the money paid or required to be paid by the
members for the conduct of the operation of the cooperative.

(n) Tertiary Cooperative – shall refer to a cooperative the members of which are
secondaries.

(o) Union – shall refer to a cooperative the members of which are registered
cooperatives and/or federations organized purposely to represent the interest and
welfare of all types of cooperatives at the provincial, city, regional, and national levels.

Article VI
Types of Cooperatives

As defined under Section 23 of RA 9520 the types of cooperatives are, as follows:

(a) Advocacy Cooperative – is a primary cooperative which promotes and advocates

cooperativism among its members and the public through socially-oriented projects,
education and training, research and communication, and other similar activities to
reach out to its intended beneficiaries.

(b) Agrarian Reform Cooperative – is one organized by marginal farmers majority of

which are agrarian reform beneficiaries for the purpose of developing an appropriate
system of land tenure, land development, land consolidation or land management in
areas covered by agrarian reform.

(c) Consumers Cooperative – is one the primary purpose of which is to procure and
distribute commodities to members and non-members.

(d) Credit Cooperative – shall refer to one that promotes and undertakes savings and
lending services among its members. It generates a common pool of funds in order to
provide financial assistance and other realted financial services to its members for
productive and provident purposes.

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(e) Dairy Cooperative – is one whose members are engaged in the production of fresh
milk which maybe processed and/or marketed as dairy products.

(f) Education Cooperative – is one organized for the primary purpose of owning and
operating licensed educational institutions, notwithstanding the provisions of Republic
Act No. 9155, otherwise known as the Governance of Basic Education Act of 2001.

(g) Fishermen Cooperative – is one organized by marginalized fishermen in localities

whose products are marketed either fresh or processed products.

(h) Health Services Cooperative – is one organized for the primary purpose of providing
medical, dental, and other health services.

(i) Housing Cooperative – is one organized to assist or provide access to housing for the
benefit of its regular members who actively participate in the savings program for
housing. It is co-owned and controlled by its members.

(j) Marketing Cooperative – is one which engages in the supply of production inputs to
members and markets their products.

(k) Multipurpose Cooperative – is one which combines two (2) or more of the business
activities of these different types of cooperatives.

(l) Producers Cooperative – is one that undertakes joint production whether agricultural
or industrial. It is formed and operated by its members to undertake the production and
processing of raw materials or goods produced by its members into finished or
processed products for sale by the cooperative to its members and non-members. Any
end product or its derivative arising from the raw materials produced by its members
sold in the name and for the account of the cooperative shall be deemed a product of
the cooperative and its members.

(m) Service Cooperative – is one which engages in medical and dental care,
hospitalization, transportation, insurance, housing, labor, electric light and power,
communication, professional, and other services.

(n) Transport Cooperative – is one which includes land and sea transportation, limited
to small vessels as defined or classified under the Philippine Maritime Laws, organized
under the provisions of this Code.

(o) Water Service Cooperative – is one organized to own, operate and manage water
systems for the provision and distribution of potable water for its members and their
households.

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(p) Workers Cooperative – is one organized by workers, including the self-employed,
who are at the same time members and owners of the enterprise. Its principal purpose
is to provide employment and business opportunities to its members and manage it in
accordance with cooperative principles.

(q) Other types – the requirements for the organization, membership, capitalization
shall be determined and prescribed by the Authority in separate guidelines.

Article VII
Jurisdiction

All applications for registration of cooperative and amendment thereto shall be filed and
registered with the CDA Extension Office (EO) having jurisdiction over the principal
office of the proposed cooperative.

In case of secondary or tertiary cooperative that shall operate with municipal/city,

provincial, regional or inter-regional coverage shall be registered in the CDA Extension
Office where its principal office is located.

The CDA Central Office shall register tertiary cooperatives with national coverage and
selected types of cooperatives including amendments thereto prescribed by law, rules
and circular issued by the Authority which are forwarded by concerned Extension Office
together with the validation report.

For this purpose, tertiary cooperatives with national coverage shall refer to a
cooperative whose area of operation covers three or more regions in Luzon, Visayas
and Mindanao.

Article VIII
Primary Cooperatives

Section 1. Number of members required for Registration. Fifteen (15) or more natural
persons who are Filipino citizens, having a common bond of interest and are residing or
working in the intended area of operations are required for registration.

Section 2. Capital Requirements.

2.1. All primary cooperatives shall be organized with share capital. The authorized share
capital of a cooperative shall be provided for in its Articles of Cooperation. At least
twenty five percent (25%) of the authorized share capital shall be subscribed by the
members and at least twenty five percent (25%) of the subscribed share capital shall
be paid by the members prior to registration.

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2.2. The paid up capitalization requirement for primary cooperatives shall not be less
than Fifteen Thousand Pesos (P15,000.00) except for multipurpose cooperative which
should have at least One Hundred Thousand (P100,000.00) or as required by the
feasibility study whichever is higher.

