Republic Act 6938 and the Philippine Cooperative Code

Study Notes

Cooperative Under Republic Act 6938

An association must be organized primarily for economic activities, where members have a common bond or interest, to be classified as a cooperative.
A cooperative differs from other organizations primarily through its member-ownership structure, emphasizing democratic governance and shared benefits.

Characteristics of a Cooperative

Cooperatives are member-owned, ensuring that decisions are made democratically.
They focus on providing services or promoting the collective well-being of their members rather than accumulating profits.
A characteristic NOT associated with cooperatives is operating for exclusive profit purposes.

Sole Proprietorships

A primary advantage of a sole proprietorship includes complete control over business decisions and profits.
A significant disadvantage is the personal liability for all business debts and obligations, exposing personal assets to risk.

Partnerships

General partnerships consist of two or more individuals managing a business, sharing responsibilities, profits, and liabilities equally.
In a limited partnership, there are general partners who manage the business and limited partners who only contribute financially and have limited liabilities.
Limited partnerships offer the advantage of personal asset protection for limited partners, reducing financial risk.

Limited Liability Companies (LLCs) vs. Corporations

An LLC provides liability protection for its owners, shielding personal assets from business debts, while corporations also offer limited liability but involve more formalities and requirements.

Disagreements in Partnerships

Limited partnerships may face disagreements due to the differing levels of involvement and investment, leading to conflicts between general and limited partners.

Types of Corporations

S corporations enable profits to be passed directly to owners, avoiding corporate income tax and allowing personal tax treatment of business income.

Disadvantages of Cooperatives

Compared to corporations, cooperatives may face challenges in raising capital due to their member-focused nature and ethical commitments, which might limit outside investment options.

Description

Learn about the definition of a cooperative according to Republic Act 6938, also known as the Cooperative Code of the Philippines, which describes it as an association of persons with a common interest working together for a lawful common goal.