Cooperative Types and Definitions

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Questions and Answers

What is the primary purpose of a Workers Cooperative?

To enable transportation services for members

To provide employment and business opportunities to its members (correct)

To distribute potable water to communities

To provide insurance to its members

Which category of cooperative consists solely of natural persons as members?

Primary Cooperative (correct)

Secondary Cooperative

Federated Cooperative

Tertiary Cooperative

How are cooperatives categorized in relation to membership?

By the geographical location of the cooperative

By the levels of membership: primary, secondary, and tertiary (correct)

By the size of the member's investment

By the type of services offered

What type of cooperative is described as managing water systems for the distribution of potable water?

Water Service Cooperative Signup and view all the answers

Which cooperative type is specifically for insuring the life and properties of cooperatives and their members?

Insurance Cooperative Signup and view all the answers

What is one of the main purposes of cooperative unions?

To advise on questions relating to cooperatives. Signup and view all the answers

Which type of member has the right to vote in a cooperative?

Regular member Signup and view all the answers

What is an associate member entitled to in a cooperative?

Limited rights as provided by bylaws Signup and view all the answers

How can an associate member become a regular member?

By remaining patronage for two years and expressing intention. Signup and view all the answers

What is NOT a purpose of cooperative unions?

Competing with local businesses for market share. Signup and view all the answers

What special type of cooperative is organized by minors?

Laboratory cooperative Signup and view all the answers

Which of the following is NOT mentioned as a means for cooperative unions to raise funds?

Private loans Signup and view all the answers

What phase does cooperative unions NOT focus on for sponsorship of studies?

Agricultural Signup and view all the answers

Under what circumstances are directors not entitled to receive per diems?

When the cooperative reports a net loss or a dividend rate below the inflation rate. Signup and view all the answers

What is required for compensation other than per diems to be granted to directors?

A majority vote of the members at a specially called general assembly meeting. Signup and view all the answers

What condition must be met to render a contract with company directors voidable?

The vote of the director was necessary for contract approval. Signup and view all the answers

Which of the following is true about the fixing of officers' compensation?

It can be set by the board of directors unless defined in the bylaws. Signup and view all the answers

In the event of a contract with a director, which of the following must be disclosed to ratify it?

The director's personal financial interests. Signup and view all the answers

What action may be taken if a contract was not authorized by the general assembly?

It may be ratified by a three-fourths vote of members with voting rights. Signup and view all the answers

What happens during the first year of a cooperative's existence regarding additional compensation?

Only per diems can be paid to directors. Signup and view all the answers

Which of the following is NOT a required condition for a valid contract with a committee member?

The contract must be ratified annually. Signup and view all the answers

What is required for a person to be eligible for election as a director of a cooperative?

They must not have a conflict of interest with the cooperative. Signup and view all the answers

How frequently must regular meetings of the board of directors of primary cooperatives be held?

At least once a month. Signup and view all the answers

What constitutes a quorum for the board of directors to conduct business?

A majority of the members of the Board. Signup and view all the answers

Under what condition can a vacancy in the board of directors be filled by the remaining directors?

If it does not affect the quorum. Signup and view all the answers

What authority does the board of directors have regarding the election of officers?

They elect the chairperson and vice-chairperson from among themselves. Signup and view all the answers

What is a valid reason for removing an officer from the cooperative?

Acts causing loss of confidence in integrity. Signup and view all the answers

Which of the following is true regarding the relationships of appointive officers in a cooperative?

No two persons with relationships up to the third degree may serve together. Signup and view all the answers

What powers may be granted to an executive committee formed by the board of directors?

Powers and duties as stipulated in the bylaws or by majority vote. Signup and view all the answers

What privilege are cooperatives granted regarding the storage of their valuable items?

They can deposit their items in safes of government offices free of charge. Signup and view all the answers

What will cooperatives organized among government employees be allowed to do?

Utilize government-owned or rented spaces free of charge. Signup and view all the answers

What is required for cooperatives providing special types of services to operate?

They need to secure a franchise. Signup and view all the answers

Which agricultural commodities are cooperatives granted preferential rights to supply to government agencies?

Rice, corn, and products from member agriculture. Signup and view all the answers

What type of treatment in fertilizer allocation is granted to cooperatives?

Preferential treatment is provided for allocation of fertilizers. Signup and view all the answers

In which area do cooperatives have preferential rights regarding public market facilities?

In the management and lease of public market facilities. Signup and view all the answers

Cooperatives engaged in credit services are entitled to loans from which of the following institutions?

Development Bank of the Philippines and Land Bank of the Philippines. Signup and view all the answers

What type of assistance are cooperatives eligible for regarding deposit insurance systems?

Technical assistance from PH Deposit Insurance Corporation. Signup and view all the answers

What kind of financing support can public transport service cooperatives receive?

Support for acquiring transport equipment and facilities. Signup and view all the answers

Which of the following statements about bottomries of commercial shipping vessels is true regarding cooperatives?