2.3. In the case of Transport Cooperatives, capital requirements shall be in accordance

with Rule V Section 5 of IRR, RA9520.

Section 3. Cooperative Name and Prohibition.

3.1. The word “Cooperative” “Kooperatiba” or “Cooperativa” shall be included in the

name of the cooperative, which name shall likewise specify the type of cooperative in
accordance with Article 23 of RA 9520.

3.2. No cooperative name shall be allowed by the Authority if the proposed name is
identical or deceptively or confusingly similar to that of any existing cooperative,
contrary to public policy, moral and existing laws.

The use of the words “development” and “integrated” in the cooperative name shall be
discouraged.

3.3. The use of “Incorporated”, “corporation”, “company”, “incorporation”, partnership,

or other similar connotation and abbreviation shall not be allowed. In addition, the use
of the word “federation” and “union” in the name of the proposed primary cooperative
is likewise prohibited except if it is part of the registered name of association or
institution where the members of the proposed cooperative come from.

3.4. Name shall not be written in all capital letters except if it is an acronym. Acronym
shall be written after the full name of cooperative.

Section 4. Registration Requirements. The following documents shall be submitted to

the Authority in Four (4) copies except for item (1) below:

4.1. Cooperative Name Reservation Notice (CNRN); (1 copy only)

4.2. Economic Survey;

4.3. Articles of Cooperation and the approved By-laws;

4.3.1. All original;

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4.3.2. The Articles of Cooperation shall be signed by all the cooperators on each and
every page; and

4.3.3. The By-Laws shall be signed all the members on the adoption page.

4.4. Treasurer’s Affidavit;

4.5. Surety Bonds of accountable officers;

4.6. Certificate of Pre-Membership Seminar (PMES) signed by the cooperative Interim

Chairman, as validated by the Authority;

4.7. Undertaking to change name;

4.8. Undertaking to comply with the auditing and accounting standards prescribed by
the Authority;

4.9. Undertaking to comply with other requirements prescribed by the other regulatory
agency, when applicable;

4.10. Favorable endorsement/written verification/authority/pre-feasibility study, if

applicable; and

4.11. Registration fee.

Section 4.a Other Specific Requirements for each type of cooperative:

4.a.1. Multi-Purpose Cooperative

4.a.1.a. Detailed feasibility study; and

4.a.1.b Undertaking to maintain separate books of accounts for each business activity

4.a.2. Agrarian Reform Beneficiaries Cooperative

4.a.2.a Mother CLOA in case of plantation based ARBs; and

4.a.2.b Written verification from Department of Agrarian Reform (DAR) to the effect
that the cooperative organization is needed and desired by the beneficiaries,
economically viable, at least majority of the members are agrarian reform beneficiaries.

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4.a.3. Housing Cooperatives

4.a.3.a. Copy of the Pre-Feasibility Study of the housing projects undertaking certified
as reviewed by National Housing Authority (NHA).

4.a.4. Transport Cooperatives

4.a.4.a. Certification of Cooperative Education and Transport Operation Seminar

(CETOS) by Office of Transport Cooperatives (OTC)

4.a.5. Water Service Cooperative

4.a.5.a. Proof of Land ownership

4.a.5.b. Well Drilling Data

4.a.6. Professional Service Cooperative

4.a.6.a. Undertaking to comply with the regulatory requirements prescribed by other

regulatory agency;

4.a.6.b. Favorable endorsement from the Governing Board of the respective profession;

4.a.6.c. Tax Identification numbers of all cooperators; and

4.a.6.d. Photocopy of valid individual Professional License of all members.

4.a.7. Labor Service Cooperative

4.a.7.a. Undertaking to comply with the regulatory requirements prescribed by other

regulatory agency;

4.a.7.b. Cooperators/Members’ Profile and

4.a.7.c. Tax Identification numbers of all cooperators;

4.a.8. Health Service Cooperative

4.a.8.a. Undertaking to comply with the regulatory requirements prescribed by other

regulatory agency;

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4.a.8.b. Favorable endorsement/written certification from Concerned health related
professional regulatory Board attesting to the fact that the concerned health related
profession is not prohibited from forming a cooperative for the purpose of engaging in
the subject undertaking;

4.a.8.c. Tax Identification numbers of all cooperators; and

4.a.8.d. Detailed Feasibility Study (expressly mentioning whether the undertaking is

primary, secondary or tertiary level hospital, diagnostic center, spa, and wellness
center, home for the aged, lying in, drop-off center, etc. and specifying the financial,
technical including architectural, plans, etc.)

