Title Reg2 Cooperative - Chapter IV - X.docx ✅

COOPERATIVE CODE: CHAPTER IV - X CHAPTER IV: ADMINISTRATION [Art. 32] Composition of the General Assembly The general assembly shall be composed of such members who are entitled to vote under the articles of cooperation and bylaws of the cooperative. [Art. 33] Powers of the General Assembly The general assembly shall be the highest policy- making body of the cooperative and shall exercise such powers as are stated in this Code, in the articles of cooperation and in the bylaws of the cooperative. The general assembly shall have the following exclusive powers which cannot be delegated: (1) To determine and approve amendments to the articles of cooperation and bylaws. (2) To elect or appoint the members of the board of directors, and to remove them for cause. Electric Cooperatives – election of the members of the board shall be held in accordance with its bylaws or election guideline (3) To approve developmental plans of the cooperative. Subject to such other provisions of this Code and only for purposes of prompt and intelligent decision-making, the general assembly may be a three-fourths (3/4) vote of all its members with voting rights, present and constituting a quorum, delegate some of its powers to a smaller body of the cooperative. These powers shall be enumerated under the bylaws of the cooperative. [Art. 34] Meeting (1) A regular meeting shall be held annually by the general assembly on a date fixed in the bylaws, or if not so fixed, on any dated within ninety (90) days after the close of each fiscal year: Provided, That notice of regular meetings shall be sent in writing, by posting or publication, or through other electronic means to all members of record. (2) Whenever necessary, a special meeting of the general assembly may be called at any time by a majority vote of the board of directors or as provided for in the bylaws: Provided, That a notice in writing shall be sent one (1) week prior to the meeting to all members who are entitled to vote. However, a special meeting shall be called by the board of directors after compliance with the required notice within from at least ten per centum (10%) of the total members who are entitled to vote to transact specific business covered by the call. If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of ten per centum (10%) of all the members of the cooperative who are entitled to vote, and for good cause shown, shall issue an order to the petitioners directing them to call a meeting of the general assembly by giving proper notice as required in this Code or in the bylaws; (3) In the case of a newly approved cooperative, a special general assembly shall be called, as far as practicable, within ninety (90) days from such approval; (4) The Authority may call a special meeting of the cooperative for the purpose of reporting to the members the result of any examination or other investigation of the cooperative affairs; and (5) Notice of any meeting may be waived, expressly or impliedly, by any member. Comparison of Meetings Cooperative Corporation (SH) Regular Meeting Frequency Annual Annual Date As fixed in by-laws As fixed in by-laws Any date within 90 days after the close of each fiscal year. Any date after April 15 Notice None. In Writing. 21 Days Prior Special Meeting Date Any time Any time Notice 1 Week Prior 1 Week Prior [Art. 35] Quorum A quorum shall consist of at least twenty-five per centum (25%) of all the members entitled to vote. In the case of cooperative banks, the quorum shall be as provided in Article 99 of this Code. In the case of electric cooperatives registered under this Code, a quorum, unless otherwise provided in the bylaws, shall consist of five per centum (5%) of all the members entitled to vote.

