Wednesday, April 1, 2015
CO-OP MERGER: 2015 REVISED RA 9520 IRR
GUIDELINES GOVERNING THE PROCEDURE FOR MERGER OR CONSOLIDATION
Section 1. Legal Basis. The legal bases for this Rule are Articles 21 and 22 of the Code quoted, as follows:
"Art. 21. Merger and Consolidation of Cooperatives.
Two or more cooperatives may merge into a single cooperative, which shall be either one of the constituent cooperatives or the consolidated cooperatives.
No merger or consolidation shall be valid unless approved by three-fourths (3/4) vote of all members with voting rights, present and constituting a quorum of each of the constituent cooperatives at separate general assembly meetings. The dissenting members shall have the right to exercise their right to withdraw their membership pursuant to Article 30.
(3) The Authority shall issue the guidelines governing the procedure of merger or consolidation of cooperatives. In any case, the merger or consolidation shall be effective upon the issuance of the Certificate of Merger or Consolidation by the Authority.
Art. 22. Effects of Merger and Consolidation. - The merger or consolidation of the cooperatives shall have the following effects:
(1) The constituent cooperatives shall become a single cooperative, which in case of merger shall be the surviving cooperative, and in case of consolidation, shall be the consolidated cooperative.
(2) The separate existence of the constituent cooperatives shall cease, except that of the surviving or the consolidated cooperative.
(3) The surviving or consolidated cooperative shall possess all rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a cooperative organized under this Code.
(4) The surviving or consolidated cooperative shall possess all the assets, rights, privileges, immunities and franchises of each of the constituent cooperatives; and
(5) The surviving or consolidate cooperative shall be responsible for all the liabilities and obligations of each of the constituent cooperatives in the same manner as if the surviving or consolidated cooperative had itself incurred such liabilities and obligations. Any claim, action, or proceeding pending by or against any such constituent cooperatives may be prosecuted by or against the surviving or consolidated cooperative, as he case may be. Neither the rights of creditors nor any lien upon the property of any such constituent shall be impaired by such merger or consolidation."
Section 2. Parties to the Merger or Consolidation. Only cooperatives belonging to to the same category can be parties to the Merger or Consolidation. A primary cooperative can only merge or consolidate with another primary cooperative; a secondary with another secondary cooperative; and a tertiary with another tertiary cooperative.
Section 3. Procedure for Merger or Consolidation. The procedure for the merger or Consolidation of cooperatives shall be, as follows:
1. Duly approved board resolution of each constituent cooperatives to enter into merger or consolidation;
2. Execution of a Memorandum of Understanding to Merge or Consolidate, stating the creation of a joint committee to formulate the plan and proposal to merge or consolidate;
3. Formulation of Plan of Merger or Consolidation by the representatives of the constituent cooperatives;
4. Calling of a General/Representative Assembly to present and approve the Proposal and Plan of Merger or Consolidation of each constituent cooperative and the Amendment/New Articles of Cooperation and By-laws;
5. Posting/Publication of the Notice of Merger or Consolidation;
6. Written Notification to Creditors through registered mail with return card and other applicable electronic means;
7. Filing with the Authority the required documents for the registration of merger or consolidation; and
8. Issuance of Certificate of Registration of Merger/Consolidation by the Authority.
Section 4. Contents of Plan of Merger or Consolidation. The Plan of Merger or Consolidation shall set forth the following:
1. Statement of Purpose of such Merger or Consolidation;
2. The Registered Names, Addresses and Registration/Confirmation Numbers, Contact Details and Respective Areas of Operation of the Constituent Cooperatives;
3. The Proposed Amendments to the Surviving Cooperative's Articles of Cooperation and By-laws, in case of Merger and with respect to Consolidation, the Proposed Articles of Cooperation and By-laws;
4. List of Members of each Constituent Cooperatives showing their Share Capital Contribution duly certified by the respective Board Secretaries and attested by the respective Board Chairpersons;
5. The Name, Address and Area of Operation of the Surviving Cooperative, in case of Merger, the Proposed Name, Address and Area of Operation, in case of Consolidation;
6. Feasibility study indicating the Viability and Sustainability of the Merging/Consolidated Cooperatives;
7. The Audited Financial Statements as of the immediate preceding year including the schedule of assets, liabilities and capital of the merging or consolidating cooperatives; and
8. Package Benefits of the Management Staff to be affected by the Plan.
Section 5. Proposal for Merger or Consolidation. The proposal to merge or consolidate shall be made and approved by at least majority of the members of the respective Board of Directors of each constituent cooperative.
During the same meeting, the respective Board of Directors shall appoint or elect the representatives to the joint committee that will draft the Plan of Merger or Consolidation.
Section 6. Approval of Plan of Merger or Consolidation. The Plan of Merger or Consolidation jointly prepared by the representatives of the constituent cooperatives shall be submitted for approval to the members of each constituent cooperative at separate general/representative assembly meetings duly called for the purpose. Notice of such meeting shall be given to all members of the respective cooperative, served either personally or by registered mail with return card, or by electronic means, within the period as indicated in their By-laws.