4.a.9. Small Scale Mining Cooperative

4.a.9.a. Undertaking to comply with the regulatory requirements prescribed by other

regulatory agency;

4.a.7.b. Certification from Mines Geo-Science Bureau Regional Office that the members
are licensed miners if the area of business operation is within the Peoples Small-Scale
Mining Area; and

4.a.7.c. Tax Identification numbers of all cooperators.

Section 5. Submission of Documents. The documents required for registration shall be

printed in an 8.5” x 13” or 8.5” x 14” and may be written in English or in Filipino or
other local dialect with appropriate English translation. As far as practicable, the text
should use bookman old style 12. In case of confusion in the interpretation of the
provisions, the English translation shall prevail.

Section 6. Common and Preferred Share.

6.1. The share capital of a cooperative may consist of common share capital and
preferred share capital if the latter is provided for under the cooperatives’ articles of
cooperation and by laws. Should the cooperative wish to have common and preferred
shares, statements to that effect should appear in the Articles of Cooperation specifying
the amount of shares to be offered for common shares and for preferred share.
However, it is recommended that only the common share be offered.

6.2. Should preferred share capital be offered, the rights and privileges of holders of
preferred shares shall be provided for in the By-laws of the cooperative.

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6.3. Preferred share capital shall not exceed Twenty Five (25%) percent or one-fourth
(1/4) of the total authorized share capital of the cooperative.

6.4. The paid up and subscription of the common share capital contribution should
strictly adhere to the twenty-five percent (25%) requirement based on the authorized
capital share.

6.5. No member shall own more than Ten (10%) percent of the subscribed share
capital of the cooperative.

Section 7. Bond of Membership. The bond of membership is categorized into four (4).
Only one common bond or field of membership will be adopted by the cooperative. The
categories are the following:

7.1. Residential – members working and/or actually and physically residing in the same
place.

7.2. Institutional – members consist of employees, workers and/or officers of a

particular institution.

7.3. Associational – members come from a registered and/or recognized association,

group, club, fraternity, religious group, cultural and other similar aggrupation.

Recognized association means legitimate aggrupation of persons which is validated to

be publicly known in a particular community and is able to present certification from
applicable government entity or substantial proof of visible activity in the community;
and

7.4. Occupational – members come from same or allied profession or actual occupation.

Section 8. Dual Membership. A prospective cooperative may include in its by-laws a

provision not allowing members of existing cooperatives of the same type within the
same area of operation to be a member of the proposed cooperative unless they resign
from the former.

Section 9. Bonding Requirements of Accountable Officers / Employees of the

Cooperative. In order to meet any contingency that may arise in the operations of the
cooperative accountable officers/employees of cooperatives shall submit a surety bond
for the faithful performance of their functions in accordance with Articles 14(5) and (56)
of the Code and in accordance with the following sub-sections:

9.1. The following persons shall be bonded:

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9.1.1. Chairperson

9.1.2. Treasurer and Cashier;

9.1.3. Manager;

9.1.4. Warehouseman;

9.1.5. Loan/deposit Collectors;

9.1.6. Signatories of checks and other financial instruments; and

9.1.7. Such other persons as may be authorized by the cooperative to act as

a custodian of funds merchandise, inventories, securities and other assets of the
cooperative.

9.2. The board of directors shall determine the adequacy of such bonds. For this
purpose, the Board of Directors shall be guided based on the initial networth of the
cooperative which shall include the paid-up capital, the membership fees and the other
assets of the cooperative at the time of registration.

Section 10. Required Period for Approval of Registration.

10.1. An application for registration shall be finally disposed by the Authority within the
period of Sixty (60) days from the filing of complete documentary requirements.
Otherwise, the application is deemed approved unless the cause of the delay is
attributable to the applicant.

10.2. In the case of denial by the Authority, appeal of such denial may be sent to the
Office of the President within ninety (90) days from receipt of the notice of denial.

10.3 The failure of the Office of the President to act on the appeal within ninety (90)
days from the filing thereof shall mean the approval of said application.

Article IX
Registration of Secondary and Tertiary cooperatives

Section 1. Requirements for Registration. The following shall be the minimum

requirements for registration:

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1.1. Membership – The minimum number of members in a federation or union pursuant
to BOA instruction dated May 23, 2011 is recommended, as follows:

Federation Union

10 primary Coops 15 primary coops

10 secondary coops 15 secondary coops

1.2. Paid-up Capital – The minimum paid-up share capital for any proposed
federation/union shall be, as follows:

Federation Union

Php 500,000.00 Not applicable

Php 5,000,000.00 or feasibility study requirement whichever is Not applicable

higher

However, for purposes of registration of a federation, the capital requirement stated in

the feasibility study may also be followed but in no case shall the paid-up share capital
of a federation be less than the amounts stated above.

1.3. Area of Coverage – A federation/union may be organized at the municipal/city,

district, provincial, regional or national levels.

