Tuesday, March 31, 2015
2015 REVISED IRR: SUBSIDIARY COOPERATIVE
Section 1. Legal Basis. The legal basis for this Rule is Art. 5 (16) of the Code, quoted as follows:
"Article 5 (16) Subsidiary Cooperative refers to any organization all or majority of whose membership or shareholders come from a cooperative organized for any other purpose different from that of, and receives technical, managerial and financial assistance from, a cooperative, in accordance with the rules and regulations of the Authority."
Section 2. General Requirements. A parent cooperative may organize a subsidiary cooperative provided that:
1. The creation of a subsidiary cooperative and the technical, managerial and financial assistance to be provided shall be approved by at least two-thirds (2/3) vote of the members of the parent cooperative with voting rights present and constituting a quorum in a regular or special general assembly/representative assembly meeting called for the purpose.
2. The Parent cooperative has been in operation for at least three (3) years and has not incurred a net loss for the last two (2) preceding years of operation.
3. It has a total net worth of at least Fifty Million Pesos (P50,000,000.00) as shown in its latest Audited Financial Statement.
4. The purpose of the subsidiary cooperative shall be different from that of the parent cooperative.
5. All or majority of the members of the subsidiary cooperative must come from that of the parent cooperative.
6. The Parent Cooperative shall be required to submit a feasibility study.
Section 3. Conditions. The following conditions shall be considered in the registration and operation of Subsidiary Cooperatives:
1. Assistance in the form of technical, managerial and financial assistance shall be provided by the Parent Cooperative to its Subsidiary Cooperative;
2. Directors or Officers of the Parent Cooperative cannot be elected or appointed as Officers of the Subsidiary Cooperative. However, the Parent Cooperative through its General/Representative Assembly may appoint its Representative to act as Ex-Officio member of the Board of Directors of the Subsidiary Cooperative;
3. The Management Staff of the Parent Cooperative cannot at the same time be the Management Staff of the Subsidiary Cooperative;
4. Transfer of shares of members and other related interests from the Parent Cooperative to the Subsidiary Cooperative or vice versa is prohibited; and
5. In the case of dissolution of the Parent Cooperative, the Subsidiary Cooperative cannot be a recipient of any grant or other interests from the Parent Cooperative.
Section 4. Name of Subsidiary Cooperative. The name of the Parent Cooperative shall appear in the name of the Subsidiary Cooperative.
Section 5. Assistance from Parent Cooperative. The financial assistance to be provided shall not exceed ten per centum (10%) of the net worth of the Parent Cooperative which shall be in the form of loans or donation. In case of grant/donations it shall not be distributed as member share capital. The technical and managerial assistance shall depend upon the needs of the Subsidiary Cooperative and capacity of the Parent Cooperative, which shall be taken up in the book at actual cost.
A Memorandum of Agreement containing the terms and conditions of the financial and other assistance provided by the Parent Cooperative to the Subsidiary Cooperative shall be entered into by both cooperatives.
Section 6. Effect of Dissolution of Parent or Subsidiary Cooperative. The dissolution of either cooperative shall not effect the existence of the other.
However, in case of the dissolution of the Parent Cooperative, the Subsidiary Cooperative shall subsequently amend its cooperative name to remove the words "Subsidiary Cooperative of (Name of Parent Cooperative)".
(To be continued..followed by RULE 3, MULTI-PURPOSE COOPERATIVE..).
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