Democratic member control: Core of coop identity, key to successful cooperative enterprise

This is a press release from the Philippine Chamber of Cooperatives Inc. (Co-op Chamber) in collaboration with CLIMBS Life and General Insurance Cooperative.

PARANAQUE CITY–In strengthening the core of the cooperative identity and restoring the fundamental principle of Democratic Member Control, the Philippine Chamber of Cooperatives Inc. in collaboration with CLIMBS Life and General Insurance Cooperative (Co-op Chamber) fortifies the celebration of Cooperative Month 2024 by holding its first National Coop Chamber President’s Conference at the Sequoia Hotel, Paranaque City, Metro Manila this October 17, 2024.

The Regional Presidents of the Coop Chamber, representing 16 regions, have united to reinforce the cooperative identity and highlight its role in empowering members and their cooperatives in economic, policy-making, governance, and cultural aspects of society.

Since its enactment on December 16, 2020, Republic Act 11502, officially declared the Month of October of Every Year as the “National Cooperative Month”. Cooperatives are recognized as conduits and partners of the government in delivering services and programs to our members and communities. Moreover, cooperatives actively engage in governance and policy-making to ensure that cooperative values and principles are upheld at all levels.

The Co-op Chamber emphasizes that the cooperative’s business model should not be modeled after corporations, as they have different business undertakings and declared principles and values.

One of the primary distinctions between a cooperative and a company is control. A corporation’s control is determined by the number of shares and corresponding share voting, whereas a cooperative’s control is defined by the principle of one member, one vote (for primary cooperatives) and one cooperative, one vote for a federation, ensuring that control is held by the general membership rather than a select few.

Deepening the cooperative identity: Democratic member-control

The Cooperative Chamber would like to highlight that Section 44 of HB 9673 and Section 45 of Senate Bill 2811 contradict Cooperative Principle No. 2, which is Democratic Member Control. This concept states that cooperatives are democratic organizations governed by their members, who actively engage in policymaking and decision-making, with elected representatives accountable to the membership. Members of primary cooperatives have equal voting rights, and cooperatives at all levels are similarly democratically constituted.

While cooperatives with higher shares receive greater patronage refunds and interest on capital, there are no majority or minority shareholders, considering that cooperatives differ from corporations. The one-member, one-vote principle is essential to the cooperative structure, as cooperatives exist to serve the needs of their members, ensuring decisions are made in line with the 2nd Principle, Democratic Member Control.

This means that each member has an equal say and vote in the decision-making process. It’s crucial to note that even at other levels, the one-member, one-vote, or the one cooperative, one vote must be maintained. The number of shares a member holds must not give them more voting power, as this would lead to a few members with more shares having more control and potentially monopolizing the cooperative.

In corporations, shareholders with more shares have more voting power. However, cooperatives do not follow this approach, as it does not allow for fair and equal representation of all members.

Co-op Chamber’s lobbying and advocacy efforts

In the Senate hearing conducted by the Senate Committee on Cooperatives, chaired by Senator Imee R. Marcos, Mr. Noel Raboy, CEO and President of CLIMBS Life and General Insurance Cooperative and Chairperson of the Philippine Chamber of Cooperatives Inc., expressed openness to allowing 40% share capital holdings in a federation, on the condition that such shares do not carry voting rights.

If share voting schemes become part of the law, it would be difficult to ensure that they continue to serve their democratic purpose. The government should support the viability and growth of cooperatives as vehicles for social justice and economic development. In doing so, the proposed share voting should not be pursued, and the one-member, one-vote, or the one-cooperative, one-vote system must be maintained.

“The Co-op Chamber has increased its advocacy and lobbying efforts by integrating into 16 different regions and electing their respective officers using a bottom-up approach that incorporates the value of the cooperative identity through collective action, shared resources, and strategic planning.” Co-op Chamber, Executive Director Mr. Edwin Bustillos stated in the First National Leadership Conference last July 24, 2024.

President Ferdinand “Bongbong” Marcos Jr. also highlighted the crucial role of cooperatives in developing the production and market power of the agriculture sector, among others. Hence, he emphasized the need to amend the provisions of RA 9520, the Cooperative Code, during his 2nd State of the Nation Address (SONA) last July 24, 2023.

Nevertheless, the Co-op Chamber is committed to addressing vital issues and concerns affecting cooperatives through legislative advocacy and lobbying efforts to advance national and regional agendas supporting cooperative ideals, principles, and values. – Rappler.com