The affirmative vote of at least three-fourths (3/4) of all members with voting rights, present and constituting a quorum from each of the constituent cooperative, at separate general/representative assembly meetings, shall be necessary for the approval of the Plan of Merger or Consolidation, or amendments thereto, if any.
Section 7. The Articles of Cooperation and By-laws. In the case of Merger, the Amended Articles of Cooperation and By-laws, if applicable, shall be attested to by the incumbent directors of the surviving cooperative. In case of Consolidation, the Articles and By-laws shall be signed by the Board of Directors of the consolidated cooperative.
Section 8. Posting/Publication. Announcement of the Merger or Consolidation may be done by posting in at least three (3) conspicuous places in their respective areas of operation, or by publication in a newspaper of general circulation once a week for three (3) consecutive weeks. Said publication may be supplemented by radio and television announcements or any other electronic means of communication.
Section 9. Notice to Creditors and Investors. The Officers of the Merged or Consolidated Cooperatives shall also notify by registered mail the creditors and investors of their respective cooperatives to inform them of such Merger or Consolidation.
Section 10. Objection/s by a Third Party. Within fifteen (15) days after the date of posting or from the last day of publication, a third party may file an objection or opposition to the Plan of Merger or Consolidation before the Authority which shall be decided within sixty (60) days from receipt of the objection or opposition. Upon a finding that the objection or opposition is meritorious and in order not to prejudice the interest of the third party, the Authority will cause the deferment or disapproval of the registration of the Merger or Consolidation.
After the period to file an objection has lapsed and all objections have been resolved, the surviving cooperative, in case of merger, or the consolidated cooperative, in case of consolidation, may file its application for registration.
Section 11. Additional Requirements for Registration. The Officers of the Merged or Consolidated cooperatives shall file with the Authority the following additional requirements for registration:
A. For Merger
1. The Original Certificate of Registration of the absorbed cooperative;
2. The resolution of the Board of Directors of both merging cooperatives approving the proposal to merge, duly certified by the respective Secretaries and attested to by the respective Chairpersons;
3. The General/Representative Assembly resolutions of both constituent cooperatives approving the proposed Plan of Merger duly certified by the respective Secretaries and attested to by the respective Chairpersons;
4. The excerpts from the minutes of the Board of the General/Representative assembly meeting stating among others the approval of the Merger;
5. Certification of the respective Secretaries duly attested to by the Chairpersons of the constituent cooperatives that there was a quorum in the general/representative assembly meetings conducted and the required number of votes for the approval was met.
6. The approved Plan of Merger and all its attachments as required under section 4 of this Rule;
7. The proposed amendment to the Article of Cooperation and By-laws of the Surviving Cooperative, if necessary;
8. Surety Bonds of Accountable Officers;
9. Proof of Publication/Posting of the Announcement of Merger;
10. Proof of Notice of Creditors;
11. Written Agreement to settle Obligations;
12. Favorable endorsement from the concerned government agency if necessary/applicable; and
13. Registration fee in accordance with the Schedule of Fees prescribed by the Authority.
B. For Consolidation
1. The Original Certificate of Registration of both constituent cooperatives;
2. The resolution of the Board of Directors of both constituent cooperatives approving the proposal to consolidate duly certified by the respective Secretaries and attested to by the Chairpersons of the Consolidating Cooperatives;
3. The General/Representative Assembly resolutions of both constituent cooperatives approving the propose plan of consolidation duly certified by the respective Secretaries and attested to by the Chairpersons of the Consolidating Cooperatives;
4. The excerpts from the minutes of the General/Representative Assembly meetings of the Consolidating Cooperatives with their respective attendance sheets duly certified by the Secretary and Chairpersons or Presiding Officer;
5. Certification of the Secretaries duly attested to by the Chairpersons of the Constituent Cooperatives that there was a quorum in the General/Representative assembly meetings conducted and the required number of votes for the appoval was met;
6. The approved Plan of Consolidation and all its attachments as required under Section 4 of this Rule;
7. The Economic Survey;
8. The proposed Articles of Cooperation and By-laws of the Consolidated Cooperative;
9. Surety bond of Accountable Officers;
10. Proof of Publication/Posting of the announcement of consolidation;
11. Proof of Notice to Creditors;
12. Written Agreement to settle Obligations;
13. Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the proposed name; and
14. Registration fee in accordance with the Schedule of Fees prescribed by the Authority.
Section 12. Issuance of Certificate. Once the registration requirements are complied with, the Authority shall issue the Certificate of Merger, in cases of merger. In cases of consolidation, the new Certificate of Registration shall be issued in addition to the Certificate of Consolidation. The absorbed cooperative in cases of merger, and the Consolidated cooperatives in cases of consolidation, shall surrender their respective original Certificates of Registration to the Authority.
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