Title Reg2 Cooperative - Chapter IV - X.docx ✅

Macaraeg|Page 2 of General At least 25% of all members entitled to vote Cooperative Banks ½ plus 1, except to amend the Articles and the By-Laws, which will require 3⁄4 Electric Cooperatives 5% of all members entitled to vote, unless otherwise provided [Art. 36] Voting System Each member of a primary cooperative shall have only one (1) vote. In the case of members of secondary or tertiary cooperatives, they shall have one (1) basic vote and as many incentive votes as provided for in the bylaws but not exceed five (5) votes. The votes cast by the delegates shall be deemed as votes cast by the members thereof. Primary One (1) vote Secondary/Tertiary At most five (5) votes ● One (1) basic vote ● As many incentive votes However, the bylaws of a cooperative other than a primary may provide for voting by proxy. Voting by proxy means allowing a delegate of a cooperative to represent or vote in behalf of another delegate of the same cooperative. [Art. 37] Composition and Term of the Board of Directors Unless otherwise provided in the bylaws, the direction and management of the affairs of a cooperative shall be vested in a board of directors which shall be composed of not less than five (5) nor more than fifteen (15) members elected by the general assembly for a term of two (2) years and shall hold office until their successors are duly elected and qualified, or until duly removed for caused. Comparison of Board of Directors Cooperative Corporation Composition 5 to 15 5 to 15 Term 2 Years 1 Year (D); 3 Years (T) Elected by General Assembly Shareholders [Art. 38] Powers of the Board of Directors The board of directors shall be responsible for the strategic planning, direction-setting and policy- formulation activities of the cooperatives. [Art. 39] Directors (1) Any member of a cooperative who under the bylaws of the cooperative, has the right to vote and who possesses all the qualifications and none of the disqualifications provided in the laws or bylaws shall be eligible for election as director. (2) The cooperative may, by resolution of its board of directors, admit as directors, or committee member one appointed by any financing institution from which the cooperative received financial assistance solely to provide technical knowledge not available within its membership. - Such director or committee member not be a member of the cooperative and shall have no powers, rights, nor responsibilities except to provided technical assistance as required by the cooperative. (3) The members of the board of directors shall not hold any other position directly involved in the day to day operation and management of the cooperative. (4) Any person engaged in a business similar to that of the cooperative or who in any way has a conflict of interest with it, is disqualified from election as a director of said cooperative. [Art. 40] Meeting of the Board and Quorum Requirement (1) In the case of primary cooperatives, regular meetings of the board of directors shall be held at least once a month. (2) Special meetings of the board of directors may be held at any time upon the call of the chairperson or a majority of the members of the board: Provided, That written notices of the meeting specifying the agenda of the special meeting shall be given to all members of the board at least one (1) week before the said meeting. (3) A majority of the members of the Board shall constitute a quorum or the conduct of
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