Cooperatives have preferential treatment in allocation or control. Signup and view all the answers

Study Notes

Cooperative Definition and Types

Cooperatives are co-owned and controlled by their members
Insurance cooperatives insure the life and property of cooperatives and their members
Transport cooperatives provide land and sea transportation with smaller vessels
Water Service cooperatives provide potable water to members and their households
Workers cooperatives are formed by workers, including the self-employed, to provide employment opportunities and are managed via cooperative principles
The Authority can determine other types of cooperatives

Cooperative Categories

Cooperatives are categorized into Primary, Secondary, and Tertiary based on membership
- Primary cooperatives have natural persons as members
- Secondary cooperatives have primaries as members
- Tertiary cooperatives have secondary cooperatives as members
They are also categorized based on their areas of operation which can coincide with the political subdivisions of the country

Functions of a Federation of Cooperatives

Cooperatives can form unions with specific functions:
- Represent member organizations
- Gather and disseminate economic, statistical, and other information about cooperatives
- Conduct studies on various aspects of cooperation
- Promote cooperative principles and practices
- Encourage the cooperative movement
- Advice local authorities on issues related to cooperatives
- Raise funds through membership fees, dues, donations, and subsidies
- Engage in non-business activities to achieve their objectives
Unions can assist national and local governments in development activities

Membership

Cooperatives can have two types of members:
- Regular members who have complied with all requirements and enjoy full rights and privileges
- Associate members who do not have voting rights and are entitled only to specified rights and privileges based on the cooperative bylaws
Associate members can become regular members after fulfilling requirements, patronizing the cooperative for two years, and expressing their intention to remain a member
Cooperatives formed by minors are considered laboratory cooperatives and need to affiliate with registered cooperatives
Individuals involved in similar businesses or having a conflict of interest are disqualified from being elected as a director of a cooperative

Board of Directors and Meetings

Primary cooperatives' boards of directors meet at least once per month
Special board meetings can be called by the chairperson or a majority of board members with one-week advance notice
A majority of board members constitute a quorum for conducting business unless the bylaws specify otherwise
Directors cannot attend or vote by proxy at board meetings

Vacancies and Officers

Vacancies in the board can be filled by a majority vote of remaining directors if they form a quorum. Otherwise, the general assembly must fill the vacancy
Directors elected to fill vacancies serve only the unexpired term of their predecessors
The board elects the chairperson, vice-chairperson, and other officers from outside of the board according to the bylaws
Officers serve indefinitely and can only be removed for cause after a hearing
Loss of confidence is not a valid reason for removal unless it is proven by acts or omissions causing loss of trust
No two individuals related up to the third degree of consanguinity or affinity can serve as appointive officers
Individuals engaged in similar businesses or with conflicting interests can't be appointive officers

Committees

Cooperatives can establish executive committees with specific powers and duties as defined in the bylaws or by a majority vote of the board
Directors don't usually receive compensation except for reasonable per diems
No per diems are given during years with a net loss or a dividend rate lower than the inflation rate
Additional compensation for directors can be granted by a majority vote of members with voting rights at a specific meeting
Compensation for officers, committee members, and employees can be fixed in the bylaws or determined by the board of directors

Dealings with Directors, Officers, or Committee Members

Contracts made between cooperatives and their directors, officers, and committee members are voidable unless certain conditions are met:
- The director's presence at the meeting where the contract was approved wasn't necessary for a quorum
- The director's vote wasn't needed for the contract's approval
- The contract is fair and reasonable under the circumstances
- For officers and committee members, the contract was authorized by the general assembly or board of directors
If the first two conditions are not met in the case of a director, the contract can be ratified by a three-fourths vote of members with voting rights at a specific meeting, provided full disclosure is made, and the contract is fair

Disloyalty of a Director

Cooperatives registered under this Code have specific privileges:
- Free storage of sealed cash boxes, documents, or valuables in government offices
- Free use of available space in their agency for cooperatives of government employees
- Obtaining franchises for specific services like cold storage, electricity, transportation, etc.
- Preferential right to supply government institutions with agricultural goods produced by their members
- Preferential treatment in the allocation of fertilizers, seeds, and other agricultural inputs
- Preferential treatment in the allocation of bottomries for commercial shipping vessels
- Preferential rights in public market management and facility leasing for cooperatives focused on agricultural, fishery, and small industrial products
- Access to loans, credit lines, and rediscounting of loan notes from Development Bank of the Philippines, Land Bank of the Philippines, and other financial institutions (except Bangko Sentral ng Pilipinas)
- Technical assistance from PDIC and other government agencies for national federations and unions of cooperatives engaged in savings and credit operations
- Financing support for acquiring or maintaining land and sea transport equipment for public transport service cooperatives

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Description

Explore the various definitions and types of cooperatives through this quiz. Understand the distinctions between primary, secondary, and tertiary cooperatives, as well as functional categories like insurance, transport, and water service cooperatives. Test your knowledge and enhance your comprehension of cooperative structures and principles.