Macaraeg|Page 3 of business, unless the bylaws proved otherwise. (4) Directors cannot attend or vote by proxy at board meetings. [Art. 41] Vacancy in the Board of Directors Any vacancy in the board of directors, other than by expiration of term, may be filled by the vote of at least a majority of the remaining directors, if still constituting a quorum; otherwise, the vacancy must be filled by the general assembly in a regular or special meeting called for the purpose. A director so elected to fill a vacancy shall serve only the unexpired term of his predecessor in office. Cause of Vacancy Who will Fill the Vacancy Expiration of the Term General Assembly Other Cause (Death, Resignation, Abandonment) Board of Directors – if they still constitute a quorum General Assembly – if the Directors no longer constitute a quorum [Art. 42] Officers of the Cooperative ● The board of directors shall elect from among themselves the chairperson and vice-chairperson, and elect or appoint other officers of the cooperative from outside of the board in accordance with their bylaws. ● All officers shall serve during good behavior and shall not be removed except for cause after due hearing. ● Loss of confidence shall not be a valid ground for removal unless evidenced by acts or omission causing loss of confidence in the honesty and integrity of such officer. ● No two (2) or more persons with relationships up to the third civil degree of consanguinity or affinity nor shall any person engaged in a business similar to that of the cooperative nor who in any other manner has interests in conflict with the cooperative shall serve as an appointive officer. [Art. 43] Committees of Cooperatives (1) The bylaws may create an executive committee to be appointed by the board of directors with such powers and duties as may be delegated to it in the bylaws or by a majority vote of all the members of the board of directors. (2) The bylaws shall provide for the creation of an audit, election, mediation and conciliation, ethics, and such other committees as may be necessary for the conduct of the affairs of the cooperative. The members of both the audit and election committee shall be elected by the general assembly and the rest shall be appointed by the board. Committee Appointed/Elected by 1. Executive Board of Directors 2. Audit 3. Election General Assembly 4. Mediation and Conciliation 5. Ethics 6. Others Board of Directors The audit committee shall be directly accountable and responsible to the general assembly. It shall have the power and duty to continuously monitor the adequacy and effectiveness of the cooperative’s management control system and audit the performance of the cooperative and its various responsibility centers. Unless otherwise provided in the bylaws, the board, in case of a vacancy in the committees, may call an election to fill the vacancy or appoint a person to fill the same subject to the provision that the person elected or appointed shall serve only for the unexpired portion of the term. [Art. 44] Functions, Responsibilities and Training Requirements of Directors, Officers and Committee Members Unless the functions and responsibilities of directors, officers and committee members, as well as their training requirements, shall be in accordance with the rules and regulations issued by the Authority. [Art. 45] Liability of Directors, Officers and Committee Members Directors, officers and committee members are liable jointly and severally for all damages or profits resulting
Macaraeg|Page 4 of therefrom to the cooperative, members, and other persons: 1. Who are willfully and knowingly vote for or assent to patently unlawful acts or 2. who are guilty of gross negligence or bad faith in directing the affairs of the cooperative or 3. who acquire any personal or pecuniary interest in conflict with their duty as such directors, officers or committee members shall be When a director, officer or committee member attempts to acquire or acquires, in violation of his duty, any interest or equity adverse to the cooperative in respect to any matter which has been reposed in him in confidence, he shall, as a trustee for the cooperative, be liable for damages and shall be accountable for double the profits which otherwise would have accrued to the cooperative. [Art. 46] Compensation (1) In the absence of any provisions in the bylaws fixing their compensation, the directors shall not receive any compensation except for reasonable per diems: Provided however, That the directors and officers shall not be entitled to any per diem when, in the preceding calendar year, the cooperative reported a net loss or had a dividend rate less than the official inflation rate for the same year. ● Any compensation other than per diems may be granted to directors by a majority vote of the members with voting rights at a regular or special general assembly meeting specifically called for the purpose: ● Provided, That no additional compensation other than per diems shall be paid during the first year of existence of any cooperative. ● Under Section 6, resumption of grant of per diem after a period of suspension shall not be compounded. No recovery of per diem during the period of suspension shall be allowed. (2) The compensation of officers of the cooperative as well as the members of the committee as well as the members of the committees created pursuant to this Code or its bylaws may be fixed in the bylaws. (3) Unless already fixed in the bylaws, the compensation of all other employee shall be determined by the board of directors. Directors General: None Exception: 1. Fixed in by-laws 2. Reasonable per diems, except ● Net loss in the preceding calendar year ● Dividend Rate < Inflation Rate in the current year Officers and Members of Committee Fixed in by-laws Other Employee Fixed in by-laws Determined by the Board of Directors [Art. 47] Dealings of Directors, Officers, or Committee Members A contract entered into by the cooperative with one (1) or more of its directors, officers, and committee members is voidable, at the option of the cooperative, unless all the following conditions are present. (1) That the presence of such director in the board meeting wherein contract was approved was not necessary to constitute a quorum for such meeting; (2) That the vote of such director was not necessary for the approval of the contract; (3) That the contract is fair and reasonable under the circumstances; and (4) That in the case of an officer or committee member, the contract with the officer or committee member has been previously authorized by the general assembly or by the board of directors. Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director, such contract may be ratified by a three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum in a meeting called for the purpose: Provided, That ● full disclosure of the adverse interest of the directors involved is made at such meeting, and ● the contract is fair and reasonable under the circumstances. [Art. 48] Disloyalty of a Director A director who, by virtue of his office, acquires for himself an opportunity which should belong to the cooperative shall be liable for damages and must