1.4. Business Activity – the federation can engage in any cooperative enterprise
authorized under Article 6 of RA 9520 that compliments, augments, or supplements but
does not conflict, compete with, nor supplant the business or economic activities of its
members.

1.5. Bonding Requirement – Accountable officer/s of the proposed federation shall be

covered by sufficient Surety Bond. The amount of the bond shall depend primarily on
the amount of accountabilities the officer/s are handling as determined by the Board of
Directors.

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1.6. Registration Fee – The registration fee to be paid by the proposed federation shall
be one tenth (1/10) of one (1%) percent of the authorized share capital or the amounts
prescribed in the CDA schedule of fees, whichever is higher. Payment of the registration
fee shall be collected on or before the issuance of the Certificate of Registration.

1.7. Feasibility Study – Four (4) copies of the Feasibility Study containing the following
items shall be submitted to the Authority:

1.7.1 Organizational Structure

1.7.2 Purposes/Objectives

1.7.3 Area of Operation

1.7.4 Number of Member and Potential Members

1.7.5 Feasibility

[Link] technical aspect of federation operation

[Link] management aspect

[Link] financial aspect, 3 years projection, contribution, subsidies

[Link] shall incorporate provision specifying cooperative education and training

programs

In the case of cooperative union, feasibility study can be replaced by a three year
development plan.

1.8. Articles of Cooperation and By-laws – Four (4) copies each of the Articles of
Cooperation and the By-laws shall be submitted to the Authority.

1.9. Treasurer’s Affidavit – A duly notarized document attached to the Articles of

Cooperation stating the total amount received from members share capital contribution,
membership fee, donations or subsidies.

1.10. General Assembly Resolution – duly notarized resolution stating that the general
assembly has approved the membership and the exact amount of share capital/dues to
be contributed to the proposed federation/union it wishes to be affiliated with.

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1.11. Other documentary requirements:

1.11.1 BOD Resolution on authorized representative;

1.11.2 Certification of the chairperson of member primaries stating the following:

1.11.3 Line of business activity to be engaged in;

1.11.4 Compliance/Adherence to the accounting and auditing standards as prescribed

by the authority;

1.11.2 Other documents as may be prescribed by the Authority

Section 2. Place of Registration. (a) The Extension Offices of the Authority shall register
all federations/unions. In cases where the proposed federation/union shall operate with
inter-regional coverage, it shall be registered in the Extension Office where the principal
office is located. (b) The Central Office of the Authority shall register tertiary
cooperatives with national coverage.

Section 3. Miscellaneous. – The following policies shall be followed by any

federation/union:

a. A federation shall engage in economic activity. A union shall actively advocate for the
benefit and welfare of its members and regularly implement plans and programs for the
advancement of member’s interest.

b. No federation/union shall be registered without complying with the minimum

membership requirement stated herein.

c. Federations/Unions are prohibited from conducting audit service to their members.

Section 4. Registration Procedures. – The procedures for registration of cooperative

federations/unions shall follow the same procedures outlined for the registration of
primary cooperatives, as approved by the Board of Administrators.

Article X
Validation Requirement

The CDA Extension Office concerned shall ensure that proposed cooperatives applying
for registration must have complied first with the basic requirements for the

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organization and registration of the proposed cooperative by conducting the requisite
validation procedure prescribed below.

Section 1. Objective. The Authority recognizes the importance of verification/validation

as an essential pre-registration function to ensure that the proposed cooperative
applying for registration with the Authority has met the minimum requirement of the
law.

Section 2. Rationale. While proposed cooperatives comply with the documentary

requirements, it has been observed that others are not complianct with the cooperative
conceptual definition on common bond of interest, voluntariness, and willingness to
undertake the business in accord with the generally accepted cooperative principles.

Section 3. Scope. All types and categories of cooperatives shall be subjected to

verification/validation before registration. On-site validation of the proposed
cooperative’s principal office address and gathering of relevant information including
but not limited to its adherence to the cooperative principles, concept and values
carried out by the cooperators/officers necessary in the submission of complete
validation report.

Article XI
Separability Clause

If any provision of this guideline is declared null and void or unconstitutional, the other
provisions not affected thereby shall continue to be in force and effect.

Article XII
Automatic Review

This guideline shall be subject to automatic review three years from effectivity thereof.

Article XIII
Repeal

All previous circulars and/or guidelines issued by the Authority which are inconsistent
with this guideline are hereby repealed or modified accordingly.

Article XIV
Effectivity

This guideline shall take effect upon the approval of the Board of Administrators and
fifteen (15) days after filing with the Office of National Administrative Registry (ONAR).
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Approved by the Board of Administrators pursuant to Res. No. 2015-29, S-2015 dated
February 18, 2015.

For the Board of Administrators:

By:

(Sgd) EULOGIO T. CASTILLO, Ph.D.

Office-in-Charge, CDA

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